I

106TH CONGRESS

2D SESSION H. R. 4839

To amend title II of the Social Security Act and the Internal Revenue

Code of 1986 to provide prospectively for personalized retirement security

through personal retirement accounts to allow for more control by individuals over their Social Security retirement income.

IN THE HOUSE OF REPRESENTATIVES

JULY 12, 2000

Mr. SANFORD (for himself, Mr. BARR of Georgia, Mr. BARTON of Texas, Mr.

BURTON of Indiana, Mr. BRYANT, Mr. CAMPBELL, Mrs. CHENOWETHHAGE, Mr. COBURN, Mr. COX, Mr. DEMINT, Mr. DOOLITTLE, Mr. DUNCAN, Mr. GANSKE, Mr. GRAHAM, Mr. HERGER, Mr. HOEKSTRA, Mr.

HUNTER, Mr. HYDE, Mr. JONES of North Carolina, Mr. KINGSTON, Mr.

LARGENT, Mr. MCINNIS, Mr. MCINTOSH, Mr. METCALF, Mrs. MYRICK,

Mr. PAUL, Mr. PICKERING, Mr. PITTS, Mr. RILEY, Mr. SALMON, Mr.

SESSIONS, Mr. SCARBOROUGH, Mr. SCHAFFER, Mr. SHADEGG, Mr.

SHAYS, Mr. SMITH of New Jersey, Mr. SPENCE, Mr. SUNUNU, Mr.

TERRY, and Mr. TOOMEY) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend title II of the Social Security Act and the Internal

Revenue Code of 1986 to provide prospectively for personalized retirement security through personal retirement

accounts to allow for more control by individuals over

their Social Security retirement income.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Personal Lockbox Act

3 of 2000’’.

4 SEC. 2. PERSONAL RETIREMENT ACCOUNT PROGRAM.

5 (a) IN GENERAL.—Title II of the Social Security Act

6 (42 U.S.C. 401 et seq.) is amended—

7 (1) by inserting after the heading for title II

8 the following:

9 ‘‘PART A—INSURANCE BENEFITS’’;

10 and

11 (2) by adding after section 233 (42 U.S.C. 433)

12 the following new part:

13 ‘‘PART B—PERSONAL RETIREMENT ACCOUNT PROGRAM

14 ‘‘Subpart 1—General Provisions

15 ‘‘DEFINITIONS

16 ‘‘SEC. 251. For purposes of this part—

17 ‘‘(1) COVERED EMPLOYER.—The term ‘covered

18 employer’ means, for any calendar year, any person

19 on whom an excise tax is imposed under section

20 3111 of the Internal Revenue Code of 1986 with re21 spect to having an individual in his employ who was

22 born on or after January 1, 1945, and to whom

23 wages are paid by such person during such calendar

24 year.
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1 ‘‘(2) COVERED INDIVIDUAL.—The term ‘cov2 ered individual’ means, for any calendar year, any

3 individual—

4 ‘‘(A) who was born on or after January 1,

5 1945, and

6 ‘‘(B)(i) with respect to whose employment

7 by a covered employer during such calendar

8 year there is imposed an excise tax under sec9 tion 3111 of the Internal Revenue Code of

10 1986, or

11 ‘‘(ii) on whose self-employment income, for

12 the taxable year beginning with or during such

13 calendar year, there is imposed a tax under sec14 tion 1401(a) of the Internal Revenue Code of

15 1986.

16 ‘‘(3) EMPLOYMENT.—The term ‘employment’

17 has the meaning provided in section 210.

18 ‘‘(4) PERSONAL RETIREMENT ACCOUNT.—The

19 term ‘personal retirement account’ means a trust

20 meeting the requirements of section 531 of the In21 ternal Revenue Code of 1986.

22 ‘‘(5) PERSONAL RETIREMENT ACCOUNT HOLD23 ER.—The term ‘account holder’ means, with respect

24 to any personal retirement account, the individual

25 for whose benefit such account is maintained.
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1 ‘‘(6) SELF-EMPLOYMENT INCOME.—The term

2 ‘self-employment income’ has the meaning provided

3 in section 211(b).

4 ‘‘(7) WAGES.—The term ‘wages’ has the mean5 ing provided in section 209.

6 ‘‘DESIGNATION OF PERSONAL RETIREMENT ACCOUNTS

7 ‘‘SEC. 252. (a) DESIGNATION OF PERSONAL RETIRE8 MENT ACCOUNTS.—In the case of any individual who is

9 a covered individual for a calendar year after 2000 for

10 whom a personal retirement account is not otherwise des11 ignated under this part, a personal retirement account

12 shall be designated for such individual in accordance with

13 this section to the extent necessary to receive deposits

14 made with respect to the individual under section 253.

15 Under regulations prescribed pursuant to this section, any

16 such individual may make such designation, in writing

17 filed with the Commissioner of Social Security, the Securi18 ties and Exchange Commission, and the Secretary of the

19 Treasury, in such form and manner as may be prescribed

20 in such regulations. The individual may designate another

21 personal retirement account in lieu of an account pre22 viously designated, in accordance with such regulations.

23 ‘‘(b) DESIGNATION BY COMMISSIONER IN ABSENCE

24 OF TIMELY DESIGNATION BY INDIVIDUAL.—The initial

25 designation by an individual of a personal retirement ac26 count must be made within such period as shall be pre-
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1 scribed in regulations under this section. In any case in

2 which there is no timely designation of a personal retire3 ment account with respect to such an individual, the Com4 missioner of Social Security shall make the designation of

5 a personal retirement account under subsection (a) on be6 half of such individual, in accordance with regulations pre7 scribed under to this section. For the purposes of desig8 nating such accounts, the Commissioner shall make ar9 rangements with certified institutions which shall be se10 lected by the Securities and Exchange Commission so as

11 to serve as trustees for such accounts in localities through12 out the United States.

13 ‘‘(c) REGULATIONS.—The regulations under this sec14 tion shall be prescribed by the Commissioner of Social Se15 curity, in consultation with the Securities and Exchange

16 Commission and the Secretary of the Treasury.

17 ‘‘FEDERAL CONTRIBUTIONS

18 ‘‘SEC. 253. (a) IN GENERAL.—Not later than 18

19 months after the end of each calendar quarter in any cal20 endar year after 2000 for which an individual is a covered

21 individual, the Secretary of the Treasury shall deposit into

22 such individual’s personal retirement account, from

23 amounts in the Federal Old-Age and Survivors Insurance

24 Trust Fund not otherwise required for immediate with25 drawal, an amount equal to the product derived by

26 multiplying—
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1 ‘‘(1) the excess in the receipts of such Trust

2 Fund for such calendar quarter over the expendi3 tures of such Trust Fund for such calendar quarter,

4 by

5 ‘‘(2) the allocation percentage for such indi6 vidual for such calendar year.

7 ‘‘(b) ALLOCATION PERCENTAGE.—For purposes of

8 subsection (a), the allocation percentage for an individual

9 for a calendar year is the ratio, expressed as a percentage,

10 of—

11 ‘‘(1) the total amount of the taxes paid under

12 sections 3101(a) and 3111(a) of the Internal Rev13 enue Code of 1986 with respect to such individual

14 in such calendar year and the taxes paid under sec15 tion 1401(a) of such Code with respect to such indi16 vidual in such calendar year, to

17 ‘‘(2) the total amount of the taxes paid under

18 such sections 3101(a), 3111(a), and 1401(a) in such

19 calendar year with respect to all individuals who are

20 covered individuals for such calendar year.

21 ‘‘(c) ELECTRONIC PAYMENT.—Deposits made pursu22 ant to subsection (a) shall, to the maximum extent prac23 ticable, be made by electronic payment.
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1 ‘‘Subpart 2—Certified Institutions

2 ‘‘CERTIFICATION OF INSTITUTIONS BY SECURITIES AND

3 EXCHANGE COMMISSION

4 ‘‘SEC 261. (a) IN GENERAL.—For purposes of meet5 ing the requirements of section 531 of the Internal Rev6 enue Code of 1986 (relating to trusteeship of personal re7 tirement accounts), any institution that is engaged, in a

8 fiduciary capacity, in the business of maintaining accounts

9 for individuals for purposes of investment may apply to

10 the Securities and Exchange Commission (in such form

11 and manner as shall be provided by the Commission by

12 regulation) for certification under this subpart.

13 ‘‘(b) REVIEW REQUIREMENTS.—In reviewing any ap14 plication for certification under this subpart and deter15 mining whether to approve the application for certifi16 cation, the Commission shall consider the following fac17 tors:

18 ‘‘(1) The financial history and condition of the

19 institution.

20 ‘‘(2) The adequacy of the institution’s capital

21 structure.

22 ‘‘(3) The future earnings prospects of the insti23 tution.

24 ‘‘(4) The general character and fitness of the

25 management of the institution.
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1 ‘‘(5) The convenience and needs of individuals

2 who are account holders with respect to personal re3 tirement accounts for which the institution is to

4 serve as trustee.

5 ‘‘(6) Whether the institution’s corporate powers

6 are consistent with the purposes of this part.

7 ‘‘(c) NOTICE OF DENIAL OF APPLICATION FOR CER8 TIFICATION.—If the Commission votes to deny any appli9 cation for certification by any institution, the Commission

10 shall promptly notify the institution of the denial of such

11 application, giving specific reasons in writing for the Com12 mission’s determination with reference to the factors de13 scribed in subsection (b).

14 ‘‘(d) NONDELEGATION REQUIREMENT.—The author15 ity of the Commission to make any determination to deny

16 any application under this section may not be delegated

17 by the Commission.

18 ‘‘ACCESS TO RECORDS

19 ‘‘SEC. 262. (a) IN GENERAL.—The Securities and

20 Exchange Commission may from time to time require any

21 certified institution to file such reports as the Commission

22 may deem advisable for purposes of this subpart.

23 ‘‘(b) REPORTS BY CERTIFIED INSTITUTIONS.—

24 ‘‘(1) IN GENERAL.—Each such report shall con25 tain a declaration by the president, by a vice presi26 dent, by the cashier or the treasurer, or by any other
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1 officer designated by the board of directors or trust2 ees of the reporting certified institution to make

3 such declaration, that the report is true and correct

4 to the best of his knowledge and belief. The correct5 ness of such report shall be attested by the signa6 tures of at least two directors or trustees of the re7 porting certified institution other than the officer

8 making such declaration, with a declaration that the

9 report has been examined by them and to be the

10 best of their knowledge and belief is true and cor11 rect. At the time of making such reports each cer12 tified institution shall furnish to the Commission a

13 copy thereof containing such signed declaration and

14 attestations. Nothing in this paragraph shall be con15 strued to preclude any Federal or State agency or

16 instrumentality from requiring a certified institution

17 under its jurisdiction to make additional reports at

18 any time.

