H.R. 4546 (103rd): Family Investment and Self-Sufficiency Act of 1994

103rd Congress, 1993–1994. Text as of Jun 08, 1994 (Introduced).

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HR 4546 IH

103d CONGRESS

2d Session

H. R. 4546

To strengthen families receiving aid to families with dependent children through education, job training, savings, and investment opportunities, and to provide States with greater flexibility in administering such aid in order to help individuals make the transition from welfare to employment and economic independence.

IN THE HOUSE OF REPRESENTATIVES

June 8, 1994

Mr. FLAKE introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To strengthen families receiving aid to families with dependent children through education, job training, savings, and investment opportunities, and to provide States with greater flexibility in administering such aid in order to help individuals make the transition from welfare to employment and economic independence.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Family Investment and Self-Sufficiency Act of 1994’.

    (b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

      Sec. 1. Short title; table of contents.

      Sec. 2. State option to increase AFDC income disregards and disregard all child support payments.

      Sec. 3. Tax credit for contributions by low-income individuals to qualified asset accounts.

      Sec. 4. State option to increase AFDC income disregard for certain stepparents.

      Sec. 5. Elimination of rules that treat families differently based on number of parents in the home.

      Sec. 6. Extension of transitional child care benefits for employed AFDC recipients.

      Sec. 7. Denial of AFDC for applicants who have abandoned a child.

      Sec. 8. State option to deny AFDC for additional children.

      Sec. 9. State option to deny AFDC benefits to parents whose children have not received required immunizations.

      Sec. 10. State option to disregard income and resources designated for education, training, employability, or self-employment.

      Sec. 11. State option to increase limitation on disregard of equity in an automobile.

      Sec. 12. Treatment of student earnings under the AFDC program.

      Sec. 13. Effective date.

SEC. 2. STATE OPTION TO INCREASE AFDC INCOME DISREGARDS AND DISREGARD ALL CHILD SUPPORT PAYMENTS.

    Section 402(a)(8)(B) of the Social Security Act (42 U.S.C. 602(a)(8)(B)) is amended--

      (1) by striking ‘and’ at the end of clause (i); and

      (2) by adding at the end the following:

        ‘(iii) may disregard--

          ‘(I) earned income of any child or relative receiving aid to families with dependent children, or of any other individual (living in the same home as such relative and child) whose needs are taken into account in making the determination under paragraph (7), in accordance with any combination of rules that is not less favorable than the rules contained in clauses (ii) and (iv) of subparagraph (A) and clause (ii) of this subparagraph and not more favorable than a disregard of the first $200 of the total of such earned income for such month plus 1/2 of the remainder thereof; and

          ‘(II) child support payments received by any such child, relative, or other individual, in accordance with any combination of rules that is not less favorable than the rules contained in subparagraph (A)(vi) and not more favorable than a disregard of all such child support payments received.’.

SEC. 3. TAX CREDIT FOR CONTRIBUTIONS BY LOW-INCOME INDIVIDUALS TO QUALIFIED ASSET ACCOUNTS.

    (a) IN GENERAL- Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by redesignating section 35 as section 36 and by inserting after section 34 the following new section:

‘SEC. 35. QUALIFIED ASSET ACCOUNT CONTRIBUTIONS.

    ‘(a) ALLOWANCE OF CREDIT-

      ‘(1) IN GENERAL- In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the applicable percentage of the qualified asset account contributions of the individual for the taxable year.

      ‘(2) APPLICABLE PERCENTAGE- For purposes of paragraph (1), the applicable percentage is--

        ‘(A) 10 percent with respect to so much of the aggregate qualified asset account contributions of the individual for the taxable year as do not exceed $1,000, and

        ‘(B) 20 percent with respect to so much of such contributions as exceed $1,000 but do not exceed $2,000.

