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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3557 Introduced in Senate (IS)]

110th CONGRESS
  2d Session
                                S. 3557

     To encourage savings, promote financial literacy, and expand 
     opportunities for young adults by establishing KIDS Accounts.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

           September 24 (legislative day, September 17), 2008

  Mr. Schumer introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
     To encourage savings, promote financial literacy, and expand 
     opportunities for young adults by establishing KIDS Accounts.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``America Saving for 
Personal Investment, Retirement, and Education Act of 2008'' or the 
``ASPIRE Act of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. KIDS Account Fund.
Sec. 3. KIDS Accounts.
Sec. 4. Certifications related to Government contributions.
Sec. 5. Rules governing KIDS Accounts relating to investment, 
                            accounting, and reporting.
Sec. 6. Tax treatment of KIDS Accounts.
Sec. 7. Private management of KIDS Accounts.
Sec. 8. KIDS Account Fund Board.
Sec. 9. Fiduciary responsibilities.
Sec. 10. Assignment, alienation, and treatment of deceased individuals.
Sec. 11. Accounts disregarded in determining eligibility for Federal 
                            benefits.
Sec. 12. Reports.
Sec. 13. Programs for promoting financial literacy.

SEC. 2. KIDS ACCOUNT FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a KIDS Account Fund.
    (b) Amounts Held by Fund.--The KIDS Account Fund consists of the 
sum of all amounts paid into the Fund under subsections (d) and (e), 
increased by the total net earnings from investments of sums held in 
the Fund or reduced by the total net losses from investments of sums 
held in the Fund, and reduced by the total amount of payments made from 
the Fund (including payments for administrative expenses).
    (c) Use of Fund.--
            (1) In general.--The sums in the KIDS Account Fund are 
        appropriated and shall remain available without fiscal year 
        limitation--
                    (A) to invest under section 5,
                    (B) to make distributions as provided pursuant to 
                section 6,
                    (C) to pay the administrative expenses of carrying 
                out this Act, and
                    (D) to purchase insurance as provided in section 
                9(c)(2).
            (2) Exclusive purposes.--The sums in the KIDS Account Fund 
        shall not be appropriated for any purpose other than the 
        purposes specified in this section and may not be used for any 
        other purpose.
    (d) Government Contributions.--
            (1) In general.--The Secretary of the Treasury shall make 
        transfers from the general fund of the Treasury to the KIDS 
        Account Fund as follows:
                    (A) Automatic contributions.--Upon receipt of each 
                certification under section 3(b), the Secretary of the 
                Treasury shall transfer $500.
                    (B) Supplemental contributions.--Upon receipt of 
                each certification under section 4(a), the Secretary of 
                the Treasury shall transfer the supplemental amount.
                    (C) Matching contributions.--Upon receipt of each 
                certification under section 4(b), the Secretary of the 
                Treasury shall transfer the matching amount.
            (2) Adjustment for inflation.--
                    (A) In general.--For each fifth calendar year 
                beginning after 2009, the $500 amount in paragraph 
                (1)(A) shall be increased by such dollar amount 
                multiplied by the cost-of-living adjustment determined 
                under section 1(f)(3) of the Internal Revenue Code of 
                1986 determined by substituting ``calendar year 2008'' 
                for ``calendar year 1992'' in subparagraph (B) thereof.
                    (B) Rounding.--If any amount adjusted under 
                subparagraph (A) is not a multiple of $50, such amount 
                shall be rounded to the next lowest multiple of $50.
    (e) Private Contributions.--The Executive Director shall pay into 
the KIDS Account Fund such amounts as are contributed under section 
3(f).

SEC. 3. KIDS ACCOUNTS.

