,i #aaith ,,congress #ast ,session ,h4 ,r4 #cdjg ,,in ,,the ,,house ,,of ,,representatives ,may #ad1 #bjbe,mr4 ,moore of ,utah introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to exempt money accounts for growth and advancement from taxation1 and for other purposes4 #a4 ,short title2 etc 7a7 ,short title ,this ,act may be cited as the ,money ,accounts for ,growth and ,advancement ,act or the ,,maga ,act4 7b7 ,references ,except as otherwise expressly provided1 whenever in this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 #b4 ,,maga accounts 7a7 ,in general ,subchapter ,f of chapter #a is amended by adding at the end the following new part3 ,,ix ,,maga accounts #ecj;,a4 ,,maga accounts 7a7 ,general rule ,a ,,maga account shall be exempt from taxation under this subtitle4 ,notwithstanding the preceding sentence1 such account shall be subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable organizations74 7b7 ,,maga account ,for purposes of this section-- 7#a7 ,in general ,the term money account for growth and advancement or ,,maga account means a trust created or organized in the ,united ,states for the exclusive benefit of an individual and which is designated 7in such manner as the ,secretary shall prescribe7 at the time of the establishment of the trust as a ,,maga account1 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,the individual establishing the account shall provide to the trustee the social security number of such individual and of the account beneficiary4 7,b7 ,except in the case of a qualified rollover contribution described in subsection 7e71 no contribution will be accepted-- 7i7 before ,january #a1 #bjbf1 7ii7 unless it is in cash1 7iii7 unless the account beneficiary has not attained age #ah1 and 7iv7 if such contribution would result in aggregate contributions for the taxable year exceeding the contribution limit specified in subsection 7c77#a74 7,c7 ,no distribution 7other than a distribution of a qualified rollover contribution7 will be allowed-- 7i7 before the date on which the account beneficiary attains age #ah1 or 7ii7 in the case of such an account the account beneficiary of which has not attained age #be1 if the aggregate distributions from such account exceeds the amount that is the cash equivalent value of the account on the date on which the account beneficiary attains age #ah4 7,d7 ,the account beneficiary has not attained age #h on the date of the establishment of the account4 7,e7 ,the trustee is a bank 7as defined in section #djh7n77 or another person who demonstrates to the satisfaction of the ,secretary that the manner in which that person will administer the trust will be consistent with the requirements of this section or who has so demonstrated with respect to any individual retirement plan4 7,f7 ,the interest of an individual in the balance of his account is nonforfeitable4 7,g7 ,the assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund4 7,h7 ,no part of the trust funds will be invested in any asset other than eligible investments4 7#b7 ,eligible investments ,the term eligible investments means stock of a regulated investment company 7within the meaning of section #hea7 which-- 7,a7 tracks a well-established index of ,united ,states equities 7or which invests in an equivalent diversified portfolio of ,united ,states equities71 7,b7 does not use leverage1 7,c7 minimizes fees and expenses1 and 7,d7 meets such other criteria as the ,secretary determines appropriate for purposes of this section4 7#c7 ,account beneficiary ,the term account beneficiary means the individual on whose behalf the ,,maga account was established4 7c7 ,treatment of contributions 7#a7 ,contribution limit ,the contribution limit for any taxable year is #e1jjj4 7#b7 ,contributions from tax exempt sources and rollover contributions ,the amount contributed to a ,,maga account for purposes of paragraph 7#a7 shall be determined without regard to-- 7,a7 a qualified rollover contribution1 7,b7 any contribution from the ,federal ,government or any ,state1 local1 or tribal government1 or 7,c7 any contribution made through the program established under subsection 7l74 7#c7 ,cost-of-living adjustment 7,a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjbf1 the #e1jjj amount under paragraph 7#a7 shall be increased by an amount equal to-- 7i7 such dollar amount1 multiplied by 7ii7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year1 determined by substituting calendar year #bjbe for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 7,b7 ,rounding ,if any increase under subparagraph 7,a7 is not a multiple of #ajj1 such amount shall be rounded to the next lower multiple of #ajj4 7d7 ,distributions 7#a7 ,amounts allocable to investment in the contract ,a distribution from a ,,maga account of an amount allocable to the investment in the contract shall not be includible in the gross income of the distributee4 7#b7 ,amounts allocable to income on the contract used for qualified expenses ,a distribution from a ,,maga account of an amount allocable to income on the contract and which is used exclusively to pay for qualified expenses shall be includible