I 

110TH CONGRESS 

1ST SESSION H. R. 242 

To amend the Social Security Act to provide each American child with 

a KidSave Account, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 5, 2007 

Mr. WELLER of Illinois introduced the following bill; which was referred to 

the Committee on Ways and Means 

A BILL 

To amend the Social Security Act to provide each American 

child with a KidSave Account, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Social Security 

5 KidSave Accounts Act’’. 

6 SEC. 2. SOCIAL SECURITY KIDSAVE ACCOUNTS. 

7 Title II of the Social Security Act (42 U.S.C. 401 

8 et seq.) is amended— 

9 (1) by inserting before section 201 the fol10 lowing: 


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1 ‘‘PART A—INSURANCE BENEFITS’’; 

2 and 

3 (2) by adding at the end the following: 

4 ‘‘PART B—KIDSAVE ACCOUNTS

5 ‘‘ESTABLISHMENT OF KIDSAVE ACCOUNTS

6 ‘‘SEC. 251. (a) IN GENERAL.—The Commissioner of 

7 Social Security, through the Federal Retirement Thrift In8 vestment Board, shall establish in the name of each indi9 vidual born on or after January 1, 2008, a KidSave Ac10 count in the Thrift Savings Fund under subchapter III 

11 of chapter 84 of title 5, United States Code, upon the later 

12 of— 

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

14 ‘‘(2) the date of the issuance of a social security 

15 account number under section 205(c)(2) to such in16 dividual. 

17 ‘‘(b) IDENTIFICATION OF ACCOUNT.—The KidSave 

18 Account shall be identified to the account holder by means 

19 of the account holder’s social security account number. 

20 ‘‘TREATMENT OF KIDSAVE ACCOUNTS

21 ‘‘SEC. 252. (a) IN GENERAL.—For purposes of this 

22 part, except as provided in subsection (b), a KidSave Ac23 count described in section 251(a) shall be treated in the 

24 same manner as an account in the Thrift Savings Fund 

25 under subchapter III of chapter 84 of title 5, United 

26 States Code. 


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1 ‘‘(b) EXCEPTIONS.— 

2 ‘‘(1) CONTRIBUTION RULES.— 

3 ‘‘(A) LOAN CONTRIBUTIONS.— 

4 ‘‘(i) IN GENERAL.—In addition to any 

5 contributions to a KidSave Account by or 

6 on behalf of an individual described in sub7 paragraph (B), the Secretary of the Treas8 ury shall transfer $2,000 to such Account 

9 from the Federal Old-Age and Survivors 

10 Insurance Trust Fund on the date of the 

11 establishment of such Account under sub12 section (a). 

13 ‘‘(ii) ADJUSTMENT FOR INFLATION.— 

14 For any calendar year after 2015, the dol15 lar amount under clause (i) shall be in16 creased by the cost-of-living adjustment de17 termined under section 215(i) for the cal18 endar year. 

19 ‘‘(B) OTHER CONTRIBUTIONS.— 

20 ‘‘(i) CONTRIBUTION LIMIT.—The ag21 gregate amount of contributions by or on 

22 behalf of an individual (including rollover 

23 contributions) for any taxable year to the 

24 KidSave Account of such individual shall 

25 not exceed $500 for such year (determined 


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1 without regard to the amount of the con2 tribution made pursuant to subparagraph 

3 (A)). 

4 ‘‘(ii) ROLLOVER CONTRIBUTIONS.— 

5 No rollover contribution may be made to a 

6 KidSave Account of an individual unless it 

7 is from an eligible retirement plan de8 scribed in clause (i), (ii), or (iii) of section 

9 402(c)(8)(B) of the Internal Revenue Code 

10 of 1986 of such individual or of a parent 

11 or grandparent of such individual. For 

12 purposes of chapters 12 and 13 of the In13 ternal Revenue Code of 1986 (relating to 

14 gift tax and tax on generation-skipping 

15 transfers), in no event shall a rollover con16 tribution under this clause be treated as a 

17 taxable gift. 

18 ‘‘(iii) NO CONTRIBUTIONS PAST THE

19 AGE OF 18.—No contribution (including 

20 rollover contribution) may be made to a 

21 KidSave Account of an individual after the 

22 date on which such individual attains the 

23 age of 19. 