19 ‘‘(2) INFORMATION TO BE PROVIDED.—In the

20 reports required to be made by paragraph (1), each

21 certified institution shall report the total amount of

22 the liability of the institution for balances main23 tained in personal retirement accounts for which

24 such institution serves as trustee.
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1 ‘‘(3) DATA COLLECTIONS.—In addition to or in

2 connection with any other report required under this

3 subsection, the Commission shall take such action as

4 may be necessary to ensure that—

5 ‘‘(A) each certified institution maintains;

6 and

7 ‘‘(B) the Commission receives on a regular

8 basis from such institution,

9 information on the total amount of all liability of the

10 institution for balances maintained in personal re11 tirement accounts for which such institution serves

12 as trustee. In prescribing reporting and other re13 quirements for the collection of actual and accurate

14 information pursuant to this paragraph, the Com15 mission shall minimize the regulatory burden im16 posed upon certified institutions while taking into

17 account the benefit of the information to the Com18 mission in carrying out its functions under this sub19 part.

20 ‘‘REVOCATION OF CERTIFICATION

21 ‘‘SEC. 263. (a) VOLUNTARY REVOCATION.—Any in22 stitution may revoke such institution’s status as a certified

23 institution if such institution provides written notice to the

24 Securities and Exchange Commission of the institution’s

25 intent to revoke such status not less than 90 days before

26 the effective date of such revocation.
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1 ‘‘(b) INVOLUNTARY REVOCATION.—

2 ‘‘(1) NOTICE TO PRIMARY REGULATOR.—

3 ‘‘(A) IN GENERAL.—If the Commission de4 termines that—

5 ‘‘(i) a certified institution or the direc6 tors or trustees of a certified institution

7 have engaged or are engaging in unsafe or

8 unsound practices in conducting the busi9 ness of the institution,

10 ‘‘(ii) a certified institution is in an un11 safe or unsound condition to continue op12 erations as a certified institution, or

13 ‘‘(iii) a certified institution or the di14 rectors or trustees of the institution have

15 violated any applicable law, regulation,

16 order, condition imposed in writing by the

17 Commission in connection with the ap18 proval of any application or other request

19 by the institution, or written agreement

20 entered into between the institution and

21 the Commission,

22 and the Commission determines that any unsafe

23 or unsound practice or condition or any viola24 tion specified in such notice requires the revoca25 tion of the certified status of the certified insti-
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1 tution, the Commission shall take the actions

2 required under subparagraph (B).

3 ‘‘(B) REQUIRED ACTIONS.—If the Com4 mission makes the determination under sub5 paragraph (A) with respect to a certified insti6 tution, the Commission shall—

7 ‘‘(i) serve written notice to the cer8 tified institution of the Commission’s in9 tention to revoke the certified status of the

10 institution;

11 ‘‘(ii) provide the certified institution

12 with a statement of the charges on the

13 basis of which the determination to revoke

14 such institution’s certified status was

15 made; and

16 ‘‘(iii) notify the certified institution of

17 the date (not less than 30 days after notice

18 under this paragraph) and place for a

19 hearing before the Commission (or any

20 person designated by the Commission) with

21 respect to the revocation of the institu22 tion’s certified status.

23 ‘‘(2) HEARING; REVOCATION.—If, on the basis

24 of the evidence presented at a hearing before the

25 Commission (or any person designated by the Com-
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1 mission for such purpose), in which all issues shall

2 be determined on the record pursuant to section 554

3 of title 5, United States Code, and the written find4 ings of the Commission (or such person) with re5 spect to such evidence (which shall be conclusive),

6 the Commission finds that any unsafe or unsound

7 practice or condition or any violation specified in the

8 notice to a certified institution under paragraph (1)

9 has been established, the Commission may issue an

10 order revoking the certified status of such institution

11 effective as of a date subsequent to such finding.

12 ‘‘(3) APPEARANCE; CONSENT TO REVOCA13 TION.—Unless the institution appears at the hearing

14 by a duly authorized representative, it shall be

15 deemed to have consented to the revocation of its

16 status as a certified institution and revocation of

17 such status thereupon may be ordered.

18 ‘‘(4) PUBLICATION OF NOTICE OF REVOCA19 TION.—The Commission may publish notice of such

20 revocation and the institution shall give notice of

21 such revocation to the account holder of each per22 sonal retirement account for which the institution

23 serves as trustee at his last address of record on the

24 books of the institution, in such manner and at such
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1 time as the Commission may find to be necessary

2 and may order for the protection of account holders.

3 ‘‘(5) TEMPORARY CONTINUANCE OF CERTIFI4 CATION AS OF REVOCATION.—After the Commission

5 has determined under the provisions of this sub6 section that the certified status of any institution is

7 to be revoked, the certification of the institution

8 shall continue for a period of at least 6 months or

9 up to 2 years, within the discretion of the Commis10 sion. The institution shall not advertise or hold itself

11 out as being a certified institution unless in the

12 same connection it shall also state with equal promi13 nence that such certification is temporarily in force

14 pending the termination of a limited continuance

15 certification after revocation thereof under this sub16 section. Such institution shall, in all other respects,

17 be subject to the duties and obligations of a certified

18 institution for the period referred to in the first sen19 tence of this paragraph from the date of such rev20 ocation, and the Commission shall have the same

21 powers and rights with respect to such institution as

22 in the case of a certified institution.

23 ‘‘(6) TEMPORARY SUSPENSION OF CERTIFI24 CATION.—
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1 ‘‘(A) IN GENERAL.—If the Commission ini2 tiates a revocation proceeding under paragraph

3 (1), and the Commission, after consultation

4 with any appropriate regulatory agency with ju5 risdiction over the institution, finds that the in6 stitution has no tangible capital under the cap7 ital guidelines or regulations of regulatory agen8 cy, the Commission may issue a temporary

9 order suspending certification of the institution.

10 ‘‘(B) EFFECTIVE PERIOD OF TEMPORARY

11 ORDER.—Any order issued under subparagraph

12 (A) shall become effective not earlier than 10

13 days from the date of service upon the institu14 tion and, unless set aside, limited, or suspended

15 by a court in proceedings authorized under this

16 paragraph, such temporary order shall remain

17 effective and enforceable until an order of the

18 Commission under paragraph (2) becomes final

19 or until the Commission dismisses the pro20 ceedings under paragraph (2).

21 ‘‘(C) JUDICIAL REVIEW.—Before the close

22 of the 10-day period beginning on the date any

23 temporary order has been served upon the insti24 tution under subparagraph (A), the institution

25 may apply to the United States District Court
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1 for the District of Columbia, or the United

2 States district court for the judicial district in

3 which the home office of the institution is lo4 cated, for an injunction setting aside, limiting,

5 or suspending the enforcement, operation, or ef6 fectiveness of such order, and such court shall

7 have jurisdiction to issue such injunction.

8 ‘‘(D) PUBLICATION OF ORDER.—The insti9 tution shall give notice of such order to the ac10 count holder of each personal retirement ac11 count for which the institution serves as trustee

12 in such manner and at such times as the Com13 mission may find to be necessary and may

14 order for the protection of account holders.

15 ‘‘(E) NOTICE BY COMMISSION.—If the

16 Commission determines that the institution has

17 not substantially complied with the notice to

18 contributors required by the Commission, the

19 Commission may provide such notice in such

20 manner as the Commission may find to be nec21 essary and appropriate.

22 ‘‘(7) FINAL DECISIONS TO REVOKE CERTIFI23 CATION.—Any decision by the Commission to—

24 ‘‘(A) issue a temporary order revoking cer25 tification; or
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1 ‘‘(B) issue a final order revoking certifi2 cation;

3 shall be made by the Commission and may not be

4 delegated.

5 ‘‘(8) JUDICIAL REVIEW.—Any party to any pro6 ceeding under this subsection to which an institution

7 is a party may obtain a review of any order served

8 pursuant to this subsection by the filing in the court

9 of appeals of the United States for the circuit in

10 which the home office of the institution is located,

11 or in the United States Court of Appeals for the

12 District of Columbia Circuit, within 30 days after

13 the date of service of such order, a written petition

14 praying that the order of the Commission be modi15 fied, terminated, or set aside. A copy of such peti16 tion shall be forthwith transmitted by the clerk of

17 the court to the Commission, and thereupon the

18 Commission shall file in the court the record in the

19 proceeding, as provided in section 2112 of title 28,

20 United States Code. Upon the filing of such petition,

21 such court shall have jurisdiction, which upon the

22 filing of the record shall be exclusive, to affirm,

23 modify, terminate, or set aside, in whole or in part,

24 the order of the Commission. Review of such pro25 ceedings shall be had as provided in chapter 7 of
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1 title 5, United States Code. The judgment and de2 cree of the court shall be final, except that the judg3 ment and decree shall be subject to review by the

4 Supreme Court upon certiorari, as provided in sec5 tion 1254 of title 28, United States Code. The com6 mencement of proceedings for judicial review under

7 this paragraph shall not, unless specifically ordered

8 by the court, operate as a stay of any order issued

9 by the Commission.

10 ‘‘INSTITUTION OF CLOSING PROCEEDINGS BY THE

11 COMMISSION

12 ‘‘SEC. 264. (a) IN GENERAL.—The Securities and

13 Exchange Commission shall as soon as practicable insti14 tute proceedings under this section to close a personal re15 tirement account whenever the Commission determines

16 that—

17 ‘‘(1) the certified status of the institution serv18 ing as trustee of the account ceases to be in effect,

19 or

20 ‘‘(2) the trustee of the account is unable to

21 make full distributions of the balance in the account

22 when due.

23 The Commission may prescribe a simplified procedure to

24 follow in closing personal retirement accounts as long as

25 that procedure includes substantial safeguards for the

26 rights of the account holder. Notwithstanding any other
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1 provision of this part, the Commission is authorized to

2 pool assets of closed personal retirement accounts for pur3 poses of administration, investment, payment of liabilities

4 of all such accounts, and such other purposes as it deter5 mines to be appropriate in the administration of this part.

6 ‘‘(b) INITIAL APPOINTMENT OF ALTERNATIVE

7 TRUSTEE.—

8 ‘‘(1) IN GENERAL.—Whenever the Commission

9 makes a determination under subsection (a) with re10 spect to a personal retirement account, it may, upon

11 notice to the institution serving as trustee of the ac12 count, apply to the appropriate United States dis13 trict court for the appointment of an alternative

14 trustee to administer the account pending the

15 issuance of a decree under subsection (c) ordering

16 the closing of the account. If within 3 business days

17 after the filing of an application under this sub18 section, or such other period as the court may order,

19 the institution consents to the appointment of an al20 ternative trustee, or fails to show why an alternative

21 trustee should not be appointed, the court may grant

22 the application and appoint an alternative trustee to

23 administer the account in accordance with the terms

24 governing the account until the Commission deter25 mines that the account should be closed or that clos-
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1 ing is unnecessary. The Commission may request

2 that it be appointed as alternative trustee of the ac3 count in any case.

4 ‘‘(2) STANDARD FOR COURT APPOINTMENT.—

5 Notwithstanding any other provision of this part,

6 upon the petition of a certified institution or the

7 Commission, the appropriate United States district

8 court may appoint an alternative trustee in accord9 ance with the provisions of this section if the inter10 ests of the account holder with respect to the per11 sonal retirement account is maintained would be bet12 ter served by the appointment of the alternative

13 trustee.

14 ‘‘(3) APPOINTMENT BY AGREEMENT BETWEEN

15 PARTIES.—The Commission and the institution serv16 ing as trustee of the account may agree to the ap17 pointment of an alternative trustee without pro18 ceeding in accordance with the requirements of para19 graphs (1) and (2).