in net capital gain of the distributee under section #a7;h77#ab74 7#c7 ,amounts includible in gross income ,any distribution from a ,,maga account which is not described in paragraph 7#a7 or 7#b7 shall be includible in the gross income of the distributee4 7#d7 ,qualified expenses ,for purposes of this subsection1 the term qualified expenses means any of the following expenses paid or incurred for the benefit of the account beneficiary3 7,a7 ,qualified higher education expenses 7as defined in section #ebi7;e77#c77 determined without regard to section #ebi7;c77#g74 7,b7 ,qualified post-secondary credentialing expenses 7as defined in section #ebi7;f774 7,c7 ,under regulations provided by the ,secretary1 amounts paid or incurred with respect to any small businesses for which the beneficiary has obtained any small business loan1 small farm loan1 or similar loan4 7,d7 ,any amount used for the purchase 7as defined in section #cf7;c77#c77 of the principal residence 7as used in section #aba7 of the account beneficiary if such account beneficiary is a first-time homebuyer 7as defined in section #cf7;c77#a77 with respect to such purchase4 7#e7 ,exceptions ,paragraphs 7#b7 and 7#c7 shall not apply to any distribution which is a qualified rollover contribution4 7#f7 ,additional tax on certain distributions ,in the case of a distributee who has not attained age #cj1 the tax imposed by this chapter on the account beneficiary for any taxable year in which there is a distribution from a ,,maga account of such beneficiary which is includible in gross income under paragraph 7#c7 shall be increased by #aj percent of the amount which is so includible4 7e7 ,qualified rollover contribution ,for purposes of this section1 the term qualified rollover contribution means an amount which is paid in a direct trustee-to-trustee transfer from a ,,maga account maintained for the benefit of the account beneficiary to a ,,maga account maintained for such beneficiary4 7f7 ,treatment after death of account beneficiary ,rules similar to the rules of section #bbc7;f77#h7 shall apply for purposes of this section4 7g7 ,determinations of aggregate distributions and investment in contract in the case of certain rollover contributions ,in the case of a qualified rollover contribution which is described in subsection 7e77#b71 any determination required under this section of the amount of the investment of the contract or of aggregate distributions from the ,,maga account shall be determined with respect to the aggregate of such amounts for all ,,maga accounts of the same account beneficiary4 7h7 ,custodial accounts ,for purposes of this section1 a custodial account shall be treated as a trust under this section if-- 7#a7 the custodial account would1 except for the fact that it is not a trust1 constitute a trust which meets the requirements of subsection 7b77#a71 and 7#b7 the assets of such account are held by a bank 7as defined in section #djh7n77 or another person who demonstrates1 to the satisfaction of the ,secretary1 that the manner in which he will administer the account will be consistent with the requirements of this section4 ,for purposes of this title1 in the case of a custodial account treated as a trust by reason of the preceding sentence1 the person holding the assets of such account shall be treated as the trustee thereof4 7i7 ,termination 7#a7 ,age #ca ,upon the date on which the account beneficiary attains age #ca1 a ,,maga account shall cease to be a ,,maga account and the amount in such account shall be treated as distributed for purposes of subsection 7d74 7#b7 ,multiple accounts of one beneficiary 7,a7 ,in general ,in the case of any duplicate ,,maga account of any account beneficiary other than a ,,maga account which is established by the deposit through a qualified rollover contribution of the entire amount of another ,,maga account of the account beneficiary-- 7i7 such duplicate ,,maga account shall cease to be a ,,maga account and the amount in such account shall be treated as distributed for purposes of subsection 7d71 and 7ii7 there is imposed an excise tax on the account beneficiary in an amount equal to so much of cash value of the account as is allocable to income on the contract4 7,b7 ,withholding requirement ,in the case of an account terminated under subparagraph 7,a71 the trustee shall deduct and withhold upon the amount to be distributed the amount in excess described in subparagraph 7,a77ii74 7,c7 ,notification ,the ,secretary1 upon determining that a duplicate account exists1 shall provide a notice to the account beneficiary of such duplicate account 7and the account custodian1 in the case of a custodial account7 and to each trustee of any ,,maga account of the account beneficiary of such duplicate account which identifies each ,,maga account of such beneficiary and the trustee of each such account4 7,d7 ,duplicate account ,for purposes of this paragraph1 the term duplicate account means-- 7i7 in the case of an account beneficiary for the benefit of whom an account was established by the ,secretary under section #fdcd1 any other ,,maga account of such account beneficiary1 or 7ii7 in