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(1) 
Section 
452(g)(2)(A) 
(42 
U.S.C.
652(g)(2)(A)) is amended by striking ‘‘454(6)’’ each
place it appears and inserting ‘‘454(4)(A)(ii)’’.
(2) Section 454(23) (42 U.S.C. 654(23)) is
amended, effective October 1, 1998, by striking ‘‘in-
formation as to any application fees for such services
and’’.
(3) 
Section 
466(a)(3)(B) 
(42 
U.S.C.
666(a)(3)(B)) is amended by striking ‘‘in the case of
overdue support which a State has agreed to collect
under section 454(6)’’ and inserting ‘‘in any other
case’’.
(4) Section 466(e) (42 U.S.C. 666(e)) is
amended by striking ‘‘or (6)’’.
SEC. 402. DISTRIBUTION OF PAYMENTS.
(a) DISTRIBUTIONS THROUGH STATE CHILD SUP-
PORT ENFORCEMENT AGENCY TO FORMER ASSISTANCE
RECIPIENTS.—Section 454(5) (42 U.S.C. 654(5)) is
amended—
(1) in subparagraph (A)—
(A) by inserting ‘‘except as otherwise spe-
cifically provided in section 464 or 466(a)(3),’’
after ‘‘is effective,’’; and
(B) by striking ‘‘except that’’ and all that
follows through the semicolon; and
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(2) in subparagraph (B), by striking ‘‘, except’’
and all that follows through ‘‘medical assistance’’.
(b) DISTRIBUTION TO A FAMILY CURRENTLY RE-
CEIVING AFDC.—Section 457 (42 U.S.C. 657) is amend-
ed—
(1) by striking subsection (a) and redesignating
subsection (b) as subsection (a);
(2) in subsection (a), as redesignated—
(A) in the matter preceding paragraph (2),
to read as follows:
‘‘(a) IN
THE
CASE
OF
A
FAMILY
RECEIVING
AFDC.—Amounts collected under this part during any
month as support of a child who is receiving assistance
under part A (or a parent or caretaker relative of such
a child) shall (except in the case of a State exercising the
option under subsection (b)) be distributed as follows:
‘‘(1) an amount equal to the amount that will
be disregarded pursuant to section 402(a)(8)(A)(vi)
shall be taken from each of—
‘‘(A) amounts received in a month which
represent payments for that month; and
‘‘(B) amounts received in a month which
represent payments for a prior month which
were made by the absent parent in the month
when due;
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and shall be paid to the family without affecting its
eligibility for assistance or decreasing any amount
otherwise payable as assistance to such family dur-
ing such month;’’;
(B) in paragraph (4), by striking ‘‘or (B)’’
and all that follows and inserting ‘‘; then (B)
from any remainder, amounts equal to arrear-
ages of such support obligations assigned, pur-
suant to part A, to any other State or States
shall be paid to such other State or States and
used to pay any such arrearages (with appro-
priate reimbursement of the Federal Govern-
ment to the extent of its participation in the
financing); and then (C) any remainder shall be
paid to the family.’’.
(3) by inserting after subsection (a), as redesig-
nated, the following new subsection:
‘‘(b) ALTERNATIVE DISTRIBUTION IN CASE OF FAM-
ILY RECEIVING AFDC.—In the case of a State electing
the option under this subsection, amounts collected as de-
scribed in subsection (a) shall be distributed as follows:
‘‘(1) an amount equal to the amount that will
be disregarded pursuant to section 402(a)(8)(A)(vi)
shall be taken from each of—
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‘‘(A) amounts received in a month which
represent payments for that month; and
‘‘(B) amounts received in a month which
represent payments for a prior month which
were made by the absent parent in the month
when due;
and shall be paid to the family without affecting its
eligibility for assistance or decreasing any amount
otherwise payable as assistance to such family dur-
ing such month;
‘‘(2) second, from any remainder, amounts
equal to the balance of support owed for the current
month shall be paid to the family;
‘‘(3) third, from any remainder, amounts equal
to arrearages of such support obligations assigned,
pursuant to part A, to the State making the collec-
tion shall be retained and used by such State to pay
any such arrearages (with appropriate reimburse-
ment of the Federal Government to the extent of its
participation in the financing);
‘‘(4) fourth, from any remainder, amounts
equal to arrearages of such support obligations as-
signed, pursuant to part A, to any other State or
States shall be paid to such other State or States
and used to pay any such arrearages (with appro-
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priate reimbursement of the Federal Government to
the extent of its participation in the financing); and
‘‘(5) fifth, any remainder shall be paid to the
family.’’.
(c) DISTRIBUTION TO A FAMILY NOT RECEIVING
AFDC.—
(1) IN GENERAL.—Section 457(c) (42 U.S.C.
657(c)) is amended to read as follows:
‘‘(c) IN CASE OF FAMILY NOT RECEIVING AFDC.—
Amounts collected by a State agency under this part dur-
ing any month as support of a child who is not receiving
assistance under part A (or of a parent or caretaker rel-
ative of such a child) shall (subject to the remaining provi-
sions of this section) be distributed as follows:
‘‘(1) first, amounts equal to the total of such
support owed for such month shall be paid to the
family;
‘‘(2) second, from any remainder, amounts
equal to arrearages of such support obligations for
months during which such child did not receive as-
sistance under part A shall be paid to the family;
‘‘(3) third, from any remainder, amounts equal
to arrearages of such support obligations assigned to
the State making the collection pursuant to part A
shall be retained and used by such State to pay any