[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4026 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 4026
To amend the Internal Revenue Code of 1986 to create American dream
accounts.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 9, 2026
Mr. Scott of Florida introduced the following bill; which was read
twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to create American dream
accounts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Dream Accounts Act of
2026''.
SEC. 2. AMERICAN DREAM ACCOUNTS.
(a) In General.--Subchapter F of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART X--AMERICAN DREAM ACCOUNTS
``Sec. 530B. American dream accounts.
``SEC. 530B. AMERICAN DREAM ACCOUNTS.
``(a) General Rule.--An American dream account shall be exempt from
taxation under this subtitle. Notwithstanding the preceding sentence,
such account shall be subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business income of
charitable organizations).
``(b) American Dream Account.--For purposes of this section--
``(1) In general.--The term `American dream account' means
a trust created or organized in the United States for the
exclusive benefit of an eligible individual and which is
designated (in such manner as the Secretary shall prescribe) at
the time of the establishment of the trust as an American dream
account, but only if the written governing instrument creating
the trust meets the following requirements:
``(A) No contribution will be accepted--
``(i) unless it is in cash,
``(ii) after the date the beneficiary makes
a qualified first-time homebuyer distribution
or a rollover distribution described in clause
(ii) or (iii) of subsection (d)(5)(A), and
``(iii) except in the case of a rollover
contribution, if such contribution would result
in aggregate contributions to all American
dream accounts of the beneficiary for the
calendar year in excess of the amount
determined under subsection (c).
``(B) The trustee is a bank (as defined in section
408(n)) 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 plan.
``(C) No part of the trust funds will be invested
in life insurance contracts.
``(D) The assets of the trust shall not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
of his account is nonforfeitable.
``(F) The trustee requires the beneficiary to
annually attest, to the best of their knowledge, to any
contributions made to any other American dream account
established for the benefit of the same beneficiary.
``(2) Eligible individual.--The term `eligible individual'
means any individual who is a citizen of the United States.
``(c) Contribution Limitation.--
``(1) In general.--The amount determined under this
subsection is the lesser of--
``(A) $7,500, or
``(B) $250,000, reduced by the aggregate amount of
contributions made to all American dream accounts of
the beneficiary for such taxable year and all prior
taxable years.
``(2) Catchup contributions.--In the case of an American
dream account the beneficiary of which has attained the age of
35 before the close of the calendar year, paragraph (1)(A)
shall be applied by substituting `$10,000' for `$7,500'.
``(3) Treatment of rollover contributions.--For purposes of
this subsection--
``(A) any rollover contribution described in
subsection (d)(5) shall not be taken into account for
purposes of determining the amount of contribution
under paragraph (1)(A), and
``(B) a rollover contribution described in
subsection (d)(5)(A)(i) shall not be taken into account
for purposes of determining the amount under paragraph
(1)(B).
``(d) Tax Treatment of Distributions.--
``(1) In general.--Except as provided in paragraph (2), any
distribution shall be includible in the gross income of the
distributee in the manner provided in section 72.
``(2) Qualified first-time homebuyer distributions.--
``(A) In general.--Except as provided in
subparagraph (B), any amount paid or distributed out of
an American dream account which is a qualified first-
time homebuyer distribution shall not be includible in
gross income.
``(B) Qualified first-time homebuyer
distribution.--For purposes of this section, the term
`qualified first-time homebuyer distribution' has the
meaning given such term under section 72(t)(8),
determined without regard to subparagraph (B) thereof
and by substituting `3-year period' for `2-year period'
in subparagraph (D)(i)(I) thereof.
``(C) Limitations.--
``(i) Dollar limitation.--
``(I) In general.--The amount
treated as a qualified first-time
homebuyer distribution under
subparagraph (A) shall not exceed
$500,000.
``(II) Special rule.--In any case
in which there is a distribution with
respect to a residence which is
acquired by the beneficiary and another
person jointly and such other person
makes distributions from an American
dream account in connection with such
acquisition, subclause (I) shall be
applied by substituting `$250,000' for
`$500,000'.
``(ii) Lifetime limitation.--No amount
shall be treated as a qualified first-time
homebuyer distribution if the beneficiary has
previously made a qualified first-time home
buyer distribution from an American dream
account in any preceding year.