    ‘(b) LIMITATION-

      ‘(1) IN GENERAL- The amount of qualified asset account contributions by an eligible individual which may be taken into account under subsection (a) for any taxable year shall not exceed the lesser of--

        ‘(A) $2,000, or

        ‘(B) an amount equal to the compensation (as defined in section 219(f)) includible in the individual’s gross income for such taxable year.

      ‘(2) PRORATION OF LIMITATION IF PART-YEAR ELIGIBILITY- In the case of an individual who is an eligible individual only for a portion (but not all) of the calendar year ending with or within the taxable year, the limitation under this subsection for such taxable year shall be an amount which bears the same ratio to such limitation (determined without regard to this paragraph) as such portion bears to the entire calendar year.

    ‘(c) DEFINITIONS- For purposes of this section--

      ‘(1) QUALIFIED ASSET ACCOUNT- The term ‘qualified asset account’ means a trust created or organized in the United States exclusively for the purpose of paying the qualified expenses of the account beneficiary, but only if the written governing instrument creating the trust meets the following requirements:

        ‘(A) No contribution will be accepted unless it is in cash, and contributions will not be accepted during any calendar year in excess of $2,000.

        ‘(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.

      ‘(2) ELIGIBLE INDIVIDUAL- The term ‘eligible individual’ means any individual if any member of such individual’s family is receiving aid under a State plan approved under part A of title IV of the Social Security Act.

      ‘(3) QUALIFIED EXPENSES- The term ‘qualified expenses’ means, with respect to the account beneficiary, the amount paid by such beneficiary for--

        ‘(A) the education of any member of such beneficiary’s family,

        ‘(B) training for employment of any such member,

        ‘(C) improving the job skills of any such member,

        ‘(D) starting a business by any such member,

        ‘(E) purchasing a principal residence for any such member, and

        ‘(F) moving expenses for any such member in moving to a new principal residence.

      ‘(4) QUALIFIED ASSET ACCOUNT CONTRIBUTIONS- The term ‘qualified asset account contributions’ means any amount paid in cash for the taxable year by or on behalf of an individual to a qualified asset account for such individual’s benefit.

      ‘(5) ACCOUNT BENEFICIARY- The term ‘account beneficiary’ means the individual for whose benefit the qualified asset account is established.

    ‘(d) OTHER DEFINITIONS AND SPECIAL RULES-

      ‘(1) TIME WHEN CONTRIBUTIONS DEEMED MADE- A contribution shall be deemed to be made on the last day of the preceding taxable year if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).

      ‘(2) MARRIED INDIVIDUALS- The maximum credit under subsection (b) shall be computed separately for each individual.

      ‘(3) EMPLOYER PAYMENTS- For purposes of this title, any amount paid by an employer to a qualified asset account shall be treated as a payment of compensation to the employee (other than a self-employed individual who is an employee within the meaning of section 401(c)(1)) includible in his gross income for the taxable year for which the amount was contributed, whether or not a credit for such payment is allowable under this section to the employee.

    ‘(e) TAX TREATMENT OF DISTRIBUTIONS-

      ‘(1) IN GENERAL- Any amount paid or distributed out of a qualified asset account shall be included in the gross income of the account beneficiary unless such amount is used exclusively to pay the qualified expenses of such beneficiary.

      ‘(2) EXCESS CONTRIBUTIONS RETURNED BEFORE DUE DATE OF RETURN- Paragraph (1) shall not apply to the distribution of any contribution paid during a taxable year to a qualified asset account to the extent that such contribution exceeds the amount excludable under subsection (a) if--

        ‘(A) 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

        ‘(B) such distribution is accompanied by the amount of net income attributable to such excess contribution.

      Any net income described in subparagraph (B) shall be included in the gross income of the individual for the taxable year in which it is received.

      ‘(3) PENALTY FOR DISTRIBUTIONS NOT USED FOR QUALIFIED EXPENSES-

        ‘(A) IN GENERAL- The tax imposed by this chapter for any taxable year in which there is a payment or distribution from a qualified asset account which is not used to pay the qualified expenses of the account beneficiary shall be increased by 10 percent of the amount of such payment or distribution which is includible in gross income under paragraph (1).