20 ‘‘(c) TERMINATION PROCEEDINGS.—

21 ‘‘(1) IN GENERAL.—If the Commission is re22 quired under subsection (a) to commence pro23 ceedings under this section with respect to a per24 sonal retirement account or, after issuing a notice

25 under this section to the certified institution serving
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1 as trustee of the account, has determined that the

2 account should be closed, the Commission may, upon

3 notice to the institution, apply to the appropriate

4 United States district court for a decree adjudi5 cating that the account must be closed in order to

6 protect the interests of the account holder with re7 spect to the account or to avoid any unreasonable

8 deterioration of the financial condition of the ac9 count. If the alternative trustee appointed under

10 subsection (b) disagrees with the determination of

11 the Commission under the preceding sentence, he

12 may intervene in the proceeding relating to the ap13 plication for the decree, or make application for such

14 decree himself. Upon granting a decree for which the

15 Commission or alternative trustee has applied under

16 this subsection, the court shall authorize the alter17 native trustee (or appoint an alternative trustee if

18 one has not been appointed under such subsection

19 and authorize him) to assume trusteeship of the per20 sonal retirement account, and provide for its liquida21 tion, in accordance with the provisions of this sec22 tion, and a transfer of its assets to a successor per23 sonal retirement account, in accordance with para24 graph (2).
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1 ‘‘(2) TRANSFER TO SUCCESSOR ACCOUNT.—In

2 any case in which a personal retirement account is

3 closed under this section, the Commission shall pro4 vide by regulation for procedures under which selec5 tion for the account holder of an appropriate suc6 cessor personal retirement account is facilitated and

7 a trustee-to-trustee transfer of the balance in the

8 closed account to the successor account is made.

9 Whenever an alternative trustee appointed under

10 this section is exercising trusteeship authority over

11 a personal retirement account with discretion as to

12 the date upon which transfer of the assets from the

13 account to a successor account is to be performed,

14 the alternative trustee shall notify the Commission

15 at least 10 days before the date on which he pro16 poses to perform such transfer. The original trustee

17 of the closed account shall be liable to the trustee of

18 the successor account for the costs of the transfer.

19 ‘‘(d) TRUSTEESHIP WITHOUT CLOSING.—If the

20 Commission and the institution agree that trusteeship

21 over the personal retirement account should be assumed

22 by an alternative trustee appointed under this section and

23 agree to the appointment of an alternative trustee without

24 proceeding in accordance with the requirements of sub25 section (c), the alternative trustee shall have the power
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1 described in subsection (e)(1) of this section and, in addi2 tion to any other duties imposed on the alternative trustee

3 under law or by agreement between the Commission and

4 the institution, the alternative trustee is subject to the du5 ties described in subsection (e)(3).

6 ‘‘(e) POWERS AND DUTIES OF ALTERNATIVE TRUST7 EE.—

8 ‘‘(1) IN GENERAL.—An alternative trustee ap9 pointed under subsection (b) shall have the power—

10 ‘‘(A) to do any act authorized by docu11 ments governing the personal retirement ac12 count or this part to be done by the institution

13 as trustee of the account;

14 ‘‘(B) to require the transfer of all (or any

15 part) of the assets and records of the account

16 to himself as trustee;

17 ‘‘(C) to invest any assets of the account

18 which he holds in accordance with the docu19 ments governing the account, regulations of the

20 Securities and Exchange Commission, and ap21 plicable rules of law;

22 ‘‘(D) to limit payment of assets in the ac23 count as appropriate or to continue payment of

24 some or all of the assets in the account which

25 were being paid prior to his appointment;
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1 ‘‘(E) to do such other acts as he deems

2 necessary to continue operation of the account

3 without increasing risk of loss to the account

4 holder, if such acts may be done under the doc5 uments governing the account; and

6 ‘‘(F) to require the institution to furnish

7 any information with respect to the account

8 which the alternative trustee may reasonably

9 need in order to administer the account.

10 ‘‘(2) TIME LIMITATION ON ALTERNATIVE

11 TRUSTEESHIP WHERE CLOSING DOES NOT ENSUE.—

12 If the court to which application is made under sub13 section (c) dismisses the application with prejudice,

14 or if the Commission fails to apply for a decree

15 under subsection (c) within 30 days after the date

16 on which the alternative trustee is appointed under

17 subsection (b), the alternative trustee shall transfer

18 all assets and records of the account held by him to

19 the institution which had been serving as trustee of

20 the account within 3 business days after such dis21 missal or the expiration of such 30-day period, and

22 shall not be liable to the institution or any other per23 son for his acts as alternative trustee except for will24 ful misconduct, or for conduct in violation of any

25 other provision of this part. The 30-day period re-
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1 ferred to in this paragraph may be extended as pro2 vided by agreement between the institution and the

3 Commission or by court order obtained by the Com4 mission.

5 ‘‘(3) ADDITIONAL POWERS UPON CLOSING.—If

6 the court to which an application is made under sub7 section (c) issues the decree requested in such appli8 cation, in addition to the powers described in para9 graph (1), the alternative trustee shall have the

10 power—

11 ‘‘(A) to collect for the account any

12 amounts due the account;

13 ‘‘(B) to commence, prosecute, or defend on

14 behalf of the institution or the account any suit

15 or proceeding involving the account;

16 ‘‘(C) to issue, publish, or file such notices,

17 statements, and reports as may be required by

18 the Commission or any order of the court;

19 ‘‘(D) to liquidate the assets of the account

20 and perform the transfer of such assets to a

21 successor personal retirement account as pro22 vided in subsection (c)(2);

23 ‘‘(E) to recover payments inappropriately

24 made from the account; and
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1 ‘‘(F) to do such other acts as may be nec2 essary to comply with this part or any order of

3 the court and to protect the interests of the ac4 count holder of the closed account.

5 ‘‘(4) NOTICE OF PROCEEDINGS.—As soon as

6 practicable after his appointment, the alternative

7 trustee shall give notice to interested parties of the

8 institution of proceedings under this section to de9 termine whether the account should be closed or to

10 close the account, whichever is applicable. For pur11 poses of this paragraph, the term ‘interested party’

12 means—

13 ‘‘(A) the institution,

14 ‘‘(B) the account holder with respect to the

15 account was maintained, including the bene16 ficiary of the account holder who is deceased,

17 ‘‘(C) each person who may be liable for

18 payments to the account.

19 ‘‘(5) ADDITIONAL DUTIES.—Except to the ex20 tent inconsistent with the provisions of this part, or

21 as may be otherwise ordered by the court, an alter22 native trustee appointed under this section shall be

23 subject to the same duties as those of a trustee

24 under section 704 of title 11, United States Code,

25 and shall be, with respect to the account, a fiduciary
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1 within the meaning of paragraph (21) of section 3

2 of the Employee Retirement Income Security Act of

3 1974 and under section 4975(e) of the Internal Rev4 enue Code of 1986 (except to the extent that the

5 provisions of this part are inconsistent with the re6 quirements applicable under part 4 of subtitle B of

7 title I of such Act and of such section 4975).

8 ‘‘(f) COORDINATION WITH BANKRUPTCY OR OTHER

9 INSOLVENCY PROCEEDINGS.—An application by the Com10 mission under this section may be filed notwithstanding

11 the pendency in the same or any other court of any bank12 ruptcy, mortgage foreclosure, or equity receivership pro13 ceeding, or any proceeding to reorganize, conserve, or liq14 uidate the personal retirement account or the institution,

15 or its assets, or any proceeding to enforce a lien against

16 assets of the account or the institution.

17 ‘‘(g) COURT JURISDICTION.—Upon the filing of an

18 application for the appointment of an alternative trustee

19 or the issuance of a decree under this section, the court

20 to which an application is made shall have exclusive juris21 diction of the account involved and its assets wherever lo22 cated with the powers, to the extent consistent with the

23 purposes of this section, of a court of the United States

24 having jurisdiction over cases under chapter 11 of title 11

25 of the United States Code. Pending an adjudication under
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•HR 4839 IH

1 subsection (c), such court shall stay, and upon appoint2 ment by it of an alternative trustee, as provided in this

3 section, such court shall continue the stay of, any pending

4 mortgage foreclosure, equity receivership, or other pro5 ceeding to reorganize, conserve, or liquidate the account

6 or its assets and any other suit against any receiver, con7 servator, or trustee of the account or the institution, or

8 its assets. Pending such adjudication and upon the ap9 pointment by it of such alternative trustee, the court may

10 stay any proceeding to enforce a lien against property of

11 the account or the institution or any other suit against

12 the account or the institution.

13 ‘‘(h) VENUE AND PROCESS.—An action under this

14 section may be brought in the judicial district where the

15 institution serving as trustee of the personal retirement

16 account is located or does business or where any asset of

17 the account or the institution is situated. A district court

18 in which such action is brought may issue process with

19 respect to such action in any other judicial district.

20 ‘‘(i) COMPENSATION AND PERSONNEL FOR ALTER21 NATIVE TRUSTEES.—

22 ‘‘(1) COMPENSATION.—The amount of com23 pensation paid to each alternative trustee appointed

24 under the provisions of this section shall require the

25 prior approval of the Commission, and, in the case
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•HR 4839 IH

1 of an alternative trustee appointed by a court, the

2 consent of that court.

3 ‘‘(2) APPOINTMENT AND RETENTION OF PER4 SONNEL.—Alternative trustees appointed under this

5 section shall appoint, retain, and compensate ac6 countants, actuaries, and other professional service

7 personnel in accordance with regulations prescribed

8 by the Commission.

9 ‘‘Subpart 3—Investment Standards, Reporting and

10 Disclosure Requirements, and Fiduciary Duties

11 ‘‘INVESTMENT STANDARDS

12 ‘‘SEC. 271. (a) REQUIRED FORMS OF INVEST13 MENT.—Under the terms governing a personal retirement

14 account, amounts held in the account shall be invested,

15 at the option of the account holder, in any of not fewer

16 than 3 forms of investment, consisting of—

17 ‘‘(1) a broad-based portfolio of common stock,

18 ‘‘(2) a portfolio consisting of United States

19 Treasury bills issued under chapter 31 of title 31,

20 United States Code, savings bonds or similar obliga21 tions issued under such chapter which are indexed to

22 inflation, or any combination of the foregoing, and

23 ‘‘(3) a broad-based portfolio of private sector

24 obligations.
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•HR 4839 IH

1 ‘‘(b) REQUIRED CHOICE OF PORTFOLIOS.—Under

2 the terms governing a personal retirement account, the ac3 count holder shall be provided with not fewer than 5 and

4 not more than 15 portfolio options, assembled so as to

5 provide the account holder, in combination, at least the

6 options required under subsection (a). Each such portfolio

7 shall be approved by the Securities and Exchange Com8 mission under this section.

9 ‘‘(c) DEFAULT PORTFOLIO SELECTIONS.—Among

10 the approved portfolio options required under subsection

11 (b), one option shall be the default option, as so designated

12 by the certified institution serving as trustee of the ac13 count. The certified institution may designate 2 or more

14 different default options for 2 or more groups of account

15 holders, respectively, categorized by age. Any such default

16 option shall apply unless an alternative selection is made

17 by the account holder under subsection (b). Application

18 of any such default option in the case of any account hold19 er in the absence of an alternative selection by the account

20 holder shall be deemed to comply with applicable fiduciary

21 standards.