24 ‘‘(iv) DIRECT DEPOSITS.—The Sec25 retary of the Treasury shall, under regulaVerDate Aug 31 2005 23:41 Jan 12, 2007 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H242.IH H242

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1 tions, provide for the direct deposit of any 

2 overpayment of Federal tax of an indi3 vidual or of a parent or grandparent of 

4 such individual as a contribution to the 

5 KidSave Account of such individual. 

6 ‘‘(2) DESIGNATIONS REGARDING KIDSAVE AC7 COUNT INVESTMENTS.— 

8 ‘‘(A) INITIAL DESIGNATIONS OF INVEST9 MENT FUND.—A person described in subsection 

10 (c) shall, on behalf of the individual described 

11 in section 251(a), designate 1 or more invest12 ment funds (established under section 8438 of 

13 title 5, United States Code) for the KidSave 

14 Account to which contributions by or on behalf 

15 of such individual are to be deposited. Such 

16 designation shall be made on the application for 

17 such individual’s social security account num18 ber. 

19 ‘‘(B) DEFAULT DESIGNATION.—In the ab20 sence of any designation under subparagraph 

21 (A), the contributions by or on behalf of an in22 dividual described in section 251(a) shall be de23 posited— 

24 ‘‘(i) 60 percent in the Common Stock 

25 Index Investment Fund established under 


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1 section 8438(b)(1)(C) of title 5, United 

2 States Code; 

3 ‘‘(ii) 20 percent in the Fixed Income 

4 Investment Fund established under section 

5 8438(b)(1)(B) of such title; and 

6 ‘‘(iii) 20 percent in the Government 

7 Securities Investment Fund established 

8 under section 8438(b)(1)(A) of such title. 

9 ‘‘(C) CHANGES IN DESIGNATIONS.—An in10 dividual who has attained age 18 or a person 

11 described in subsection (c) on behalf of such in12 dividual may change 1 or more investment des13 ignations for a KidSave Account of such indi14 vidual at the same time and in the same man15 ner as provided under subchapter III of chapter 

16 84 of such title. 

17 ‘‘(3) DISTRIBUTIONS.— 

18 ‘‘(A) IN GENERAL.—Except as provided in 

19 subparagraph (B), distributions may only be 

20 made from a KidSave Account of an individual 

21 on or after the earlier of— 

22 ‘‘(i) the date on which the individual 

23 begins receiving benefits under part A; or 

24 ‘‘(ii) the date of the individual’s 

25 death. 


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1 ‘‘(B) REPAYMENT OF CONTRIBUTION

2 LOAN.— 

3 ‘‘(i) IN GENERAL.—On the date on 

4 which an individual described in section 

5 251(a) attains age 30 and on such date in 

6 each succeeding calendar year (as nec7 essary), the Federal Retirement Thrift In8 vestment Board shall transfer from the 

9 KidSave Account of such individual to the 

10 Federal Old-Age and Survivors Insurance 

11 Trust Fund an amount equal to the least 

12 of the following amounts: 

13 ‘‘(I) 20 percent of the applicable 

14 amount. 

15 ‘‘(II) 20 percent of the balance in 

16 such KidSave Account. 

17 ‘‘(III) An amount equal to the 

18 excess of the applicable amount over 

19 the aggregate amount deducted under 

20 this clause in all preceding calendar 

21 years with respect to such individual. 

22 ‘‘(ii) APPLICABLE AMOUNT.—With re23 spect to any individual described in clause 

24 (i), the applicable amount is equal to the 

25 amount transferred by the Secretary of the 


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1 Treasury to such KidSave Account under 

2 paragraph (1)(A). 

3 ‘‘(c) TREATMENT OF MINORS AND INCOMPETENT IN4 DIVIDUALS.— 

5 ‘‘(1) DESIGNATIONS.—Any designation under 

6 subsection (b)(2) to be made by a minor, or an indi7 vidual mentally incompetent or under other legal dis8 ability, may be made by the person who is con9 stituted guardian or other fiduciary by the law of 

10 the State of residence of the individual or is other11 wise legally vested with the care of the individual or 

12 his estate. 

13 ‘‘(2) DISTRIBUTIONS.—Payment under this 

14 part due a minor, or an individual mentally incom15 petent or under other legal disability, may be made 

16 to the person who is constituted guardian or other 

17 fiduciary by the law of the State of residence of the 

18 claimant or is otherwise legally vested with the care 

19 of the claimant or his estate. 

20 ‘‘(3) OTHER PERSONS DESIGNATED.—In any 

21 case in which a guardian or other fiduciary of the 

22 individual under legal disability has not been ap23 pointed under the law of the State of residence of 

24 the individual, if any other person, in the judgment 

25 of the Commissioner, is responsible for the care of 


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1 such individual, any designation under subsection 

2 (b)(2) which may otherwise be made by such indi3 vidual may be made by such person, any payment 

4 under this part which is otherwise payable to such 

5 individual may be made to such person, and the pay6 ment of an annuity payment under this part to such 

7 person bars recovery by any other person. 

