READY Accounts Act

The "READY Accounts Act" amends the Internal Revenue Code of 1986 to create a new type of tax-advantaged savings vehicle called Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts . These accounts allow individuals to deduct cash contributions made during the taxable year, up to an annual limit of $4,500 . This contribution limit is subject to inflation adjustments for taxable years beginning after 2025, ensuring its value is maintained over time. A READY account is a trust established exclusively to pay for qualified home disaster mitigation and recovery expenses for the account beneficiary's principal residence. Qualified mitigation measures include specific actions like installing roofing underlayment, strengthening roof connections, installing impact-resistant windows, or elevating a home, provided they meet criteria set by the Secretary of the Treasury in consultation with FEMA and are certified by a qualified professional. Qualified disaster recovery costs cover expenses for repairing damage from fire, storm, or other casualties that are not compensated by insurance or other means. Funds within a READY account grow tax-exempt, and distributions are not includible in gross income if used for qualified home disaster mitigation and recovery expenses. However, amounts distributed for non-qualified purposes are included in gross income and are subject to an additional 20 percent tax . The bill also outlines rules for excess contributions, rollover contributions, transfers incident to divorce, and the treatment of accounts upon the death of the account beneficiary, ensuring proper handling and preventing abuse. The Secretary of the Treasury is authorized to require reports from trustees regarding contributions, distributions, and other relevant matters, and to prescribe regulations necessary to carry out the purposes of this section and prevent abuse. These amendments will apply to taxable years beginning after December 31, 2024.