the case of any other account beneficiary1 any ,,maga account established after the first ,,maga account established for the benefit of such account beneficiary4 7j7 ,investment in the contract ,for purposes of this section1 rules similar to the rules applied to a qualified tuition program 7as defined in section #ebi7;b77 under section #gb7;e77#i7 shall apply for purposes of determining the investment in the contract1 except that such amount shall be determined without regard to any contribution which is described in subsection 7c77#b74 7k7 ,reports ,the trustee of a ,,maga account shall make such reports regarding such account to the ,secretary and to the beneficiary of the account with respect to contributions1 distributions1 the amount of investment in the contract1 and such other matters as the ,secretary may require4 ,the reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required4 7l7 ,contributions to predominately unrelated children ,the ,secretary shall establish a program through which contributions may be made to the ,,maga accounts of a large group of account beneficiaries if-- 7#a7 the contribution is made by any person described in any paragraph of section #eja7;c7 and exempt from taxation under section #eja7;a71 7#b7 such accounts are selected on the basis of the location of the residence of the account beneficiaries1 the school district in which such beneficiaries attend school1 or another basis the ,secretary determines appropriate1 and 7#c7 all individuals who are account beneficiaries of such an account who meet the selected criteria receive an equal portion of the contribution4 4 7b7 ,distribution taxed at same rate as net capital gains ,section #a7;h7 is amended by adding at the end the following new paragraph3 7#ab7 ,distributions from ,,maga account taxed as net capital gain ,for purposes of this subsection1 the term net capital gain means the net capital gain 7determined without regard to this paragraph7 increased by the amount includible in net capital gain under this paragraph by reason of section #ecj;,a7d77#b74 4 7c7 ,tax on excess contributions 7#a7 ,in general ,section #digc7;a7 is amended by striking or at the end of paragraph 7#e71 by inserting or at the end of paragraph 7#f71 and by inserting after paragraph 7#f7 the following new paragraph3 7#g7 a ,,maga account 7as defined in section #ecj;,a7b771 4 7#b7 ,excess contribution ,section #digc is amended by adding at the end the following new subsection3 7i7 ,excess contributions to a ,,maga account ,for purposes of this section1 in the case of ,,maga accounts 7within the meaning of section #ecj;,a71 the term excess contributions means the sum of-- 7#a7 the amount by which the amount contributed for the calendar year to such account 7other than qualified rollover contributions 7as defined in section #ecj;,a7e777 exceeds the contribution limit under section #ecj;,a7c77#a7 7determined without regard to contributions described in section #ecj;,a7c77#b771 and 7#b7 the amount determined under this subsection for the preceding calendar year1 reduced by the excess 7if any7 of the maximum amount allowable as a contribution under section #ecj;,a7c77#a7 7as so determined7 for the calendar year over the amount contributed to the account for the calendar year 7other than qualified rollover contributions 7as so defined774 4 7d7 ,disclosure of return information ,to facilitate certain contributions ,section #fajc7l7 is amended by adding at the end the following new paragraph3 7#bc7 ,disclosure of return information to enable certain contributions to ,,maga accounts ,upon written request signed by the head of the bureau or office of the ,department of the ,treasury requesting the inspection or disclosure1 the ,secretary may disclose the following return information with respect to a ,,maga account 7as defined in section #ejc;,a7b77 to officers and employees of such bureau or office to the extent that such disclosure is necessary to carry out section #ecj;,a7l73 7,a7 ,information necessary to identify the account holders in a particular class of beneficiaries identified by a donor as the intended recipients4 7,b7 ,the name1 address1 and social security number of a beneficiary4 7,c7 ,the account custodian and the address of such custodian4 7,d7 ,the account number4 7,e7 ,the routing number4 7,f7 ,to the extent determined by the ,secretary in regulations1 such other return information as the ,secretary determines necessary to ensure proper routing of funds4 ,return information disclosed under this paragraph may only be used to identify account holders in a particular class of beneficiaries or for the proper routing of funds and may not be redisclosed by the ,secretary4 4 7e7 ,failure ,to provide reports on ,,maga accounts ,section #ffic7;a77#b7 is amended by striking and at the end of subparagraph 7,e71 by striking the period at the end of subparagraph 7,f7 and inserting 1 and1 and by adding at the end the following new subparagraph3 7,g7 section #ecj;,a7h7 7relating to ,,maga accounts74 4 7f7 ,conforming amendment ,the table of parts for subchapter ,f of chapter #a is amended by adding at the end the following new