[10042]
June 22, 1998
TO: PENSION COMMITTEE No. 37-98
AD HOC EDUCATION IRA COMMITTEE
RE: SENATOR KERREY INTRODUCES KIDSAVE ACCOUNT LEGISLATION
______________________________________________________________________________
Senator Kerrey (D-NE), together with Senators Moynihan (D-NY), Breaux (D-LA) and
Lieberman (D-CT), recently introduced the Social Security KidSave Accounts Act, S. 2184. This bill
would require the Social Security Administration to establish a KidSave Account for every child born
after January 1, 1997. The bill would require the Secretary of the Treasury to transfer from the Federal
Old-Age and Survivors Insurance Trust Fund and credit to each KidSave Account $1,000 for each child
born on or after January 1, 1999, and $500 on the 1st, 2nd, 3rd, 4th and 5th birthdays occurring on or
after January 1, 2002 of each child born on or after January 1, 1997. Beginning in 2009, these
contribution amounts would be increased by a cost-of-living adjustment, as described in the bill. The
legal guardian of the child would designate the investment vehicle for the KidSave Account to which
contributions would be made. The bill would require the Social Security Commissioner to issue
regulations regarding the manner in which a legal guardian may change an investment vehicle in which a
KidSave Account is invested and in which an individual who has attained age 18 may designate a
KidSave Account to which all or a portion of an existing KidSave Account may be transferred.
A KidSave Account would be deemed an individual retirement plan, as defined under Code
section 7701(A)(37), other than a Roth IRA, which is designated as a KidSave Account. The
contribution limits would be limited to those noted above. Rollovers to KidSave Accounts would be
limited to amounts from another KidSave Account. Distributions would be permitted at the earlier of
eligibility for Social Security benefits or death of the individual. The bill would establish a KidSave
Investment Fund in the Treasury, similar to the Thrift Savings Fund. A KidSave Investment Fund Board
would be established to manage the KidSave Investment Fund, similar to the management of the Thrift
Savings Fund.
A copy of S. 2184 is attached.
Kathryn A. Ricard
Assistant Counsel
Attachment