    (a) Establishment.--The Executive Director shall establish in the 
KIDS Account Fund a Kids Investment and Development Savings Account 
(hereafter in this Act referred to as a ``KIDS Account'') for each 
eligible individual certified under subsection (b). Each such account 
shall be identified to its account holder by means of the account 
holder's social security account number.
    (b) Certification of Account Holders.--On the date on which an 
eligible individual is issued a social security account number under 
section 203(c)(2) of the Social Security Act, the Commissioner of 
Social Security shall certify to the Executive Director and the 
Secretary of the Treasury the name of, and social security number 
issued to, such eligible individual.
    (c) Account Balance.--The balance in an account holder's KIDS 
Account at any time is the excess of--
            (1) the sum of--
                    (A) all deposits made into the KIDS Account Fund 
                and credited to the account under subsection (d), and
                    (B) the total amount of allocations made to and 
                reductions made in the account pursuant to subsection 
                (e), over
            (2) the amounts paid out of the account with respect to 
        such individual under section 6.
    (d) Crediting of Contributions.--Pursuant to regulations which 
shall be prescribed by the Executive Director, the Executive Director 
shall credit to each KIDS Account the amounts paid into the KIDS 
Account Fund under subsections (d) and (e) of section 2 which are 
attributable to the account holder of such account.
    (e) Allocation of Earnings and Losses.--The Executive Director 
shall allocate to each KIDS Account an amount equal to the net earnings 
and net losses from each investment of sums in the KIDS Account Fund 
which are attributable, on a pro rata basis, to sums credited to such 
account, reduced by an appropriate share of the administrative expenses 
paid out of the net earnings, as determined by the Executive Director.
    (f) Private Contributions.--
            (1) In general.--The Executive Director shall accept cash 
        contributions for payment into the KIDS Account Fund if such 
        contribution is identified (in such manner as the Executive 
        Director may require) with the account holder of a KIDS Account 
        to whom it is to be credited at the time the contribution is 
        made.
            (2) Alternative methods of contribution.--
                    (A) Payroll deduction.--Under regulations 
                prescribed by the Executive Director and at the 
                election of the employer, contributions under paragraph 
                (1) may be made through payroll deductions.
                    (B) Tax refunds.--Under regulations prescribed by 
                the Secretary of the Treasury, contributions under 
                paragraph (1) may be made by an election to contribute 
                all or a portion of the tax refund of the contributor.
            (3) Annual limitation.--
                    (A) Account holders under age 18.--In the case of 
                an account holder who has not attained age 18 at the 
                end of a calendar year--
                            (i) the limitation under section 219(b)(1) 
                        of the Internal Revenue Code of 1986 shall not 
                        apply, and
                            (ii) the Executive Director shall not 
                        accept any contribution identified with such 
                        account holder if such contribution, when added 
                        to all other contributions made under this 
                        subsection during such calendar year with 
                        respect to such account holder, exceeds $2,000.
                    (B) Account holders age 18 or older.--In the case 
                of an account holder who is age 18 or older at the end 
                of a calendar year, any contribution identified with 
                such account holder shall be taken into account under 
                section 219(b)(1) of the Internal Revenue Code of 1986 
                for such year.
                    (C) Adjustment for inflation.--
                            (i) In general.--For each fifth calendar 
                        year beginning after 2009, the $2,000 amount 
                        under subparagraph (A)(ii) shall be increased 
                        by such dollar amount multiplied by the cost-
                        of-living adjustment determined under section 
                        1(f)(3) of the Internal Revenue Code of 1986 
                        determined by substituting ``calendar year 
                        2008'' for ``calendar year 1992'' in 
                        subparagraph (B) thereof.
                            (ii) Rounding.--If any amount adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the next lowest 
                        multiple of $50.
    (g) Eligible Individual.--For purposes of this Act, the term 
``eligible individual'' means any individual who is--
            (1) a United States citizen or a person described in 
        paragraph (1) of section 431(b) of the Personal Responsibility 
        and Work Opportunity Reconciliation Act of 1996,
            (2) born after December 31, 2008, and
            (3) less than 18 years of age.
    (h) Rights of Legal Guardian.--Until the account holder of a KIDS 
Account attains age 18, any rights or duties of the account holder 
under this Act with respect to such account shall be exercised or 
performed by the legal guardian of such account holder.

SEC. 4. CERTIFICATIONS RELATED TO GOVERNMENT CONTRIBUTIONS.