``(D) Amount included in income in year sold before
3 years.--
``(i) In general.--If the principal
residence acquired by the taxpayer in a
distribution described in subparagraph (A) is
sold before the date that is 3 years after the
date on which such principal residence was
acquired, the amount which would have been
included in gross income in the year of the
distribution shall be included in gross income
in the year in which such principal residence
is sold.
``(ii) Exceptions.--Clause (i) shall not
apply to any sale if, during the period
described in such clause, one of the following
events occurs:
``(I) The death of the taxpayer or
the spouse of the taxpayer.
``(II) A change in the legal
marital status of the taxpayer.
``(III) A change in the number of
the dependents of the taxpayer.
``(IV) The termination of the
employment of the taxpayer or the
taxpayer's spouse.
``(V) A change in the required
location of employment (including in
connection with Government orders
received by the taxpayer, or the
taxpayer's spouse) for qualified
official extended duty service (as
defined in section 36(f)(4)(E)) to a
location of 50 or more miles from the
previous location of employment.
``(3) Special rules for applying estate and gift taxes with
respect to account.--Rules similar to the rules of paragraphs
(2), (4), and (5) of section 529(c) shall apply for purposes of
this section.
``(4) Additional tax for distributions not used for
qualified expenses.--
``(A) In general.--The tax imposed by this chapter
for any taxable year on any taxpayer who receives a
payment or distribution from an American dream account
which is includible in gross income shall be increased
by 10 percent of the amount which is so includible.
``(B) Exceptions.--Subparagraph (A) shall not apply
if the payment or distribution is--
``(i) made to the beneficiary (or to the
estate of the beneficiary) on or after the
death of the beneficiary, or
``(ii) attributable to the beneficiary's
being disabled (within the meaning of section
72(m)(7)),
``(C) Contributions returned before certain date.--
Rules similar to the rules of section 530(d)(4)(C)
shall apply for purposes of this paragraph.
``(5) Rollover contributions.--
``(A) In general.--Paragraph (1) shall not apply to
any amount paid or distributed from an American dream
account to the extent that the amount received is paid,
not later than the 60th day after the date of such
payment or distribution, into--
``(i) another American dream account for
the benefit of the same beneficiary,
``(ii) another American dream account the
beneficiary of which (referred to in this
paragraph as a `transferee beneficiary') is a
member of the family of the beneficiary of the
American dream account with respect to which
the distribution was made, or
``(iii) a Roth IRA maintained for the
benefit of the same beneficiary.
``(B) Change in designated beneficiaries at
death.--In the case of the death of a beneficiary, a
change in the beneficiary of an American dream account
shall not be treated as a distribution for purposes of
paragraph (1) if the new beneficiary is a member of the
family of the old beneficiary. The preceding sentence
shall not apply to the extent of any amount in excess
of the dollar amount in effect under subsection
(c)(1)(B).
``(C) Limitations on same-beneficiary rollovers.--
Subparagraph (A)(i) shall not apply to any payment or
distribution if it applied to any prior payment or
distribution during the 12-month period ending on the
date of the payment or distribution.
``(D) Dollar limitations.--
``(i) Annual limitation for transfers to
other beneficiaries.--Subparagraph (A)(ii)
shall only apply to so much of any
distribution--
``(I) which is paid in a direct
trustee-to-trustee transfer, and
``(II) as does not exceed the
amount applicable to the transferee
beneficiary under subsection (c) for
the taxable year (reduced by the amount
of aggregate contributions made during
the taxable year to all American dream
accounts maintained for the benefit of
the transferee beneficiary).
``(ii) Annual limitation for roth iras.--
Subparagraph (A)(iii) shall only apply to so
much of any distribution--
``(I) which is paid in a direct
trustee-to-trustee transfer, and
``(II) as does not exceed the
amount applicable to the beneficiary
under section 408A(c)(2) for the
taxable year (reduced by the amount of
aggregate contributions made during the
taxable year to all individual
retirement plans maintained for the
benefit of the beneficiary).
``(iii) Lifetime account limitation.--
Clauses (ii) and (iii) of subparagraph (A)
shall not apply to any payment or distribution
made from an American dream account if the
aggregate amount of payments or distributions
made from such account during the taxable year
and all prior taxable years to which such
clauses applied (determined without regard to
this subparagraph) exceeds $100,000.
``(E) Member of family.--For purposes of this
paragraph, the term `member of the family' has the same
meaning given such term under section 529(e)(2).
``(6) Special rules for death and divorce.--Rules similar
to the rules of paragraphs (7) and (8) of section 220(f) shall
apply.
