II 

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. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘America Saving for Personal Investment, Retirement, 

6 and Education Act of 2008’’ or the ‘‘ASPIRE Act of 

7 2008’’. 

8 (b) TABLE OF CONTENTS.—The table of contents for 

9 this Act is as follows: 

Sec. 1. Short title; table of contents. 


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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. 

1 SEC. 2. KIDS ACCOUNT FUND. 

2 (a) ESTABLISHMENT.—There is established in the 

3 Treasury of the United States a KIDS Account Fund. 

4 (b) AMOUNTS HELD BY FUND.—The KIDS Account 

5 Fund consists of the sum of all amounts paid into the 

6 Fund under subsections (d) and (e), increased by the total 

7 net earnings from investments of sums held in the Fund 

8 or reduced by the total net losses from investments of 

9 sums held in the Fund, and reduced by the total amount 

10 of payments made from the Fund (including payments for 

11 administrative expenses). 

12 (c) USE OF FUND.— 

13 (1) IN GENERAL.—The sums in the KIDS Ac14 count Fund are appropriated and shall remain avail15 able without fiscal year limitation— 

16 (A) to invest under section 5, 

17 (B) to make distributions as provided pur18 suant to section 6, 


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1 (C) to pay the administrative expenses of 

2 carrying out this Act, and 

3 (D) to purchase insurance as provided in 

4 section 9(c)(2). 

5 (2) EXCLUSIVE PURPOSES.—The sums in the 

6 KIDS Account Fund shall not be appropriated for 

7 any purpose other than the purposes specified in this 

8 section and may not be used for any other purpose. 

9 (d) GOVERNMENT CONTRIBUTIONS.— 

10 (1) IN GENERAL.—The Secretary of the Treas11 ury shall make transfers from the general fund of 

12 the Treasury to the KIDS Account Fund as follows: 

13 (A) AUTOMATIC CONTRIBUTIONS.—Upon 

14 receipt of each certification under section 3(b), 

15 the Secretary of the Treasury shall transfer 

16 $500. 

17 (B) SUPPLEMENTAL CONTRIBUTIONS.— 

18 Upon receipt of each certification under section 

19 4(a), the Secretary of the Treasury shall trans20 fer the supplemental amount. 

21 (C) MATCHING CONTRIBUTIONS.—Upon 

22 receipt of each certification under section 4(b), 

23 the Secretary of the Treasury shall transfer the 

24 matching amount. 

25 (2) ADJUSTMENT FOR INFLATION.— 


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1 (A) IN GENERAL.—For each fifth calendar 

2 year beginning after 2009, the $500 amount in 

3 paragraph (1)(A) shall be increased by such 

4 dollar amount multiplied by the cost-of-living 

5 adjustment determined under section 1(f)(3) of 

6 the Internal Revenue Code of 1986 determined 

7 by substituting ‘‘calendar year 2008’’ for ‘‘cal8 endar year 1992’’ in subparagraph (B) thereof. 

9 (B) ROUNDING.—If any amount adjusted 

10 under subparagraph (A) is not a multiple of 

11 $50, such amount shall be rounded to the next 

12 lowest multiple of $50. 

13 (e) PRIVATE CONTRIBUTIONS.—The Executive Di14 rector shall pay into the KIDS Account Fund such 

15 amounts as are contributed under section 3(f). 

16 SEC. 3. KIDS ACCOUNTS. 

17 (a) ESTABLISHMENT.—The Executive Director shall 

18 establish in the KIDS Account Fund a Kids Investment 

19 and Development Savings Account (hereafter in this Act 

20 referred to as a ‘‘KIDS Account’’) for each eligible indi21 vidual certified under subsection (b). Each such account 

22 shall be identified to its account holder by means of the 

23 account holder’s social security account number. 

