READY Accounts Act
This bill establishes a new Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) account, allows individuals to make tax-deductible contributions of up to $4,500 per year to such accounts (adjusted annually for inflation), and allows individuals to take tax-free distributions from such accounts to pay for qualified home disaster mitigation and recovery expenses related to a principal residence owned by the taxpayer.
Under the bill, qualified home disaster mitigation expenses include expenses certified by a qualified industry professional as meeting criteria to mitigate damage from a natural or other disaster, including
Qualified home disaster recovery expenses include costs for repairing damage to a residence resulting from fire, storm, or other casualty (provided such costs are not reimbursed).
Distributions from a READY account used for anything other than qualified home disaster mitigation and recovery expenses must be included in gross income and are subject to a 20% penalty. (Some exceptions apply.)
Finally, the bill imposes a 6% tax on contributions in excess of the annual limit. (Some exceptions apply.)
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 440 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 440
To amend the Internal Revenue Code of 1986 to provide for Residential
Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 15, 2025
Ms. Lee of Florida (for herself, Mr. Moskowitz, Mr. Buchanan, and Mr.
Scott Franklin of Florida) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for Residential
Emergency Asset-accumulation Deferred Taxation Yield (READY) 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 ``READY Accounts Act''.
SEC. 2. READY ACCOUNTS.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by redesignating section 224
as section 225 and by inserting after section 223 the following new
section:
``SEC. 224. RESIDENTIAL EMERGENCY ASSET-ACCUMULATION DEFERRED TAXATION
YIELD (READY) ACCOUNTS.
``(a) Deduction Allowed.--In the case of an individual, there shall
be allowed as a deduction for the taxable year an amount equal to the
aggregate amount paid in cash during such taxable year by or on behalf
of such individual to a Residential Emergency Asset-accumulation
Deferred Taxation Yield (READY) account such individual.
``(b) Limitation.--
``(1) In general.--The amount allowable as a deduction
under subsection (a) to an individual for the taxable year
shall not exceed $4,500.
``(2) Inflation adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2025, the $4,500
dollar amount under paragraph (1) shall be increased by
an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting in subparagraph
(A)(ii) thereof `calendar year 2024' for
`calendar year 2016'.
``(B) Rounding.--If any amount as adjusted under
paragraph (1) is not a multiple of $50, such dollar
amount shall be rounded to the next lowest multiple of
$50.
``(c) Residential Emergency Asset-Accumulation Deferred Taxation
Yield (READY) Account.--For purposes of this section--
``(1) In general.--The term `Residential Emergency Asset-
accumulation Deferred Taxation Yield (READY) account' means a
trust created or organized in the United States as a
Residential Emergency Asset-accumulation Deferred Taxation
Yield (READY) account exclusively for the purpose of paying the
qualified home disaster mitigation and recovery expenses of the
account beneficiary, but only if the written governing
instrument creating the trust meets the following requirements:
``(A) Except in the case of a rollover contribution
described in subsection (e)(5), no contribution will be
accepted--
``(i) unless it is in cash, or
``(ii) to the extent such contribution,
when added to previous contributions to the
trust for the calendar year, exceeds the dollar
amount in effect under subsection (b)(1).
``(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
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will 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
in his account is nonforfeitable.
``(2) Qualified home disaster mitigation and recovery
expenses.--
``(A) In general.--The term `qualified home
disaster mitigation and recovery expenses' means, with
respect to an account beneficiary, amounts paid by such
beneficiary for--
``(i) qualified disaster mitigation
measures, or
``(ii) qualified disaster recovery costs,
with respect to a qualified home of the taxpayer.
``(B) Qualified disaster mitigation measures.--For
purposes of subparagraph (A)--
``(i) In general.--The term `qualified
disaster mitigation measures' means any measure
described in clause (ii) with respect to a
qualified home of the taxpayer if--
``(I) such measure meets such
criteria as the Secretary, in
consultation with the Administrator of
the Federal Emergency Management
Agency, considers appropriate to
mitigate damage from a natural or other
disaster, and
``(II) is certified by a qualified
industry professional as meeting such
criteria.
``(ii) Mitigation measures.--The following
measures are measures described in this clause:
``(I) Installing a roofing
underlayment to sheathing.
``(II) Replacing a roof covering.
``(III) Applying a foam adhesive to
reinforce the roof structure.
``(IV) Strengthening connection of
roof deck to roof framing.
``(V) Strengthening roof-to-wall
connections.
``(VI) Strengthening soffits.
``(VII) Strengthening attic
ventilation openings.
``(VIII) Installing impact-
resistant windows.
``(IX) Installing impact-resistant
entry doors.
``(X) Elevating the residential
home.
``(XI) Installing ground anchors.
``(XII) If the qualified home was
built according to a building code from
a prior year, achieving the current
building code standard in the
applicable State or locality.
``(XIII) Such other measures
determined by the Secretary, in
consultation with the Administrator of
the Federal Emergency Management
Agency, to be consistent with the
purposes of this section.
