rules) is amended by adding at the end the following 
new paragraph: 
‘‘(8) 100 PERCENT TAX ON DISTRIBUTIONS RE-
LATED
TO
CERTAIN
GOVERNMENT
CONTRIBU-
TIONS.—
‘‘(A) IN GENERAL.—In the case of any dis-
tribution which is attributable to contributions 
made under section 2(d) of the America Saving 
for Personal Investment, Retirement, and Edu-
cation Act of 2004 and which would be includ-
ible in gross income (but for this paragraph)—
‘‘(i) such amount shall not be includ-
ible in gross income, and 
‘‘(ii) 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. 
‘‘(B) ORDERING RULES.—For purposes of 
this paragraph, distributions shall be treated as 
made from amounts attributable to other con-
tributions and from earnings before made from 
amounts attributable to contributions made 
under section 2(d) of the America Saving for 
Personal Investment, Retirement, and Edu-
cation Act of 2004.’’.
(3) QUALIFIED
TUITION
PROGRAMS.—Section 
529(c)(3) of the Internal Revenue Code of 1986 (re-
lating to distributions) is amended by adding at the 
end the following new subparagraph: 
‘‘(E) 100 PERCENT
TAX
ON
DISTRIBU-
TIONS
RELATED
TO
CERTAIN
GOVERNMENT 
CONTRIBUTIONS.—
‘‘(i) IN GENERAL.—In the case of any 
distribution which is attributable to con-
tributions made under section 2(d) of the 
America Saving for Personal Investment, 
Retirement, and Education Act of 2004 
and which would be includible in gross in-
come (but for this subparagraph)—
‘‘(I) such amount shall not be in-
cludible in gross income, and 
‘‘(II) 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. 
‘‘(ii) ORDERING
RULES.—For pur-
poses of this subparagraph, distributions 
shall be treated as made from amounts at-
tributable to other contributions and from
earnings before made from amounts attrib-
utable to contributions made under section 
2(d) of the America Saving for Personal 
Investment, Retirement, and Education 
Act of 2004.’’. 
SEC. 8. 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 sec-
tion, a privately managed KIDS Account shall be treated 
in the same manner as a Roth IRA, except that: 
‘‘(1) Qualified distributions shall include—
‘‘(A) qualified higher education expenses 
(as defined in section 529(e)(3)) of the bene-
ficiary of a privately managed KIDS Account, 
and 
‘‘(B) amounts which within 60 days of dis-
tribution 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) Section 408A(d)(2)(B) shall not apply. 
‘‘(3) In lieu of the definition given the term 
‘qualified 
rollover 
contribution’ 
under 
section 
408A(e), such term shall mean a rollover contribu-
tion to a privately managed KIDS Account from an-
other such account or from a KIDS Account under 
section 7(b)(2)(A) of the America Saving for Per-
sonal Investment, Retirement, and Education Act of 
2004, but only if such rollover contribution meets 
the requirements of section 408(d)(3). 
‘‘(4) In the case of any distribution which is at-
tributable to contributions made under section 2(d) 
of the America Saving for Personal Investment, Re-
tirement, and Education Act of 2004 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 from 
privately managed KIDS Accounts shall be treated 
as made from amounts attributable to contributions