Children born in North Dakota starting in 2010 will each get a $500 savings account from the state under a proposed legislative bill.
The bill – dubbed the “North Dakota Family Financial Security Program” – calls for creating the savings accounts with no withdrawals permitted except by the child once he or she turns 18.
Deposits may be made to the accounts over time by parents and as long as the child is a North Dakota resident, the state will match those contributions up to $500 annually, according to the bill’s sponsors.
Rep. Scot Kelsh, D-Fargo, the bill’s prime sponsor, said this legislation comes at a time when people in the United States aren’t saving money. He said this is a good time to encourage people to save more.
Bill co-sponsor, Rep. Lisa Wolf, D-Minot, said North Dakota could be one of the first states to offer the accounts, which she believes will teach its young holders lessons in savings. “This money is going into a lockup.”
If parents make no deposits to their child’s accounts, the minimum a child would have is the original $500 plus interest. On the other hand, if parents make the maximum $500 deposit each year, the child would have $18,000 plus interest after the state match.
If the child moves out of state, the account would remain in place but the state would not match any deposits, Wolf said.
Under the bill, the children may access their accounts after turning 18, but may only use the money to:
• Pay for postsecondary education, career technical education or training.
• Buy a first home.
• Buy a vehicle for transportation to work.
• Start a small business.
• Fund a retirement account.
The accounts are estimated to cost the state $8.8 million for the biennium and the accounts’ funds would be drawn from the state’s general fund, Wolf said.