II 

109TH CONGRESS 

1ST SESSION S. 1302

To amend the Social Security Act and the Internal Revenue Code of 1986 

to stop the Congress from spending Social Security surpluses on other 

Government programs by dedicating those surpluses to personal accounts 

that can only be used to pay Social Security benefits. 

IN THE SENATE OF THE UNITED STATES 

JUNE 23, 2005

Mr. DEMINT (for himself, Mr. SANTORUM, Mr. GRAHAM, Mr. CRAPO, Mr. 

COBURN, Mr. SUNUNU, Mr. ISAKSON, Mr. ENZI, Mr. CORNYN, Mr. LOTT, 

Mr. BROWNBACK, and Mr. CRAIG) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL

To amend the Social Security Act and the Internal Revenue 

Code of 1986 to stop the Congress from spending Social 

Security surpluses on other Government programs by 

dedicating those surpluses to personal accounts that can 

only be used to pay Social Security benefits.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Stop the Raid on Social Security Act of 2005’’. 
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•S 1302 IS 

1 (b) TABLE OF CONTENTS.—The table of contents is 

2 as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

TITLE I—SOCIAL SECURITY PERSONAL RETIREMENT ACCOUNTS 

PROGRAM 

Sec. 101. Establishment of the Social Security Personal Retirement Accounts 

Program. 

‘‘PART B—SOCIAL SECURITY PERSONAL RETIREMENT ACCOUNTS PROGRAM

‘‘Sec. 251. Definitions. 

‘‘Sec. 252. Establishment of Program. 

‘‘Sec. 253. Participation in Program. 

‘‘Sec. 254. Social security personal retirement accounts . 

‘‘Sec. 255. Investment of accounts. 

‘‘Sec. 256. Distributions of account balance at retirement. 

‘‘Sec. 257. Additional rules relating to disposition of account assets. 

‘‘Sec. 258. Administration of the program. 

Sec. 102. Annual account statements. 

TITLE II—TAX TREATMENT 

Sec. 201. Tax treatment of social security personal retirement accounts. 

Sec. 202. Benefits taxable as Social Security benefits. 

‘‘Sec. 2059. Social security personal retirement accounts.

3 SEC. 2. FINDINGS. 

4 Congress makes the following findings: 

5 (1) President Franklin Roosevelt’s January 17, 

6 1935, message on Social Security declared that, 

7 ‘‘First, the system adopted, except for the money 

8 necessary to initiate it, should be self-sustaining in 

9 the sense that funds for the payment of insurance 

10 benefits should not come from the proceeds of gen11 eral taxation.’’. 

12 (2) Social Security’s financial integrity is main13 tained by requiring that benefit payments do not ex14 ceed the program’s dedicated tax revenues and the 
3

•S 1302 IS 

1 interest earned on the balances in the Federal Old2 Age and Survivors Insurance Trust Fund and the 

3 Federal Disability Insurance Trust Fund over the 

4 long term. 

5 (3) The separation of Social Security from 

6 other budget accounts also serves to protect Social 

7 Security benefits from competing against other Fed8 eral programs for its funding resources. 

9 (4) Comprehensive reforms should be enacted 

10 to—

11 (A) fix Social Security permanently; 

12 (B) ensure that any use of general reve13 nues for the program is temporary; and 

14 (C) provide for the eventual repayment of 

15 any revenue transfers from the general fund to 

16 the Federal Old-Age and Survivors Insurance 

17 Trust Fund and the Federal Disability Insur18 ance Trust Fund. 

19 TITLE I—SOCIAL SECURITY PER20 SONAL RETIREMENT AC21 COUNTS PROGRAM 

22 SEC. 101. ESTABLISHMENT OF THE SOCIAL SECURITY PER23 SONAL RETIREMENT ACCOUNTS PROGRAM. 

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

25 is amended— 
4

•S 1302 IS 

1 (1) by inserting before section 201 the fol2 lowing: 

3 ‘‘PART A—INSURANCE BENEFITS’’; 

4 and 

5 (2) by adding at the end of such title the fol6 lowing new part: 

7 ‘‘PART B—SOCIAL SECURITY PERSONAL RETIREMENT

8 ACCOUNTS PROGRAM

9 ‘‘DEFINITIONS

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

11 ‘‘(1) PARTICIPATING INDIVIDUAL.—The term 

12 ‘participating individual’ has the meaning provided 

13 in section 253(a). 

14 ‘‘(2) ACCOUNT ASSETS.—The term ‘account as15 sets’ means, with respect to a social security per16 sonal retirement account, the total amount trans17 ferred to such account, increased by earnings cred18 ited under this part and reduced by losses and ad19 ministrative expenses under this part. 

20 ‘‘(3) CERTIFIED ACCOUNT MANAGER.—The 

21 term ‘certified account manager’ means a person 

22 who is certified under section 258(b). 

