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Question: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Children's Firearm Marketing Safety
Act''.

SEC. 2. PROHIBITION OF MARKETING FIREARMS TO CHILDREN.

(a) Conduct Prohibited.--Not later than one year after the date of
the enactment of this Act, the Federal Trade Commission shall
promulgate rules in accordance with section 553 of title 5, United
States Code, to prohibit any person from marketing firearms to
children. Such rules shall include the following:
(1) A prohibition on the use of cartoon characters to
promote firearms and firearm products.
(2) A prohibition on firearm brand name merchandise
marketed for children (such as hats, t-shirts, and stuffed
animals).
(3) A prohibition on the use of firearm marketing campaigns
with the specific intent to appeal to children.
(4) A prohibition on the manufacturing of a gun with colors
or designs that are specifically designed with the purpose to
appeal to children.
(5) A prohibition on the manufacturing of a gun intended
for use by children that does not clearly and conspicuously
note the risk posed by the firearm by labeling somewhere
visible on the firearm any of the following:
(A) ''Real gun, not a toy.''.
(B) ''Actual firearm the use of which may result in
death or serious bodily injury.''.
(C) ''Dangerous weapon''.
(D) Other similar language determined by the
Federal Trade Commission.
(b) Enforcement.--
(1) Unfair or deceptive acts or practices.--A violation of
a rule promulgated under subsection (a) shall be treated as a
violation of a regulation under section 18(a)(1)(B) of the
Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) regarding
unfair or deceptive acts or practices.
(2) Powers of commission.--The Federal Trade Commission
shall enforce this Act in the same manner, by the same means,
and with the same jurisdiction as though all applicable terms
and provisions of the Federal Trade Commission Act were
incorporated into and made a part of this Act. Any person who
violates the regulations promulgated under subsection (a) shall
be subject to the penalties and entitled to the privileges and
immunities provided in the Federal Trade Commission Act.
(c) Actions by States.--
(1) In general.--In any case in which the attorney general
of a State has reason to believe that an interest of the
residents of such State has been or is threatened or adversely
affected by an act or practice in violation of a rule
promulgated under subsection (a), the State, as parens patriae,
may bring a civil action on behalf of the residents of the
State in an appropriate State court to--
(A) enjoin such act or practice;
(B) enforce compliance with such rule;
(C) obtain damages, restitution, or other
compensation on behalf of residents of the State; or
(D) obtain such other legal and equitable relief as
the court may consider to be appropriate.
(2) Notice.--Before filing an action under this subsection,
the attorney general, official, or agency of the State involved
shall provide to the Federal Trade Commission a written notice
of such action and a copy of the complaint for such action. If
the attorney general, official, or agency determines that it is
not feasible to provide the notice described in this paragraph
before the filing of the action, the attorney general,
official, or agency shall provide written notice of the action
and a copy of the complaint to the Federal Trade Commission
immediately upon the filing of the action.
(3) Authority of federal trade commission.--
(A) In general.--On receiving notice under
paragraph (2) of an action under this subsection, the
Federal Trade Commission shall have the right--
(i) to intervene in the action;
(ii) upon so intervening, to be heard on
all matters arising therein; and
(iii) to file petitions for appeal.
(B) Limitation on state action while federal action
is pending.--If the Federal Trade Commission or the
Attorney General of the United States has instituted a
civil action for violation of a rule promulgated under
subsection (a) (referred to in this subparagraph as the
''Federal action''), no State attorney general,
official, or agency may bring an action under this
subsection during the pendency of the Federal action
against any defendant named in the complaint in the
Federal action for any violation of such rule alleged
in such complaint.
(4) Rule of construction.--For purposes of bringing a civil
action under this subsection, nothing in this Act shall be
construed to prevent an attorney general, official, or agency
of a State from exercising the powers conferred on the attorney
general, official, or agency by the laws of such State to
conduct investigations, administer oaths and affirmations, or
compel the attendance of witnesses or the production of
documentary and other evidence.
(d) Definitions.--In this section:
(1) Child.--The term ''child'' means an individual that is
less than 18 years of age.
(2) Firearm.--The term ''firearm'' has the meaning given
that term in section 921 of title 18, United States Code.