        ‘(B) DISABILITY OR DEATH CASES- Subparagraph (A) shall not apply if the payment or distribution is made after the account beneficiary becomes disabled within the meaning of section 72(m)(7) or dies.

    ‘(f) TAX TREATMENT OF ACCOUNTS-

      ‘(1) IN GENERAL- A qualified asset account is exempt from taxation under this subtitle, unless such account has ceased to be a qualified asset account by reason of paragraph (2) or (3). 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 TERMINATES IF INDIVIDUAL ENGAGES IN PROHIBITED TRANSACTION-

        ‘(A) IN GENERAL- If, during any taxable year of the account beneficiary engages in any transaction prohibited by section 4975 with respect to the account, the account ceases to be a qualified asset account as of the first day of that taxable year.

        ‘(B) ACCOUNT TREATED AS DISTRIBUTING ALL ITS ASSETS- In any case in which any account ceases to be a qualified asset account by reason of subparagraph (A) on the first day of any taxable year, paragraph (1) of subsection (e) shall be applied as if there were a distribution on such first day in an amount equal to the fair market value (on such first day) of all assets in the account (on such first day) and no portion of such distribution were used to pay qualified expenses.

      ‘(3) EFFECT OF PLEDGING ACCOUNT AS SECURITY- If, during any taxable year, the account beneficiary uses the account or any portion thereof as security for a loan, the portion so used is treated as distributed and not used to pay qualified expenses.

    ‘(g) CUSTODIAL ACCOUNTS- For purposes of this section, a custodial account shall be treated as a trust if--

      ‘(1) 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

      ‘(2) the custodial account would, except for the fact that it is not a trust, constitute a qualified asset account described in subsection (c).

    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- The trustee of a qualified asset account shall make such reports regarding such account to the Secretary and to the account beneficiary with respect to contributions, distributions, and such other matters as the Secretary may require under regulations. 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 those regulations.’

    (b) TAX ON EXCESS CONTRIBUTIONS- Section 4973 of such Code (relating to tax on excess contributions to individual retirement accounts, certain section 403(b) contracts, and certain individual retirement annuities) is amended--

      (1) by inserting ‘qualified asset accounts,’ after ‘accounts,’ in the heading of such section,

      (2) by redesignating paragraph (2) of subsection (a) as paragraph (3) and by inserting after paragraph (1) the following:

      ‘(2) a qualified asset account (within the meaning of section 35(c)),’,

      (3) by striking ‘or’ at the end of paragraph (1) of subsection (a), and

      (4) by adding at the end thereof the following new subsection:

    ‘(d) EXCESS CONTRIBUTIONS TO QUALIFIED ASSET ACCOUNTS- For purposes of this section, in the case of a qualified asset account (within the meaning of section 35(c)), the term ‘excess contributions’ means the amount by which the amount contributed for the taxable year to the account exceeds the amount which may be taken into account in determining the credit under section 35 for such taxable year. For purposes of this subsection, any contribution which is distributed out of the qualified asset account in a distribution to which section 35(e)(2) applies shall be treated as an amount not contributed.’

    (c) TAX ON PROHIBITED TRANSACTIONS- Section 4975 of such Code (relating to prohibited transactions) is amended--

      (1) by adding at the end of subsection (c) the following new paragraph:

      ‘(4) SPECIAL RULE FOR QUALIFIED ASSET ACCOUNTS- An individual for whose benefit a qualified asset account (within the meaning of section 35(c)) 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 qualified asset account by reason of the application of section 35(f)(2)(A) to such account.’, and

      (2) by inserting ‘or a qualified asset account described in section 35(c)’ in subsection (e)(1) after ‘described in section 408(a)’.