23 ‘‘(4) BOARD.—The term ‘Board’ means the So24 cial Security Personal Savings Board established 

25 under section 258(a). 
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•S 1302 IS 

1 ‘‘(5) COMMISSIONER.—The term ‘Commis2 sioner’ means the Commissioner of Social Security. 

3 ‘‘(6) PROGRAM.—The term ‘Program’ means 

4 the Social Security Personal Retirement Accounts 

5 Program established under this part. 

6 ‘‘ESTABLISHMENT OF PROGRAM

7 ‘‘SEC. 252. There is hereby established a Social Secu8 rity Personal Retirement Accounts Program. The Pro9 gram shall be governed by regulations which shall be pre10 scribed by the Social Security Personal Savings Board. 

11 The Board, the Executive Director appointed by the 

12 Board, the Commissioner, and the Secretary of the Treas13 ury shall consult with each other in issuing regulations 

14 relating to their respective duties under this part. Such 

15 regulations shall provide for appropriate exchange of in16 formation to assist them in performing their duties under 

17 this part. 

18 ‘‘PARTICIPATION IN PROGRAM

19 ‘‘SEC. 253. (a) PARTICIPATING INDIVIDUAL.—For 

20 purposes of this part, the term ‘participating individual’ 

21 means any individual— 

22 ‘‘(1) who is credited under part A with wages 

23 paid after December 31, 2005, or self-employment 

24 income derived in any taxable year ending after such 

25 date, 
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•S 1302 IS 

1 ‘‘(2) who is born on or after January 1, 1950, 

2 and 

3 ‘‘(3) who has not filed an election to renounce 

4 such individual’s status as a participating individual 

5 under subsection (b). 

6 ‘‘(b) RENUNCIATION OF PARTICIPATION.— 

7 ‘‘(1) IN GENERAL.—An individual— 

8 ‘‘(A) who has not attained retirement age 

9 (as defined in section 216(l)(1)), and 

10 ‘‘(B) with respect to whom no distribution 

11 has been made from amounts credited to the in12 dividual’s social security personal retirement ac13 count, 

14 may elect, in such form and manner as shall be pre15 scribed in regulations of the Board, to renounce 

16 such individual’s status as a ‘participating indi17 vidual’ for purposes of this part. Upon completion of 

18 the procedures provided for under paragraph (2), 

19 any such individual who has made such an election 

20 shall not be treated as a participating individual 

21 under this part, effective as if such individual had 

22 never been a participating individual. The Board 

23 shall provide for immediate notification of such elec24 tion to the Commissioner of Social Security, the Sec25 retary of the Treasury, and the Executive Director. 
7

•S 1302 IS 

1 ‘‘(2) PROCEDURE.—The Board shall prescribe 

2 by regulation procedures governing the termination 

3 of an individual’s status as ‘participating individual’ 

4 pursuant to an election under this subsection. Such 

5 procedures shall include— 

6 ‘‘(A) prompt closing of the individual’s so7 cial security personal retirement account estab8 lished under section 254, and 

9 ‘‘(B) prompt transfer to the Federal Old10 Age and Survivors Insurance Trust Fund as 

11 general receipts of any amount held for invest12 ment in such individual’s social security per13 sonal retirement account. 

14 ‘‘(3) IRREVOCABILITY.—An election under this 

15 subsection shall be irrevocable. 

16 ‘‘SOCIAL SECURITY PERSONAL RETIREMENT ACCOUNTS

17 ‘‘SEC. 254. (a) ESTABLISHMENT OF ACCOUNTS.—

18 Under regulations which shall be prescribed by the Board 

19 in consultation with the Secretary of the Treasury— 

20 ‘‘(1) the Board shall establish a social security 

21 personal retirement account for each participating 

22 individual (for whom a social security personal re23 tirement account has not otherwise been established 

24 under this part) upon initial receipt of a transfer 

25 under subsection (b) with respect to such partici26 pating individual, and 
8

•S 1302 IS 

1 ‘‘(2) in any case described in paragraph (2) of 

2 section 257(b), the Board shall establish a social se3 curity personal retirement account for the divorced 

4 spouse referred to in such paragraph (2). 

5 ‘‘(b) TRANSFERS TO SOCIAL SECURITY PERSONAL

6 RETIREMENT ACCOUNTS.— 

7 ‘‘(1) IN GENERAL.—Under regulations which 

8 shall be prescribed by the Secretary of the Treasury 

9 in consultation with the Board, as soon as prac10 ticable during the 1-year period after each calendar 

11 year, the Secretary of the Treasury shall transfer to 

12 each participating individual’s social security per13 sonal retirement account, from amounts held in the 

14 Federal Old-Age and Survivors Insurance Trust 

15 Fund, amounts equivalent to the personal retirement 

16 account deposit with respect to such participating 

17 individual for such calendar year. 