24 (b) CERTIFICATION OF ACCOUNT HOLDERS.—On the 

25 date on which an eligible individual is issued a social secuVerDate Aug 31 2005 23:56 Sep 26, 2008 Jkt 069200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3557.IS S3557

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1 rity account number under section 203(c)(2) of the Social 

2 Security Act, the Commissioner of Social Security shall 

3 certify to the Executive Director and the Secretary of the 

4 Treasury the name of, and social security number issued 

5 to, such eligible individual. 

6 (c) ACCOUNT BALANCE.—The balance in an account 

7 holder’s KIDS Account at any time is the excess of— 

8 (1) the sum of— 

9 (A) all deposits made into the KIDS Ac10 count Fund and credited to the account under 

11 subsection (d), and 

12 (B) the total amount of allocations made 

13 to and reductions made in the account pursuant 

14 to subsection (e), over 

15 (2) the amounts paid out of the account with 

16 respect to such individual under section 6. 

17 (d) CREDITING OF CONTRIBUTIONS.—Pursuant to 

18 regulations which shall be prescribed by the Executive Di19 rector, the Executive Director shall credit to each KIDS 

20 Account the amounts paid into the KIDS Account Fund 

21 under subsections (d) and (e) of section 2 which are attrib22 utable to the account holder of such account. 

23 (e) ALLOCATION OF EARNINGS AND LOSSES.—The 

24 Executive Director shall allocate to each KIDS Account 

25 an amount equal to the net earnings and net losses from 


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1 each investment of sums in the KIDS Account Fund 

2 which are attributable, on a pro rata basis, to sums cred3 ited to such account, reduced by an appropriate share of 

4 the administrative expenses paid out of the net earnings, 

5 as determined by the Executive Director. 

6 (f) PRIVATE CONTRIBUTIONS.— 

7 (1) IN GENERAL.—The Executive Director shall 

8 accept cash contributions for payment into the 

9 KIDS Account Fund if such contribution is identi10 fied (in such manner as the Executive Director may 

11 require) with the account holder of a KIDS Account 

12 to whom it is to be credited at the time the contribu13 tion is made. 

14 (2) ALTERNATIVE METHODS OF CONTRIBU15 TION.— 

16 (A) PAYROLL DEDUCTION.—Under regula17 tions prescribed by the Executive Director and 

18 at the election of the employer, contributions 

19 under paragraph (1) may be made through pay20 roll deductions. 

21 (B) TAX REFUNDS.—Under regulations 

22 prescribed by the Secretary of the Treasury, 

23 contributions under paragraph (1) may be made 

24 by an election to contribute all or a portion of 

25 the tax refund of the contributor. 


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1 (3) ANNUAL LIMITATION.— 

2 (A) ACCOUNT HOLDERS UNDER AGE 18.— 

3 In the case of an account holder who has not 

4 attained age 18 at the end of a calendar year— 

5 (i) the limitation under section 

6 219(b)(1) of the Internal Revenue Code of 

7 1986 shall not apply, and 

8 (ii) the Executive Director shall not 

9 accept any contribution identified with 

10 such account holder if such contribution, 

11 when added to all other contributions made 

12 under this subsection during such calendar 

13 year with respect to such account holder, 

14 exceeds $2,000. 

15 (B) ACCOUNT HOLDERS AGE 18 OR

16 OLDER.—In the case of an account holder who 

17 is age 18 or older at the end of a calendar year, 

18 any contribution identified with such account 

19 holder shall be taken into account under section 

20 219(b)(1) of the Internal Revenue Code of 

21 1986 for such year. 

22 (C) ADJUSTMENT FOR INFLATION.— 

23 (i) IN GENERAL.—For each fifth cal24 endar year beginning after 2009, the 

25 $2,000 amount under subparagraph (A)(ii) 


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1 shall be increased by such dollar amount 

2 multiplied by the cost-of-living adjustment 

3 determined under section 1(f)(3) of the In4 ternal Revenue Code of 1986 determined 

5 by substituting ‘‘calendar year 2008’’ for 

6 ‘‘calendar year 1992’’ in subparagraph (B) 

7 thereof. 

