Sponsor
Richard Lynn Scott
Senator · R-FL
Senator · R-FL
Creates a new tax-favored "American dream account" and adds it to excise-tax, prohibited-transaction, reporting-penalty, and Roth rollover rules in the tax code.
Official title: Amend the Internal Revenue Code of 1986 to create American dream accounts.
Introduced March 9, 2026 by Richard Lynn Scott · Last progress March 9, 2026
The bill creates a new tax‑favored savings option and Roth rollover pathway that can boost household saving, but it also imposes penalties, new compliance obligations, and short‑term planning uncertainty for savers and financial institutions.
Taxpayers — especially middle-class families and parents — can open a new tax‑favored "American Dream Account," giving them an additional vehicle to save with tax advantages.
Taxpayers — particularly middle-class savers — can roll over funds from American Dream Accounts into Roth IRAs, enabling future tax‑free growth on converted balances.
Taxpayers and financial institutions benefit from clarified excess‑contribution rules and reporting requirements, improving transparency and reducing opportunities for abuse.
Taxpayers — especially middle‑class families — face excise taxes if they exceed annual contribution limits, creating a meaningful penalty risk for savers who miscalculate contributions.
Financial institutions (trustees/issuers) must meet new reporting obligations and face penalties for failures, increasing administrative burdens and compliance costs.
Financial institutions and taxpayers may be constrained by inclusion of these accounts in prohibited‑transaction rules, restricting certain transactions and raising compliance costs for plan administrators.
Based on analysis of 4 sections of legislative text.
Creates a new tax-favored account type called an "American dream account" and updates several Internal Revenue Code provisions to treat that account like other tax-advantaged accounts for excise taxes, prohibited-transaction rules, reporting penalties, and rollovers to Roth IRAs. The law's tax-code changes apply to taxable years beginning after December 31, 2026. The bill adds a definition and computation rule for excess contributions to American dream accounts, excludes certain rollovers and distributions from excess-contribution calculations, and inserts references to the new account type into multiple sections of the Internal Revenue Code to ensure consistent tax treatment and reporting obligations.