II

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.

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 (a) IN GENERAL.—Title II of the Social Security Act

8 (42 U.S.C. 401 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, 2001, 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 Secu15 rity account number under section 205(c)(2) to such

16 individual.

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 subsection (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 2008, 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.

12 ‘‘(iii) NO CONTRIBUTIONS PAST THE

13 AGE OF 18.—No contribution (including

14 rollover contribution) may be made to a

15 KidSave Account of an individual in any

16 year after the year in which such indi17 vidual attains the age of 19.

18 ‘‘(iv) DIRECT DEPOSITS.—The Sec19 retary of the Treasury shall, under regula20 tions, provide for the direct deposit of any

21 overpayment of Federal tax of an indi22 vidual or of a parent or grandparent of

23 such individual as a contribution to the

24 KidSave Account of such individual.
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1 ‘‘(2) DESIGNATIONS REGARDING KIDSAVE AC2 COUNT INVESTMENTS.—

3 ‘‘(A) INITIAL DESIGNATIONS OF INVEST4 MENT FUND.—A person described in subsection

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

6 in section 251(a), designate 1 or more invest7 ment funds (established under section 8438 of

8 title 5, United States Code) for the KidSave

9 Account to which contributions by or on behalf

10 of such individual are to be deposited. Such

11 designation shall be made on the application for

12 such individual’s Social Security account num13 ber.

14 ‘‘(B) DEFAULT DESIGNATION.—In the ab15 sence of any designation under subparagraph

16 (A), the contributions by or on behalf of an in17 dividual described in section 251(a) shall be

18 deposited—

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

20 Index Investment Fund established under

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

22 States Code;

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

24 Investment Fund established under section

25 8438(b)(1)(B) of such title; and
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1 ‘‘(iii) 20 percent in the Government

2 Securities Investment Fund established

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

4 ‘‘(C) CHANGES IN DESIGNATIONS.—An in5 dividual who has attained age 18 or a person

6 described in subsection (c) on behalf of such in7 dividual may change 1 or more investment des8 ignations for a KidSave Account of such indi9 vidual at the same time and in the same man10 ner as provided under subchapter III of chapter

11 84 of such title.

12 ‘‘(3) DISTRIBUTIONS.—

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

14 subparagraph (B), distributions may only be

15 made from a KidSave Account of an individual

16 on or after the earlier of—

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

18 begins receiving benefits under this title; or

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

20 death.

21 ‘‘(B) REPAYMENT OF CONTRIBUTION

22 LOAN.—

23 ‘‘(i) IN GENERAL.—On the date on

24 which an individual described in section

25 251(a) attains age 30 and on such date in
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1 each succeeding calendar year (as nec2 essary), the Federal Retirement Thrift In3 vestment Board shall transfer from the

4 KidSave Account of such individual to the

5 Federal Old-Age and Survivors Insurance

6 Trust Fund an amount equal to the least

7 of the following amounts:

8 ‘‘(I) 20 percent of the applicable

9 amount.

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

11 such KidSave Account.

12 ‘‘(III) An amount equal to the

13 excess of the applicable amount over

14 the aggregate amount deducted under

15 this clause in all preceding calendar

16 years with respect to such individual.

17 ‘‘(ii) APPLICABLE AMOUNT.—With re18 spect to any individual described in clause

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

20 amount of the loan contribution under

21 paragraph (1)(A) determined for the first

22 calendar year described in such clause for

23 KidSave Accounts established in such year.

24 ‘‘(c) TREATMENT OF MINORS AND INCOMPETENT IN25 DIVIDUALS.—
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1 ‘‘(1) DESIGNATIONS.—Any designation under

2 subsection (b)(2) to be made by a minor, or an indi3 vidual mentally incompetent or under other legal dis4 ability, may be made by the person who is con5 stituted guardian or other fiduciary by the law of

6 the State of residence of the individual or is other7 wise legally vested with the care of the individual or

8 his estate.

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

10 part due a minor, or an individual mentally incom11 petent or under other legal disability, may be made

12 to the person who is constituted guardian or other

13 fiduciary by the law of the State of residence of the

14 claimant or is otherwise legally vested with the care

15 of the claimant or his estate.

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

17 case in which a guardian or other fiduciary of the

18 individual under legal disability has not been ap19 pointed under the law of the State of residence of

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

21 of the Commissioner, is responsible for the care of

22 such individual, any designation under subsection

23 (b)(2) which may otherwise be made by such indi24 vidual may be made by such person, any payment

25 under this part which is otherwise payable to such
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1 individual may be made to such person, and the pay2 ment of an annuity payment under this part to such

3 person bars recovery by any other person.

4 ‘‘TREATMENT OF THRIFT SAVINGS FUND

5 ‘‘SEC. 253. For purposes of subchapter VIII of chap6 ter 84 of title 5, United States Code, the KidSave Ac7 counts established in the Thrift Savings Fund under sec8 tion 251 shall be separately maintained and accounted for

9 by the Federal Retirement Thrift Investment Board from

10 the accounts established under such subchapter in such

11 Fund.’’.

12 (b) CONFORMING AMENDMENTS REGARDING ROLL13 OVERS.—

14 (1) Section 402(c)(5) of the Internal Revenue

15 Code of 1986 is amended by striking ‘‘(i) or (ii)’’

16 and inserting ‘‘(i), (ii), or (v)’’.

17 (2) Section 402(c)(8)(B) of such Code is

18 amended by striking ‘‘and’’ at the end of clause (iii),

19 by striking the period at the end of clause (iv) and

20 inserting ‘‘, and’’, and by adding at the end the fol21 lowing new clause:

22 ‘‘(v) a KidSave Account established

23 under section 251(a) of the Social Security

24 Act.’’.

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

26 amended by inserting ‘‘or a KidSave Account estab-
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1 lished under section 251(a) of the Social Security

2 Act’’ after ‘‘contract)’’.

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