22 ‘‘(d) APPROVAL OF PORTFOLIOS.—A portfolio of23 fered for a personal retirement account may be approved

24 by the Commission only if—
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•HR 4839 IH

1 ‘‘(1) to the extent that the portfolio provides an

2 investment form described in paragraph (1) or (3) of

3 subsection (a), the portfolio replicates the assets of

4 a broad-based index of equities or obligations meet5 ing requirements which shall be prescribed in regula6 tions of the Commission,

7 ‘‘(2) the portfolio is managed exclusively by the

8 investment manager so as to minimize risk on the

9 part of the individual investor,

10 ‘‘(3) the portfolio is constructed so as not to

11 present an unreasonable risk of loss inconsistent

12 with saving for retirement, and

13 ‘‘(4) any charge for administrative expenses in

14 connection with the account (including any fee

15 charged in connection with management of the port16 folio) is expressed in terms of a flat fee for a fixed

17 period of time, except that additional charges may

18 be required, in accordance with regulations of the

19 Commission, on a reasonable basis and at reasonable

20 margins, as may be necessary to allow for—

21 ‘‘(A) reasonable payment of appropriate

22 management fees to investment managers, and

23 ‘‘(B) costs relating to accounting for vol24 untary contributions to the account,
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•HR 4839 IH

1 if such additional charges are set forth separately

2 and clearly identified as such.

3 ‘‘(e) SPECIAL RULES.—

4 ‘‘(1) LIMITS ON ASSET REALLOCATIONS.—The

5 Commission shall establish by regulation reasonable

6 limits on the frequency of changes in allocations of

7 assets in personal retirement accounts to invest8 ments permitted under this section.

9 ‘‘(2) INVESTMENT OF ACCOUNTS WITH DE

10 MINIMIS BALANCES.—In the case of a personal re11 tirement account with a balance of less than $500,

12 the certified institution serving as trustee of such ac13 count may provide for investment of such balance

14 solely in accordance with policies established by such

15 institution. The Commission shall prescribe regula16 tions which shall set forth standards which such

17 policies must meet and shall provide for adequate

18 disclosure of such policies to the account holder.

19 ‘‘REPORTING AND DISCLOSURE REQUIREMENTS

20 ‘‘SEC. 272. (a) IN GENERAL.—In the case of a per21 sonal retirement account which does not form part of an

22 individual account plan covered under part 1 of subtitle

23 B of title I of the Employee Retirement Income Security

24 Act of 1974, rules similar to the rules of such part 1 appli25 cable to individual account plans covered under such part

26 1 shall apply with respect to such account and the terms
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•HR 4839 IH

1 of any arrangement under which such account is main2 tained, to the extent that the application of such rules to

3 personal retirement accounts is determined by the Securi4 ties and Exchange Commission by regulation to be appro5 priate. Compliance with the requirements of this sub6 section may be by electronic means in the case of personal

7 retirement account holders having reasonable access there8 to, if such electronic means meets requirements which

9 shall be prescribed in regulations of the Commission and

10 receipt of information by the account holder by electronic

11 means is elected by the account holder in accordance with

12 such regulations.

13 ‘‘(b) GENERAL REQUIREMENTS.—In applying under

14 subsection (a) the rules of part 1 of subtitle B of title

15 I of the Employee Retirement Income Security Act of

16 1974 in the case of a personal retirement account de17 scribed in subsection (a), references in such part to the

18 Secretary of Labor shall be deemed to be references to

19 the Securities and Exchange Commission, references in

20 such part to a participant or beneficiary in connection with

21 an individual account plan covered under such part shall

22 be deemed to be references to the account holder with re23 spect to the personal retirement account, and references

24 in such part to the plan administrator or plan sponsor in

25 connection with an individual account plan covered under
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•HR 4839 IH

1 such part shall be deemed to be references to the trustee

2 of the personal retirement account.

3 ‘‘(c) COORDINATION OF REPORTING REQUIRE4 MENTS.—The Securities and Exchange Commission and

5 the Secretary of Labor shall jointly issue regulations so

6 as to ensure that requirements of part 1 of subtitle B of

7 title I of the Employee Retirement Income Security Act

8 of 1974 applicable to any trustee that is a certified institu9 tion and the requirements of this section are mutually con10 sistent and to minimize administrative expense. Separate

11 inclusion of information relating to a personal retirement

12 account maintained by a certified institution in an annual

13 report filed by such institution pursuant to section 103

14 of the Employee Retirement Income Security Act of 1974

15 shall be treated as meeting the annual reporting require16 ment under this subsection relating to such personal re17 tirement account. The Secretary of Labor and the Securi18 ties and Exchange Commission shall provide for prompt

19 transmission to the Commission of a copy of any such an20 nual report filed by a certified institution with such Sec21 retary relating to the personal retirement account.

22 ‘‘(d) SPECIFIC TRUSTEE REQUIREMENTS.—The re23 quirements of this section relating to the trustee of a per24 sonal retirement account under this section shall not be

25 treated as met unless the trustee—
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•HR 4839 IH

1 ‘‘(1) submits to the Securities and Exchange

2 Commission periodic evaluations of the investment

3 options available to personal retirement account

4 holders in accordance with regulations which shall be

5 prescribed by the Commission and makes such eval6 uations reasonably available to the personal retire7 ment account holders in accordance with such regu8 lations, and

9 ‘‘(2) the trustee provides to the personal retire10 ment account holder—

11 ‘‘(A) in connection with the designation of

12 the account under section 252 and at least

13 semi-annually thereafter, in language under14 standable by the typical account holder, infor15 mation describing the investment options avail16 able to the account holder which shall be speci17 fied in regulations of the Securities and Ex18 change Commission and which shall be suffi19 cient to enable a reasonably educated selection

20 of portfolio options offered by the trustee,

21 ‘‘(B) on an annual basis, a disclosure of all

22 fees and other charges imposed by the trustee

23 with respect to the personal retirement account,
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•HR 4839 IH

1 ‘‘(C) on a quarterly basis, an accounting of

2 all activity of the personal retirement account

3 during the preceding quarter, and

4 ‘‘(D) on an annual basis, an accounting of

5 all activity of the personal retirement account

6 during the preceding year.

7 ‘‘FIDUCIARY DUTIES

8 ‘‘SEC. 273. (a) IN GENERAL.—In the case of a per9 sonal retirement account which does not form part of an

10 individual account plan covered under part 4 of subtitle

11 B of title I of the Employee Retirement Income Security

12 Act of 1974, rules similar to the rules of such part 4 appli13 cable to individual account plans covered under such part

14 4 shall apply with respect to a personal retirement account

15 and the terms of any arrangement under which such ac16 count is maintained.

17 ‘‘(b) GENERAL REQUIREMENTS.—In applying under

18 subsection (a) the rules of part 4 of subtitle B of title

19 I of the Employee Retirement Income Security Act of

20 1974 in the case of a personal retirement account, ref21 erences in such part to the Secretary of Labor shall be

22 deemed to be references to the Securities and Exchange

23 Commission, references in such part to a participants or

24 beneficiary in connection with an individual account plan

25 covered under such part shall be deemed to be references

26 to the account holder with respect to the personal retire-
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•HR 4839 IH

1 ment account, and references in such part to the plan ad2 ministrator or plan sponsor in connection with an indi3 vidual account plan covered under such part shall be

4 deemed to be references to the trustee of the personal re5 tirement account.

6 ‘‘(c) LIMITATION ON LIABILITY.—Any account holder

7 who issues an instruction to the trustee of the account

8 directing an investment of funds held in the account shall

9 sign an acknowledgement prescribed by the Securities and

10 Exchange Commission which states that the account hold11 er understands that an investment of any amount in the

12 account is made at the account holder’s risk, that the ac13 count holder is not protected by the Government or by

14 the trustee against any loss on such investment, and that

15 a return on such investment is not guaranteed by the Gov16 ernment or by the trustee. Notwithstanding the preceding

17 provisions of this section and any other provision of Fed18 eral or State law, the trustee of a personal retirement ac19 count shall not be liable for losses suffered in connection

20 with any investment of assets held in the account unless

21 it is shown by clear and convincing evidence that the trust22 ee did not act in the manner in which a reasonable trustee

23 would act under the circumstances then prevailing in eval24 uating the risk and reward properties of the investment

25 option involved.
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•HR 4839 IH

1 ‘‘Subpart 4—Enforcement

2 ‘‘CAUSE OF ACTION

3 ‘‘SEC. 281. The account holder with respect to a per4 sonal retirement account who is adversely affected by an

5 act or practice of any party (other than the Securities and

6 Exchange Commission, the Social Security Administra7 tion, the Department of the Treasury, or any officer or

8 employee of any of the foregoing) in violation of any provi9 sion of this part, may bring an action—

10 ‘‘(1) to enjoin such act or practice, or

11 ‘‘(2) to obtain other appropriate equitable relief

12 (A) to redress such violation or (B) to enforce such

13 provision.

14 ‘‘JURISDICTION AND VENUE

15 ‘‘SEC. 282. Civil actions under this subpart may be

16 brought in the district courts of the United States in the

17 district where the personal retirement account is adminis18 tered, where the violation took place, or where a defendant

19 resides or may be found, and process may be served in

20 any district where a defendant resides or may be found.

21 The district courts of the United State shall have jurisdic22 tion, without regard to the amount in controversy or the

23 citizenship of the parties, to grant the relief provided for

24 in section 281 in any action.
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1 ‘‘RIGHT OF SECURITIES AND EXCHANGE COMMISSION TO

2 INTERVENE

3 ‘‘SEC. 283. A copy of the complaint or notice of ap4 peal in any action under this subpart shall be served upon

5 the Securities and Exchange Commission by certified mail.

6 The Commission shall each have the right to intervene in

7 any action.

8 ‘‘AWARDS OF COSTS AND EXPENSES

9 ‘‘SEC. 284. In any action brought under this subpart,

10 the court in its discretion may award all or a portion of

11 the costs and expenses incurred in connection with such

12 action, including reasonable attorney’s fees, to any party

13 who prevails or substantially prevails in such action.

14 ‘‘LIMITATION ON ACTIONS

15 ‘‘SEC. 285. (a) IN GENERAL.—Except as provided in

16 subsection (c), an action under this subpart may not be

17 brought after the later of—

18 ‘‘(1) 6 years after the date on which the cause

19 of action arose, or

20 ‘‘(2) 3 years after the applicable date specified

21 in subsection (b).

22 ‘‘(b) APPLICABLE DATE.—The applicable date speci23 fied in this subsection is the earliest date on which the

24 plaintiff acquired or should have acquired actual knowl25 edge of the existence of such cause of action.
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•HR 4839 IH

1 ‘‘(c) CASES OF FRAUD OR CONCEALMENT.—In the

2 case of fraud or concealment, the period described in sub3 section (a)(2) shall be extended to 6 years after the appli4 cable date specified in subsection (b).

5 ‘‘PENALTY FOR FAILURE TO TIMELY PROVIDE REQUIRED

6 INFORMATION

7 ‘‘SEC. 286. The Securities and Exchange Commission

8 may assess a penalty, payable to it, against any person

9 who fails to provide any notice or other material informa10 tion required under this part or any regulations prescribed

11 under this part within the applicable time limit specified

12 therein. Such penalty shall not exceed $1,000 for each day

13 for which such failure continues.