Answer: Children's Firearm Marketing Safety Act - Directs the Federal Trade Commission (FTC) to promulgate rules to prohibit the marketing of firearms to children, including prohibitions against: the use of cartoon characters to promote firearms and firearm products, firearm brand name merchandise marketed for children, the use of firearm marketing campaigns with the specific intent to appeal to children, the manufacturing of a gun with colors or designs that are specifically designed to appeal to children, and the manufacturing of a gun intended for use by children that does not clearly and conspicuously note, by specified warnings on the firearm, the risk posed by the firearm by labeling somewhere visible on the firearm. Treats violations of such rules as violations of Federal Trade Commission Act regulations regarding unfair or deceptive acts or practices. Provides for enforcement of this Act by the FTC and through civil actions by state attorneys general.

Question: SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

(a) Short Title.--This Act may be cited as the ''Individual
Retirement Account Equity and Enhancement Act of 1994''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.

SEC. 2. HOMEMAKERS ELIGIBLE FOR FULL IRA DEDUCTION.

(a) Spousal IRA Computed on Basis of Compensation of Both
Spouses.--Subsection (c) of section 219 (relating to special rules for
certain married individuals) is amended to read as follows:
''(c) Special Rules for Certain Married Individuals.--
''(1) In general.--In the case of an individual to whom
this paragraph applies for the taxable year, the limitation of
paragraph (1) of subsection (b) shall be equal to the lesser
of--
''(A) $2,000, or
''(B) the sum of--
''(i) the compensation includible in such
individual's gross income for the taxable year,
plus
''(ii) the compensation includible in the
gross income of such individual's spouse for
the taxable year reduced by the amount
allowable as a deduction under subsection (a)
to such spouse for such taxable year.
''(2) Individuals to whom paragraph (1) applies.--Paragraph
(1) shall apply to any individual if--
''(A) such individual files a joint return for the
taxable year, and
''(B) the amount of compensation (if any)
includible in such individual's gross income for the
taxable year is less than the compensation includible
in the gross income of such individual's spouse for the
taxable year.''
(b) Conforming Amendments.--
(1) Paragraph (2) of section 219(f) (relating to other
definitions and special rules) is amended by striking
''subsections (b) and (c)'' and inserting ''subsection (b)''.
(2) Section 408(d)(5) is amended by striking ''$2,250'' and
inserting ''$2,000''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1994.

SEC. 3. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED WITHOUT PENALTY TO
PURCHASE FIRST HOMES, TO PAY HIGHER EDUCATION OR
QUALIFIED LONG-TERM CARE EXPENSES, OR BY THE LONG-TERM
UNEMPLOYED.