    (d) FAILURE TO PROVIDE REPORTS ON QUALIFIED ASSET ACCOUNTS- Section 6693 of such Code (relating to failure to provide reports on individual retirement account or annuities) is amended--

      (1) by inserting ‘or on qualified asset accounts’ after ‘annuities’ in the heading of such section, and

      (2) by adding at the end of subsection (a) the following: ‘The person required by section 35(h) to file a report regarding a qualified asset account at the time and in the manner required by such section shall pay a penalty of $50 for each failure unless it is shown that such failure is due to reasonable cause.’

    (e) CLERICAL AMENDMENTS-

      (1) The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 35 and inserting the following:

‘Sec. 35. Qualified asset account contributions.

‘Sec. 36. Overpayments of tax.’

      (2) The table of sections for chapter 43 of such Code is amended by striking the item relating to section 4973 and inserting the following:

‘Sec. 4973. Tax on excess contributions to individual retirement accounts, qualified asset accounts, certain 403(b) contracts, and certain individual retirement annuities.’

      (3) The table of sections for subchapter B of chapter 68 of such Code is amended by inserting ‘or on qualified asset accounts’ after ‘annuities’ in the item relating to section 6693.

    (f) EFFECTIVE DATE- The amendments made by this section shall apply to contributions made after December 31, 1994, in taxable years ending after such date.

SEC. 4. STATE OPTION TO INCREASE AFDC INCOME DISREGARD FOR CERTAIN STEPPARENTS.

    Section 402(a)(31) of the Social Security Act (42 U.S.C. 602(a)(31)) is amended--

      (1) by striking ‘(A)’ and all that follows through ‘(C)’ and inserting ‘(A) the first $120 of the total of the stepparent’s earned income for the month, plus 1/3 of the remainder of such earned income, (B)’; and

      (2) by striking ‘(D)’ and inserting ‘(C)’.

SEC. 5. ELIMINATION OF RULES THAT TREAT FAMILIES DIFFERENTLY BASED ON NUMBER OF PARENTS IN THE HOME.

    (a) IN GENERAL- Section 402(a) of the Social Security Act (42 U.S.C. 602(a)) is amended by striking paragraph (41).

    (b) CONFORMING AMENDMENTS-

      (1) Section 402(a)(19)(B)(i)(II) of such Act (42 U.S.C. 602(a)(19)(B)(i)(II)) is amended by striking ‘(and’ and all that follows through ‘407(b)(2)(B)(i))’.

      (2) Section 402(a)(19)(D) of such Act (42 U.S.C. 602(a)(19)(D)) is amended by striking ‘eligible’ and all that follows through ‘earner’ and inserting ‘in which both parents are living at home’.

      (3) Section 402(a)(19)(G)(i) of such Act (42 U.S.C. 602(a)(19)(G)(i)) is amended--

        (A) in subclause (I), by striking ‘(whether or not section 407 applies)’; and

        (B) in subclause (II), by striking ‘which is eligible for aid to families with dependent children by reason of section 407’ and inserting ‘in which both parents are living at home’.

      (4) Section 402(a)(38)(B) of such Act (42 U.S.C. 602(a)(38)(B)) is amended by striking ‘or in section 407(a)’.

      (5) Section 402(a) of such Act (42 U.S.C. 602(a)) is amended by striking paragraph (42).

      (6) Section 403(l)(4)(A)(i) of such Act (42 U.S.C. 603(l)(4)(A)(i)) is amended by striking ‘family eligible’ and all that follows through ‘earner’ and inserting ‘2-parent family’.

      (7) Section 406(a)(1) of such Act (42 U.S.C. 606(a)(1)) is amended by striking ‘who has been deprived’ and all that follows through ‘incapacity of a parent’.

      (8) Section 406(b)(1) of such Act (42 U.S.C. 606(b)(1)) is amended by striking ‘and if such relative’ and all that follows through ‘section 407’.

      (9) Section 407 of such Act (42 U.S.C. 607) is hereby repealed.

      (10) Section 472(a) of such Act (42 U.S.C. 672(a)) is amended by striking ‘or of section 407’.