14 ‘‘ACTIONS BY SECURITIES AND EXCHANGE COMMISSION

15 ‘‘SEC. 287. If any person is assessed under this sub16 part and fails to pay the assessment when due, or any

17 person otherwise fails to meet any requirement of this

18 part, the Securities and Exchange Commission may bring

19 a civil action in any district court of the United States

20 within the jurisdiction of which such person’s assets are

21 located or in which such person resides or is found for

22 the recovery of the amount of the assessment or for appro23 priate equitable relief to redress the violation or enforce

24 the provisions of this part, and process may be served in

25 any other district. The district courts of the United States

26 shall have jurisdiction over actions brought under this sec-
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•HR 4839 IH

1 tion by the Commission without regard to the amount in

2 controversy.

3 ‘‘CRIMINAL PENALTY FOR FRAUD OR INTENTIONAL MIS4 REPRESENTATION IN CONNECTION WITH INVEST5 MENT OPTIONS

6 ‘‘SEC. 288. Any person who makes, or causes to be

7 made, a statement or representation of a material fact for

8 use in selecting an investment option under section 271

9 that the person knows or should know is false or mis10 leading or knows or should know omits a material fact

11 or makes such a statement with knowing disregard for the

12 truth shall upon conviction be fined not more than

13 $500,000 or imprisoned for not more than 5 years, or

14 both.’’.

15 (b) IMPLEMENTATION.—The Securities and Ex16 change Commission, in consultation with the Commis17 sioner of Social Security and the Secretary of the Treas18 ury, shall establish an expedited procedure to ensure time19 ly implementation of the amendments made by this sec20 tion. The Commission shall submit to each House of the

21 Congress report on the status of such implementation not

22 later than March 1, 2001. All measures necessary to pre23 pare for full implementation of such amendments shall be

24 completed by the Commission, the Commissioner, and the

25 Secretary not later than July 1, 2001.
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1 SEC. 3. PERSONAL RETIREMENT ACCOUNTS.

2 (a) IN GENERAL.—Subchapter F of chapter 1 of the

3 Internal Revenue Code of 1986 (relating to exempt organi4 zations) is amended by adding at the end the following

5 new part:

6 ‘‘PART IX—PERSONAL RETIREMENT ACCOUNTS

‘‘Sec. 531. Personal Retirement Accounts.

7 ‘‘SEC. 531. PERSONAL RETIREMENT ACCOUNTS.

8 ‘‘(a) GENERAL RULE.—A personal retirement ac9 count shall be exempt from taxation under this subtitle.

10 Notwithstanding the preceding sentence, the personal re11 tirement account shall be subject to the taxes imposed by

12 section 511 (relating to imposition of tax on unrelated

13 business income of charitable organizations).

14 ‘‘(b) PERSONAL RETIREMENT ACCOUNT DEFINED.—

15 For purposes of this section—

16 ‘‘(1) IN GENERAL.—The term ‘personal retire17 ment account’ means a trust which is designated

18 under section 252 of the Social Security Act as a

19 personal retirement account and which is created or

20 organized in the United States for the exclusive ben21 efit of an individual, or the beneficiaries of such in22 dividual, but only if the written governing instru23 ment creating the trust meets the following require24 ments:
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•HR 4839 IH

1 ‘‘(A) The contribution requirements of sub2 section (c) are met.

3 ‘‘(B) The distribution requirements of sub4 section (d) are met.

5 ‘‘(C) The trustee requirements of sub6 section (f) are met.

7 ‘‘(D) The investment requirements of sub8 part 3 of part B of title II of the Social Secu9 rity Act are met.

10 ‘‘(E) The interest of an individual in the

11 balance in his account is nonforfeitable.

12 ‘‘(2) AGGREGATION OF ACCOUNTS.—For pur13 poses of determining whether the requirements of

14 paragraph (1) are met in a taxable year, a prede15 cessor personal retirement account and a successor

16 personal retirement account of an account holder

17 shall be treated as 1 account.

18 ‘‘(c) CONTRIBUTION REQUIREMENTS.—

19 ‘‘(1) IN GENERAL.—The requirements of this

20 subsection are met if, except in the case of a rollover

21 contribution described in paragraph (2) or sub22 section (e)(4), no contribution will be accepted un23 less it is in cash, and contributions will not be ac24 cepted for the taxable year on behalf of any indi25 vidual in excess of the sum of—
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1 ‘‘(A) the Federal contribution under sec2 tion 253 of the Social Security Act,

3 ‘‘(B) the entitlement payment for early

4 contributions under section 54, and

5 ‘‘(C) $10,000.

6 ‘‘(2) ROLLOVER CONTRIBUTIONS FROM ELIGI7 BLE RETIREMENT PLANS.—

8 ‘‘(A) IN GENERAL.—A rollover contribu9 tion is described in this paragraph if such con10 tribution is—

11 ‘‘(i) an eligible rollover distribution

12 out of a qualified trust and excluded from

13 gross income under section 402(c),

14 403(a)(4), or 403(b)(8), determined, for

15 purposes of this paragraph, by treating the

16 personal retirement account as a qualified

17 trust, employee annuity, or annuity con18 tract, as the case may be, or

19 ‘‘(ii) an eligible rollover within the

20 meaning of section 408(d)(3)) out of an in21 dividual retirement account or individual

22 retirement annuity, determined, for pur23 poses of this paragraph, by treating the

24 contribution to the personal retirement ac25 count as a payment into an individual re-
45

•HR 4839 IH

1 tirement account or individual retirement

2 annuity.

3 ‘‘(B) INCLUSION IN GROSS INCOME FOR

4 ROLLOVER CONTRIBUTIONS, SPREAD OVER 4-

5 YEAR TAXABLE PERIOD.—For purposes of any

6 rollover contribution described in subparagraph

7 (A), rules similar to the rules of section

8 408A(d)(3) shall apply, except that the date in

9 subparagraph (A)(iii) thereof shall be dis10 regarded. The preceding sentence shall not

11 apply to a rollover contribution from a Roth

12 IRA.

13 ‘‘(C) NO ROLLOVER FROM CURRENT DE14 FINED CONTRIBUTION PLAN.—For purposes of

15 subparagraph (A)(i), amounts may not be rolled

16 over to a personal retirement account from any

17 defined contribution plan which is maintained

18 by the employer of the employee who is the ac19 count holder of the personal retirement account

20 on the date such rollover is made.

21 ‘‘(d) DISTRIBUTION REQUIREMENTS.—

22 ‘‘(1) IN GENERAL.—The distribution require23 ments of this paragraph are met if—

24 ‘‘(A)(i) no payment or distribution from

25 the personal retirement account from amounts
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1 attributable to Federal contributions may be

2 made from the personal retirement account be3 fore the date the account holder attains age 62,

4 and

5 ‘‘(ii) on and after the date the account

6 holder attains age 62, no payment or distribu7 tion from the personal retirement account from

8 amounts attributable to Federal contributions

9 may be made in a taxable year if, immediately

10 after the distribution, the amount remaining in

11 the account that is attributable to Federal con12 tributions is less than the minimum annuity

13 amount, and

14 ‘‘(B) no payment or distribution from the

15 personal retirement account from amounts at16 tributable to voluntary contributions may be

17 made from the personal retirement account be18 fore the date the account holder attains age

591 19 ⁄2.

20 ‘‘(2) EXCEPTIONS.—The requirements of para21 graph (1) shall not be treated as not met solely by

22 reason of—

23 ‘‘(A) any trustee-to-trustee transfer from a

24 personal retirement account to a successor per25 sonal retirement account,
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1 ‘‘(B) any payment or distribution used to

2 purchase a minimum annuity or a survivor an3 nuity that meets the requirements of paragraph

4 (3)(B)(ii),

5 ‘‘(C) any payment or distribution from

6 amounts attributable to voluntary contributions

7 by reason of the individual’s being disabled

8 (within the meaning of section 72(m)(7)),

9 ‘‘(D) any payment or distribution made to

10 a beneficiary (or to the estate of the employee)

11 on or after the death of the account holder,

12 ‘‘(E) any payment or distribution which is

13 a return of contributions described in sub14 section (e)(5),

15 ‘‘(F) any payment or distribution incident

16 to divorce (within the meaning of subsection

17 (e)(6)),

18 ‘‘(G) any payment or distribution to which

19 subsection (e)(7) applies,

20 ‘‘(H) any payment or distribution to which

21 subsection (e)(8) applies,

22 ‘‘(I) any payment or distribution for ad23 ministrative expenses charged by the trustee of

24 the personal retirement account meeting the ap-
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1 plicable requirements of section 271(d)(4) of

2 the Social Security Act, and

3 ‘‘(J) any payment or distribution which

4 fails to meet the requirements of paragraph (1)

5 with respect to which the Secretary makes the

6 good faith determination described in sub7 section (e)(10).

8 ‘‘(3) MINIMUM ANNUITY AMOUNT; MINIMUM

9 ANNUITY.—For purposes of this subsection—

10 ‘‘(A) MINIMUM ANNUITY AMOUNT.—

11 ‘‘(i) IN GENERAL.—The term ‘min12 imum annuity amount’ means, as of any

13 date, the amount determined by the trust14 ee (under regulations issued by the Sec15 retary) to be necessary to purchase on

16 such date an immediate annuity which is a

17 minimum annuity.

18 ‘‘(ii) REDUCTION TO ACCOUNT FOR

19 OLD-AGE INSURANCE BENEFITS.—In the

20 case of a personal retirement account hold21 er who is entitled to old-age insurance ben22 efits under section 202 of the Social Secu23 rity Act, the minimum annuity amount de24 termined under clause (i) shall be reduced

25 by the actuarial present value, as of the
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1 date referred to in clause (iii), of future

2 old-age insurance benefits payable to such

3 individual under such section (determined

4 by using reasonable assumptions which

5 shall be prescribed by the Commission).

6 ‘‘(iii) IMMEDIATE ANNUITY.—For pur7 poses of clause (i), the term ‘immediate

8 annuity’ means an annuity—

9 ‘‘(I) which is purchased with a

10 single premium or annuity consider11 ation,

12 ‘‘(II) the annuity starting date

13 (as defined in section 72(c)(4)) of

14 which commences no later than 1 year

15 from the date of the purchase of the

16 annuity, and

17 ‘‘(III) which provides for a series

18 of substantially equal periodic pay19 ments (to be made not less frequently

20 than annually) during the annuity pe21 riod, subject to adjustment under sub22 paragraph (D).

23 ‘‘(B) MINIMUM ANNUITY.—

24 ‘‘(i) IN GENERAL.—The term ‘min25 imum annuity’ means an amount deter-
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•HR 4839 IH

1 mined under regulations issued by the

2 Commissioner of Social Security. Such

3 amount shall be stated on a monthly basis

4 and shall assume an annuity making pay5 ments over the life (or life expectancy) of

6 the account holder.