    (a) Supplemental Government Contributions.--
            (1) In general.--Upon such showing as the Executive 
        Director may require to establish the basis for certification, 
        the Executive Director shall, with respect to each eligible 
        account holder, certify to the Secretary of the Treasury the 
        supplemental amount with respect to such account holder.
            (2) Eligible account holder.--For purposes of this 
        subsection, the term ``eligible account holder'' means an 
        account holder of a KIDS Account who, for the last taxable year 
        ending before such account holder's certification under section 
        3(b), has a modified adjusted gross income which is below the 
        applicable national median adjusted gross income amount.
            (3) Supplemental amount.--
                    (A) In general.--For purposes of this Act, the term 
                ``supplemental amount'' means $500.
                    (B) Income phase-out.--With respect to any account 
                holder who has a modified adjusted gross income for the 
                last taxable year ending before such account holder's 
                certification under section 3(b) which is in excess of 
                50 percent of the applicable national median adjusted 
                gross income amount, the $500 amount in subparagraph 
                (A) shall be reduced (but not below zero) by an amount 
                which bears the same ratio to $500 as such excess bears 
                to 50 percent of the applicable national median 
                adjusted gross income amount.
                    (C) Adjustment for inflation.--
                            (i) In general.--For each fifth calendar 
                        year beginning after 2009, each of the $500 
                        amounts under subparagraphs (A) and (B) shall 
                        be increased by such dollar amount multiplied 
                        by the cost-of-living adjustment determined 
                        under section 1(f)(3) of the Internal Revenue 
                        Code of 1986 determined by substituting 
                        ``calendar year 2008'' for ``calendar year 
                        1992'' in subparagraph (B) thereof.
                            (ii) Rounding.--If any amount adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the next lowest 
                        multiple of $50.
    (b) Government Matching Contribution.--
            (1) In general.--Upon such showing as the Executive 
        Director may require to establish the basis for certification, 
        the Executive Director shall, with respect to each private 
        contribution to the account of an account holder which is made 
        before such account holder attains age 18, certify to the 
        Secretary of the Treasury the matching amount with respect to 
        such contribution.
            (2) Matching amount.--
                    (A) In general.--For purposes of this subsection, 
                the term ``matching amount'' means, with respect to the 
                first $500 of private contributions to an account 
                during any calendar year, an amount equal to 100 
                percent of such contribution.
                    (B) Income phase-out.--With respect to any account 
                holder who has a modified adjusted gross income for the 
                last taxable year ending before such contribution which 
                is in excess of 100 percent of the applicable national 
                median adjusted gross income amount, the $500 amount in 
                subparagraph (A) shall be reduced (but not below zero) 
                by an amount which bears the same ratio to $500 as--
                            (i) such excess, bears to
                            (ii) 20 percent of the applicable national 
                        median adjusted gross income amount.
                    (C) Adjustment for inflation.--
                            (i) In general.--For each fifth calendar 
                        year beginning after 2009, each of the $500 
                        amounts under subparagraphs (A) and (B) shall 
                        be increased by such dollar amount multiplied 
                        by the cost-of-living adjustment determined 
                        under section 1(f)(3) of the Internal Revenue 
                        Code of 1986 determined by substituting 
                        ``calendar year 2008'' for ``calendar year 
                        1992'' in subparagraph (B) thereof.
                            (ii) Rounding.--If any amount adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the next lowest 
                        multiple of $50.
            (3) Private contribution.--For purposes of this subsection, 
        the term ``private contribution'' means a contribution accepted 
        under section 3(f).
    (c) Definitions and Rules Relating to Modified Adjusted Gross 
Income.--For purposes of this section--
            (1) Special rule for account holders who can be claimed as 
        dependents.--In the case of an account holder of a KIDS Account 
        for whom a deduction is allowable under section 151 of the 
        Internal Revenue Code of 1986 to another taxpayer, any 
        reference in this section to the modified adjusted gross income 
        of the account holder for any taxable year shall be treated as 
        a reference to the modified adjusted gross income of such other 
        taxpayer.
            (2) Modified adjusted gross income.--The term ``modified 
        adjusted gross income'' has the meaning given such term in 
        section 221(b) of the Internal Revenue Code of 1986.
            (3) Applicable national median adjusted gross income.--
                    (A) In general.--The term ``applicable national 
                median adjusted gross income'' means, with respect to 
                any calendar year, the median amount of adjusted gross 
                income (as defined in section 62 of the Internal 
                Revenue Code of 1986) for individual taxpayers for 
                taxable years ending in the prior calendar year as 
                determined by the Secretary of the Treasury.
                    (B) Joint returns.--The applicable national median 
                adjusted gross income shall be calculated and applied 
                separately with respect to joint returns and all other 
                returns.

SEC. 5. RULES GOVERNING KIDS ACCOUNTS RELATING TO INVESTMENT, 
              ACCOUNTING, AND REPORTING.