      (11) Section 473(a)(2)(A)(i) of such Act (42 U.S.C. 672(a)(2)(A)(i)) is amended by striking ‘or section 407’.

      (12) Section 1115(b) of such Act (42 U.S.C. 1315(b)) is amended by striking paragraph (5).

      (13) Section 1115 of such Act (42 U.S.C. 1315) is amended by striking subsection (d).

      (14) Section 1902(a)(10)(A)(i) of such Act (42 U.S.C. 1396a(a)(10)(A)(i)) is amended by striking subclause (V) and by redesignating subclauses (VI) and (VII) as subclauses (V) and (VI), respectively.

      (15) Section 1905 of such Act (42 U.S.C. 1396d) is amended by striking subsection (m).

      (16) Section 1905(n)(1) of such Act (42 U.S.C. 1396d(n)(1)) is amended--

        (A) in subparagraph (A)--

          (i) by striking ‘(or’ and all that follows through ‘407)’; and

          (ii) by adding ‘or’ at the end; and

        (B) by striking subparagraph (B).

      (17) Section 204(b)(2) of the Family Support Act of 1988 (42 U.S.C. 681 note) is amended by striking the semicolon and all that follows through ‘1998’.

SEC. 6. EXTENSION OF TRANSITIONAL CHILD CARE BENEFITS FOR EMPLOYED AFDC RECIPIENTS.

    Section 402(g)(1)(A)(iii) of the Social Security Act (42 U.S.C. 602(g)(1)(A)(iii)) is amended by inserting ‘(or, if and for so long as the caretaker relative of the family is employed, 24 months)’ after ‘12 months’.

SEC. 7. DENIAL OF AFDC FOR APPLICANTS WHO HAVE ABANDONED A CHILD.

    Section 402(a) of the Social Security Act (42 U.S.C. 602(a)) is amended--

      (1) by striking ‘and’ at the end of paragraph (44);

      (2) by striking the period at the end of paragraph (45) and inserting ‘; and’; and

      (3) by inserting after paragraph (45) the following:

      ‘(46) notwithstanding any other provision of this part, provide that an applicant for aid under the State plan shall not be eligible for such aid if a court has found that the applicant has abandoned a child.’.

SEC. 8. STATE OPTION TO DENY AFDC FOR ADDITIONAL CHILDREN.

    Section 402(a) of the Social Security Act (42 U.S.C. 602(a)), as amended by section 7 of this Act, is amended--

      (1) by striking ‘and’ at the end of paragraph (45);

      (2) by striking the period at the end of paragraph (46) and inserting ‘; and’; and

      (3) by inserting after paragraph (46) the following:

      ‘(47) at the option of the State, provide that--

        ‘(A) aid under the State plan shall not be payable to a family with respect to a child born to a family member--

          ‘(i) while a recipient of aid under the State plan; or

          ‘(ii) who received aid under any State plan approved under this part at any time during the 10-month period that ends with the birth of the child; and

        ‘(B) a child with respect to whom aid is not payable under the State plan under this part solely by reason of subparagraph (A) shall be considered to be receiving such aid for purposes of eligibility for medical assistance under the State plan approved under title XIX.’.

SEC. 9. STATE OPTION TO DENY AFDC BENEFITS TO PARENTS WHOSE CHILDREN HAVE NOT RECEIVED REQUIRED IMMUNIZATIONS.

    (a) IN GENERAL- Section 402(a) of the Social Security Act (42 U.S.C. 602(a)), as amended by sections 7 and 8 of this Act, is amended--

      (1) by striking ‘and’ at the end of paragraph (47);

      (2) by striking the period at the end of paragraph (48) and inserting ‘; and’; and

      (3) by inserting after paragraph (48) the following:

      ‘(49) at the option of the State, provide that--

        ‘(A) the State will deduct and withhold from the amount of aid otherwise payable under the State plan to a family that is not in compliance with this paragraph an amount equal to--

