401Kids Account: Wyden introduces bill to create savings accounts for every child nationwide

WASHINGTON (KTVZ) -- Sen. Ron Wyden, D-Ore., and Senate colleagues introduced legislation last week that would create children’s savings accounts for every single child in Oregon and nationwide.

Wyden said these savings accounts would build 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.

“Part of the story of America is that anybody can get ahead with enough hard work and determination, but with every passing generation, young people are feeling less confident that that kind of opportunity still exists for them. It’s hard to climb the economic ladder when you’re buried under student loan debt or held down by the rising cost of housing,” Wyden said.

“This bill is about restoring economic opportunity for young people with a smart approach that will give kids a brighter future, put families on stronger financial footing and pay dividends for our economy nationwide. I’m proud to come from a state like Oregon that’s an innovator when it comes to helping working people save and grow a nest egg, and this bill is a great opportunity to build on that success.”

The 401Kids Savings Act, led by Senator Bob Casey, D-Pa., 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.

Analysis shows that 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.

The 401Kids Savings Act is supported by the Alfond Scholarship Foundation, The Aspen Institute Financial Security Program, California CSA Coalition, Change Machine, Children's Assets Policy Collaborative, City of St. Paul Minn., Commonwealth, Compass Working Capital, and more.

A one-pager summary is here.

A report on the impact of the legislation is here.