8 (ii) ROUNDING.—If any amount ad9 justed under clause (i) is not a multiple of 

10 $50, such amount shall be rounded to the 

11 next lowest multiple of $50. 

12 (g) ELIGIBLE INDIVIDUAL.—For purposes of this 

13 Act, the term ‘‘eligible individual’’ means any individual 

14 who is— 

15 (1) a United States citizen or a person de16 scribed in paragraph (1) of section 431(b) of the 

17 Personal Responsibility and Work Opportunity Rec18 onciliation Act of 1996, 

19 (2) born after December 31, 2008, and 

20 (3) less than 18 years of age. 

21 (h) RIGHTS OF LEGAL GUARDIAN.—Until the ac22 count holder of a KIDS Account attains age 18, any rights 

23 or duties of the account holder under this Act with respect 

24 to such account shall be exercised or performed by the 

25 legal guardian of such account holder. 


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1 SEC. 4. CERTIFICATIONS RELATED TO GOVERNMENT CON2 TRIBUTIONS. 

3 (a) SUPPLEMENTAL GOVERNMENT CONTRIBU4 TIONS.— 

5 (1) IN GENERAL.—Upon such showing as the 

6 Executive Director may require to establish the basis 

7 for certification, the Executive Director shall, with 

8 respect to each eligible account holder, certify to the 

9 Secretary of the Treasury the supplemental amount 

10 with respect to such account holder. 

11 (2) ELIGIBLE ACCOUNT HOLDER.—For pur12 poses of this subsection, the term ‘‘eligible account 

13 holder’’ means an account holder of a KIDS Ac14 count who, for the last taxable year ending before 

15 such account holder’s certification under section 

16 3(b), has a modified adjusted gross income which is 

17 below the applicable national median adjusted gross 

18 income amount. 

19 (3) SUPPLEMENTAL AMOUNT.— 

20 (A) IN GENERAL.—For purposes of this 

21 Act, the term ‘‘supplemental amount’’ means 

22 $500. 

23 (B) INCOME PHASE-OUT.—With respect to 

24 any account holder who has a modified adjusted 

25 gross income for the last taxable year ending 

26 before such account holder’s certification under 


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1 section 3(b) which is in excess of 50 percent of 

2 the applicable national median adjusted gross 

3 income amount, the $500 amount in subpara4 graph (A) shall be reduced (but not below zero) 

5 by an amount which bears the same ratio to 

6 $500 as such excess bears to 50 percent of the 

7 applicable national median adjusted gross in8 come amount. 

9 (C) ADJUSTMENT FOR INFLATION.— 

10 (i) IN GENERAL.—For each fifth cal11 endar year beginning after 2009, each of 

12 the $500 amounts under subparagraphs 

13 (A) and (B) shall be increased by such dol14 lar amount multiplied by the cost-of-living 

15 adjustment determined under section 

16 1(f)(3) of the Internal Revenue Code of 

17 1986 determined by substituting ‘‘calendar 

18 year 2008’’ for ‘‘calendar year 1992’’ in 

19 subparagraph (B) thereof. 

20 (ii) ROUNDING.—If any amount ad21 justed under clause (i) is not a multiple of 

22 $50, such amount shall be rounded to the 

23 next lowest multiple of $50. 

24 (b) GOVERNMENT MATCHING CONTRIBUTION.— 


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1 (1) IN GENERAL.—Upon such showing as the 

2 Executive Director may require to establish the basis 

3 for certification, the Executive Director shall, with 

4 respect to each private contribution to the account 

5 of an account holder which is made before such ac6 count holder attains age 18, certify to the Secretary 

7 of the Treasury the matching amount with respect 

8 to such contribution. 

