U.S. Sen. Bob Casey (D-PA) and U.S. Rep. Don Beyer (D-VA) led a bicameral delegation with Senate Finance Committee Chairman Ron Wyden (D-OR), Senate Majority Leader Chuck Schumer (D-NY), and Representatives Joyce Beatty (D-OH) and Suzan DelBene (D-WA) in introducing the 401Kids Savings Act. The new bill would create children’s savings accounts (CSAs) for every single child in America, building lifelong wealth and economic self-sufficiency for kids from families with limited resources. Funds from the accounts could be used for post-secondary education, starting a business, buying a house, or retirement security.
“Wealth inequality is one of the most intractable challenges facing our nation; it perpetuates injustice, slows economic growth, and fosters political dysfunction. Our bill would help reverse this worsening trend by ensuring that all children entering adulthood have the means to invest in their future,” said Rep. Beyer. “The positive effects of 401Kids accounts would go far beyond the children and their families who get accounts, because we know that when young adults can pursue education, start businesses, and buy homes, it creates economy-wide benefits. I thank Senator Casey and our other colleagues and partners for their leadership on this crucial legislation.”
Along with introducing the bill, Casey also released a new report called “401Kids: Building Wealth for the Next Generation,” which delves into the proposal and examples of how such savings accounts are already working for kids in several states.
Based on local models around the nation, the 401Kids Savings Act would create children’s savings accounts that would be built on state 529 college savings platforms and managed by state Treasurers. Once the accounts are established for all newborns and kids under age 18, families, non-profits, employers, foundations, and others could contribute to a 401Kids Account which, starting at age 18, could be used for post-secondary education and training, a small business, a first home or retirement security. While all families could contribute up to $2,500 per year to the accounts, only lower- and moderate-income families would receive direct federal support.
According to analysis by the Constellation Fund, for every dollar invested in 401Kids, society would receive at least $2.61 in benefits associated with increased income, improved health, additional tax revenues, and savings to other government sectors.