7 ‘‘(ii) JOINT AND SURVIVOR ANNUITY

8 AND PRERETIREMENT SURVIVOR ANNUITY

9 REQUIREMENTS.—An annuity shall not be

10 treated as a minimum annuity within the

11 meaning of clause (i) unless the require12 ments of section 401(a)(11) applicable to

13 plans are met with respect to such annuity,

14 except that, for purposes of this clause, the

15 minimum required survivor annuity shall

16 be an amount such that the monthly equiv17 alent thereof is equal to the excess of—

18 ‘‘(I) the widow’s or widower’s in19 surance benefit under section 202 of

20 the Social Security Act to which the

21 surviving spouse would have been eli22 gible upon the personal retirement ac23 count holder’s death without the ap24 plication of section 215(a)(8) of such

25 Act, over
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1 ‘‘(II) the amount of such widow’s

2 or widower’s insurance benefit.

3 ‘‘(C) LIFE EXPECTANCY TABLES.—In de4 termining life expectancy for purposes of sub5 paragraphs (A) and (B), the trustee of a per6 sonal retirement account shall not be treated as

7 failing to meet the requirements of this para8 graph if the trustee follows life expectancy ta9 bles prescribed by the Commissioner of Social

10 Security for purposes of this paragraph.

11 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.—

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection—

14 ‘‘(A) AMOUNT ATTRIBUTABLE TO FED15 ERAL CONTRIBUTIONS.—In the case of the por16 tion of any payment or distribution out of a

17 personal retirement account that is the amount

18 attributable to Federal contributions—

‘‘(i) 1 19 ⁄2 of such portion shall be treat20 ed as a social security benefit under sec21 tion 86, and

‘‘(ii) 1 22 ⁄2 of such portion shall not be

23 includible in gross income.

24 ‘‘(B) AMOUNT ATTRIBUTABLE TO VOL25 UNTARY CONTRIBUTIONS.—The portion of any
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1 payment or distribution out of a personal retire2 ment account that is the amount attributable to

3 voluntary contributions shall not be includible

4 in gross income.

5 ‘‘(2) EARLY WITHDRAWAL OF CONTRIBU6 TIONS.—

7 ‘‘(A) IN GENERAL.—In the case of an

8 amount paid or distributed out of a personal re9 tirement account to a personal retirement ac10 count holder who—

11 ‘‘(i) in the case of amounts attrib12 utable to Federal contributions, has not at13 tained age 62, and

14 ‘‘(ii) in the case of amounts attrib15 utable to voluntary contributions, has not

attained age 591 16 ⁄2,

17 the tax of such personal retirement account

18 holder under this chapter for the taxable year

19 in which such amount is received shall be in20 creased by an amount equal to the applicable

21 percentage of the portion of such amount which

22 is includible in gross income.

23 ‘‘(B) APPLICABLE PERCENTAGE.—For

24 purposes of subparagraph (A), the term ‘appli25 cable percentage’ means—
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1 ‘‘(i) 100 percent in the case of

2 amounts attributable to Federal contribu3 tions, and

4 ‘‘(ii) 10 percent in the case of

5 amounts attributable to voluntary con6 tributions.

7 ‘‘(C) SPECIAL RULE.—For purposes of this

8 paragraph, the amount includible in gross in9 come shall be determined under section 72.

10 ‘‘(3) EXCESS DISTRIBUTIONS.—

11 ‘‘(A) IN GENERAL.—In the case of excess

12 distributions from a personal retirement ac13 count to a personal retirement account holder,

14 the tax of such personal retirement account

15 holder under this chapter for the taxable year

16 in which such amount is received shall be in17 creased by an amount equal to 10 percent of

18 the portion of such amount which is includible

19 in gross income.

20 ‘‘(B) EXCESS DISTRIBUTIONS DEFINED.—

21 For purposes of subparagraph (A), the term

22 ‘excess distribution’ means a distribution from

23 a personal retirement account that is prohibited

24 by subsection (d)(1)(A)(ii).
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1 ‘‘(C) APPLICABLE RULES.—Rules similar

2 to the rules of paragraphs (2) and (3) of sec3 tion 4980A(c) (as in effect before the date of

4 the enactment of the Taxpayer Relief Act of

5 1997) shall apply for purposes of subparagraph

6 (A).

7 ‘‘(4) ROLLOVER CONTRIBUTION TO SUCCESSOR

8 PERSONAL RETIREMENT ACCOUNT.—

9 ‘‘(A) IN GENERAL.—Paragraph (1) does

10 not apply to any amount paid or distributed out

11 of a personal retirement account of an account

12 holder to another personal retirement account

13 of such account holder if such transfer meets

14 the requirements of subparagraph (B).

15 ‘‘(B) REQUIREMENTS.—A transfer meets

16 the requirements of this subparagraph if—

17 ‘‘(i) such transfer is a direct trustee18 to-trustee transfer,

19 ‘‘(ii) the entire amount in the account

20 from which the distribution is made is so

21 transferred,

22 ‘‘(iii) during the 12-month period end23 ing with the month preceding the month in

24 which such transfer occurred, not more

25 than 2 such transfers were made, and
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1 ‘‘(iv) during the 3-year period ending

2 with the month preceding the month in

3 which such transfer occurred, not more

4 than 4 such transfers were made.

5 ‘‘(C) INVOLUNTARY TRANSFER.—A trans6 fer of assets as a result of the replacement of

7 a trustee or closing an account under subpart

8 II of part B of title II of the Social Security

9 Act shall not be taken into account for purposes

10 of clauses (iii) and (iv) of subparagraph (B).

11 ‘‘(5) CONTRIBUTIONS RETURNED BEFORE DUE

12 DATE OF RETURN.—Paragraph (1) does not apply to

13 the distribution of any contribution paid during a

14 taxable year to a personal retirement account if—

15 ‘‘(A) such distribution is received on or be16 fore the day prescribed by law (including exten17 sions of time) for filing such individual’s return

18 for such taxable year, and

19 ‘‘(B) such distribution is accompanied by

20 the amount of net income attributable to such

21 contribution.

22 In the case of such a distribution, for purposes of

23 section 61, any net income described in subpara24 graph (B) shall be deemed to have been earned and
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•HR 4839 IH

1 receivable in the taxable year in which such con2 tribution is made.

3 ‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI4 VORCE.—For purposes of this section, rules similar

5 to the rules of section 408(d)(6) (relating to transfer

6 of account incident to divorce) shall apply.

7 ‘‘(7) QUALIFIED FIRST-TIME HOMEBUYER DIS8 TRIBUTION.—The additional tax imposed by para9 graph (3) shall not apply to a distribution from

10 amounts attributable to voluntary contributions

11 which is a qualified first-time homebuyer distribu12 tion (as defined in section 72(t)(8)).

13 ‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT

14 HOLDER.—

15 ‘‘(A) IN GENERAL.—Paragraph (1) shall

16 not apply to distributions made on account of

17 the death of the account holder. For purposes

18 of this paragraph, rules similar to the rules of

19 section 401(a)(9) shall apply to the personal re20 tirement account upon the death of the account

21 holder.

22 ‘‘(B) ACCOUNT HOLDER WHO DIES BE23 FORE ATTAINING AGE 62.—

24 ‘‘(i) USE OF AMOUNTS TO PAY BENE25 FITS.—In the case of the death of an ac-
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•HR 4839 IH

1 count holder who has not attained age 62,

2 if any beneficiary of the account holder is

3 either—

4 ‘‘(I) a spouse or former spouse of

5 the account holder who has not at6 tained age 62 as of the date of such

7 death, or

8 ‘‘(II) a child of the account hold9 er who meets the requirements of sec10 tion 202(d) of the Social Security Act,

11 but for the filing of an application for

12 child’s insurance benefits,

13 the amounts in the account attributable to

14 Federal contributions shall be apportioned

15 in accordance with clause (ii) and trans16 ferred to the personal retirement account

17 of each such beneficiary and shall be pay18 able as a monthly annuity in accordance

19 with the entitlement of such beneficiary to

20 benefits under section 202 of the Social

21 Security Act.

22 ‘‘(ii) DETERMINATION OF

23 AMOUNTS.—

24 ‘‘(I) IN GENERAL.—The amount

25 apportioned to a beneficiary under
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1 clause (i) shall be the amount equal to

2 the present value of the benefits to

3 which each beneficiary specified in

4 clause (i) is entitled under section 202

5 of the Social Security Act, as deter6 mined by the Commissioner of Social

7 Security.

8 ‘‘(II) PROPORTIONAL ALLOCA9 TION.—If amounts attributable to

10 Federal contributions is less than the

11 amount required to yield each month12 ly annuity described in clause (ii), the

13 Commissioner shall allocate such

14 amounts among all beneficiaries de15 scribed in clause (ii) on a proportional

16 basis in accordance with regulations

17 of the Commissioner.

18 ‘‘(iii) INTERIM PERSONAL RETIRE19 MENT ACCOUNTS FOR INDIVIDUALS WHO

20 ARE NOT EMPLOYEES.—For purposes of

21 this subparagraph, the Commissioner shall

22 provide for the establishment of interim

23 personal retirement accounts in accordance

24 with part B of title II of the Social Secu25 rity Act for any beneficiary referred to in
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1 this subparagraph who is not a covered in2 dividual (as defined by section 251 of the

3 Social Security Act).

4 ‘‘(C) EXCESS AMOUNTS TREATED IN SAME

5 MANNER AS VOLUNTARY CONTRIBUTIONS.—For

6 purposes of this paragraph, amounts in the per7 sonal retirement account attributable to Federal

8 contributions which are in excess of the amount

9 required under subparagraph (B)(ii)(I) (if any)

10 shall be treated in the same manner as amounts

11 attributable to voluntary contributions.

12 ‘‘(9) ADMINISTRATIVE EXPENSES.—Paragraphs

13 (1), (2), and (3) shall not apply to amounts paid or

14 distributed for administrative expenses charged by

15 the trustee of the personal retirement account.

16 ‘‘(10) GOOD FAITH EXCEPTION TO ADDITIONAL

17 TAX.—The additional tax imposed by paragraph (3)

18 or (4) shall not apply if the Secretary determines

19 that—

20 ‘‘(A) the taxpayer in good faith attempted

21 to meet the requirements to which such para22 graph relates, and

23 ‘‘(B) any failure to meet such require24 ments is due to inadvertent error after the tax-
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1 payer took reasonable steps to comply with such

2 requirements.

3 ‘‘(f) TRUSTEE REQUIREMENTS.—The requirements

4 of this subsection are met if the trustee—

5 ‘‘(1) in the case of a personal retirement ac6 count maintained by an employer which has in effect

7 an individual account plan under a qualified cash or

8 deferred arrangement (as defined in section 401(k)),

9 is the trustee of the trust forming part of such plan,

10 and

11 ‘‘(2) in any case not described in paragraph (1),

12 has in effect a certification under subpart 2 of part

13 B of title II of the Social Security Act or is an alter14 native trustee appointed under section 264 of such

15 Act.

16 ‘‘(g) DEFINITIONS AND SPECIAL RULES.—For pur17 poses of this section—

18 ‘‘(1) AMOUNT ATTRIBUTABLE TO FEDERAL

19 CONTRIBUTIONS.—The term ‘amount attributable to

20 Federal contributions’ means, with respect to any

21 payment or distribution from a personal retirement

22 account, the amount determined by multiplying the

23 total amount of such payment or distribution by the

24 ratio—
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1 ‘‘(A) the numerator of which is the aggre2 gate of the contributions described in subpara3 graphs (A) and (B) of subsection (c)(1) and the

4 total amount of earnings on such contributions,

5 and

6 ‘‘(B) the denominator of which is the sum

7 of the total amount in the personal retirement

8 account immediately before such payment or

9 distribution was made.