18 ‘‘(2) PERSONAL RETIREMENT ACCOUNT DE19 POSIT.— 

20 ‘‘(A) IN GENERAL.—For purposes of para21 graph (1), the personal retirement account de22 posit for a calendar year with respect to a par23 ticipating individual is the product derived by 

24 multiplying— 

25 ‘‘(i) the sum of— 
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•S 1302 IS 

1 ‘‘(I) the total amount of wages 

2 paid to the participating individual 

3 during such calendar year on which 

4 there was imposed a tax under section 

5 3101(a) of the Internal Revenue Code 

6 of 1986, and 

7 ‘‘(II) the total amount of self-em8 ployment income derived by the par9 ticipating individual during the tax10 able year ending during such calendar 

11 year on which there was imposed a 

12 tax under section 1401(a) of the In13 ternal Revenue Code of 1986, by 

14 ‘‘(ii) the surplus percentage for such 

15 calendar year determined under subpara16 graph (B), 

17 increased by deemed interest on each amount 

18 transferred for such calendar year for the pe19 riod commencing with July 1 of such calendar 

20 year and the ending on the date on which such 

21 amount is transferred, computed at an annual 

22 rate equal to the average annual rate of return 

23 on investments of amounts in the Government 

24 Securities Investment Fund for such calendar 

25 year and the preceding 2 calendar years (except 
10

•S 1302 IS 

1 that, for purposes of the first 3 calendar years 

2 for which deemed interest is computed, this 

3 sentence shall be applied by substituting ‘Fed4 eral Old-Age and Survivors Insurance Trust 

5 Fund’ for ‘Government Securities Investment 

6 Fund’) and decreased by the administrative off7 set amount determined under subparagraph 

8 (D). 

9 ‘‘(B) SURPLUS PERCENTAGE.—For pur10 poses of subparagraph (A)(ii), the surplus per11 centage for a calendar year is the ratio (ex12 pressed as a percentage) of— 

13 ‘‘(i) the net surplus in the Federal 

14 Old-Age and Survivors Insurance Trust 

15 Fund for such year, to 

16 ‘‘(ii) the sum of— 

17 ‘‘(I) the total amount of wages 

18 paid to participating individuals dur19 ing such calendar year under section 

20 3101(a) of the Internal Revenue Code 

21 of 1986, and 

22 ‘‘(II) the total amount of self-em23 ployment income derived during tax24 able years ending during such cal25 endar year by participating individ-
11

•S 1302 IS 

1 uals under section 1401(a) of such 

2 Code. 

3 ‘‘(C) NET TRUST FUND SURPLUS.—For 

4 purposes of subparagraph (B), the term ‘net 

5 surplus’ in connection with the Federal Old-Age 

6 and Survivors Insurance Trust Fund for a cal7 endar year means the excess, if any, of— 

8 ‘‘(i) the sum of— 

9 ‘‘(I) the total amounts which are 

10 appropriated to such Trust Fund 

11 under clauses (3) and (4) of section 

12 201(a) and attributable to such cal13 endar year, and 

14 ‘‘(II) the total amounts which are 

15 appropriated to such Trust Fund 

16 under section 121 of the Social Secu17 rity Amendments of 1983 and attrib18 utable to such calendar year, over 

19 ‘‘(ii) the amount estimated by the 

20 Commissioner of Social Security to be the 

21 total amount to be paid from such Trust 

22 Fund during such calendar year for all 

23 purposes authorized by section 201 (other 

24 than payments of interest on, and repay25 ments of, loans from the Federal Hospital 
12

•S 1302 IS 

1 Insurance Trust Fund under section 

2 201(l)(1), but reducing the amount of any 

3 transfer to the Railroad Retirement Ac4 count by the amount of any transfers into 

5 such Trust Fund from such Account). 

6 ‘‘(D) ADMINISTRATIVE OFFSET

7 AMOUNT.—For purposes of subparagraph (A), 

8 the administrative offset amount determined 

9 with respect to a personal retirement account 

10 deposit for a calendar year is the amount equal 

11 to the product of— 

12 ‘‘(i) the amount of such deposit deter13 mined for that year without regard to a re14 duction under this subparagraph; and 

15 ‘‘(ii) the administrative cost percent16 age attributable to the Program deter17 mined by the Board for that year (includ18 ing reasonable administration fees charged 

19 by certified account managers under the 

20 Program), but in no event to exceed 30 

21 basis points per year of the assets under 

22 management). 

23 ‘‘(3) TRANSITION RULE.—Notwithstanding 

24 paragraph (1), amounts payable to social security 

25 personal retirement accounts under paragraph (1) 
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•S 1302 IS 

1 with respect to the first calendar year described in 

2 paragraph (1) ending after the date of the enact3 ment of the Stop the Raid on Social Security Act of 

4 2005 shall be paid by the Secretary of the Treasury 

5 as soon as practicable after such Secretary deter6 mines that the administrative mechanisms necessary 

7 to provide for accurate and efficient payment of such 

8 amounts have been established. 