9 (2) MATCHING AMOUNT.— 

10 (A) IN GENERAL.—For purposes of this 

11 subsection, the term ‘‘matching amount’’ 

12 means, with respect to the first $500 of private 

13 contributions to an account during any calendar 

14 year, an amount equal to 100 percent of such 

15 contribution. 

16 (B) INCOME PHASE-OUT.—With respect to 

17 any account holder who has a modified adjusted 

18 gross income for the last taxable year ending 

19 before such contribution which is in excess of 

20 100 percent of the applicable national median 

21 adjusted gross income amount, the $500 

22 amount in subparagraph (A) shall be reduced 

23 (but not below zero) by an amount which bears 

24 the same ratio to $500 as— 

25 (i) such excess, bears to 


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1 (ii) 20 percent of the applicable na2 tional median adjusted gross income 

3 amount. 

4 (C) ADJUSTMENT FOR INFLATION.— 

5 (i) IN GENERAL.—For each fifth cal6 endar year beginning after 2009, each of 

7 the $500 amounts under subparagraphs 

8 (A) and (B) shall be increased by such dol9 lar amount multiplied by the cost-of-living 

10 adjustment determined under section 

11 1(f)(3) of the Internal Revenue Code of 

12 1986 determined by substituting ‘‘calendar 

13 year 2008’’ for ‘‘calendar year 1992’’ in 

14 subparagraph (B) thereof. 

15 (ii) ROUNDING.—If any amount ad16 justed under clause (i) is not a multiple of 

17 $50, such amount shall be rounded to the 

18 next lowest multiple of $50. 

19 (3) PRIVATE CONTRIBUTION.—For purposes of 

20 this subsection, the term ‘‘private contribution’’ 

21 means a contribution accepted under section 3(f). 

22 (c) DEFINITIONS AND RULES RELATING TO MODI23 FIED ADJUSTED GROSS INCOME.—For purposes of this 

24 section— 


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1 (1) SPECIAL RULE FOR ACCOUNT HOLDERS

2 WHO CAN BE CLAIMED AS DEPENDENTS.—In the 

3 case of an account holder of a KIDS Account for 

4 whom a deduction is allowable under section 151 of 

5 the Internal Revenue Code of 1986 to another tax6 payer, any reference in this section to the modified 

7 adjusted gross income of the account holder for any 

8 taxable year shall be treated as a reference to the 

9 modified adjusted gross income of such other tax10 payer. 

11 (2) MODIFIED ADJUSTED GROSS INCOME.—The 

12 term ‘‘modified adjusted gross income’’ has the 

13 meaning given such term in section 221(b) of the In14 ternal Revenue Code of 1986. 

15 (3) APPLICABLE NATIONAL MEDIAN ADJUSTED

16 GROSS INCOME.— 

17 (A) IN GENERAL.—The term ‘‘applicable 

18 national median adjusted gross income’’ means, 

19 with respect to any calendar year, the median 

20 amount of adjusted gross income (as defined in 

21 section 62 of the Internal Revenue Code of 

22 1986) for individual taxpayers for taxable years 

23 ending in the prior calendar year as determined 

24 by the Secretary of the Treasury. 


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1 (B) JOINT RETURNS.—The applicable na2 tional median adjusted gross income shall be 

3 calculated and applied separately with respect 

4 to joint returns and all other returns. 

5 SEC. 5. RULES GOVERNING KIDS ACCOUNTS RELATING TO 

6 INVESTMENT, ACCOUNTING, AND REPORT7 ING. 

8 (a) DEFAULT INVESTMENT PROGRAM.—The KIDS 

9 Account Fund Board shall establish a default investment 

10 program under which, in a manner similar to a lifecycle 

11 investment program, sums in each KIDS Account are allo12 cated to investment funds in the KIDS Account Fund 

13 based on the amount of time before the account holder 

14 attains the age of 18. Each account holder of a KIDS 

15 Account shall be enrolled in such program unless such ac16 count holder, in such form and manner as prescribed by 

17 the Executive Director, elects otherwise. 

18 (b) OTHER RULES.—Under regulations which shall 

19 be prescribed by the Executive Director, and subject to 

20 the provisions of this Act, the provisions of— 

21 (1) section 8438 of title 5, United States Code 

22 (relating to investment of the Thrift Savings Fund), 

23 (2) section 8439(b) of such title (relating to en24 gagement of independent qualified public account25 ant), 


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1 (3) section 8439(c) of such title (relating to 

2 periodic statements and summary descriptions of in3 vestment options), and 

4 (4) section 8439(d) of such title (relating to as5 sumption of risk), shall apply with respect to the 

6 KIDS Account Fund and accounts maintained in 

7 such Fund in the same manner and to the same ex8 tent as such provisions relate to the Thrift Savings 

9 Fund and the accounts maintained in the Thrift 

10 Savings Fund. For purposes of this subsection, ref11 erences in such sections 8438 and 8439 to an em12 ployee, Member, former employee, or former Member 

13 shall be deemed references to an account holder of 

14 a KIDS Account in the KIDS Account Fund. 

15 SEC. 6. TAX TREATMENT OF KIDS ACCOUNTS. 

16 (a) IN GENERAL.—Except as otherwise provided in 

17 this Act, for purposes of the Internal Revenue Code of 

18 1986— 

19 (1) each KIDS Account shall be treated in the 

20 same manner as a Roth IRA (within the meaning of 

21 section 408A of such Code), except that section 

22 408A of such Code shall be applied separately to 

23 KIDS Accounts and 


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1 (2) any distribution from such account shall be 

2 treated in the same manner as a distribution from 

3 a Roth IRA. 

4 (b) SEPARATE APPLICATION OF TAXATION RULES.— 

5 For purposes of this Act, section 408A, other than sub6 section (c) thereof (relating to treatment of contributions), 

7 of the Internal Revenue Code of 1986 shall be applied sep8 arately to KIDS accounts. 

9 (c) MINIMUM BALANCE.—No amount shall be dis10 tributed pursuant to subsection (a)(2) to the extent such 

11 distribution would cause the balance of such account to 

12 be less than the amount transferred to such account under 

13 section 2(d)(1)(A) before the account holder— 

(1) attains age 591 14 ⁄2, 

15 (2) dies, or 

16 (3) becomes disabled (within the meaning of 

17 section 72(m)(7). 

18 (d) DISTRIBUTIONS FOR HIGHER EDUCATION.—In 

19 the case of higher education expenses of an account holder 

20 incurred during the period beginning on the date the ac21 count holder attains 18 and ending before the account 

22 holder attains 25, no amount shall be treated as a quali23 fied distribution pursuant to subsection (a)(2) unless such 

24 amount is paid directly to the institution of higher edu25 cation (as defined in section 101 of the Higher Education 


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1 Act of 1065 (20 U.S.C. 1001) through which the higher 

2 education is provided. 

3 (e) AGE LIMITATION.—Except as otherwise provided 

4 by this Act, no distribution shall be made under subsection 

5 (a) with respect to any account holder of a KIDS Account 

6 before such account holder attains age 18. 

7 (f) QUALIFIED ROLLOVERS CONTRIBUTIONS.— 

8 (1) IN GENERAL.—Except as provided in para9 graph (2), no qualified rollover contribution (as de10 fined in section 408A(e) of the Internal Revenue 

11 Code of 1986) shall be allowed with respect to a 

12 KIDS Account. 

13 (2) QUALIFIED ROLLOVERS.— 

14 (A) IN GENERAL.—Under regulations pre15 scribed by the Secretary of the Treasury in con16 sultation with the Executive Director, after the 

17 account holder of a KIDS Account attains the 

18 age of 18 (or, if earlier, on the date of the roll19 over contribution if the balance in such KIDS 

20 Account exceeds $10,000), such account holder 

21 may elect to make a rollover contribution from 

22 such account holder’s account to a privately 

23 managed KIDS Account (as defined in section 

24 408B of the Internal Revenue Code of 1986). 


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1 (B) LIMITATION.—No rollover contribution 

2 may be made under this paragraph to the ex3 tent that such rollover contribution would cause 

4 the balance of such account holder’s account to 

5 be less than the minimum balance specified in 

6 subsection (c). 

7 (g) 100 PERCENT TAX ON GOVERNMENT CONTRIBU8 TIONS.— 

9 (1) KIDS ACCOUNTS.— 

10 (A) IN GENERAL.—In the case of any 

11 amount distributed from a KIDS Account 

12 which is attributable to contributions made 

13 under section 2(d) and which would be includ14 ible in gross income (but for this paragraph)— 

15 (i) such amount shall not be includible 

16 in gross income, and 

17 (ii) the tax imposed under chapter 1 

18 of the Internal Revenue Code of 1986 on 

19 the distributee for the taxable year in 

20 which such amount is distributed shall be 

21 increased by 100 percent of such amount. 

22 (B) ORDERING RULES.—For purposes of 

23 this paragraph, distributions from KIDS Ac24 counts shall be treated as made from amounts 

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1 tion 3(f) and from earnings before made from 

2 amounts attributable to contributions made 

3 under section 2(d). 

4 SEC. 7. PRIVATE MANAGEMENT OF KIDS ACCOUNTS. 

5 (a) IN GENERAL.—Part I of subchapter D of chapter 

6 1 of the Internal Revenue Code of 1986 is amended by 

7 inserting after section 408A the following new section: 

8 ‘‘SEC. 408B. PRIVATELY MANAGED KIDS ACCOUNTS. 

9 ‘‘(a) IN GENERAL.—Except as provided in this sec10 tion, a privately managed KIDS Account shall be treated 

11 in the same manner as a Roth IRA, except that: 

12 ‘‘(1) QUALIFIED SPECIAL PURPOSE DISTRIBU13 TIONS.—Qualified special distributions (as defined in 

14 section 408A(d)(5)) shall include— 

15 ‘‘(A) distributions to the extent that such 

16 distributions do not exceed qualified higher edu17 cation expenses (as defined in section 

18 529(e)(3)) of the beneficiary of a privately man19 aged KIDS Account, reduced by the sum of— 

20 ‘‘(i) the amount excluded from gross 

21 income under section 127, 135, 529, or 

22 530 by reason of such expenses, 

23 ‘‘(ii) the amount excluded from gross 

24 income under section 221 by reason of 

25 such expenses (determined without regard 


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1 to the last sentence of subsection (d)(2) 

2 thereof), 

3 ‘‘(iii) the amount of any scholarship, 

4 allowance, or payment described in section 

5 25A(g)(2), and 

6 ‘‘(iv) the amount of such expenses 

7 which were taken into account in deter8 mining the credit allowed to the taxpayer 

9 or any other person under section 25A, 

10 and 

11 ‘‘(B) amounts which within 60 days of dis12 tribution are transferred to a qualified tuition 

13 program under section 529 for the benefit of 

14 the account holder of a privately managed 

15 KIDS Account or a member of the family 

16 (within the meaning of section 529(e)(2)) of 

17 such account holder. 

18 ‘‘(2) NONEXCLUSION PERIOD DOES NOT

19 APPLY.—Section 408A(d)(2)(B) shall not apply. 

20 ‘‘(3) QUALIFIED ROLLOVER.—In lieu of the def21 inition given the term ‘qualified rollover contribu22 tion’ under section 408A(e), such term shall mean a 

23 rollover contribution to a privately managed KIDS 

24 Account from another such account or from a KIDS 

25 Account under section 7(b)(2)(A) of the America 


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1 Saving for Personal Investment, Retirement, and 

2 Education Act of 2008, but only if such rollover con3 tribution meets the requirements of section 

4 408(d)(3). 

5 ‘‘(4) AGE LIMITATION ON DISTRIBUTIONS.—Ex6 cept as otherwise provided in this section, no dis7 tribution may be made with respect to any account 

8 holder of a privately managed KIDS Account before 

9 such account holder attains age 18. 

10 ‘‘(5) TAXATION OF GOVERNMENT CONTRIBU11 TIONS.—In the case of any distribution which is at12 tributable to contributions made under section 2(d) 

13 of the America Saving for Personal Investment, Re14 tirement, and Education Act of 2008 and which 

15 would be includible in gross income (but for this 

16 paragraph)— 

17 ‘‘(A) such amount shall not be includible in 

18 gross income, and 

19 ‘‘(B) the tax imposed under chapter 1 on 

20 the distributee for the taxable year in which 

21 such amount is distributed shall be increased by 

22 100 percent of such amount. 

23 For purposes of this paragraph, distributions shall 

24 be treated as made from amounts attributable to 

25 other contributions and from earnings before made 


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1 from amounts attributable to contributions made 

2 under section 2(d) of the America Saving for Per3 sonal Investment, Retirement, and Education Act of 

4 2008. 

5 ‘‘(6) ASSIGNMENT, ALIENATION, AND TREAT6 MENT OF DECEASED INDIVIDUALS.—Section 10 of 

7 the America Saving for Personal Investment, Retire8 ment, and Education Act of 2008 shall apply in lieu 

9 of treatment under this subsection as a Roth IRA. 

10 ‘‘(b) PRIVATELY MANAGED KIDS ACCOUNT.—For 

11 purposes of this title, the term ‘privately managed KIDS 

12 Account’ means an individual retirement plan (as defined 

13 in section 7701(a)(37)) which is designated (in such man14 ner as the Secretary may prescribe) as a privately man15 aged KIDS Account and which meets the requirements of 

16 the America Saving for Personal Investment, Retirement, 

17 and Education Act of 2008.’’. 

18 (b) CONFORMING AMENDMENT.—The table of sec19 tions for part I of subchapter D of chapter 1 of the Inter20 nal Revenue Code of 1986 is amended by inserting after 

21 the item related to section 408A the following new item: 

‘‘Sec. 408B. Privately managed KIDS Accounts.’’. 

22 SEC. 8. KIDS ACCOUNT FUND BOARD. 

23 (a) IN GENERAL.—There is established in the execu24 tive branch of the Government a KIDS Account Fund 

25 Board. 


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1 (b) COMPOSITION, DUTIES, AND RESPONSIBIL2 ITIES.—Subject to the provisions of this Act, the provi3 sions of— 

4 (1) section 8472 of title 5, United States Code 

5 (relating to composition of Federal Retirement 

6 Thrift Investment Board), 

7 (2) section 8474 of such title (relating to Exec8 utive Director), 

9 (3) section 8475 of such title (relating to in10 vestment policies), and 

11 (4) section 8476 of such title (relating to ad12 ministrative provisions), shall apply with respect to 

13 the KIDS Account Fund Board in the same manner 

14 and to the same extent as such provisions relate to 

15 the Federal Retirement Thrift Investment Board. 

16 SEC. 9. FIDUCIARY RESPONSIBILITIES. 

17 (a) IN GENERAL.—Under regulations of the Sec18 retary of Labor, the provisions of sections 8477 and 8478 

19 of title 5, United States Code, shall apply in connection 

20 with the KIDS Account Fund and the accounts main21 tained in such Fund in the same manner and to the same 

22 extent as such provisions apply in connection with the 

23 Thrift Savings Fund and the accounts maintained in the 

24 Thrift Savings Fund. 


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1 (b) INVESTIGATIVE AUTHORITY.—Any authority 

2 available to the Secretary of Labor under section 504 of 

3 the Employee Retirement Income Security Act of 1974 

4 (29 U.S.C. 1134) is hereby made available to the Sec5 retary of Labor, and any officer designated by the Sec6 retary of Labor, to determine whether any person has vio7 lated, or is about to violate, any provision applicable under 

8 subsection (a). 

