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Text of the Social Security KidSave Accounts Act

This bill was introduced on October 12, 2000, in a previous session of Congress, but was not enacted. The text of the bill below is as of Oct 12, 2000 (Introduced).

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S 3200 IS

106th CONGRESS

2d Session

S. 3200

To amend the Social Security Act to provide each American child with a KidSave Account, and for other purposes.

IN THE SENATE OF THE UNITED STATES

October 12 (legislative day, SEPTEMBER 22), 2000

Mr. KERREY (for himself, Mr. SANTORUM, Mr. MOYNIHAN, Mr. GRASSLEY, and Mr. BREAUX) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Social Security Act to provide each American child with a KidSave Account, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Social Security KidSave Accounts Act’.

SEC. 2. SOCIAL SECURITY KIDSAVE ACCOUNTS.

    (a) IN GENERAL- Title II of the Social Security Act (42 U.S.C. 401 et seq.) is amended--

      (1) by inserting before section 201 the following:

‘Part A--Insurance Benefits’;

      and

      (2) by adding at the end the following:

‘Part B--KidSave Accounts

‘ESTABLISHMENT OF KIDSAVE ACCOUNTS

    ‘SEC. 251. (a) IN GENERAL- The Commissioner of Social Security, through the Federal Retirement Thrift Investment Board, shall establish in the name of each individual born on or after January 1, 2001, a KidSave Account in the Thrift Savings Fund under subchapter III of chapter 84 of title 5, United States Code, upon the later of--

      ‘(1) the date of enactment of this part; or

      ‘(2) the date of the issuance of a Social Security account number under section 205(c)(2) to such individual.

    ‘(b) IDENTIFICATION OF ACCOUNT- The KidSave Account shall be identified to the account holder by means of the account holder’s Social Security account number.

‘TREATMENT OF KIDSAVE ACCOUNTS

    ‘SEC. 252. (a) IN GENERAL- For purposes of this part, except as provided in subsection (b), a KidSave Account described in subsection (a) shall be treated in the same manner as an account in the Thrift Savings Fund under subchapter III of chapter 84 of title 5, United States Code.

    ‘(b) EXCEPTIONS-

      ‘(1) CONTRIBUTION RULES-

        ‘(A) LOAN CONTRIBUTIONS-

          ‘(i) IN GENERAL- In addition to any contributions to a KidSave Account by or on behalf of an individual described in subparagraph (B), the Secretary of the Treasury shall transfer $2,000 to such Account from the Federal Old-Age and Survivors Insurance Trust Fund on the date of the establishment of such Account under subsection (a).

          ‘(ii) ADJUSTMENT FOR INFLATION- For any calendar year after 2008, the dollar amount under clause (i) shall be increased by the cost-of-living adjustment determined under section 215(i) for the calendar year.

        ‘(B) OTHER CONTRIBUTIONS-

          ‘(i) CONTRIBUTION LIMIT- The aggregate amount of contributions by or on behalf of an individual (including rollover contributions) for any taxable year to the KidSave Account of such individual shall not exceed $500 for such year (determined without regard to the amount of the contribution made pursuant to subparagraph (A)).

          ‘(ii) ROLLOVER CONTRIBUTIONS- No rollover contribution may be made to a KidSave Account of an individual unless it is from an eligible retirement plan described in clause (i), (ii), or (iii) of section 402(c)(8)(B) of the Internal Revenue Code of 1986 of such individual or of a parent or grandparent of such individual.

          ‘(iii) NO CONTRIBUTIONS PAST THE AGE OF 18- No contribution (including rollover contribution) may be made to a KidSave Account of an individual in any year after the year in which such individual attains the age of 19.

          ‘(iv) DIRECT DEPOSITS- The Secretary of the Treasury shall, under regulations, provide for the direct deposit of any overpayment of Federal tax of an individual or of a parent or grandparent of such individual as a contribution to the KidSave Account of such individual.

      ‘(2) DESIGNATIONS REGARDING KIDSAVE ACCOUNT INVESTMENTS-

        ‘(A) INITIAL DESIGNATIONS OF INVESTMENT FUND- A person described in subsection (c) shall, on behalf of the individual described in section 251(a), designate 1 or more investment funds (established under section 8438 of title 5, United States Code) for the KidSave Account to which contributions by or on behalf of such individual are to be deposited. Such designation shall be made on the application for such individual’s Social Security account number.