item3 ,part ,,ix4 ,,maga accounts 4 7g7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbd4 #c4 ,,maga accounts contribution pilot program 7a7 ,in general ,subchapter ,b of chapter #fe is amended by adding at the end the following new section3 #fdcd4 ,,maga accounts contribution pilot program 7a7 ,in general ,in the case of any taxpayer with respect to whom an eligible individual is a qualifying child1 there shall be allowed a one-time credit of #a1jjj with respect to each such eligible individual who is a qualifying child of such taxpayer which shall be payable by the ,secretary only to the ,,maga account with respect to which such eligible individual is the account beneficiary4 7b7 ,account established by ,secretary 7#a7 ,in general ,in the case of any eligible individual that the ,secretary determines is not the account beneficiary of any ,,maga account as of the qualifying date of such eligible individual1 the ,secretary shall establish an account for the benefit of such eligible individual4 7#b7 ,qualifying date ,for purposes of paragraph 7#a71 the term qualifying date means1 with respect to an eligible individual1 the first date on which a return of tax is filed by an individual with respect to whom such eligible individual is a qualifying child with respect to the taxable year to which such return relates4 7#c7 ,notification ,in the case of any eligible individual for the benefit of whom the ,secretary establishes an account under paragraph 7#a71 the ,secretary shall-- 7,a7 notify any individual with respect to whom such eligible individual is a qualifying child for the taxable year described in paragraph 7#b7 of the establishment of such account1 and 7,b7 shall provide an opportunity to such individual to elect to decline the application of this subsection to such qualifying child4 7#d7 ,determination of default trustee ,for purposes of selecting a trustee for an account established under paragraph 7#a71 the ,secretary shall take into account-- 7,a7 the history of reliability and regulatory compliance of such trustee1 7,b7 the customer service experience of such trustee1 7,c7 the costs imposed by such trustee on the account or account beneficiary1 and 7,d7 to the extent practicable1 the preferences of any individual described in paragraph 7#c77;,a7 with respect to such eligible individual4 7c7 ,eligible individual ,for purposes of subsection 7a71 the term eligible individual means an individual-- 7#a7 who is born after ,december #ca1 #bjbd1 and before ,january #a1 #bjbi1 and 7#b7 who is a ,united ,states citizen at birth4 7d7 ,social security number required 7#a7 ,in general ,no credit shall be allowed under subsection 7a7 to a taxpayer unless such taxpayer includes on the return of tax for the taxable year-- 7,a7 such individual's social security number1 7,b7 if such individual is married1 the social security number of such individual's spouse1 and 7,c7 the social security number of the eligible individual with respect to whom such credit is allowed4 7#b7 ,social security number defined ,for purposes of paragraph 7#a71 the term social security number shall have the meaning given such term in section #bd7;h77#g74 7e7 ,definitions ,for purposes of this section-- 7#a7 ,qualifying child ,the term qualifying child has the meaning given such term in section #aeb7;c74 7#b7 ,,maga account2 account beneficiary ,the terms ,,maga account and account beneficiary have the meaning given such terms in section #ecj;,a7b74 4 7b7 ,penalty for negligent claim or fraudulent claim ,part ,i of subchapter ,a of chapter #fh of subtitle ,f is amended by adding at the end the following new section3 #ffei4 ,improper claim for ,,maga account contribution pilot program credit 7a7 ,in general ,in the case of any taxpayer that makes an excessive claim for a credit under section #fdcd-- 7#a7 if such excess is a result of negligence or disregard of the rules or regulations1 there shall be imposed a penalty of #ejj1 or 7#b7 if such excess is a result of fraud1 there shall be imposed a penalty of #a1jjj4 7b7 ,definitions ,the terms negligence and disregard have the same meaning as when such terms are used in section #fffb4 4 7c7 ,omission of correct social security number treated mathematical or clerical error ,section #fbac7;g77#b7 is amended by striking and at the end of subparagraph 7,u71 by striking the period at the end of subparagraph 7,v7 and inserting 1 and1 and by inserting after subparagraph 7,v7 the following new subparagraph3 7,w7 an omission of a correct social security number required under section #fdcd7;d77#a7 7relating to the ,,maga accounts contribution pilot program74 4 7d7 ,clerical amendments 7#a7 ,the table of sections for subchapter ,b of chapter #fe is amended by adding at the end the following new item3 ,sec4 #fdcd4 ,,maga accounts contribution pilot program4 4 7#b7 ,the table of sections for part ,i of subchapter ,a of chapter #fh of subtitle ,f is amended by inserting after the item relating to section #ffeh the following new item3 ,sec4 #ffei4 ,improper claim for ,,maga account contribution pilot program credit4 4 7e7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbd4