Social Security KidSave Accounts Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Security KidSave Accounts 
Act''.

SEC. 2. SOCIAL SECURITY KIDSAVE ACCOUNTS.

    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

                           ``kidsave accounts

    ``Sec. 251. (a) Establishment.--The Commissioner of Social Security 
shall establish in the name of each individual born on or after January 
1, 1997, a KidSave Account described in subparagraph (A) of section 
252(1), 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.
The KidSave Account shall be identified to the account holder by means 
of the account holder's Social Security account number.
    ``(b) Contributions.--
            ``(1) In general.--The Secretary of the Treasury shall 
        transfer from the Federal Old-Age and Survivors Insurance Trust 
        Fund for crediting by the Commissioner to each account holder's 
        KidSave Account under subsection (a), an amount equal to the 
        sum of--
                    ``(A) in the case of any individual born on or 
                after January 1, 1999, $1000.00, on the date of the 
                establishment of such individual's KidSave Account, and
                    ``(B) in the case of any individual born on or 
                after January 1, 1997, $500.00, on the 1st, 2nd, 3rd, 
                4th, and 5th birthdays of such individual occurring on 
                or after January 1, 2002.
            ``(2) Adjustment for inflation.--For any calendar year 
        after 2008, each of the dollar amounts under paragraph (1) 
        shall be increased by the cost-of-living adjustment determined 
        under section 215(i) for the calendar year.
    ``(c) Designations Regarding KidSave Accounts.--
            ``(1) Initial designations of investment vehicle.--A person 
        described in subsection (d) shall, on behalf of the individual 
        described in subsection (a), designate the investment vehicle 
        for the KidSave Account to which contributions 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.
            ``(2) Changes in investment vehicles or types of kidsave 
        accounts.--The Commissioner shall by regulation provide the 
        time and manner by which--
                    ``(A) an individual or a person described in 
                subsection (d) on behalf of such individual may change 
                1 or more investment vehicles for a KidSave Account 
                described in subparagraph (A) of section 252(1), and
                    ``(B) an individual who has attained age 18, may 
                designate a KidSave Account described in subparagraph 
                (B) of section 252(1) to which all or a portion of the 
                amounts in an existing KidSave Account described in 
                subparagraph (A) of such section are to be transferred.
    ``(d) Treatment of Minors and Incompetent Individuals.--Any 
designation under subsection (c) 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. 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. 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 (c) 
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.

                    ``definitions and special rules

    ``Sec. 252. For purposes of this part--
            ``(1) Kidsave accounts.--
                    ``(A) A KidSave Account described in this 
                subparagraph is a KidSave Account in the KidSave 
                Investment Fund (established under section 253) which 
                is administered by the KidSave Investment Fund Board.
                    ``(B) A Kidsave Account described in this 
                subparagraph is any individual retirement plan (as 
                defined in section 7701(a)(37) of the Internal Revenue 
                Code of 1986), other than a Roth IRA (as defined in 
                section 408A(b) of such Code), which is designated by 
                an individual as a KidSave Account (in such manner as 
                the Secretary of the Treasury may prescribe) and which 
                is administered or issued by a bank or other person 
                referred to in section 408(a)(2) of such Code.
            ``(2) Treatment of accounts.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B)--
                            ``(i) any KidSave Account described in 
                        paragraph (1)(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, and
                            ``(ii) any KidSave Account described in 
                        paragraph (1)(B) shall be treated in the same 
                        manner as an individual retirement plan (as so 
                        defined).
                    ``(B) Exceptions.--
                            ``(i) Contribution limit.--The aggregate 
                        amount of contributions for any taxable year to 
                        all KidSave Accounts of an individual shall not 
                        exceed the contribution made pursuant to 
                        section 251(b) for such year on behalf of such 
                        individual.
                            ``(ii) Rollover contributions.--No rollover 
                        contribution may be made to a KidSave Account 
                        unless it is from another KidSave Account. A 
                        rollover described in the preceding sentence 
                        shall not be taken into account for purposes of 
                        clause (i).
                            ``(iii) Distributions.--Notwithstanding any 
                        other provision of law, 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.

                       ``kidsave investment fund

    ``Sec. 253. (a) Establishment.--There is established and maintained 
in the Treasury of the United States a KidSave Investment Fund in the 
same manner as the Thrift Savings Fund under sections 8437, 8438, and 
8439 of title 5, United States Code.
    ``(b) KidSave Investment Fund Board.--
            ``(1) In general.--There is established and operated in the 
        Social Security Administration a Kidsave Investment Fund Board 
        in the same manner as the Federal Retirement Thrift Investment 
        Board under subchapter VII of chapter 84 of title 5, United 
        States Code.
            ``(2) Specific investment duties.--The Kidsave Investment 
        Fund shall be managed by the Kidsave Investment Fund Board in 
        the same manner as the Thrift Savings Fund is managed under 
        subchapter VIII of chapter 84 of title 5, United States Code.

 ``appropriations to the federal old-age and survivors insurance trust 
                                  fund

    ``Sec. 254. Out of any money in the Treasury of the United States 
not otherwise appropriated, there are appropriated to the Federal Old-
Age and Survivors Insurance Trust Fund such sums as are necessary to 
carry out this part.''.

Summary: Social Security KidSave Accounts Act - Amends title II (OASDI) of the Social Security Act to create a new part B . Directs the Commissioner of Social Security to establish in the name of each individual born on or after January 1, 1997, an individual retirement account known as a KidSave Account. Requires the Secretary of the Treasury to transfer from the Federal OASDI Trust Fund to the Commissioner for crediting to each account holder's KidSave Account: (1) $1,000, on the date such individual's KidSave Account is established, in the case of any individual born on or after January 1, 1999. Plus (2) in the case of any individual born on or after January 1, 1997, $500 on each of the individual's first five birthdays occurring on or after January 1, 2002. Establishes in the Treasury the KidSave Investment Fund in the same manner as the Thrift Savings Fund under the Federal Employees Retirement System (FERS). Establishes the KidSave Investment Fund Board in the Social Security Administration in the same manner as the Federal Retirement Thrift Investment Board under the FERS Thrift Savings Program. Requires the KidSave Investment Fund to be managed in the same manner as the FERS Thrift Savings Fund. Makes appropriations to the Federal OASDI Trust Fund of any sums necessary to carry out the KidSave Accounts program.