BABY’S FIRST: ASPIRE Act would give $500 to U.S. newborns in proposed lifetime savings accounts
Will the U.S. Congress reintroduce the ASPIRE Act to give newborns $500?
A bill to provide every United States child born after December 31, 2009 with a “Lifetime Savings Account” is expected to be reintroduced in Congress before the end of the year, according to an Oct. 6 article in U.S News & World Report.
The legislation enjoys bipartisan support. If it becomes law, newborns would receive $500 when their Social Security card is issued.
“Each account will be endowed with a one-time $500 contribution,” according to the ASPIRE Act of 2009 Bill Summary, “and children in households earning below national median income will be eligible for a supplement contribution of up to $500.”
The earnings would be tax-free and eligible families would receive matched savings and financial education incentives.
The estimated cost for the federal government to fund the savings accounts is projected to be $37.5 billion over the first 10 years.
Reid Cramer, director of the Asset Building Program at the New America Foundation, says the legislation is necessary to promote asset building for children.
“A KIDS account will get every child and their family thinking about their future,” Cramer said. “The public investment signals that society has an interest in the success of every child, and they, in turn, will be responsible to make appropriate choices throughout their lives.”
The U.S. Treasury Department would manage the fund governed by a Board of Directors similar in structure to the retirement program for federal employees. Once an account is created, the Treasury Secretary would automatically transfer the initial $500 contribution, which would be indexed for inflation.
“No withdrawals can be made until the account holder reaches the age of 18,” the proposed bill reads. “Between the ages of 18 and 25 the only allowed use of the funds will be for post-secondary education with distributions being made directly to post-secondary education providers. After reaching the age of 25, home ownership and retirement security will be the additional allowed uses.”
Originally introduced as H.R. 3740 and S.3557 in 2007 and 2008, the bill was referred to the House Ways and Means Committee and the Senate Finance committees but did not pass.
Other countries, like the United Kingdom, have similar programs. Since September 1, 2002, children in the UK have benefited from the Child Trust Fund. One difference between the British program and the proposed U.S. program is when children turn 18 they are permitted to use the funds from the account as they see fit with no restrictions from the government.
Watch Big 3 News discuss the ASPIRE Act:
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