9 ‘‘(4) TRANSFER OF GENERAL REVENUES TO

10 ENSURE CONTINUED SOLVENCY OF FEDERAL OLD11 AGE AND SURVIVORS INSURANCE TRUST FUND.—

12 Whenever the Secretary of the Treasury makes a 

13 transfer under paragraph (1), the Secretary of the 

14 Treasury also shall transfer, to the extent necessary, 

15 from amounts otherwise available in the general 

16 fund of the Treasury, such amounts as are necessary 

17 to maintain a 100 percent ratio of assets of the Fed18 eral Old-Age and Survivors Insurance Trust Fund 

19 and the Federal Disability Insurance Trust Fund to 

20 the annual amount required to pay the full amount 

21 of benefits payable under part A for each year oc22 curring during the period that begins with the year 

23 in which such transfer is made and ends with 2041. 
14

•S 1302 IS 

1 ‘‘(c) REQUIREMENTS FOR ACCOUNTS.—The following 

2 requirements shall be met with respect to each social secu3 rity personal retirement account: 

4 ‘‘(1) Amounts transferred to the account con5 sist solely of amounts transferred pursuant to this 

6 part. 

7 ‘‘(2) In accordance with section 255, the ac8 count assets are held for purposes of investment 

9 under the Program by a certified account manager 

10 designated by (or on behalf of) the participating in11 dividual for whom such account is established under 

12 the Program. 

13 ‘‘(3) Disposition of the account assets is made 

14 solely in accordance with sections 256 and 257. 

15 ‘‘(d) ACCOUNTING OF RECEIPTS AND DISBURSE16 MENTS UNDER THE PROGRAM.—The Board shall provide 

17 by regulation for an accounting system for purposes of 

18 this part— 

19 ‘‘(1) which shall be maintained by or under the 

20 Executive Director, 

21 ‘‘(2) which shall provide for crediting of earn22 ings from, and debiting of losses and administrative 

23 expenses from, amounts held in social security per24 sonal retirement accounts, and 
15

•S 1302 IS 

1 ‘‘(3) under which receipts and disbursements 

2 under the Program which are attributable to each 

3 account are separately accounted for with respect to 

4 such account. 

5 ‘‘(e) CORRECTION OF ERRONEOUS TRANSFERS.—

6 The Board, in consultation with the Commissioner, shall 

7 provide by regulation rules similar to paragraphs (4) 

8 through (7) and (9) of section 205(c) and section 205(g) 

9 with respect to the correction of erroneous or omitted 

10 transfers of amounts to social security personal retirement 

11 accounts. 

12 ‘‘INVESTMENT OF ACCOUNTS

13 ‘‘SEC. 255. (a) DESIGNATION OF CERTIFIED AC14 COUNT MANAGERS.—Under the Program, a certified ac15 count manager shall be designated by or on behalf of each 

16 participating individual to hold for investment under this 

17 section such individual’s social security personal retire18 ment account assets. 

19 ‘‘(b) PROCEDURE FOR DESIGNATION.—Any designa20 tion made under subsection (a) shall be made in such form 

21 and manner as shall be prescribed in regulations pre22 scribed by the Board. Such regulations shall provide for 

23 annual selection periods during which participating indi24 viduals may make designations pursuant to subsection (a). 

25 Designations made pursuant to subsection (a) during any 

26 such period shall be irrevocable for the one-year period 
16

•S 1302 IS 

1 following such period, except that such regulations shall 

2 provide for such interim designations as may be neces3 sitated by the decertification of a certified account man4 ager. Such regulations shall provide for such designations 

5 made by the Board on behalf of a participating individual 

6 in any case in which a timely designation is not made by 

7 the participating individual. 

8 ‘‘(c) INVESTMENT.—Any balance held in a partici9 pating individual’s social security personal retirement ac10 count under this part which is not necessary for immediate 

11 withdrawal shall be invested on behalf of such partici12 pating individual by the certified account manager as fol13 lows: 

14 ‘‘(1) INVESTMENT IN MARKETABLE GOVERN15 MENT SECURITIES.—In a representative mix of fixed 

16 marketable interest-bearing obligations of the United 

17 States then forming a part of the public debt which 

18 are not due or callable earlier than 4 years after the 

19 date of investment. 

20 ‘‘(2) ADDITIONAL AND ALTERNATIVE INVEST21 MENTS.—Beginning with 2008, in such additional 

22 and alternative investment options in broad-based 

23 index funds that are similar to the index fund in24 vestment options available within the Thrift Savings 

25 Fund established under section 8437 of title 5, 
17

•S 1302 IS 

1 United States Code, as the Board determines would 

2 be prudent sources of retirement income that could 

3 yield greater amounts of income than the investment 

4 described in paragraph (1) and a participating indi5 vidual may elect. 