``(iii) Qualified industry professional.--
The term `qualified industry professional'
means an individual who meets such rules and
standards as determined appropriate by the
Secretary, in consultation with the
Administrator of the Federal Emergency
Management Agency.
``(C) Qualified disaster recovery costs.--For
purposes of subparagraph (A), the term `qualified
disaster recovery costs' means costs for repairing
damage to the qualified home of the taxpayer if such
damage arises from fire, storm, or other casualty and
such costs are not compensated for by insurance or
otherwise.
``(D) Qualified home.--For purposes of this
section, the term `qualified home' means, with respect
to any taxable year, any structure which is--
``(i) owned by the taxpayer, and
``(ii) used by the taxpayer as the
taxpayer's principal residence (within the
meaning of section 121) for the taxable year.
``(3) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the Residential Emergency
Asset-accumulation Deferred Taxation Yield (READY) account was
established.
``(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction
for rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Section 219(f)(5) (relating to employer
payments).
``(D) Section 408(g) (relating to community
property laws).
``(E) Section 408(h) (relating to custodial
accounts).
``(d) Tax Treatment of Accounts.--
``(1) In general.--A Residential Emergency Asset-
accumulation Deferred Taxation Yield (READY) account is exempt
from taxation under this subtitle unless such account has
ceased to be a Residential Emergency Asset-accumulation
Deferred Taxation Yield (READY) account. Notwithstanding the
preceding sentence, any such account is subject to the taxes
imposed by section 511 (relating to imposition of tax on
unrelated business income of charitable, etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to
Residential Emergency Asset-accumulation Deferred Taxation
Yield (READY) accounts, and any amount treated as distributed
under such rules shall be treated as not used to pay qualified
home disaster mitigation and recovery expenses.
``(e) Tax Treatment of Distributions.--
``(1) Amounts used for qualified home disaster mitigation
and recovery expenses.--Any amount paid or distributed out of a
Residential Emergency Asset-accumulation Deferred Taxation
Yield (READY) account which is used exclusively to pay
qualified home disaster mitigation and recovery expenses of the
account beneficiary shall not be includible in gross income.
``(2) Inclusion of amounts not used for qualified home
disaster mitigation and recovery expenses.--Any amount paid or
distributed out of a Residential Emergency Asset-accumulation
Deferred Taxation Yield (READY) account which is not used
exclusively to pay the qualified home disaster mitigation and
recovery expenses of the account beneficiary shall be included
in the gross income of such beneficiary.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) account of an individual, paragraph (2) shall
not apply to distributions from the Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) accounts of such individual (to the extent such
distributions do not exceed the aggregate excess
contributions to all such accounts of such individual
for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution
described in paragraph (5)) which is not deductible
under this section.
``(4) Additional tax on distributions not used for
qualified home disaster mitigation and recovery expenses.--The
tax imposed by this chapter on the account beneficiary for any
taxable year in which there is a payment or distribution from a
Residential Emergency Asset-accumulation Deferred Taxation
Yield (READY) account of such beneficiary which is includible
in gross income under paragraph (2) shall be increased by 20
percent of the amount which is so includible.
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from a Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) account to the account beneficiary to the
extent the amount received is paid into a Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) account for the benefit of such beneficiary not
later than the 60th day after the day on which the
beneficiary receives the payment or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from a Residential Emergency Asset-
accumulation Deferred Taxation Yield (READY) account
if, at any time during the 1-year period ending on the
day of such receipt, such individual received any other
amount described in subparagraph (A) from a Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) account which was not includible in the
individual's gross income because of the application of
this paragraph.
``(6) Transfer of account incident to divorce.--The
transfer of an individual's interest in a Residential Emergency
Asset-accumulation Deferred Taxation Yield (READY) account to
an individual's spouse or former spouse under a divorce or
separation instrument described in clause (i) of section
121(d)(3)(C) shall not be considered a taxable transfer made by
such individual notwithstanding any other provision of this
subtitle, and such interest shall, after such transfer, be
treated as a Residential Emergency Asset-accumulation Deferred
Taxation Yield (READY) account with respect to which such
spouse is the account beneficiary.
``(7) Treatment after death of account beneficiary.--
``(A) Treatment if designated beneficiary is
spouse.--If the account beneficiary's surviving spouse
acquires such beneficiary's interest in a Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) account by reason of being the designated
beneficiary of such account at the death of the account
beneficiary, such Residential Emergency Asset-
accumulation Deferred Taxation Yield (READY) account
shall be treated as if the spouse were the account
beneficiary.
``(B) Other cases.--If, by reason of the death of
the account beneficiary, any person acquires the
account beneficiary's interest in a Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) account in a case to which subparagraph (A)
does not apply--
``(i) such account shall cease to be a
Residential Emergency Asset-accumulation
Deferred Taxation Yield (READY) account as of
the date of death, and
``(ii) an amount equal to the fair market
value of the assets in such account on such
date shall be includible if such person is not
the estate of such beneficiary, in such
person's gross income for the taxable year
which includes such date, or if such person is
the estate of such beneficiary, in such
beneficiary's gross income for the last taxable
year of such beneficiary.
