Congressman Jim Himes, D-CT, has introduced legislation that would establish a portable retirement savings account for every newborn American assigned a Social Security number.

The Portable Retirement and Investment Account Act would establish savings accounts with similar tax, contribution, and withdrawal structures to 401(k)s.

Children born to families that qualify for the child tax credit would have $500 invested in the accounts at birth, and another $50 at age 18 if the beneficiary can prove they completed financial literacy training, according to the bill's text.

Once the accounts reach a value of $15,000, individuals would have the option of rolling the accounts over to a private sector investment or an employer-sponsored savings plan.

Himes is serving his fifth term in the House and is Chairman of the New Democrat Coalition, which counts 68 centrist Democrats committed to “pro-economic growth, pro-innovation, and fiscally responsible policies,” according to the caucus' website. Prior to entering public office he ran a nonprofit and was an executive at Goldman Sachs.

A press release from Himes' office claims the current retirement system “is not working for most Americans,” and says that failure is attributable to the employer-based nature of the system.

“Millions of Americans are not properly prepared for retirement,” said Himes in the statement. “We need a mechanism that makes it easier to save throughout their lives regardless of employment status. PRIA is the solution. It's an account that's created when you're born and stays with you from job to job and in between. Employers can contribute just like in legacy plans when you have a job, but individuals can contribute whenever they have the resources.”

A private sector investment provider would oversee management of the accounts, and assets would be invested in that provider's lifecycle funds. The bill establishes a board headed by a Presidentially nominated director, and three members appointed by Treasury, three by the Labor Department, two by the PBGC, and one by the Consumer Financial Protection Board. At no point could more than five members come from one political party.

The accounts would be subject to the same early withdrawal taxes as with 401(k)s. Loans from the accounts would have to be repaid in five years.

“The idea behind PRIA is to create an account that is personalized and independent of your employment situation and managed the way you want by the people you want,” Himes explained in the release. “For Americans who want to stick with 401ks, IRAs and other savings plans with which they are familiar, that will remain an option. As individuals change jobs, they can easily roll their accounts into their PRIA so at retirement they have just one vehicle to manage, invested the way they have chosen. PRIA adds a new, flexible and portable plan that's going to be very desirable for millions of Americans.”

The bill was developed with input from the financial services industry, retiree advocacies, and retirement plan service providers.

In the release, Himes said the bill is designed to encourage discussion and flesh out criticism to make for an ultimately workable plan.

“We need to enshrine strong, ERISA-like protections for workers, mirror effective auto-enrollment and escalation policies to help Americans to save, set contribution levels correctly, and ensure that PRIA is satisfying an unmet need in the market,” said Himes. “Today's introduction is a call to partnership for all interested parties who know our system isn't working and are committed to fixing it.”

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A portable retirement savings account for every newborn

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