6 ‘‘DISTRIBUTIONS OF ACCOUNT BALANCE AT RETIREMENT

7 ‘‘SEC. 256. (a) PART A AND SOCIAL SECURITY PER8 SONAL RETIREMENT ACCOUNT BENEFITS COMBINED.—

9 Upon the date on which a participating individual becomes 

10 entitled to old-age insurance benefits under section 

11 202(a), the Executive Director shall determine the total 

12 amount which would (but for this section) be payable as 

13 benefits under subsection (a), (b), (c), or (h) of section 

14 202, subsection (e) or (f) of section 202 other than on 

15 the basis of disability, or any combination thereof, to any 

16 individual who is a participant on the basis of the wages 

17 and self-employment income of such individual or any 

18 other individual under part A for any month and provide 

19 for the following distributions from the individual’s social 

20 security personal retirement account (in accordance with 

21 regulations which shall be prescribed by the Board): 

22 ‘‘(1) PART A BENEFIT PROVIDES AT LEAST A

23 POVERTY-LEVEL ANNUAL BENEFIT.—If such total 

24 amount would be sufficient to purchase a minimum 

25 annuity, the participating individual shall elect to 

26 have the Executive Director provide for the distribu-
18

•S 1302 IS 

1 tion of the balance in the participating individual’s 

2 social security personal retirement account in the 

3 form of— 

4 ‘‘(A) a lump-sum payment; or 

5 ‘‘(B) an annuity which meets the require6 ments of subsection (b) (other than the require7 ment that the annuity provides for payments 

8 which, on an annual basis, are equal to at least 

9 the minimum annuity amount), the terms of 

10 which provide for a monthly payment equal to 

11 the maximum amount that such account can 

12 fund. 

13 ‘‘(2) PART A BENEFIT COMBINED WITH AC14 COUNT BALANCE PROVIDES AT LEAST A POVERTY15 LEVEL BENEFIT.—

16 ‘‘(A) IN GENERAL.—If such total amount 

17 when combined with all or a portion of the bal18 ance in the participating individual’s social se19 curity personal retirement account would be 

20 sufficient to purchase a minimum annuity, the 

21 Executive Director shall, subject to subpara22 graph (B)— 

23 ‘‘(i) use such amount of the balance 

24 in a participating individual’s social secu25 rity personal retirement account as is nec-
19

•S 1302 IS 

1 essary to purchase an annuity which meets 

2 the requirements of subsection (b) (other 

3 than the requirement that the annuity pro4 vides for payments which, on an annual 

5 basis, are equal to at least the minimum 

6 annuity amount), the terms of which pro7 vide for an annual payment that, when 

8 combined with the total amount of annual 

9 old-age insurance benefits payable to the 

10 participating individual, is equal to the an11 nual amount that a minimum annuity 

12 would pay to the individual; and 

13 ‘‘(ii) provide for the distribution of 

14 any remaining balance in the participating 

15 individual’s social security personal retire16 ment account in the form of a lump-sum 

17 payment. 

18 ‘‘(B) OPTION FOR INCREASED ANNUITY.—

19 A participating individual may elect to have the 

20 Executive Director use the balance of the indi21 vidual’s social security personal retirement ac22 count to purchase an annuity which meets the 

23 requirements of subsection (b), the terms of 

24 which provide for the maximum monthly pay25 ment that such account can fund, in lieu of 
20

•S 1302 IS 

1 using only a portion of such balance to pur2 chase an annuity which provides a monthly pay3 ment equal to the amount described in subpara4 graph (A)(i). 

5 ‘‘(3) DISTRIBUTION IN EVENT OF FAILURE TO

6 OBTAIN AT LEAST A POVERTY-LEVEL BENEFIT.—If 

7 such total amount when combined with all of the 

8 balance in the participating individual’s social secu9 rity personal retirement account would not be suffi10 cient to purchase a minimum annuity, the partici11 pating individual may elect to have the Executive 

12 Director—

13 ‘‘(A) distribute the balance in the partici14 pating individual’s social security personal re15 tirement account in the form of a lump-sum 

16 payment; or 

17 ‘‘(B) if such balance is sufficient to pur18 chase an annuity which meets the requirements 

19 of subsection (b) (other than the requirement 

20 that the annuity provides for payments which, 

21 on an annual basis, are equal to at least the 

22 minimum annuity amount), purchase such an 

23 annuity on behalf of the individual. 
21

•S 1302 IS 

1 ‘‘(b) MINIMUM ANNUITY DEFINED.—For purposes of 

2 this subsection, the term ‘minimum annuity’ means an an3 nuity that meets the following requirements: 

4 ‘‘(1) The annuity starting date (as defined in 

5 section 72(c)(4) of the Internal Revenue Code of 

6 1986) commences on the first day of the month be7 ginning after the date of the purchase of the annu8 ity. 

9 ‘‘(2) The terms of the annuity provide for a se10 ries of substantially equal annual payments, subject 

11 to adjustment as provided in subsection (d), payable 

12 monthly to the participating individual during the 

13 life of the participating individual which are, on an 

14 annual basis, equal to at least the minimum annuity 

15 amount. 