    (a) Default Investment Program.--The KIDS Account Fund Board shall 
establish a default investment program under which, in a manner similar 
to a lifecycle investment program, sums in each KIDS Account are 
allocated to investment funds in the KIDS Account Fund based on the 
amount of time before the account holder attains the age of 18. Each 
account holder of a KIDS Account shall be enrolled in such program 
unless such account holder, in such form and manner as prescribed by 
the Executive Director, elects otherwise.
    (b) Other Rules.--Under regulations which shall be prescribed by 
the Executive Director, and subject to the provisions of this Act, the 
provisions of--
            (1) section 8438 of title 5, United States Code (relating 
        to investment of the Thrift Savings Fund),
            (2) section 8439(b) of such title (relating to engagement 
        of independent qualified public accountant),
            (3) section 8439(c) of such title (relating to periodic 
        statements and summary descriptions of investment options), and
            (4) section 8439(d) of such title (relating to assumption 
        of risk), shall apply with respect to the KIDS Account Fund and 
        accounts maintained in such Fund in the same manner and to the 
        same extent as such provisions relate to the Thrift Savings 
        Fund and the accounts maintained in the Thrift Savings Fund. 
        For purposes of this subsection, references in such sections 
        8438 and 8439 to an employee, Member, former employee, or 
        former Member shall be deemed references to an account holder 
        of a KIDS Account in the KIDS Account Fund.

SEC. 6. TAX TREATMENT OF KIDS ACCOUNTS.

    (a) In General.--Except as otherwise provided in this Act, for 
purposes of the Internal Revenue Code of 1986--
            (1) each KIDS Account shall be treated in the same manner 
        as a Roth IRA (within the meaning of section 408A of such 
        Code), except that section 408A of such Code shall be applied 
        separately to KIDS Accounts and
            (2) any distribution from such account shall be treated in 
        the same manner as a distribution from a Roth IRA.
    (b) Separate Application of Taxation Rules.--For purposes of this 
Act, section 408A, other than subsection (c) thereof (relating to 
treatment of contributions), of the Internal Revenue Code of 1986 shall 
be applied separately to KIDS accounts.
    (c) Minimum Balance.--No amount shall be distributed pursuant to 
subsection (a)(2) to the extent such distribution would cause the 
balance of such account to be less than the amount transferred to such 
account under section 2(d)(1)(A) before the account holder--
            (1) attains age 59\1/2\,
            (2) dies, or
            (3) becomes disabled (within the meaning of section 
        72(m)(7).
    (d) Distributions for Higher Education.--In the case of higher 
education expenses of an account holder incurred during the period 
beginning on the date the account holder attains 18 and ending before 
the account holder attains 25, no amount shall be treated as a 
qualified distribution pursuant to subsection (a)(2) unless such amount 
is paid directly to the institution of higher education (as defined in 
section 101 of the Higher Education Act of 1065 (20 U.S.C. 1001) 
through which the higher education is provided.
    (e) Age Limitation.--Except as otherwise provided by this Act, no 
distribution shall be made under subsection (a) with respect to any 
account holder of a KIDS Account before such account holder attains age 
18.
    (f) Qualified Rollovers Contributions.--
            (1) In general.--Except as provided in paragraph (2), no 
        qualified rollover contribution (as defined in section 408A(e) 
        of the Internal Revenue Code of 1986) shall be allowed with 
        respect to a KIDS Account.
            (2) Qualified rollovers.--
                    (A) In general.--Under regulations prescribed by 
                the Secretary of the Treasury in consultation with the 
                Executive Director, after the account holder of a KIDS 
                Account attains the age of 18 (or, if earlier, on the 
                date of the rollover contribution if the balance in 
                such KIDS Account exceeds $10,000), such account holder 
                may elect to make a rollover contribution from such 
                account holder's account to a privately managed KIDS 
                Account (as defined in section 408B of the Internal 
                Revenue Code of 1986).
                    (B) Limitation.--No rollover contribution may be 
                made under this paragraph to the extent that such 
                rollover contribution would cause the balance of such 
                account holder's account to be less than the minimum 
                balance specified in subsection (c).
    (g) 100 Percent Tax on Government Contributions.--
            (1) KIDS accounts.--
                    (A) In general.--In the case of any amount 
                distributed from a KIDS Account which is attributable 
                to contributions made under section 2(d) and which 
                would be includible in gross income (but for this 
                paragraph)--
                            (i) such amount shall not be includible in 
                        gross income, and
                            (ii) the tax imposed under chapter 1 of the 
                        Internal Revenue Code of 1986 on the 
                        distributee for the taxable year in which such 
                        amount is distributed shall be increased by 100 
                        percent of such amount.
                    (B) Ordering rules.--For purposes of this 
                paragraph, distributions from KIDS Accounts shall be 
                treated as made from amounts attributable to 
                contributions made under section 3(f) and from earnings 
                before made from amounts attributable to contributions 
                made under section 2(d).