``(f) Reports.--
``(1) In general.--The Secretary may require the trustee of
a Residential Emergency Asset-accumulation Deferred Taxation
Yield (READY) account to make such reports regarding such
account to the Secretary and to the account beneficiary with
respect to contributions, distributions, the return of excess
contributions, and such other matters as the Secretary
determines appropriate.
``(2) Time and manner of reports.--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 by the Secretary.
``(g) Regulations.-- The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section and to prevent the abuse of such purposes.''.
(b) 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) a Residential Emergency Asset-accumulation Deferred
Taxation Yield (READY) account (within the meaning of section
224),''.
(2) Excess contributions.--Section 4973 of such Code is
amended by adding at the end the following new subsection:
``(i) Excess Contributions to READY Accounts.--
``(1) In general.--For purposes of this section, in the
case of a Residential Emergency Asset-accumulation Deferred
Taxation Yield (READY) account (within the meaning of section
224), the term `excess contributions' means the sum of--
``(A) the aggregate amount contributed for the
taxable year to such accounts (other than rollover
contributions described in section 224(e)(5)) which is
not allowed as a deduction under section 224 fo such
year, and, 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
which were included in gross income under
section 224(e)(2), and
``(ii) the excess (if any) of the maximum
amount allowed as a deduction under section
224(b) for the taxable year over the amount
contributed to the accounts for the taxable
year.
``(2) Special rules.--For purposes of this subsection, any
contribution which is distributed out of the Residential
Emergency Asset-accumulation Deferred Taxation Yield (READY)
account in a distribution to which section 223(e)(3) applies
shall be treated as an amount not contributed.''.
(c) Application of Prohibited Transaction Rules.--
(1) In general.--Section 4975(e)(1) of the Internal Revenue
Code of 1986 is amended by striking ``or'' at the end of
subparagraph (F), by redesignating subparagraph (G) as
subparagraph (H), and by inserting after subparagraph (F) the
following new subparagraph:
``(G) a Residential Emergency Asset-accumulation
Deferred Taxation Yield (READY) account described in
section 224, or''.
(2) Special rule.--Section 4975(c) of such Code is amended
by adding at the end the following new paragraph:
``(8) Special rule for residential emergency asset-
accumulation deferred taxation yield (ready) accounts.--An
individual for whose benefit a Residential Emergency Asset-
accumulation Deferred Taxation Yield (READY) account (within
the meaning of section 224) is established shall be exempt from
the tax imposed by this section with respect to any transaction
concerning such account (which would otherwise be taxable under
this section) if, with respect to such transaction, the account
ceases to be a Residential Emergency Asset-accumulation
Deferred Taxation Yield (READY) account by reason of the
application of section 224(d)(2) to such account.''.
(d) Conforming Amendments.--
(1) Section 26(b)(2) of the Internal Revenue Code of 1986
is amended by striking ``and'' at the end of subparagraph (Y),
by striking the period at the end of subparagraph (Z) and
inserting ``, and'', and by inserting after subparagraph (Y)
the following:
``(AA) section 224(e)(4).''.
(2) Section 62(a) of such Code is amended by inserting
after paragraph (21) the following new paragraph:
``(22) Residential emergency asset-accumulation deferred
taxation yield (ready) account.--The deduction allowed by
section 224.''.
(3) Section 165(h) of such Code is amended by adding at the
end the following new paragraph:
``(6) Coordination with expenditures from ready accounts.--
No deduction shall be allowed with respect to any loss
described in subsection (a)(3) to the extent the taxpayer has
made an expenditure from a Residential Emergency Asset-
accumulation Deferred Taxation Yield (READY) account (as
defined in section 224) which is taken into account under
section 224(c)(2)(C) as a cost with respect to such loss.''.
(4) Section 877A of such Code is amended--
(A) in subsection (e)(2) by inserting ``a
Residential Emergency Asset-accumulation Deferred
Taxation Yield (READY) account (as defined in section
224),'' after ``a health savings account (as defined in
section 223),'', and
(B) in subsection (g)(6) by inserting
``224(e)(4),'' after ``223(f)(4),''.
(5) Section 6693(a)(2) of such Code is amended by striking
``and'' at the end of subparagraph (E), by striking the period
at the end of subparagraph (F) and inserting ``, and'', and by
inserting after subparagraph (F) the following new
subparagraph:
``(G) section 224(f) (relating to Residential
Emergency Asset-accumulation Deferred Taxation Yield
(READY) accounts).''.
(6) The table of sections for part VII of subchapter B of
chapter 1 of such Code is amended redesignating the item
relating to section 224 as relating to section 225 and by
inserting after the item relating to section 223 the following
new item:
``Sec. 224. Residential Emergency Asset-accumulation Deferred Taxation
Yield (READY) accounts.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2024.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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