16 ‘‘(c) MINIMUM ANNUITY AMOUNT.—For purposes of 

17 this subsection, the term ‘minimum annuity amount’ 

18 means an amount equal to 100 percent of the poverty line 

19 for an individual (determined under the poverty guidelines 

20 of the Department of Health and Human Services issued 

21 under sections 652 and 673(2) of the Omnibus Budget 

22 Reconciliation Act of 1981). 

23 ‘‘(d) COST OF LIVING ADJUSTMENT.—The terms of 

24 any annuity described in subsection (b) shall include provi25 sion for increases in the monthly annuity amounts there-
22

•S 1302 IS 

1 under determined in the same manner and at the same 

2 rate as primary insurance amounts are increased under 

3 section 215(i). 

4 ‘‘(e) ASSUMPTIONS.—The assumptions under sub5 section (b) include the probability of survival for persons 

6 born in the same year as the participating individual (and 

7 the spouse, in the case of a joint annuity), future projec8 tion of investment earnings based on investment of the 

9 account assets, and expected price inflation. Determina10 tions under this subsection shall be made in accordance 

11 with regulations which shall be prescribed by the Board, 

12 otherwise using generally accepted actuarial assumptions, 

13 except that no differentiation shall be made in such as14 sumptions on the basis of sex, race, health status, or other 

15 characteristics other than age. Such assumptions may in16 clude, for determinations made prior to 2009, an assumed 

17 interest rate reflecting investment earnings of the Federal 

18 Old-Age and Survivors Insurance Trust Fund. 

19 ‘‘(f) OFFSET OF PART A BENEFITS.—Notwith20 standing any other provision of this title, in the case of 

21 a participating individual to which subsection (a)(1) ap22 plies, the total amount of monthly old-age insurance bene23 fits payable as benefits under subsection (a), (b), (c), or 

24 (h) of section 202, subsection (e) or (f) of section 202 

25 other than on the basis of disability, or any combination 
23

•S 1302 IS 

1 thereof, to such individual determined under subsection 

2 (a) shall be reduced so that the amount of such monthly 

3 old-age insurance benefits payable to the individual does 

4 not exceed the amount equal to the difference between—

5 ‘‘(i) such monthly old-age insurance 

6 benefits (determined without regard to a 

7 reduction under this subsection); and 

8 ‘‘(ii) the ratio of—

9 ‘‘(I) what would have been the 

10 monthly annuity payment payable to 

11 the individual from an annuity if the 

12 individual’s personal retirement ac13 count balance had earned the rate of 

14 return specified in section 

15 254(b)(2)(A); to 

16 ‘‘(II) the expected present value 

17 of all future potential benefits payable 

18 under section 202 on the basis of the 

19 wages or self-employment income of 

20 the participating individual (deter21 mined as of the date the participating 

22 individual becomes entitled to old-age 

23 benefits under section 202(a)). 
24

•S 1302 IS 

1 ‘‘ADDITIONAL RULES RELATING DISPOSITION OF

2 ACCOUNT ASSETS

3 ‘‘SEC. 257. (a) SPLITTING OF ACCOUNT ASSETS

4 UPON DIVORCE AFTER 1 YEAR OF MARRIAGE.— 

5 ‘‘(1) IN GENERAL.—Upon the divorce of a par6 ticipating individual for whom a social security per7 sonal retirement account has been established under 

8 this part, from a spouse to whom the participating 

9 individual had been married for at least 1 year, the 

10 Board shall direct the appropriate certified account 

11 manager to transfer— 

12 ‘‘(A) from the social security personal re13 tirement account of the participating individual, 

14 ‘‘(B) to the social security personal retire15 ment account of the divorced spouse, 

16 an amount equal to one-half of the amount of net 

17 accruals (including earnings) during the time of the 

18 marriage in the social security personal retirement 

19 account of the participating individual. 

20 ‘‘(2) TREATMENT OF DIVORCED SPOUSE WHO

21 IS NOT A PARTICIPATING INDIVIDUAL.—In the case 

22 of a divorced spouse referred to in paragraph (1) 

23 who, as of the time of the divorce, is not a partici24 pating individual and for whom a social security per25 sonal retirement account has not been established— 
25

•S 1302 IS 

1 ‘‘(A) the divorced spouse shall be deemed 

2 a participating individual for purposes of this 

3 part, and 

4 ‘‘(B) the Board shall establish a social se5 curity personal retirement account for the di6 vorced spouse and shall direct the appropriate 

7 certified account manager to perform the such 

8 transfer. 

