Establishes New Jersey Baby Bond Account Program.

A2345

ASSEMBLY, No. 2345

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman WILLIAM F. MOEN, JR.

District 5 (Camden and Gloucester)

Assemblywoman VERLINA REYNOLDS-JACKSON

District 15 (Hunterdon and Mercer)

Assemblyman� CHIGOZIE U. ONYEMA

District 28 (Essex and Union)

Co-Sponsored by:

Assemblyman Singh, Assemblywomen Kane and Brennan

SYNOPSIS

���� Establishes New Jersey Baby Bond Account Program.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

establishing the �New Jersey Baby Bond Account
Program,� supplementing chapter 10 of Title 44 of the Revised Statutes, and
making a $70,000,000 appropriation.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� This act shall be known
and may be cited as the �New Jersey Baby Bond Account Program Act.�

���� 2.� As used in this act:

���� �Account holder� means an
eligible individual who is the owner of an individual account established
pursuant to paragraph (2) of subsection a. of section 4 of this act.

���� �Board� means the Baby Bond
Account Board established pursuant to section 8 of this act.

���� �Department� means the
Department of the Treasury.

���� �Eligible individual� means an
infant born on or after January 1, 2021 to a family domiciled in this State or
outside of this State, provided the individual establishes residence in the
State within six months of birth, and who resides in a household having an
annual household income on the individual�s date of birth that does not exceed 200
percent of the federal poverty level.

���� �Executive director� means the
executive director of the Baby Bond Account Board selected pursuant to
subsection f. of section 8 of this act.

���� �Federal poverty level� means
a measure of income promulgated annually by the United States Department of
Health and Human Services pursuant to 42 U.S.C. 9902 that established a
threshold for poverty in the United States based on the size of household.

���� �Fund� means the Baby Bond
Account Fund established pursuant to paragraph (1) of subsection a. of section
4 of this act.

���� �Household income� means
income as defined in 7 CFR ss.245.2 and 245.6 or any subsequent superseding
federal law or regulation

���� �Individual account� means one
of the accounts established within the Baby Bond Account Fund for an eligible
individual pursuant to paragraph (2) of subsection a. of section 4 of this act.

���� �Program� means the New Jersey
Baby Bond Account Program established pursuant to the provisions of section 3 of
this act.

���� 3.� There is established in
the Department of the Treasury the �New Jersey Baby Bond Account Program.�� The
program shall be under the direction and control of the executive director and
the board.� The Department of the Treasury shall provide primary staff support
for the program and the board.

���� The purpose of the program
shall be to credit each eligible individual with a $2,000 deposit into an
individual account

established by the State Treasurer.�
The individual account may be used for any of the purposes specified under
subsection c. of section 7 of this act.

����

���� 4.��� a.�� (1)�� There is
established in the Department of the Treasury a non-lapsing fund to be known as
the �Baby Bond Account Fund,� with the board established pursuant to section 8
of this act as its trustee.� The fund shall include the individual accounts of
eligible individuals, which shall be accounted for as individual accounts.� The
fund shall be credited with moneys made available from an appropriation of $70,000,000
pursuant to section 10 of this act to effectuate the purposes of this act for a
full fiscal year and other moneys that the Legislature may appropriate from
time to time.

���� (2)� On and after January 1,
2021, the State Treasurer, in coordination with the executive director, shall
establish in the fund an account for each eligible individual identified
pursuant to section 6 of this act.� Each individual account shall be identified
to its account holder by means of a unique personal identifier and shall remain
in the fund.� The State Treasurer shall credit to each individual account the
amounts credited to the fund, which are attributable to the account holder.

���� b.��� Moneys in the fund shall
be invested by the board, established pursuant to section 8 of this act, in
permitted investments or shall be held in interest-bearing accounts in those
depositories as the board may select and may be invested and reinvested in
permitted investments in accordance with this subsection.� The board shall
exercise the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims; provided that, in making each investment, the board shall act
with the reasonable expectation that the return on each investment shall be
commensurate with the risk associated with each investment.� Any interest
earnings that are attributable to moneys in the fund shall be deposited into
the fund.