SEC. 7. PRIVATE MANAGEMENT OF KIDS ACCOUNTS.

    (a) In General.--Part I of subchapter D of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
408A the following new section:

``SEC. 408B. PRIVATELY MANAGED KIDS ACCOUNTS.

    ``(a) In General.--Except as provided in this section, a privately 
managed KIDS Account shall be treated in the same manner as a Roth IRA, 
except that:
            ``(1) Qualified special purpose distributions.--Qualified 
        special distributions (as defined in section 408A(d)(5)) shall 
        include--
                    ``(A) distributions to the extent that such 
                distributions do not exceed qualified higher education 
                expenses (as defined in section 529(e)(3)) of the 
                beneficiary of a privately managed KIDS Account, 
                reduced by the sum of--
                            ``(i) the amount excluded from gross income 
                        under section 127, 135, 529, or 530 by reason 
                        of such expenses,
                            ``(ii) the amount excluded from gross 
                        income under section 221 by reason of such 
                        expenses (determined without regard to the last 
                        sentence of subsection (d)(2) thereof),
                            ``(iii) the amount of any scholarship, 
                        allowance, or payment described in section 
                        25A(g)(2), and
                            ``(iv) the amount of such expenses which 
                        were taken into account in determining the 
                        credit allowed to the taxpayer or any other 
                        person under section 25A, and
                    ``(B) amounts which within 60 days of distribution 
                are transferred to a qualified tuition program under 
                section 529 for the benefit of the account holder of a 
                privately managed KIDS Account or a member of the 
                family (within the meaning of section 529(e)(2)) of 
                such account holder.
            ``(2) Nonexclusion period does not apply.--Section 
        408A(d)(2)(B) shall not apply.
            ``(3) Qualified rollover.--In lieu of the definition given 
        the term `qualified rollover contribution' under section 
        408A(e), such term shall mean a rollover contribution to a 
        privately managed KIDS Account from another such account or 
        from a KIDS Account under section 7(b)(2)(A) of the America 
        Saving for Personal Investment, Retirement, and Education Act 
        of 2008, but only if such rollover contribution meets the 
        requirements of section 408(d)(3).
            ``(4) Age limitation on distributions.--Except as otherwise 
        provided in this section, no distribution may be made with 
        respect to any account holder of a privately managed KIDS 
        Account before such account holder attains age 18.
            ``(5) Taxation of government contributions.--In the case of 
        any distribution which is attributable to contributions made 
        under section 2(d) of the America Saving for Personal 
        Investment, Retirement, and Education Act of 2008 and which 
        would be includible in gross income (but for this paragraph)--
                    ``(A) such amount shall not be includible in gross 
                income, and
                    ``(B) the tax imposed under chapter 1 on the 
                distributee for the taxable year in which such amount 
                is distributed shall be increased by 100 percent of 
                such amount.
        For purposes of this paragraph, distributions shall be treated 
        as made from amounts attributable to other contributions and 
        from earnings before made from amounts attributable to 
        contributions made under section 2(d) of the America Saving for 
        Personal Investment, Retirement, and Education Act of 2008.
            ``(6) Assignment, alienation, and treatment of deceased 
        individuals.--Section 10 of the America Saving for Personal 
        Investment, Retirement, and Education Act of 2008 shall apply 
        in lieu of treatment under this subsection as a Roth IRA.
    ``(b) Privately Managed KIDS Account.--For purposes of this title, 
the term `privately managed KIDS Account' means an individual 
retirement plan (as defined in section 7701(a)(37)) which is designated 
(in such manner as the Secretary may prescribe) as a privately managed 
KIDS Account and which meets the requirements of the America Saving for 
Personal Investment, Retirement, and Education Act of 2008.''.
    (b) Conforming Amendment.--The table of sections for part I of 
subchapter D of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item related to section 408A the 
following new item:

``Sec. 408B. Privately managed KIDS Accounts.''.

SEC. 8. KIDS ACCOUNT FUND BOARD.

