Bill 119 HR 440, also known as the Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) Act, aims to amend the Internal Revenue Code of 1986 to establish a new type of savings account called READY accounts. These accounts are designed to help individuals save for emergencies and unexpected expenses by allowing them to defer taxation on the interest earned on their savings.
Under this bill, individuals can contribute up to $5,000 per year to a READY account, and the interest earned on these contributions will not be taxed until the funds are withdrawn. This tax-deferred status is intended to incentivize individuals to save for emergencies and build up their financial resilience.
The READY Act also includes provisions to ensure that funds withdrawn from these accounts are used for qualified emergency expenses, such as medical bills, home repairs, or job loss. Any funds withdrawn for non-qualified expenses will be subject to taxation and a penalty.
Overall, the READY Act aims to encourage individuals to save for emergencies and build up their financial security by providing a tax-advantaged savings vehicle. This bill has the potential to help individuals better prepare for unexpected financial challenges and reduce their reliance on high-interest debt in times of crisis.