10 ‘‘(2) AMOUNT ATTRIBUTABLE TO VOLUNTARY

11 CONTRIBUTIONS.—The term ‘amount attributable to

12 voluntary contributions’ means, with respect to any

13 payment or distribution from a personal retirement

14 account, the amount determined by multiplying the

15 total amount of such payment or distribution by the

16 ratio—

17 ‘‘(A) the numerator of which is the aggre18 gate of the contributions described in subsection

19 (c)(1)(C), the rollover contributions described in

20 subsection (c)(2), and the total amount of earn21 ings on contributions described in subsection

22 (c)(1)(C) and subsection (c)(2), and

23 ‘‘(B) the denominator of which is the sum

24 of the total amount in the personal retirement
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1 account immediately before such payment or

2 distribution was made.

3 ‘‘(3) SEPARATE ACCOUNTING FOR CONTRIBU4 TIONS AND EARNINGS THEREON AND DISTRIBU5 TIONS.—

6 ‘‘(A) IN GENERAL.—The trustee of any

7 personal retirement account shall separately ac8 count for—

9 ‘‘(i) contributions under subparagraph

10 (A) of subsection (c)(1) and earnings

11 thereon,

12 ‘‘(ii) contributions under subsection

13 (c)(1)(B) and earnings thereon,

14 ‘‘(iii) contributions under subsection

15 (c)(1)(C) and earnings thereon, and

16 ‘‘(iv) distributions from amounts ac17 counted for under clauses (i) and (ii).

18 ‘‘(B) SUCCESSOR ACCOUNTS.—The char19 acter of contributions and earnings separately

20 accounted for under subparagraph (A) in a

21 predecessor personal retirement account shall

22 apply to the successor personal retirement ac23 count (within the meaning of subsection (e)(4)).

24 ‘‘(4) ADDITIONAL RULES ON TAX TREATMENT

25 OF ACCOUNT.—Rules similar to the rules of para-
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1 graphs (2), (3), and (4) of section 408(e) shall

2 apply.

3 ‘‘(5) ESTATE TAX TREATMENT.—No amount

4 shall be includible in the gross estate of any indi5 vidual for purposes of chapter 11 by reason of an in6 terest in a personal retirement account.

7 ‘‘(6) COMMUNITY PROPERTY LAWS.—This sec8 tion shall be applied without regard to any commu9 nity property laws.’’.

10 (b) STUDY RELATING TO REINSURANCE.—The Secu11 rities and Exchange Commission shall conduct a study to

12 determine the need for, and the feasibility of requiring,

13 reinsurance relating to personal retirement accounts. In

14 particular, the study shall address the need for a govern15 mental entity to provide such reinsurance and to which

16 providers of annuities from personal retirement accounts

17 would make payments for such reinsurance. The Commis18 sion shall make such recommendations to the Congress re19 lating to such study as the Commission determines appro20 priate.

21 (c) FEDERAL CONTRIBUTIONS TREATED AS EM22 PLOYER CONTRIBUTIONS FOR PURPOSES OF PENSION

23 NONDISCRIMINATION RULES.—

24 (1) IN GENERAL.—Subparagraph (D) of section

25 401(k)(3) of such Code (relating to application of
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1 participation and discrimination standards) is

2 amended by striking ‘‘and’’ at the end of clause (i),

3 by striking the period at the end of clause (ii) and

4 inserting ‘‘, and’’, and by inserting after clause (ii)

5 the following new clause:

6 ‘‘(iii) shall include contributions de7 scribed in subparagraphs (A) and (B) of

8 section 531(c)(1).’’.

9 (2) INFORMATION PROVIDED TO EMPLOYER.—

10 Paragraph (3) of section 401(k) of such Code (relat11 ing to application of participation and discrimination

12 standards) is amended by adding at the end the fol13 lowing new subparagraph:

14 ‘‘(H) CERTIFICATION TO EMPLOYER RE15 GARDING PERSONAL RETIREMENT ACCOUNT.—

16 For purposes of subparagraph (D)(iii), an em17 ployee shall, in such manner and on such forms

18 as the Secretary shall prescribe, certify to the

19 employer the existence of the personal retire20 ment account of the employee, the number of

21 such account, the trustee for such account, and

22 the contributions to such account under sub23 paragraphs (A) and (B) of section 531(c)(1).

24 Information furnished under this subparagraph

25 shall be confidential and may not be disclosed
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1 to any person for any purpose other than the

2 purposes of subparagraph (D)(iii).’’.

3 (d) CLERICAL AMENDMENT.—The table of parts for

4 subchapter F of chapter 1 of the Internal Revenue Code

5 of 1986 is amended by adding after the item relating to

6 part VIII the following new item:

‘‘Part IX. Personal Retirement accounts.’’.

7 (e) EFFECTIVE DATE.—The amendments made by

8 this subsection shall apply to taxable years beginning after

9 December 31, 2000.

10 SEC. 4. PRIMARY INSURANCE AMOUNTS.

11 (a) IN GENERAL.—Section 215(a) of the Social Secu12 rity Act (42 U.S.C. 415(a)) is amended by adding at the

13 end the following new paragraph:

14 ‘‘(8)(A) Notwithstanding the preceding provisions of

15 this subsection, solely for purposes of determining monthly

16 insurance benefits other than disability insurance benefits,

17 the primary insurance amount (as determined under the

18 preceding paragraphs of this subsection) of an individual

19 who is a personal retirement account holder (as defined

20 in section 251) shall be reduced to the product derived

21 by multiplying such primary insurance amount by a frac22 tion (not less than zero) equal to 1 minus a fraction—

23 ‘‘(i) the numerator of which is the total of all

24 deposits (adjusted as provided under subparagraph
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1 (B)) made to the individual’s personal retirement ac2 count pursuant to section 253 of this Act or section

3 531(e)(8) of the Internal Revenue Code of 1986

4 prior to the date on which such individual becomes

5 eligible for such benefits (or dies before becoming el6 igible for such benefits), and

7 ‘‘(ii) the denominator of which is the amount

8 which would be the actuarial present value as of

9 such date of the expected future benefits under sec10 tion 202 based on such individual’s wages and self11 employment income if such individual became enti12 tled to old-age insurance benefits on such date (dis13 regarding the reduction under this paragraph and

14 disregarding, in the case of an individual’s primary

15 insurance amount determined by reason of such in16 dividual’s death, such individual’s death on such

17 date).

18 ‘‘(B) For purposes of this paragraph, the total

19 amount of the deposits referred to in subparagraph (A)(i)

20 made during each calendar year shall be deemed to be

21 equal to such amount, plus interest on such amount com22 pounded annually thereafter at the rate equal to the aver23 age market yield (computed by the Secretary of the Treas24 ury on the basis of market quotations as of the end of

25 the calendar month next preceding the date of each
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1 compounding) on all marketable interest-bearing obliga2 tions of the United States than forming a part of the pub3 lic debt which were not due or callable until after the expi4 ration of four years from the end of such calendar month

5 (rounded to the nearest one-eighth of one percent).

6 ‘‘(C) The actuarial assumptions and methods used

7 for purposes of subparagraph (A)(ii) shall be assumptions

8 and methods which are generally accepted for making ac9 tuarial determinations, except that the Commissioner shall

10 use reasonable life expectancy tables prescribed by the

11 Commissioner of Social Security by regulation for pur12 poses of this subparagraph which do not discriminate on

13 the basis of gender.’’.

14 (b) CONFORMING AMENDMENT PRESERVING APPRO15 PRIATIONS FOR MEDICARE.—Section 121(e)(1)(B) of the

16 Social Security Amendments of 1983 (42 U.S.C. 401

17 note) is amended, in the first sentence, by inserting

18 ‘‘, including the increase in such tax liabilities which

19 would have occurred if the amendment made by section

20 4(a) of the Personal Lockbox Act of 2000 had not been

21 enacted’’ after ‘‘subparagraph (A)(ii)’’.

22 SEC. 5. CREDIT FOR CONTRIBUTIONS TO PERSONAL RE23 TIREMENT ACCOUNTS.

24 (a) IN GENERAL.—Part IV of subchapter A of chap25 ter 1 of the Internal Revenue Code of 1986 (relating to
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1 credits against tax) is amended by adding at the end the

2 following new subpart:

3 ‘‘Subpart H—Personal Retirement Account

4 Contributions Credit

‘‘Sec. 54. Personal retirement account contributions credit.

5 ‘‘SEC. 54. PERSONAL RETIREMENT ACCOUNT CONTRIBU6 TIONS CREDIT.

7 ‘‘(a) IN GENERAL.—

8 ‘‘(1) ENTITLEMENT TO PAYMENT.—Each eligi9 ble individual shall be entitled to have a payment

10 made on behalf of such individual for any calendar

11 year (subject to subsection (b)) equal to $300.

12 ‘‘(2) PAYMENT.—Notwithstanding any other

13 provision of this title, the payment under paragraph

14 (1) shall be paid by the Secretary (in such manner

15 as the Secretary shall prescribe) to the personal re16 tirement account of the eligible individual from

17 amounts available in the Federal Old-Age and Sur18 vivors Insurance Trust Fund.

19 ‘‘(b) LIMITATIONS.—

20 ‘‘(1) PAYMENT ALLOWED ONLY FOR 2 CAL21 ENDAR YEARS.—A payment under subsection (a) on

22 behalf of any individual may not be made for any

23 calendar year if a payment under subsection (a) on
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1 behalf of such individual was made for any 2 prior

2 calendar years.

3 ‘‘(2) LIMITATION BASED ON WAGES AND SELF4 EMPLOYED INCOME.—The amount which would (but

5 for this paragraph) be paid under subsection (a) for

6 the calendar year shall be reduced (but not below

7 zero) by the amount which bears the same ratio to

8 the amount which would be so paid as—

9 ‘‘(A) the excess (if any) of—

10 ‘‘(i) the individuals wage and self-em11 ployment income for such calendar year,

12 over

13 ‘‘(ii) $15,000, bears to

14 ‘‘(B) $10,000.

15 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur16 poses of this section—

17 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible

18 individual’ means any individual—

19 ‘‘(A) who is a covered employee or covered

20 self-employed individual for a calendar year

21 after 2000 under part B of title II of the Social

22 Security Act, and

23 ‘‘(B) whose wage and self-employment in24 come for the calendar year is greater than

25 $5,000.
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1 ‘‘(2) WAGE AND SELF-EMPLOYMENT INCOME.—

2 The term ‘wage and self-employment income’ for a

3 calendar year means with respect to an individual

4 the sum of—

5 ‘‘(A) wages (as defined in section 3121(a))

6 received by such individual in the calendar year

7 with respect to employment (as defined in sec8 tion 3121(b)) on which tax is imposed under

9 section 3201, and

10 ‘‘(B) self-employment income (as defined

11 in 1402(b)) of such individual for the taxable

12 year ending in such calendar year on which tax

13 is imposed under section 1401.

14 ‘‘(3) PERSONAL RETIREMENT ACCOUNT.—The

15 term ‘personal retirement account’ has the meaning

16 given such term by section 531(b).