(a) In General.--Paragraph (2) of section 72(t) (relating to
exceptions to 10-percent additional tax on early distributions from
qualified retirement plans) is amended by adding at the end the
following new subparagraph:
''(D) Distributions from certain plans for first home
purchases or educational or long-term care expenses.--
Distributions to an individual from an individual retirement
plan, or from amounts attributable to employer contributions
made pursuant to elective deferrals described in subparagraph
(A) or (C) of section 402(g)(3) or section 501(c)(18)(D)(iii)--
''(i) which are qualified first-time homebuyer
distributions (as defined in paragraph (6)), or
''(ii) to the extent such distributions do not
exceed the sum of the qualified higher education
expenses (as defined in paragraph (7)) and the
qualified long-term care expenses (as defined in
paragraph (8)) of the taxpayer for the taxable year.''
(b) Definitions.--Section 72(t) is amended by adding at the end the
following new paragraphs:
''(6) Qualified first-time homebuyer distributions.--For
purposes of paragraph (2)(D)(i)--
''(A) In general.--The term 'qualified first-time
homebuyer distribution' means any payment or
distribution received by an individual to the extent
such payment or distribution is used by the individual
before the close of the 60th day after the day on which
such payment or distribution is received to pay
qualified acquisition costs with respect to a principal
residence of a first-time homebuyer who is such
individual, the spouse of such individual, or the child
or grandchild of such individual or the individual's
spouse.
''(B) Qualified acquisition costs.--For purposes of
this paragraph, the term 'qualified acquisition costs'
means the costs of acquiring, constructing, or
reconstructing a residence. Such term includes any
usual or reasonable settlement, financing, or other
closing costs.
''(C) First-time homebuyer; other definitions.--For
purposes of this paragraph--
''(i) First-time homebuyer.--The term
'first-time homebuyer' means any individual
if--
''(I) such individual (and if
married, such individual's spouse) had
no present ownership interest in a
principal residence during the 3-year
period ending on the date of
acquisition of the principal residence
to which this paragraph applies, and
''(II) subsection (a)(6), (h), or
(k) of section 1034 did not suspend the
running of any period of time specified
in section 1034 with respect to such
individual on the day before the date
the distribution is applied pursuant to
subparagraph (A)(ii).
''(ii) Principal residence.--The term
'principal residence' has the same meaning as
when used in section 1034.
''(iii) Date of acquisition.--The term
'date of acquisition' means the date--
''(I) on which a binding contract
to acquire the principal residence to
which subparagraph (A) applies is
entered into, or
''(II) on which construction or
reconstruction of such a principal
residence is commenced.
''(D) Special rule where delay in acquisition.--If
any distribution from any individual retirement plan
fails to meet the requirements of subparagraph (A)
solely by reason of a delay or cancellation of the
purchase or construction of the residence, the amount
of the distribution may be contributed to an individual
retirement plan as provided in section 408(d)(3)(A)(i)
(determined by substituting '120 days' for '60 days' in
such section), except that--
''(i) section 408(d)(3)(B) shall not be
applied to such contribution, and
''(ii) such amount shall not be taken into
account in determining whether section
408(d)(3)(A)(i) applies to any other amount.
''(7) Qualified higher education expenses.--For purposes of
paragraph (2)(D)(ii)--
''(A) In general.--The term 'qualified higher
education expenses' means tuition, fees, books,
supplies, and equipment required for the enrollment or
attendance of--
''(i) the taxpayer,
''(ii) the taxpayer's spouse, or
''(iii) the child (as defined in section
151(c)(3)) or grandchild of the taxpayer or the
taxpayer's spouse,
at an eligible educational institution (as defined in
section 135(c)(3)).
''(B) Coordination with savings bond provisions.--
The amount of qualified higher education expenses for
any taxable year shall be reduced by any amount
excludable from gross income under section 135.
''(8) Qualified long-term care expenses.--For purposes of
paragraph (2)(D)(ii)--
''(A) In general.--The term 'qualified long-term
care expenses' means amounts paid or incurred for
qualified long-term care services, including amounts
for insurance covering such services.
''(B) Qualified long-term care services.--For
purposes of subparagraph (A)--
''(i) In general.--The term 'qualified