9 ‘‘(3) PREEMPTION.—The provisions of this sub10 section shall supersede any provision of law of any 

11 State or political subdivision thereof which is incon12 sistent with the requirements of this subsection. 

13 ‘‘(b) CLOSING OF ACCOUNT UPON THE DEATH OF

14 THE PARTICIPATING INDIVIDUAL.— 

15 ‘‘(1) IN GENERAL.—Upon the death of a par16 ticipating individual, the Executive Director shall 

17 close out any remaining balance in the participating 

18 individual’s social security personal retirement ac19 count. In closing out the account, the Executive Di20 rector shall certify to the certified account manager 

21 the amount of the account assets, and, upon receipt 

22 of such certification, the certified account manager 

23 shall transfer from such account an amount equal to 

24 such certified amount to the Secretary of the Treas25 ury for subsequent transfer to— 
26

•S 1302 IS 

1 ‘‘(A) the social security personal retire2 ment account of the surviving spouse of such 

3 participating individual, 

4 ‘‘(B) if there is no such surviving spouse, 

5 to such other person as may be designated by 

6 the participating individual in accordance with 

7 regulations which shall be prescribed by the 

8 Board, or 

9 ‘‘(C) if there is no such designated person, 

10 to the estate of such participating individual. 

11 ‘‘(2) TREATMENT OF SURVIVING SPOUSE WHO

12 IS NOT A PARTICIPATING INDIVIDUAL.—In the case 

13 of a surviving spouse referred to in paragraph (1) 

14 who, as of the time of the death of the participating 

15 individual, is not a participating individual and for 

16 whom a social security personal retirement account 

17 has not been established— 

18 ‘‘(A) the surviving spouse shall be deemed 

19 a participating individual for purposes of this 

20 part, and 

21 ‘‘(B) the Board shall establish a social se22 curity personal retirement account for the sur23 viving spouse and shall direct the appropriate 

24 certified account manager to perform the such 

25 transfer. 
27

•S 1302 IS 

1 ‘‘(c) CLOSING OF ACCOUNT OF PARTICIPATING INDI2 VIDUALS WHO ARE INELIGIBLE FOR BENEFITS UPON

3 ATTAINING RETIREMENT AGE.—In any case in which, as 

4 of the date on which a participating individual attains re5 tirement age (as defined in section 216(l)), such individual 

6 is not eligible for an old-age insurance benefit under sec7 tion 202(a), the Commissioner shall so certify to the Exec8 utive Director and, upon receipt of such certification, the 

9 Executive Director shall close out the participating indi10 vidual’s social security personal retirement account. In 

11 closing out the account, the Executive Director shall cer12 tify to the certified account manager the amount of the 

13 account assets, and upon receipt of such certification from 

14 the Executive Director, the account manager shall trans15 fer from such account an amount equal to such certified 

16 amount to the Secretary of the Treasury for subsequent 

17 transfer to the participating individual. 

18 ‘‘(d) ADMINISTRATIVE EXPENSES.— 

19 ‘‘(1) IN GENERAL.—Under regulations which 

20 shall be prescribed by the Board, account assets are 

21 available in accordance with section 254(b)(2)(D)(ii) 

22 for payment of the reasonable administrative costs 

23 of the Program (including reasonable administration 

24 fees charged by certified account managers under 
28

•S 1302 IS 

1 the Program), but in no event to exceed 30 basis 

2 points per year of the assets under management. 

3 ‘‘(2) TEMPORARY AUTHORIZATION OF APPRO4 PRIATIONS FOR STARTUP ADMINISTRATIVE COSTS.—

5 For any such administrative costs that remain after 

6 applying paragraph (1) for each of the first five fis7 cal years that end after the date of the enactment 

8 of this part, there are authorized to be appropriated 

9 such sums as may be necessary for each of such fis10 cal years. 

11 ‘‘ADMINISTRATION OF THE PROGRAM

12 ‘‘SEC. 258. (a) GENERAL PROVISIONS.— 

13 ‘‘(1) ESTABLISHMENT AND DUTIES OF THE SO14 CIAL SECURITY PERSONAL SAVINGS BOARD.— 

15 ‘‘(A) ESTABLISHMENT.—There is estab16 lished within the Social Security Administration 

17 a Social Security Personal Savings Board. 

18 ‘‘(B) NUMBER AND APPOINTMENT.—The 

19 Board shall be composed of 6 members as fol20 lows: 

21 ‘‘(i) two members appointed by the 

22 President who may not be of the same po23 litical party; 

24 ‘‘(ii) one member appointed by the 

25 Speaker of the House of Representatives, 

26 in consultation with the Chairman of the 
29

•S 1302 IS 

1 Committee on Ways and Means of the 

2 House of Representatives; 

3 ‘‘(iii) one member appointed by the 

4 minority leader of the House of Represent5 atives, in consultation with the ranking 

6 member of the Committee on Ways and 

7 Means of the House of Representatives; 

8 ‘‘(iv) one member appointed by the 

9 majority leader of the Senate, in consulta10 tion with the Chairman of the Committee 

11 on Finance of the Senate; and 

12 ‘‘(v) one member appointed by the mi13 nority leader of the Senate, in consultation 

14 with the ranking member of the Committee 

15 on Finance of the Senate. 