���� c.� The amounts deposited in
the fund shall not constitute as property of the State and the fund shall not
be construed to be a department, institution, or agency of the State. �Amounts
in the fund shall not be commingled with State funds and the State shall have
no claim to or against, or interest in, such funds.

���� d.��� The State Treasurer
shall allocate to each individual account an amount equal to the net earnings
and net losses from each investment of sums in the fund which are attributable,
on a pro rata basis, to sums credited to such account, reduced by an appropriate
share of the administrative expenses paid out of the net earnings, as
determined by the executive director.

���� e.���� In the event a person
or entity wishes to make a deposit into an individual account, the State
Treasurer shall be authorized to process such deposits, in a manner and method
to be determined by the State Treasurer.

���� f.���� In the event an account
holder wishes to transfer money to the individual account of a family member or
dependent, the State Treasurer shall be authorized to receive transfer requests
and process such transfers, in a manner and method determined by the State
Treasurer.

���� g.��� Except as provided in
subsection e. of section 7 of this act, the moneys in the fund are appropriated
and shall remain available to:� make contributions to individual accounts; to
invest pursuant to subsection b. of this section; make distributions in
accordance with section 7 of this act; and pay the administrative expenses of
carrying out this act.� The moneys in the fund shall not be appropriated for
any purpose other than the purposes specified in this subsection and may not be
used for any other purpose.

���� h.� No State entity, board,
commission, or agency, or any officer, employee, or member thereof is liable
for any loss or deficiency resulting from particular investments selected under
this act, except for any liability that arises out of a breach of fiduciary
duty by the board under subsection b. of this section.

���� 5.� The executive director
shall notify each eligible individual�s family of their potential eligibility
for the Baby Bond Account Program.� The executive director shall also provide
each eligible individual�s family with information about the program�s eligibility
criteria, application process, guidelines, procedures, and requirements for
withdrawing money from an individual account to be used for qualified expenses
listed in subsection c. of section 7 of this act.�

���� 6.��� a. �Upon receipt of the
birth certificate of an eligible individual under paragraph (1) of subsection c
of this section, or approval of an application received under paragraph (2) of
that subsection, the State Treasurer shall establish an individual account for
such eligible individual and shall credit the account with $2,000.

���� b.� (1)� On the 20th day of
each month, the State Registrar shall transmit to the executive director the
name of, and social security number issued to, each eligible individual for
which the State Registrar received an original birth certificate pursuant to
subsection g. of R.S.26:8-25.

���� (2)� In the case of an
eligible individual who is not provided an individual account under paragraph
(1) of this subsection, the eligible individual may request the establishment of
an individual account under this paragraph by application to the executive
director on a form prescribed by the executive director.

���� c.���� If the amounts in the
Baby Bond Account Fund are insufficient to credit $2,000 to a newly established
individual account, the board shall determine guidelines to process the new
individual accounts established thereafter and the appropriate allocation of
any remaining funds to those accounts.

���� 7.��� a.�� (1)�� Except as
provided in paragraph (2) of this subsection, no amount may be distributed from
an individual account before the date on which the account holder attains the
age of 18.

���� (2)� Notwithstanding the
provisions of paragraph (1) of this subsection to the contrary, an amount may
be distributed from an individual account to the account holder before the
account holder attains the age of 18 to pay for qualified tuition and related
expenses, as defined in section 25A(f)(1) of the Internal Revenue Code of 1986,
of the account holder if the account holder is an eligible student as defined
in section 25A(b)(3) of the Internal Revenue Code.

���� b.� No amount may be
distributed from an individual account unless the account holder establishes,
under rules established by the executive director in consultation with the
board, that such amount shall be used for a qualified expense.

