H.R. 1041, The Social Security KidSave Accounts Act (2 comments ↓)
- This item is from the 109th Congress (2005-2006) and is no longer current. Comments, voting, and wiki editing have been disabled, and the cost/savings estimate has been frozen.
Under H.R. 1041, the government would create a $2,000 account for each child born in 2006 or later when he or she receives a Social Security number. That initial deposit would come from the Old-Age and Survivors Insurance (OASI) trust fund, an off-budget account. The $2,000 would increase after 2013 in step with Social Security cost-of-living adjustments. The bill would also permit voluntary contributions of up to $500 a year through age 18, including rollovers from Individual Retirement Accounts of parents or grandparents. Many features of KidSave accounts, including investment choices, would resemble those of the Thrift Savings Plan (TSP) for federal employees. If account holders, or their parents or guardians, failed to express a choice, the government would automatically assign them a default mix: 60 percent in a stock index fund (the TSP¿s C fund), 20 percent in a corporate bond fund (the F fund), and 20 percent in Treasury securities (the G fund). The holder could withdraw from the KidSave account when he or she became entitled to Social Security benefits. In most cases that means age 62 or later, although some beneficiaries qualify at a younger age¿before age 18 as the children of retired, disabled, or deceased workers, or between 18 and 62 as disabled workers. The amount withdrawn would not affect the owner¿s Social Security benefit. Under H.R. 1041, the government would recapture $2,000 (or the balance in the account, if less) in five installments when the owner reaches age 30. Those repayments would be credited to the OASI trust fund. The accumulated investment returns would remain in the account.