long-term care services' means necessary
diagnostic, preventive, therapeutic,
rehabilitative, and maintenance (including
personal care) services--
''(I) which are required by an
individual during any period during
which such individual is a functionally
impaired individual,
''(II) which have as their primary
purpose the provision of needed
assistance with 1 or more activities of
daily living which a functionally
impaired individual is certified as
being unable to perform under clause
(ii)(I), and
''(III) which are provided pursuant
to a continuing plan of care prescribed
by a licensed health care practitioner
(other than a relative of such
individual).
''(ii) Functionally impaired individual.--
''(I) In general.--The term
'functionally impaired individual'
means any individual who is certified
by a licensed health care practitioner
(other than a relative of such
individual) as being unable to perform,
without substantial assistance from
another individual (including
assistance involving verbal reminding,
physical cueing, or substantial
supervision), at least 3 activities of
daily living described in clause (iii).
''(II) Special rule for home health
care services.--In the case of services
which are provided during any period
during which an individual is residing
within the individual's home (whether
or not the services are provided within
the home), subclause (I) shall be
applied by substituting '2' for '3'.
For purposes of this subclause, a
nursing home or similar facility shall
not be treated as a home.
''(iii) Activities of daily living.--Each
of the following is an activity of daily
living:
''(I) Eating.
''(II) Transferring.
''(III) Toileting.
''(IV) Dressing.
''(V) Bathing.
''(C) Licensed health care practitioner.--For
purposes of subparagraph (B)--
''(i) In general.--The term 'licensed
health care practitioner' means--
''(I) a physician or registered
professional nurse,
''(II) a qualified community care
case manager (as defined in clause
(ii)), or
''(III) any other individual who
meets such requirements as may be
prescribed by the Secretary after
consultation with the Secretary of
Health and Human Services.
''(ii) Qualified community care case
manager.--The term 'qualified community care
case manager' means an individual or entity
which--
''(I) has experience or has been
trained in providing case management
services and in preparing individual
care plans;
''(II) has experience in assessing
individuals to determine their
functional and cognitive impairment;
''(III) is not a relative of the
individual receiving case management
services; and
''(IV) meets such requirements as
may be prescribed by the Secretary
after consultation with the Secretary
of Health and Human Services.
''(D) Relative.--For purposes of this paragraph,
the term 'relative' means an individual bearing a
relationship to another individual which is described
in paragraphs (1) through (8) of section 152(a).''
(c) Penalty-Free Distributions for Certain Unemployed
Individuals.--Paragraph (2) of section 72(t) is amended by adding at
the end the following new subparagraph:
''(E) Distributions to unemployed individuals.--A
distribution from an individual retirement plan to an
individual after separation from employment, if--
''(i) such individual has received
unemployment compensation for 12 consecutive
weeks under any Federal or State unemployment
compensation law by reason of such separation,
and
''(ii) such distributions are made during
any taxable year during which such unemployment
compensation is paid or the succeeding taxable
year.''
(d) Conforming Amendments.--
(1) Section 401(k)(2)(B)(i) is amended by striking ''or''
at the end of subclause (III), by striking ''and'' at the end
of subclause (IV) and inserting ''or'', and by inserting after
subclause (IV) the following new subclause:
''(V) the date on which qualified
first-time homebuyer distributions (as
defined in section 72(t)(6)), or
distributions for qualified higher
education expenses (as defined in
section 72(t)(7)), or for qualified
long-term care expenses (as defined in
section 72(t)(18)), are made, and''.
(2) Section 403(b)(11) is amended by striking ''or'' at the
end of subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting '', or'', and by inserting after
subparagraph (B) the following new subparagraph:
''(C) for qualified first-time homebuyer
distributions (as defined in section 72(t)(6)) or for
the payment of qualified higher education expenses (as
defined in section 72(t)(7)) or qualified long-term
care expenses (as defined in section 72(t)(8)).''
(e) Effective Date.--The amendments made by this section shall
apply to payments and distributions after the date of the enactment of
this Act.