          ‘(i) the amount of such aid otherwise payable to the family; minus

          ‘(ii) the amount of such aid that would be payable to the family if, in making the determination under paragraph (7) with respect to a family, the needs of the caretaker relative (and the spouse of such relative, if section 407 applies) were not taken into account;

        ‘(B) the State will apply subparagraph (A) to a noncompliant family for each month for which such noncompliance continues;

        ‘(C) the State will place into escrow all amounts deducted and withheld from a family pursuant to subparagraph (A);

        ‘(D) the State will pay in a lump sum to a family eligible for aid under the State plan that has ceased to be a noncompliant family an amount equal to--

          ‘(i) the total amount deducted and withheld from the family pursuant to subparagraph (A); divided by

          ‘(ii) the number of months for which amounts have been so withheld and deducted;

        ‘(E) the State shall consider a family to be not in compliance with this paragraph if the family includes a dependent child who has not attained 6 years of age, and the State agency has not received from 1 or more physicians written verification (on a form prescribed by the State) that the child has been immunized in accordance with recommendations issued by the Surgeon General of the Public Health Service, unless the child has not been so immunized for good cause (as determined by the State in accordance with regulations prescribed by the Secretary), including--

          ‘(i) medical contraindication, as evidenced by written notice from a physician (on a form prescribed by the State);

          ‘(ii) an excessive distance between the residence of the child and the nearest location at which the child could be so immunized;

          ‘(iii) the lack of reasonable access to transportation to any location at which the child could be so immunized;

          ‘(iv) an excessive waiting period at any such location before the child could be so immunized;

          ‘(v) religious objection to the child being so immunized; and

          ‘(vi) an illness of a member of the family that has prevented the child from being accompanied by a responsible adult to any such location; and

        ‘(F) the State will conduct appropriate education and outreach activities designed to--

          ‘(i) increase public awareness of the importance of preventive health care and immunizations for preschool children; and

          ‘(ii) inform the public about--

            ‘(I) the availability of preventive health care and immunization services for preschool children;

            ‘(II) any transportation, child care, or other support services that may be available to assist parents in obtaining such services for their children; and

            ‘(III) the clinics at which any child may receive immunizations free or at a reduced charge.’.

    (b) ISSUANCE OF IMMUNIZATION RECOMMENDATIONS BY THE SURGEON GENERAL OF THE PUBLIC HEALTH SERVICE- After taking into consideration the then most recent report of the Committee on Infectious Diseases of the American Academy of Pediatrics, the Surgeon General of the Public Health Service shall issue, and revise from time to time, recommendations for the immunization of children under 6 years of age. With respect to each recommended immunization, such recommendation shall include--

      (1) contraindications (if any) that should be identified to exempt a child from receiving such immunization, and

      (2) remedial action that may be taken to minimize the adverse effect of failure to administer such immunization to a child at the recommended age.

SEC. 10. STATE OPTION TO DISREGARD INCOME AND RESOURCES DESIGNATED FOR EDUCATION, TRAINING, EMPLOYABILITY, OR SELF-EMPLOYMENT.

    (a) RESOURCE DISREGARD- Section 402(a)(7)(B) of the Social Security Act (42 U.S.C. 602(a)(7)(B)) is amended--

      (1) by striking ‘or’ at the end of clause (iii); and

      (2) by inserting ‘, or (v) at the option of the State, in the case of the family, not more than $9,000 in 1 qualified asset account (as defined in section 406(i)) of the family’ before the semicolon.

    (b) DISREGARD OF INCOME FROM QUALIFIED ASSET ACCOUNTS- Section 402(a)(8)(A) of such Act (42 U.S.C. 602(a)(8)(A)) is amended--

      (1) by striking ‘and’ at the end of clause (vii); and

      (2) by inserting after clause (viii) the following:

          ‘(ix) at the option of the State, may disregard--

            ‘(I) any interest or income earned on 1 qualified asset account (as defined in section 406(i)), if not more than $2,000 has been deposited in the account during the immediately preceding 12-month period, but only to the extent that the total amount in the account, after the payment of such interest or income, does not exceed $9,000; and

            ‘(II) any qualified distribution (as defined in section 406(i)(2)) from a qualified asset account (as defined in section 406(i)(1)); and’.