``(e) Tax Treatment of Accounts.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to any American
dream account.
``(f) Community Property Laws.--This section shall be applied
without regard to any community property laws.
``(g) Custodial Accounts.--For purposes of this section, a
custodial account shall be treated as a trust under this section if the
assets of such account are held by a bank (as defined in section
408(n)) or another person who demonstrates, to the satisfaction of the
Secretary, that the manner in which he will administer the account will
be consistent with the requirements of this section, and if the
custodial account would, except for the fact that it is not a trust,
constitute a trust which meets the requirements of subsection (b). For
purposes of this title, in the case of a custodial account treated as a
trust by reason of the preceding sentence, the custodian of such
account shall be treated as the trustee thereof.
``(h) Reports.--
``(1) In general.--The trustee of an American dream account
shall make such reports regarding such account to the Secretary
and to the beneficiary with respect to contributions,
distributions, and such other matters as the Secretary may
require. 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 required.
``(2) Rollover distributions.--In the case of any
distribution described in subsection (d)(5)(D), the officer or
employee having control of the American dream account (or their
designee) shall provide a report to the trustee of the Roth IRA
or American dream account to which the distribution is made.
Such report shall be filed at such time and in such manner as
the Secretary may require and shall include information with
respect to the contributions, distributions, and earnings of
the American dream account as of the date of the distribution
described in subsection (d)(5)(D), together with such other
matters as the Secretary may require.''.
(b) Tax on Excess Contributions.--
(1) In general.--Section 4973(a) of the Internal Revenue
Code of 1986 is amended by striking ``or'' at the end of
paragraph (5), by inserting ``or'' at the end of paragraph (6),
and by inserting after paragraph (6) the following new
paragraph:
``(7) an American dream account (as defined in section
530B),''.
(2) Excess contribution.--Section 4973 of such Code is
amended by adding at the end the following new subsection:
``(i) Excess Contributions to American Dream Accounts.--For
purposes of this section--
``(1) In general.--In the case of American dream accounts
(within the meaning of section 530B), the term `excess
contributions' means the sum of--
``(A) the amount (if any) by which the amount
contributed for the taxable year to such accounts
exceeds the dollar amount in effect under section
530B(c) with respect to the beneficiary, and
``(B) the amount determined under this subsection
for the preceding taxable year, reduced by the sum of--
``(i) the distributions out of the accounts
for the taxable year (other than rollover
distributions), and
``(ii) the excess (if any) of the maximum
amount which may be contributed to the accounts
for the taxable year over the amount
contributed to the accounts for the taxable
year.
``(2) Special rule.--For purposes of paragraph (1), the
following contributions shall not be taken into account:
``(A) Any contribution which is distributed out of
an American dream account in a distribution to which
section 530B(d)(4)(C) applies.
``(B) Any rollover contribution.''.
(c) Tax on Prohibited Transactions.--Section 4975(e)(1) of the
Internal Revenue Code of 1986 is amended by striking ``or'' at the end
of subparagraph (F), by striking the period at the end of subparagraph
(G) and inserting ``, or'', and by adding at the end the following new
subparagraph:
``(H) an American dream account (as defined in
section 530B).''.
(d) Failure To Provide Reports on American Dream Accounts.--
Paragraph (2) of section 6693(a) of the Internal Revenue Code of 1986
is amended by striking ``and'' at the end of subparagraph (F), by
striking the period at the end of subparagraph (G) and inserting ``,
and'', and by adding at the end the following new subparagraph:
``(H) section 530B(h) (relating to American dream
accounts).''.
(e) Rollovers to Roth IRAs.--Section 408A(e) of the Internal
Revenue Code of 1986 is amended by striking ``and'' at the end of
subparagraph (B)(ii), by striking the period at the end of subparagraph
(C) and inserting ``, and'', and by adding at the end the following new
subparagraph:
``(D) from an American dream account to the extent
provided in section 530B(d)(5)(A)(iii).''.
(f) Clerical Amendment.--The table of parts for subchapter F of
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at
the end the following new item:
``PART X--American Dream Accounts''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
<all>
American Dream Accounts Act of 2026
#4026 | S Congress #119
Policy Area: Taxation
Subjects:
Last Action: Read twice and referred to the Committee on Finance. (3/9/2026)
Bill Text Source: Congress.gov
Summary and Impacts
Original Text