Answer: Individual Retirement Account Equity and Enhancement Act of 1994 - Amends the Internal Revenue Code to allow certain spouses a deduction for contributions to an individual retirement account.
Allows distribution from certain retirement plans without penalty to purchase first homes, pay higher education expenses and qualified long-term care expenses, and assist certain unemployed individuals.

Question: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Children's Financial Security Act of
1996''.

SEC. 2. FEDERAL CONTRIBUTIONS TO CHILD RETIREMENT ACCOUNTS.

(a) In General.--As soon as practicable after the close of each
calendar year, the Secretary of the Treasury or his delegate shall
transfer for such calendar year, from amounts in the general fund of
the Treasury not otherwise appropriated, $1,000 to the Child Retirement
Account of each individual who is an eligible child for such calendar
year.
(b) Eligible Child.--For purposes of this section, the term
''eligible child'' means, with respect to any calendar year, any
individual who, as of the close of such calendar year--
(1) is a citizen or resident alien of the United States,
and
(2) has not attained age 6.
(c) Reduction in Contribution for Children of High Income
Parents.--
(1) In general.--If, with respect to an eligible child, the
adjusted gross income of the applicable taxpayer for the
taxable year ending with or within a calendar year exceeds the
threshold amount, the $1,000 amount in subsection (a) with
respect to such child for such calendar year shall be reduced
(but not below zero) by the amount which bears the same ratio
to $1,000 as such excess bears to the phaseout range.
(2) Applicable taxpayer may make-up reduced contribution.--
If there is a reduction under this subsection in the amount
transferred under subsection (a) to the Child Retirement
Account of an eligible child for any calendar year, the
applicable taxpayer with respect to such child may (at such
time and in such manner as the Secretary may prescribe)
transfer an amount equal to the amount of such reduction to the
Child Retirement Account of such child.
(d) Children Below Age 19 as of Enactment.--
(1) In general.--In the case of an individual who, as of
the close of 1996--
(A) is a citizen or resident alien of the United
States, and
(B) has not attained age 19,
the applicable taxpayer with respect to such individual may (at
such time and in such manner as the Secretary may prescribe)
contribute to the Child Retirement Account of such child an
amount equal to the lesser of $6,000 or the product of $1,000
and the age of such child as of the close of 1996. Any
contribution under the preceding sentence may be made only
during 1997 and 1998.
(2) Reduction of contribution for children of high income
parents.--If, with respect to an individual described in
paragraph (1), the adjusted gross income of the applicable
taxpayer for the taxable year ending with or within 1997
exceeds the threshold amount, the amount otherwise determined
under paragraph (1) with respect to such individual shall be
reduced (but not below zero) by the amount which bears the same
ratio to the amount so otherwise determined as such excess
bears to the phaseout range.
(e) Definitions.--For purposes of subsections (c) and (d)--
(1) Phaseout range.--The term ''phaseout range'' means--
(A) $50,000 in the case of a joint return,
(B) $33,000 in the case of an individual who is not
married, and
(C) $25,000 in the case of a married individual
filing a separate return.
(2) Threshold amount.--The term ''threshold amount''
means--
(A) $100,000 in the case of a joint return for such
taxable year,
(B) $67,000 in the case of an individual who is not
married, and
(C) $50,000 in the case of a married individual
filing a separate return.
(3) Applicable taxpayer.--The term ''applicable taxpayer''
means, with respect to an eligible child--
(A) the taxpayer to whom a deduction is allowable
under section 151(c) of the Internal Revenue Code of
1986 for such child, or
(B) if no taxpayer is described in subparagraph
(A), such child.

SEC. 3. CHILD RETIREMENT ACCOUNTS.

(a) In General.--Subchapter F of chapter 1 of the Internal Revenue
Code of 1986 (relating to exempt organizations) is amended by adding at
the end the following new part:

''PART VIII--CHILD RETIREMENT ACCOUNTS

''Sec. 529. Child Retirement Accounts.

''SEC. 529. CHILD RETIREMENT ACCOUNTS.