    (c) NONRECURRING LUMP SUM EXEMPT FROM LUMP SUM RULE- Section 402(a)(17) of such Act (42 U.S.C. 602(a)(17)) is amended by adding at the end the following: ‘; and, at the option of the State, that this paragraph shall not apply to earned or unearned income received in a month on a nonrecurring basis to the extent that such income is deposited in a qualified asset account (as defined in section 406(i)) in which not more than $2,000 has been deposited during the immediately preceding 12-month period and the total amounts in which, after such placement, does not exceed $9,000;’.

    (d) DEFINITIONS- Section 406 of such Act (42 U.S.C. 606) is amended by adding at the end the following:

    ‘(i)(1) The term ‘qualified asset account’ means an account established at a financial institution by a recipient of aid to families with dependent children, in which not more than $2,000 has been deposited during any period of 12 consecutive months, for the purpose of saving money to--

      ‘(A) enable a member of the family of the recipient to attend an education or training program;

      ‘(B) enable a member of the family to improve his or her employability (including self-employment), including through the purchase of an automobile;

      ‘(C) purchase a home for the family;

      ‘(D) change the family residence; or

      ‘(E) operate or establish a commercial enterprise which has 5 or fewer employees, 1 or more of whom owns or would own the enterprise.

    ‘(2) The term ‘qualified distribution’ means a distribution from a qualified asset account for expenses directly related to 1 or more of the purposes described in paragraph (1).’.

SEC. 11. STATE OPTION TO INCREASE LIMITATION ON DISREGARD OF EQUITY IN AN AUTOMOBILE.

    Section 402(a)(7)(B)(i) of the Social Security Act (42 U.S.C. 602(a)(7)(B)(i)) is amended by inserting ‘(or, at the option of the State, $3,000)’ before ‘, (ii)’.

SEC. 12. TREATMENT OF STUDENT EARNINGS UNDER THE AFDC PROGRAM.

    (a) EXEMPTION FROM RESOURCES OF EXEMPT EARNINGS OF A CHILD- Section 402(a)(7)(B) of the Social Security Act (42 U.S.C. 602(a)(7)(B)), as amended by section 10(a) of this Act, is amended--

      (1) by striking ‘or’ at the end of clause (iv); and

      (2) by inserting ‘, or (vi) the earned income of any child to the extent disregarded under paragraph (8)’ before the semicolon.

    (b) EXEMPT EARNINGS OF A CHILD TO BE DISREGARDED IN DETERMINING WHETHER FAMILY INCOME EXCEEDS NEED STANDARD- Section 402(a)(18) of such Act (42 U.S.C. 602(a)(18)) is amended by striking ‘paragraph (8)(A)(v) or 8(A)(viii)’ and inserting ‘clause (i), (v), or (viii) of paragraph (8)(A)’.

    (c) DISREGARD OF EARNINGS OF STUDENTS AND INCOME OF DEPENDENT CHILD FROM A JTPA PROGRAM- Section 402(a)(8)(A) of such Act (42 U.S.C. 602(a)(8)(A)) is amended--

      (1) in clause (i), by inserting ‘(including a child (whether or not married) who has not attained 20 years of age)’ after ‘dependent child’; and

      (2) in clause (v)--

        (A) by inserting ‘that portion of’ before ‘the income’;

        (B) by inserting ‘(including any individual (whether or not married) who has not attained 20 years of age)’ after ‘dependent child’; and

        (C) by striking ‘in such amounts, and for such period of time (not to exceed six months with respect to earned income)’ and inserting ‘to the extent not exceeding the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to the family, for such period of time’.

SEC. 13. EFFECTIVE DATE.

    Except as provided in section 3(f), the amendments made by this Act shall apply to calendar quarters beginning on or after January 1, 1995.