8 ‘‘TREATMENT OF THRIFT SAVINGS FUND

9 ‘‘SEC. 253. For purposes of subchapter III of chapter 

10 84 of title 5, United States Code, the KidSave Accounts 

11 established in the Thrift Savings Fund under section 251 

12 shall be separately maintained and accounted for by the 

13 Federal Retirement Thrift Investment Board from the ac14 counts established under such subchapter in such Fund.’’. 

15 SEC. 3. CONFORMING AMENDMENTS. 

16 (a) AMENDMENTS RELATING TO ROLLOVERS.— 

17 (1) Section 402(c)(1) of the Internal Revenue 

18 Code of 1986 is amended by adding at the end the 

19 following new sentence: ‘‘For purposes of the pre20 ceding sentence, a rollover contribution to a KidSave 

21 Account under section 252(b)(1)(B)(ii) of the Social 

22 Security Act with respect to an employee who is a 

23 parent or grandparent of the beneficiary of such ac24 count shall be treated as a distribution to such em25 ployee.’’. 


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1 (2) Section 402(c)(5) of such Code is amended 

2 by striking ‘‘(i) or (ii)’’ and inserting ‘‘(i), (ii), or 

3 (vii)’’. 

4 (3) Section 402(c)(8)(B) of such Code is 

5 amended by striking ‘‘and’’ at the end of clause (v), 

6 by striking the period at the end of clause (vi) and 

7 inserting ‘‘, and’’, and by adding at the end the fol8 lowing new clause: 

9 ‘‘(vii) a KidSave Account established 

10 under section 251(a) of the Social Security 

11 Act.’’. 

12 (4) Section 408(d)(3)(A)(i) of such Code is 

13 amended by inserting ‘‘, or is paid into a KidSave 

14 Account of a beneficiary under section 

15 252(b)(1)(B)(ii) of the Social Security Act with re16 spect to whom such individual is the parent or 

17 grandparent,’’ after ‘‘such individual’’. 

18 (b) CROSS REFERENCES.— 

19 (1) IN GENERAL.— 

20 (A) The Social Security Act is amended— 

21 (i) in part A of title II (as redesig22 nated by section 2), by striking ‘‘this title’’ 

23 each place it appears and inserting ‘‘this 

24 part’’; 


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1 (ii) by striking ‘‘title II’’ each place it 

2 appears (except in sections 

3 464(c)(3)(B)(i), 807(b)(2)(F), 807(c)(1), 

4 1110(a)(3), 1110(c)(1), 1129A(d)(2), 

5 1136(g), 1147(b)(1)(A), 1148(h)(4)(A), 

6 1148(j)(1)(A), 1148(k), 1612(b)(18), and 

7 1613(a)(10)) and inserting ‘‘part A of title 

8 II’’; 

9 (iii) by striking ‘‘title II or XVI’’ each 

10 place it appears in sections 

11 464(c)(3)(B)(i), 1110(a)(3), 1110(c)(1), 

12 1129A(d)(2), and 1136(g) and inserting 

13 ‘‘part A of title II or title XVI’’; 

14 (iv) by striking ‘‘title II, or XVI’’ each 

15 place it appears in sections 807(b)(2)(F) 

16 and 807(c)(1) and inserting ‘‘part A of 

17 title II, or title XVI’’; 

18 (v) by striking ‘‘title II, VIII, or’’ in 

19 section 1129(a)(3) and inserting ‘‘part A 

20 of title II or title VIII or’’; and 

21 (vi) by striking ‘‘title II or VIII’’ in 

22 section 1147(b)(1)(A) and inserting ‘‘part 

23 A of title II or title VIII’’. 

24 (B) The Internal Revenue Code of 1986 is 

25 amended— 


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1 (i) by striking ‘‘title II’’ each place it 

2 appears (except in sections 30B(b)(2)(C), 

3 30B(h)(3), 35(c)(2), 142(h)(1), 

4 410(b)(3)(B), 451(d), 912(1)(C), 912(2), 

5 4980B(f), and 7442) and inserting ‘‘part 

6 A of title II’’; and 

7 (ii) by striking ‘‘title II or XVI’’ each 

8 place it appears in section 4980B(f) and 

9 inserting ‘‘part A of title II or title XVI’’. 

10 (C) The Railroad Retirement Act of 1974 

11 is amended by striking ‘‘title II’’ each place it 

12 appears (except in section 19(d)(3)) and insert13 ing ‘‘part A of title II’’. 

14 (2) RULE OF CONSTRUCTION.—In each provi15 sion of Federal law (other than provisions amended 

16 or added by the amendments made by this Act), any 

17 reference to title II of the Social Security Act shall 

18 be deemed a reference to part A of title II of such 

19 Act (as redesignated by section 2). 

Æ 


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