���� c.���� An eligible individual
shall be authorized to withdraw moneys from the individual�s account, in the
form of a check or transfer of funds made payable to the individual, for any of
the following purposes:

���� (1)�� post-secondary
educational expenses of the account holder;

���� (2)�� acquisition costs of a
primary residence of the account holder;

���� (3)�� qualified business
capitalization expenses of the account holder, as determined by the executive
director and board; and

���� (4)� any other investment in
financial assets or personal capital that provides long-term gains to wages and
wealth, as determined by the executive director and board.

���� d.� In the case of a deceased
account holder of an individual account which has an account balance greater
than zero, upon receipt of notification of such individual�s death, the State
Treasurer shall close the account and shall transfer the balance in such
account to the individual account of such account holder�s surviving spouse or,
if there is no such account of a surviving spouse, to the duly appointed legal
representative of the estate of the deceased account holder, or if there is no
such representative, to the person or persons determined to be entitled thereto
under the laws of the State.� The transfer provided for under this subsection
shall occur only if the deceased account holder was domiciled in this State at
the time of death.

���� e.���� An account holder shall
not be authorized to make a distribution from the account holder�s individual
account unless the account holder is domiciled in the State.� If an account
holder of an individual account attains the age of 25 and thereafter is domiciled
in a state other than New Jersey for five or more consecutive years, the moneys
in such individual account shall be presumed abandoned and transferred to the
Unclaimed Personal Property Trust Fund.

���� 8.��� a.� There is established
in, but not of, the Department of the Treasury the Baby Bond Account Board.�
The purpose of the board shall be to oversee the fund�s investments, to select
an executive director for the program, and to assist with the administration of
the program.�

���� b.��� The 11-member board
shall consist of:

���� (1)�� five ex-officio members,
as follows:� the State Treasurer, or the State Treasurer�s designee, who shall
serve as chair; the State Comptroller, or the State Comptroller�s designee; the
Director of the Office of Management and Budget, or the director�s designee; the
Chief Executive Officer of the Economic Development Authority, or the chief
executive officer�s designee; the Commissioner of Human Services, or the
commissioner�s designee; and

���� (2)� six representatives of
the general public with expertise in savings plan administration or investment,
or both, of which two representatives shall be appointed by the Governor, two
representative shall be appointed by the Speaker of the General Assembly, and
two representatives shall be appointed by the Senate President.

���� c.� Members of the board,
except for the executive director as provided in subsection f. of this section,
shall serve without compensation but may be reimbursed for necessary expenses
incurred in the performance of their duties.

���� d.��� Public members shall
serve for a term of four years from their date of appointment and until their
successors are appointed and qualified.� Any vacancy in the membership of the board
shall be filled by appointment in the same manner as the original appointment.�
Vacancies resulting from causes other than by expiration of term shall be
filled for the unexpired term only.

���� e.���� Each board member,
prior to assuming office, shall take an oath that the member will diligently
and honestly administer the affairs of the board and that the member will not
knowingly violate or willingly permit to be violated any of the provisions of
law applicable to the program. �The oath shall be certified by the officer
before whom it is taken and immediately filed with the Secretary of State.

���� f.���� The board shall select
and employ an executive director, who shall be responsible for the
administration of the Baby Bond Account Program and shall fix the executive
director�s compensation and conditions of employment. �The executive director
shall maintain oversight of investment and administrative operations conducted
by the board; arrange board agendas with the approval of the board; execute
contracts on behalf of the board; and perform any other responsibilities designated
to the executive director by the board.

���� g.��� The executive director
shall make economic literacy training available to each eligible individual�s
family.� The board shall determine the economic literacy training curriculum to
be used to

fulfill the provisions of this
paragraph, provided that, at a minimum, the curriculum offers a basic
understanding of budgets and savings accounts, credit and interest, how to use
financial services, and how to use a savings plan to reach the account holder's
savings goal for an individual account.