''(a) Child Retirement Account.--For purposes of this part, the
term 'Child Retirement Account' means any trust created or organized in
the United States for the exclusive benefit of the account beneficiary
but only if the written governing instrument creating the trust meets
the following requirements:
''(1) No contribution will be accepted unless it is in
cash.
''(2) The only contributions which will be accepted are--
''(A) contributions under section 2 of the
Children's Financial Security Act of 1996,
''(B) contributions of not more than $100 for each
calendar year after the calendar year in which the
account beneficiary attains age 5 and before the
calendar year in which such beneficiary attains age 19,
and
''(C) trustee-to-trustee transfers to such trust
from another Child Retirement Account of the account
beneficiary.
''(3) The assets of the trust are invested only in an
approved mutual fund.
''(4) The requirements of paragraphs (2) through (6) of
section 408(a) are met.
''(b) Tax Treatment of Accounts.--
''(1) In general.--A Child Retirement Account is exempt
from taxation under this subtitle unless such account has
ceased to be a Child Retirement Account. Notwithstanding the
preceding sentence, any such Account is subject to the taxes
imposed by section 511 (relating to imposition of tax on
unrelated business income of charitable, etc., organizations).
''(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to Child
Retirement Accounts; except that such paragraph (4) shall not
apply to loans which are qualified special purpose
distributions.
''(c) Tax Treatment of Distributions.--
''(1) In general.--
''(A) Withholding.--The trustee of a Child
Retirement Account shall deduct and withhold from any
distribution from such Account a tax equal to 20
percent of such distribution.
''(B) No other tax.--Distributions from a Child
Retirement Account shall not be includible in gross
income.
''(C) Credit for amounts withheld only on qualified
special purpose loan distributions which are repaid.--
In the case of an amount withheld under subparagraph
(A) on a qualified special purpose distribution from a
Child Retirement Account in the form of a loan, there
shall be allowed as a credit against the tax imposed by
this subtitle for any taxable year an amount which
bears the same ratio to the amount withheld as the
principal amount of such loan which is repaid during
such taxable year bears to the total principal amount
of the loan. The credit allowed under the preceding
sentence shall be treated as a credit allowed under
subpart C of part IV of subchapter A of this chapter
and shall be allowed to the account beneficiary.
''(2) Penalty on distributions not used for qualified
purposes.--If any distribution is made from a Child Retirement
Account which is not a qualified distribution, the account
beneficiary's tax imposed by this chapter for the taxable year
in which such distribution is made shall be increased by an
amount equal to 50 percent of such distribution.
''(3) Qualified distribution.--For purposes of paragraph
(2), the term 'qualified distribution' means any distribution--
''(A) made on or after the date on which the
account beneficiary attains age 59/2\,
''(B) made to a beneficiary (or to the estate of
the individual) on or after the death of the account
beneficiary,
''(C) attributable to the account beneficiary being
disabled (within the meaning of section 72(m)(7)), or
''(D) which is a qualified special purpose
distribution.
''(4) Qualified special purpose distribution.--For purposes
of paragraph (3), the term 'qualified special purpose
distribution' means any distribution (including in the form of
a loan) from a Child Retirement Account to the account
beneficiary--
''(A) if such distribution is a qualified first-
time homebuyer distribution, or
''(B) to the extent the aggregate distributions
from the Account does not exceed the qualified higher
education expenses of the account beneficiary for the
taxable year in which received.
Such term shall not include any distribution from such an
Account during a calendar year to the extent such distribution,
when added to the amount of all prior distributions from such
Account during the calendar year and all prior calendar years,
exceeds an amount equal to 50 percent of the balance in such
Account as of the close of the prior calendar year.
''(5) Qualified first-time homebuyer distributions.--
''(A) In general.--For purposes of this subsection,
the term 'qualified first-time homebuyer distribution'
means any payment or distribution received by the
account beneficiary to the extent such payment or
distribution is used by such beneficiary within a
reasonable period to pay qualified acquisition costs
with respect to a principal residence for such
beneficiary as a first-time homebuyer.
''(B) Qualified acquisition costs.--For purposes of
this paragraph, the term 'qualified acquisition costs'
means the costs of acquiring, constructing, or
reconstructing a residence. Such term includes any
usual or reasonable settlement, financing, or other
closing costs.
''(C) First-time homebuyer; other definitions.--For
purposes of this paragraph--
''(i) First-time homebuyer.--The term
'first-time homebuyer' means any individual if
such individual (and, if married, such
individual's spouse) had no present ownership
interest in a principal residence during the 3-
year period ending on the date of acquisition
of the principal residence to which this
paragraph applies.
''(ii) Principal residence.--The term