    (a) In General.--There is established in the executive branch of 
the Government a KIDS Account Fund Board.
    (b) Composition, Duties, and Responsibilities.--Subject to the 
provisions of this Act, the provisions of--
            (1) section 8472 of title 5, United States Code (relating 
        to composition of Federal Retirement Thrift Investment Board),
            (2) section 8474 of such title (relating to Executive 
        Director),
            (3) section 8475 of such title (relating to investment 
        policies), and
            (4) section 8476 of such title (relating to administrative 
        provisions), shall apply with respect to the KIDS Account Fund 
        Board in the same manner and to the same extent as such 
        provisions relate to the Federal Retirement Thrift Investment 
        Board.

SEC. 9. FIDUCIARY RESPONSIBILITIES.

    (a) In General.--Under regulations of the Secretary of Labor, the 
provisions of sections 8477 and 8478 of title 5, United States Code, 
shall apply in connection with the KIDS Account Fund and the accounts 
maintained in such Fund in the same manner and to the same extent as 
such provisions apply in connection with the Thrift Savings Fund and 
the accounts maintained in the Thrift Savings Fund.
    (b) Investigative Authority.--Any authority available to the 
Secretary of Labor under section 504 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1134) is hereby made available to the 
Secretary of Labor, and any officer designated by the Secretary of 
Labor, to determine whether any person has violated, or is about to 
violate, any provision applicable under subsection (a).
    (c) Exculpatory Provisions; Insurance.--
            (1) In general.--Any provision in an agreement or 
        instrument which purports to relieve a fiduciary from 
        responsibility or liability for any responsibility, obligation, 
        or duty under this Act shall be void.
            (2) Insurance.--Amounts in the KIDS Account Fund available 
        for administrative expenses shall be available and may be used 
        at the discretion of the Executive Director to purchase 
        insurance to cover potential liability of persons who serve in 
        a fiduciary capacity with respect to the Fund and accounts 
        maintained therein, without regard to whether a policy of 
        insurance permits recourse by the insurer against the fiduciary 
        in the case of a breach of a fiduciary obligation.

SEC. 10. ASSIGNMENT, ALIENATION, AND TREATMENT OF DECEASED INDIVIDUALS.

    (a) Assignment and Alienation.--Under regulations which shall be 
prescribed by the Executive Director, rules relating to assignment and 
alienation applicable under chapter 84 of title 5, United States Code, 
with respect to amounts held in accounts in the Thrift Savings Fund 
shall apply with respect to amounts held in KIDS Accounts in the KIDS 
Account Fund.
    (b) Treatment of Accounts of Deceased Individuals.--In the case of 
a deceased account holder of a KIDS Account which has an account 
balance greater than zero, upon receipt of notification of such 
individual's death, the Executive Director shall close the account and 
shall transfer the balance in such account to the KIDS Account of such 
account holder's surviving spouse or, if there is no such account of a 
surviving spouse, to the duly appointed legal representative of the 
estate of the deceased account holder, or if there is no such 
representative, to the person or persons determined to be entitled 
thereto under the laws of the domicile of the deceased account holder.

SEC. 11. ACCOUNTS DISREGARDED IN DETERMINING ELIGIBILITY FOR FEDERAL 
              BENEFITS.

    Amounts in any KIDS Account shall not be taken into account in 
determining any individual's or household's financial eligibility for, 
or amount of, any benefit or service, paid for in whole or in part with 
Federal funds, including student financial aid.

SEC. 12. REPORTS.

    The Executive Director, in consultation with the Secretary of the 
Treasury, shall annually transmit a written report to the Congress. 
Such report shall include--
            (1) a detailed description of the status and operation of 
        the KIDS Account Fund and the management of the KIDS Accounts, 
        and
            (2) a detailed accounting of the administrative expenses in 
        carrying out this Act, including the ratio of such 
        administrative expenses to the balance of the KIDS Account Fund 
        and the methodology adopted by the Executive Director for 
        allocating such expenses among the KIDS Accounts.

SEC. 13. PROGRAMS FOR PROMOTING FINANCIAL LITERACY.

    The Secretary of the Treasury, in coordination with the Financial 
Literacy and Education Commission, shall develop programs to promote 
the financial literacy of account holders of KIDS Accounts and the 
legal guardians of such account holders who have the rights with 
respect to such accounts under section 3(h).
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