17 ‘‘(4) INFLATION ADJUSTMENT.—

18 ‘‘(A) IN GENERAL.—In the case of any cal19 endar year after 2001, the $300 in subsection

20 (a)(1) and the $15,000 amount in subsection

21 (b)(2)(A)(ii) shall each be increased by an

22 amount equal to—

23 ‘‘(i) such dollar amount, multiplied by

24 ‘‘(ii) the cost-of-living adjustment de25 termined under section 1(f)(3) for the cal-
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1 endar year in which the taxable year be2 gins, determined by substituting ‘calendar

3 year 2000’ for ‘calendar year 1992’ in sub4 paragraph (B) thereof.

5 ‘‘(B) ROUNDING.—If any amount deter6 mined under subparagraph (A) with respect to

7 the $15,000 amount in subsection (b)(2)(A)(ii)

8 is not a multiple of $50, such amount shall be

9 rounded to the next lowest multiple of $50.’’.

10 (b) CONFORMING AMENDMENT.—The table of sub11 parts for part IV of subchapter A of chapter 1 of the In12 ternal Revenue Code of 1986 is amended by adding at the

13 end the following new item:

‘‘Subpart H. Personal Retirement Account Contributions Credit.’’.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to calendar years beginning after

16 December 31, 2000.

17 SEC. 6. EXCISE TAX ON EXCESS CONTRIBUTIONS TO PER18 SONAL RETIREMENT ACCOUNTS.

19 (a) IN GENERAL.—Section 4973 of the Internal Rev20 enue Code of 1986 (relating to tax imposed on excess con21 tributions) is amended—

22 (1) in subsection (a) by striking ‘‘or’’ at the end

23 of paragraph (3), by inserting ‘‘or’’ at the end of

24 paragraph (4), and by inserting after paragraph (4)

25 the following:
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1 ‘‘(5) a personal retirement account (as defined

2 in section 531),’’, and

3 (2) by adding at the end the following new sub4 section:

5 ‘‘(g) EXCESS CONTRIBUTIONS TO PERSONAL RE6 TIREMENT ACCOUNTS.—

7 ‘‘(1) IN GENERAL.—For purposes of this sec8 tion, in the case of personal retirement accounts, the

9 term ‘excess contributions’ means the sum of—

10 ‘‘(A) the amount by which the amount con11 tributed for the taxable year to the accounts ex12 ceeds the amount allowable as a contribution

13 under section 531(c)(1)(C) (without regard to

14 section 531(c)(1) (A) and (B)) for such taxable

15 year, and

16 ‘‘(B) the amount determined under this

17 subsection for the preceding taxable year, re18 duced by the sum of—

19 ‘‘(i) the distributions out of the plans

20 for the taxable year (other than rollover

21 distributions) of amounts attributable to

22 voluntary contributions (as defined in sec23 tion 531(h)(2)), and

24 ‘‘(ii) the excess (if any) of the max25 imum amount which may be contributed to
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1 the plans under section 531(c)(1)(C) for

2 the taxable year over the amount contrib3 uted to the plans under such section for

4 the taxable year.

5 ‘‘(2) CONTRIBUTIONS RETURNED BEFORE

6 DUE DATE.—For purposes of this subsection,

7 any contribution which is distributed out of the

8 personal retirement account in a distribution to

9 which section 531(e)(5) applies shall be treated

10 as an amount not so contributed.’’.

11 (b) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after

13 December 31, 2000.

14 SEC. 7. INFORMATION REQUIREMENTS FOR STATEMENTS.

15 (a) INFORMATION REQUIREMENTS FOR SOCIAL SE16 CURITY ACCOUNT STATEMENT.—Section 1143(a) of the

17 Social Security Act (42 U.S.C. 1320b–13(a)) is

18 amended—

19 (1) in paragraph (2)—

20 (A) in subparagraph (B), by inserting

21 ‘‘, including a separate estimate of the amount

22 of interest earned on the contributions,’’ after

23 ‘‘disability insurance’’;

24 (B) in subparagraph (C)—
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1 (i) by inserting ‘‘, including a separate

2 estimate of the amount of interest earned

3 on the contributions,’’ after ‘‘hospital in4 surance’’; and

5 (ii) by striking ‘‘and’’ after the semi6 colon;

7 (C) in subparagraph (D), by striking the

8 period at the end and inserting a semicolon;

9 (D) by redesignating subparagraphs (A),

10 (B), (C), and (D) as subparagraphs (B), (C),

11 (D), and (E), respectively;

12 (E) by inserting after the matter preceding

13 subparagraph (B), as redesignated by subpara14 graph (D), the following:

15 ‘‘(A) the name, age, gender, mailing ad16 dress, and marital status of the eligible indi17 vidual;’’;

18 (F) by adding at the end the following:

19 ‘‘(F) the total amount of the employer and

20 employee contributions for the eligible indi21 vidual for old-age and survivors insurance bene22 fits, as of the end of the month preceding the

23 date of the statement, in both actual dollars

24 and dollars adjusted for inflation;

25 ‘‘(G) the projected value of—
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1 ‘‘(i) the aggregate amount of the em2 ployer and employee contributions for old3 age and survivors insurance benefits that

4 are expected to be made by or on behalf of

5 the individual prior to the individual at6 taining retirement age, in both actual dol7 lars and dollars adjusted for inflation;

8 ‘‘(ii) the annual amount of old-age

9 and survivors insurance benefits that are

10 expected to be payable on the eligible indi11 vidual’s account for a single individual and

12 for a married couple, in dollars adjusted

13 for inflation;

14 ‘‘(iii) the total amount of old-age and

15 survivors insurance benefits payable on the

16 eligible individual’s account for the individ17 ual’s life expectancy, in dollars adjusted

18 for inflation, identifying—

19 ‘‘(I) the life expectancy assumed;

20 ‘‘(II) the amount of benefits re21 ceived on the basis of each $1 of con22 tributions made by or on behalf of the

23 individual; and

24 ‘‘(III) the projected annual rate

25 of return for the individual, taking
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1 into account the date on which the

2 contributions are made in the eligible

3 individual’s account and the date on

4 which the benefits are paid;

5 ‘‘(iv) the total amount of old-age and

6 survivors insurance benefits that would

7 have accumulated on the eligible individ8 ual’s account on the date on which the in9 dividual attains retirement age if the con10 tributions for such individual had been in11 vested in Treasury 10-year saving bonds at

12 the prevailing interest rate for such bonds

13 as of the end of the month preceding the

14 date of the statement, in dollars adjusted

15 for inflation, identifying—

16 ‘‘(I) the date of retirement as17 sumed;

18 ‘‘(II) the interest rate used for

19 the projection; and

20 ‘‘(III) the amount that would be

21 received on the basis of each $1 of

22 contributions made by or on behalf of

23 the individual;
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1 ‘‘(H) the average annual rate of return,

2 adjusted for inflation, on the Treasury 10-year

3 saving bond as of the date of the statement;

4 ‘‘(I) the average annual rate of return, ad5 justed for inflation, on a domestic stock index

6 selected by the Commissioner of Social Secu7 rity, or an equivalent portfolio of common stock

8 equities that are based on a broad index of

9 United States market performance, for the pre10 ceding 25 years;

11 ‘‘(J) a brief statement that identifies—

12 ‘‘(i) the balance of the trust fund ac13 counts as of the end of the month pre14 ceding the date of the statement;

15 ‘‘(ii) the annual estimated balance of

16 the trust fund accounts for each of the

17 succeeding 30 years; and

18 ‘‘(iii) the assumptions used to provide

19 the information described in clauses (i)

20 and (ii), including the rates of return and

21 the nature of the investments of such trust

22 fund accounts; and

23 ‘‘(K) a simple 1-page summary and com24 parison of the information that is provided to
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1 an eligible individual under subparagraphs (G),

2 (H), and (I).’’; and

3 (2) by striking paragraph (3) and inserting the

4 following:

5 ‘‘(3) The estimated amounts required to be pro6 vided in a statement under this section shall be de7 termined by the Commissioner using a general meth8 odology for making such estimates, as formulated

9 and published at the beginning of each calendar year

10 by the Board of Trustees of the trust fund accounts.

11 A description of the general methodology used shall

12 be provided to the eligible individual as part of the

13 statement required under this section.

14 ‘‘(4) The Commissioner of Social Security shall

15 notify an individual who receives a social security ac16 count statement under this section that the indi17 vidual may request that the information described in

18 paragraph (2) be determined on the basis of relevant

19 information provided by the individual, including in20 formation regarding the individual’s income, marital

21 status, date of retirement, or race.

22 ‘‘(5) For purposes of this section—

23 ‘‘(A) the term ‘dollars adjusted for infla24 tion’ means—
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1 ‘‘(i) dollars in constant or real value

2 terms on the date on which the statement

3 is issued; and

4 ‘‘(ii) an amount that is adjusted on

5 the basis of the Consumer Price Index.

6 ‘‘(B) the term ‘eligible individual’ means

7 an individual who—

8 ‘‘(i) has a social security account

9 number;

10 ‘‘(ii) has attained age 25 or over; and

11 ‘‘(iii) has wages or net earnings from

12 self-employment; and

13 ‘‘(C) the term ‘trust fund account’

14 means—

15 ‘‘(i) the Federal Old-Age and Sur16 vivors Insurance Trust Fund; and

17 ‘‘(ii) the Federal Disability Insurance

18 Trust Fund.’’.

19 (b) MANDATORY PROVISION OF STATEMENTS.—Sec20 tion 1143(c)(2) of the Social Security Act (42 U.S.C.

21 1320b–13(c)(2)) is amended by striking ‘‘With respect to’’

22 and all that follows.

23 (c) TECHNICAL AMENDMENTS.—Section 1143 of the

24 Social Security Act (42 U.S.C. 1320b–13) is amended by
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1 striking ‘‘Secretary’’ each place it appears and inserting

2 ‘‘Commissioner of Social Security’’.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to statements provided for fiscal

5 years beginning after the date of enactment of this Act.

6 SEC. 8. PROTECTION OF FEDERAL DISABILITY INSURANCE

7 TRUST FUND.

8 Section 201(b) of the Social Security Act (42 U.S.C.

9 401(b)) is amended by adding at the end (after and below

10 paragraph (2)) the following:

11 ‘‘In addition to amounts otherwise appropriated under the

12 preceding provisions of this subsection, there is hereby ap13 propriated for each fiscal year after fiscal year 2000 to

14 the Federal Disability Insurance Trust Fund, from

15 amounts in the general fund of the Treasury not otherwise

16 appropriated, such sums as may as necessary from time

17 to time to maintain the balance ratio (as defined in section

18 709(b)) of the Federal Disability Insurance Trust Fund,

19 for the calendar year commencing during such fiscal year,

20 at not less than 20 percent. The sums to be appropriated

21 under the preceding sentence shall be determined by the

22 Board of Trustees of the Federal Old-Age and Surviviors

23 Insurance Trust Fund and the Federal Disability Insur24 ance Trust Fund and certified by the Board of Trustees

25 to each House of the Congress as part of the Board’s re-
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1 port submitted pursuant to section 709. The Board of

2 Trustees shall also transmit a copy of any such certifi3 cation to the Secretary of the Treasury, and upon receipt

4 thereof, such Secretary shall promptly take appropriate

5 actions in accordance with the certification.’’.

Æ