'principal residence' has the same meaning as
when used in section 1034.
''(iii) Date of acquisition.--The term
'date of acquisition' means the date--
''(I) on which a binding contract
to acquire the principal residence to
which subparagraph (A) applies is
entered into, or
''(II) on which a binding contract
to construct or reconstruct such a
principal residence is entered into.
''(6) Qualified higher education expenses.--For purposes of
this subsection--
''(A) In general.--The term 'qualified higher
education expenses' means--
''(i) expenses for tuition, fees, books,
supplies, and equipment required for the
enrollment or attendance of the account
beneficiary at an eligible educational
institution (as defined in section 135(c)(3)),
and
''(ii) reasonable living expenses while
away from home while attending such
institution.
''(B) Coordination with savings bond provisions.--
The amount of qualified higher education expenses for
any taxable year shall be reduced by any amount
excludable from gross income under section 135.
''(7) Exceptions from withholding tax and penalty for
trustee-to-trustee transfers.--Paragraphs (1)(A) and (2) shall
not apply to any trustee-to-trustee transfers from a Child
Retirement Account to another Child Retirement Account of the
same account beneficiary.
''(d) Approved Mutual Fund.--For purposes of this section--
''(1) In general.--The term 'approved mutual fund' means
any fund of any regulated investment company (as defined in
section 851(a)) if--
''(A) an election under section 851(b)(1) is in
effect with respect to such company, and
''(B) such fund is designated by the Federal
Retirement Thrift Investment Board for purposes of this
section.
''(2) Standards for designation.--A fund may be designated
under paragraph (1) only if the Federal Retirement Thrift
Investment Board determines that it is reasonable to expect
that not less than 75 percent of the total value of the assets
of such fund are represented by equity securities.
''(e) Certain Rules To Apply.--Rules similar to the following rules
shall apply for purposes of this section:
''(1) Section 219(f)(3) (relating to time when
contributions deemed made).
''(2) Section 408(g) (relating to community property laws).
''(3) Section 408(h) (relating to custodial accounts).
''(f) Reports.--The Secretary may require the trustee of a Child
Retirement Account to make such reports regarding such Account to the
Secretary and to the account beneficiary with respect to contributions,
distributions, and such other matters as the Secretary determines
appropriate. The reports required by this subsection shall be filed at
such time and in such manner and furnished to such individuals at such
time and in such manner as may be required by the Secretary.''
(b) Conforming Amendments.--
(1) Tax on prohibited transactions.--
(A) Section 4975 of such Code (relating to tax on
prohibited transactions) is amended by adding at the
end of subsection (c) the following new paragraph:
''(5) Special rule for child retirement accounts.--An
individual for whose benefit a Child Retirement Account (within
the meaning of section 529(a)) is established shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a Child Retirement
Account by reason of the application of section 529(b)(2) to
such Account.''
(B) Paragraph (1) of section 4975(e) of such Code
is amended by striking ''or'' at the end of
subparagraph (D), by redesignating subparagraph (E) as
subparagraph (F), and by inserting after subparagraph
(D) the following new subparagraph:
''(E) a Child Retirement Account described in
section 529(a), or''.
(2) Failure to provide reports on child retirement
accounts.--Paragraph (2) of section 6693(a) of such Code is
amended by striking ''and'' at the end of subparagraph (A), by
striking the period at the end of subparagraph (B) and
inserting '', and'', and by adding at the end the following new
subparagraph:
''(C) section 529(f) (relating to Child Retirement
Accounts).''
(3) Clerical amendment.--The table of parts for subchapter
F of chapter 1 of such Code is amended by adding at the end the
following new item:

''Part VIII. Child Retirement Accounts.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1996.

Answer:
Children's Financial Security Act of 1996 -
Directs the Secretary of the Treasury or a delegate to transfer each calendar year, from the general fund of the Treasury and for each calendar year, $1,000 to the Child Retirement Account (CRA) of each eligible child. Makes eligible any individual who as of the close of such calendar year: (1) is a citizen or resident alien of the United States; and (2) has not attained age six. Allows the applicable taxpayer, in the case of children below age 19 as of the close of 1996, to contribute, during 1997 and 1998 only, to the child's CRA an amount equal to the lesser of $6,000 or the product of $1,000 and the child's age as of the close of 1996. Reduces the amount of any Federal or parental contribution for children of high-income parents, according to a phaseout range formula.
Amends the Internal Revenue Code to exempt CRAs from the income tax, but not from the tax on unrelated business income of charitable organizations. Requires the withholding of a 20 percent tax on any distribution from a CRA (although such distributions shall not be included in gross income). Provides for qualified special purpose distributions for first-time homebuying and for higher education expenses (along with a specified credit against the 20 percent distribution tax).