���� 9.� Gross income calculations
for determining State income tax shall not include:

���� a.� any contribution credited
to the individual account of the taxpayer under section 4 of this act; and

���� b. �any distribution from such
individual account, including interest and earnings.

���� 10.� There is appropriated
from the General Fund the sum of $70,000,000 to be credited to the �Baby Bond
Account Fund� to
effectuate the provisions of this
act for a full fiscal year.

���� 11.� The State Treasurer, in
consultation with the executive director and board, pursuant to the
�Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1 et seq.), shall
promulgate rules and regulations to effectuate the provisions of this act.

����

���� 12.� This act shall take
effect immediately.

STATEMENT

���� This bill establishes the New
Jersey Baby Bond Account Program and Baby Bond Account Fund in the Department
of the Treasury and appropriates the sum of $70,000,000 from the General Fund
to the Baby Bond Account Fund.� The purpose of the program is to credit each
eligible individual in the State with a $2,000 deposit into an individual
account in the Baby Bond Account Fund by the program.� An eligible individual
is any infant born on or after January 1, 2021 to a family domiciled in this
State or outside of this State, provided the individual establishes residence
in the State within six months of birth, and who resides in a household having
an annual household income on the individual�s date of birth that does not
exceed 200 percent of the federal poverty level.�

���� The bill requires the State
Treasurer to establish in the fund an account for each eligible individual and
credit each account with $2,000.� The State Treasurer will credit to each
individual account the amounts credited to the fund, which are attributable to
the account holder of the account.� In the event a person or entity wishes to
make a deposit into an individual account or an account holders wishes to
transfer money to the individual account of a family member or dependent, the
bill authorizes the State Treasurer to accept such� deposits and to process
such transfers, in a manner and method to be determined by the State
Treasurer.� The money within an individual account may only be distributed when
the account holder attains the age of 18, with an exemption of qualified
tuition and related expenses for eligible students, defined by the federal
Internal Revenue Code of 1986.� The moneys within an individual account may
only be used for the following expenses:

���� (1)�� post-secondary
educational expenses of the account holder;

���� (2)�� acquisition costs of a
primary residence of the account holder;

���� (3)�� qualified business
capitalization expenses of the account holder, as determined by the program;
and

���� (4)�� any other investment in
financial assets or personal capital that provides long-term gains to wages and
wealth, as determined by the program.

���� This bill requires that the
money in the Baby Bond Account Fund will be managed by an 11-member Baby Bond
Account Board, established pursuant to this bill, and will be invested in
permitted investments or held in interest-bearing accounts.� The board will
consist of five ex-officio members, as follows:� the State Treasurer or the
State Treasurer�s designee; the State Comptroller or the State Comptroller�s
designee; the Director of the Office of Management and Budget or the director�s
designee; the Chief Executive of the Economic Development Authority or the
chief executive officer�s designee; the Commissioner of Human Services or the
commissioner�s designee; and six public members with the Governor, the Speaker
of the General Assembly, and the Senate President each appointing two members
each.��� The board will hold a fiduciary duty to the fund and will make
investments with the reasonable expectation that the return on each investment
will be commensurate with the risk associated with each investment.�

���� The board will select and
employ an executive director who will be responsible for the administration of
the Baby Bond Account Program.� The executive director will also be required
notify each eligible individual�s family of their potential eligibility for the
Baby Bond Account Program.� The executive director will also provide each
eligible individual�s family with information about the program�s eligibility
criteria, application process, guidelines, procedures, and requirements for
withdrawing money from an individual account to be used for qualified
expenses.� Lastly, the executive director will be required to make economic
literacy training available to each eligible individual�s family.� The board
will determine the economic literacy training curriculum to fulfill this
provision, provided that, at a minimum, the curriculum offers a basic
understanding of budgets and savings accounts, credit and interest, how to use
financial services, and how to use a savings plan to reach the account holder's
savings goal for an individual account.