9 (c) EXCULPATORY PROVISIONS; INSURANCE.— 

10 (1) IN GENERAL.—Any provision in an agree11 ment or instrument which purports to relieve a fidu12 ciary from responsibility or liability for any responsi13 bility, obligation, or duty under this Act shall be 

14 void. 

15 (2) INSURANCE.—Amounts in the KIDS Ac16 count Fund available for administrative expenses 

17 shall be available and may be used at the discretion 

18 of the Executive Director to purchase insurance to 

19 cover potential liability of persons who serve in a fi20 duciary capacity with respect to the Fund and ac21 counts maintained therein, without regard to wheth22 er a policy of insurance permits recourse by the in23 surer against the fiduciary in the case of a breach 

24 of a fiduciary obligation. 


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•S 3557 IS

1 SEC. 10. ASSIGNMENT, ALIENATION, AND TREATMENT OF 

2 DECEASED INDIVIDUALS. 

3 (a) ASSIGNMENT AND ALIENATION.—Under regula4 tions which shall be prescribed by the Executive Director, 

5 rules relating to assignment and alienation applicable 

6 under chapter 84 of title 5, United States Code, with re7 spect to amounts held in accounts in the Thrift Savings 

8 Fund shall apply with respect to amounts held in KIDS 

9 Accounts in the KIDS Account Fund. 

10 (b) TREATMENT OF ACCOUNTS OF DECEASED INDI11 VIDUALS.—In the case of a deceased account holder of a 

12 KIDS Account which has an account balance greater than 

13 zero, upon receipt of notification of such individual’s 

14 death, the Executive Director shall close the account and 

15 shall transfer the balance in such account to the KIDS 

16 Account of such account holder’s surviving spouse or, if 

17 there is no such account of a surviving spouse, to the duly 

18 appointed legal representative of the estate of the deceased 

19 account holder, or if there is no such representative, to 

20 the person or persons determined to be entitled thereto 

21 under the laws of the domicile of the deceased account 

22 holder. 

23 SEC. 11. ACCOUNTS DISREGARDED IN DETERMINING ELIGI24 BILITY FOR FEDERAL BENEFITS. 

25 Amounts in any KIDS Account shall not be taken 

26 into account in determining any individual’s or houseVerDate Aug 31 2005 23:56 Sep 26, 2008 Jkt 069200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S3557.IS S3557

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•S 3557 IS

1 hold’s financial eligibility for, or amount of, any benefit 

2 or service, paid for in whole or in part with Federal funds, 

3 including student financial aid. 

4 SEC. 12. REPORTS. 

5 The Executive Director, in consultation with the Sec6 retary of the Treasury, shall annually transmit a written 

7 report to the Congress. Such report shall include— 

8 (1) a detailed description of the status and op9 eration of the KIDS Account Fund and the manage10 ment of the KIDS Accounts, and 

11 (2) a detailed accounting of the administrative 

12 expenses in carrying out this Act, including the ratio 

13 of such administrative expenses to the balance of the 

14 KIDS Account Fund and the methodology adopted 

15 by the Executive Director for allocating such ex16 penses among the KIDS Accounts. 

17 SEC. 13. PROGRAMS FOR PROMOTING FINANCIAL LIT18 ERACY. 

19 The Secretary of the Treasury, in coordination with 

20 the Financial Literacy and Education Commission, shall 

21 develop programs to promote the financial literacy of ac22 count holders of KIDS Accounts and the legal guardians 

23 of such account holders who have the rights with respect 

24 to such accounts under section 3(h). 

Æ 


smartinez on PROD1PC64 with BILLS