        ‘(B) DEFAULT DESIGNATION- In the absence of any designation under subparagraph (A), the contributions by or on behalf of an individual described in section 251(a) shall be deposited--

          ‘(i) 60 percent in the Common Stock Index Investment Fund established under section 8438(b)(1)(C) of title 5, United States Code;

          ‘(ii) 20 percent in the Fixed Income Investment Fund established under section 8438(b)(1)(B) of such title; and

          ‘(iii) 20 percent in the Government Securities Investment Fund established under section 8438(b)(1)(A) of such title.

        ‘(C) CHANGES IN DESIGNATIONS- An individual who has attained age 18 or a person described in subsection (c) on behalf of such individual may change 1 or more investment designations for a KidSave Account of such individual at the same time and in the same manner as provided under subchapter III of chapter 84 of such title.

      ‘(3) DISTRIBUTIONS-

        ‘(A) IN GENERAL- Except as provided in subparagraph (B), distributions may only be made from a KidSave Account of an individual on or after the earlier of--

          ‘(i) the date on which the individual begins receiving benefits under this title; or

          ‘(ii) the date of the individual’s death.

        ‘(B) REPAYMENT OF CONTRIBUTION LOAN-

          ‘(i) IN GENERAL- On the date on which an individual described in section 251(a) attains age 30 and on such date in each succeeding calendar year (as necessary), the Federal Retirement Thrift Investment Board shall transfer from the KidSave Account of such individual to the Federal Old-Age and Survivors Insurance Trust Fund an amount equal to the least of the following amounts:

            ‘(I) 20 percent of the applicable amount.

            ‘(II) 20 percent of the balance in such KidSave Account.

            ‘(III) An amount equal to the excess of the applicable amount over the aggregate amount deducted under this clause in all preceding calendar years with respect to such individual.

          ‘(ii) APPLICABLE AMOUNT- With respect to any individual described in clause (i), the applicable amount is equal to the amount of the loan contribution under paragraph (1)(A) determined for the first calendar year described in such clause for KidSave Accounts established in such year.

    ‘(c) TREATMENT OF MINORS AND INCOMPETENT INDIVIDUALS-

      ‘(1) DESIGNATIONS- Any designation under subsection (b)(2) to be made by a minor, or an individual mentally incompetent or under other legal disability, may be made by the person who is constituted guardian or other fiduciary by the law of the State of residence of the individual or is otherwise legally vested with the care of the individual or his estate.

      ‘(2) DISTRIBUTIONS- Payment under this part due a minor, or an individual mentally incompetent or under other legal disability, may be made to the person who is constituted guardian or other fiduciary by the law of the State of residence of the claimant or is otherwise legally vested with the care of the claimant or his estate.

      ‘(3) OTHER PERSONS DESIGNATED- In any case in which a guardian or other fiduciary of the individual under legal disability has not been appointed under the law of the State of residence of the individual, if any other person, in the judgment of the Commissioner, is responsible for the care of such individual, any designation under subsection (b)(2) which may otherwise be made by such individual may be made by such person, any payment under this part which is otherwise payable to such individual may be made to such person, and the payment of an annuity payment under this part to such person bars recovery by any other person.

‘TREATMENT OF THRIFT SAVINGS FUND

    ‘SEC. 253. For purposes of subchapter VIII of chapter 84 of title 5, United States Code, the KidSave Accounts established in the Thrift Savings Fund under section 251 shall be separately maintained and accounted for by the Federal Retirement Thrift Investment Board from the accounts established under such subchapter in such Fund.’.

    (b) CONFORMING AMENDMENTS REGARDING ROLLOVERS-

      (1) Section 402(c)(5) of the Internal Revenue Code of 1986 is amended by striking ‘(i) or (ii)’ and inserting ‘(i), (ii), or (v)’.

      (2) Section 402(c)(8)(B) of such Code is amended by striking ‘and’ at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ‘, and’, and by adding at the end the following new clause:

          ‘(v) a KidSave Account established under section 251(a) of the Social Security Act.’.

      (3) Section 408(d)(3)(A)(i) of such Code is amended by inserting ‘or a KidSave Account established under section 251(a) of the Social Security Act’ after ‘contract)’.