16 ‘‘(C) ADVICE AND CONSENT.—Appoint17 ments under this paragraph shall be made by 

18 and with the advice and consent of the Senate. 

19 ‘‘(D) MEMBERSHIP REQUIREMENTS.—

20 Members of the Board shall have substantial 

21 experience, training, and expertise in the man22 agement of financial investments and pension 

23 benefit plans. 

24 ‘‘(E) TERMS.— 
30

•S 1302 IS 

1 ‘‘(i) IN GENERAL.—Each member 

2 shall be appointed for a term of 4 years, 

3 except as provided in clauses (ii) and (iii). 

4 The initial members shall be appointed not 

5 later than 90 days after the date of the en6 actment of this section. 

7 ‘‘(ii) TERMS OF INITIAL AP8 POINTEES.—Of the members first ap9 pointed under each clause of subparagraph 

10 (B), one of the members appointed under 

11 subparagraph (B)(i) (as designated by the 

12 President at the time of appointment) and 

13 the members appointed under clauses (iii) 

14 and (v) of subparagraph (B) shall be ap15 pointed for a term of 2 years, and the re16 maining members shall be appointed for a 

17 term of 4 years. 

18 ‘‘(iii) VACANCIES.—Any member ap19 pointed to fill a vacancy occurring before 

20 the expiration of the term for which the 

21 member’s predecessor was appointed shall 

22 be appointed only for the remainder of that 

23 term. A member may serve after the expi24 ration of that member’s term until a suc25 cessor has taken office. A vacancy in the 
31

•S 1302 IS 

1 Board shall be filled in the manner in 

2 which the original appointment was made. 

3 ‘‘(F) POWERS AND DUTIES OF THE

4 BOARD.— 

5 ‘‘(i) IN GENERAL.—The Board shall 

6 have powers and duties solely as provided 

7 in this part. The Board shall prescribe by 

8 regulation the terms of the Social Security 

9 Personal Retirement Accounts Program es10 tablished under this part, including policies 

11 for investment under the Program of ac12 count assets, and policies for the certifi13 cation and decertification of account man14 agers under the Program, which shall in15 clude consideration of the appropriateness 

16 of the marketing materials and plans of 

17 such person. 

18 ‘‘(ii) BUDGETARY REQUIREMENTS.—

19 The Board shall prepare and submit to the 

20 President and to the appropriate commit21 tees of Congress an annual budget of the 

22 expenses and other items relating to the 

23 Board which shall be included as a sepa24 rate item in the budget required to be 

25 transmitted to the Congress under section 
32

•S 1302 IS 

1 1105 of title 31, United States Code. The 

2 Board shall provide for low administrative 

3 costs such that, to the extent practicable, 

4 overall administrative costs of the Program 

5 do not exceed 30 basis points in relation to 

6 assets under management under the Pro7 gram. 

8 ‘‘(iii) ADDITIONAL AUTHORITIES OF

9 THE BOARD.—The Board may— 

10 ‘‘(I) adopt, alter, and use a seal; 

11 ‘‘(II) establish policies with which 

12 the Commissioner shall comply under 

13 this part; 

14 ‘‘(III) appoint and remove the 

15 Executive Director, as provided in 

16 paragraph (2); and 

17 ‘‘(IV) beginning with 2008, pro18 vide for such additional and alter19 native investment options for partici20 pating individuals as the Board deter21 mines would be prudent sources of re22 tirement income that would yield 

23 greater amounts of retirement income 

24 than the investment described in sec25 tion 255(c)(1). 
33

•S 1302 IS 

1 ‘‘(iv) INDEPENDENCE OF CERTIFIED

2 ACCOUNT MANAGERS.—The policies of the 

3 Board may not require a certified account 

4 manager to invest or to cause to be in5 vested any account assets in a specific 

6 asset or to dispose of or cause to be dis7 posed of any specific asset so held. 

8 ‘‘(v) MEETINGS OF THE BOARD.—The 

9 Board shall meet at the call of the Chair10 man or upon the request of a quorum of 

11 the Board. The Board shall perform the 

12 functions and exercise the powers of the 

13 Board on a majority vote of a quorum of 

14 the Board. Four members of the Board 

15 shall constitute a quorum for the trans16 action of business. 

17 ‘‘(vi) COMPENSATION OF BOARD MEM18 BERS.— 

19 ‘‘(I) IN GENERAL.—Each mem20 ber of the Board who is not an officer 

21 or employee of the Federal Govern22 ment shall be compensated at the 

23 daily rate of basic pay for level IV of 

24 the Executive Schedule for each day 

25 during which such member is engaged 
34

•S 1302 IS 

1 in performing a function of the 

2 Board. Any member who is such an 

3 officer or employee shall not suffer 

4 any loss of pay or deduction from an5 nual leave on the basis of any time 

6 used by such member in performing 

7 such a function. 

8 ‘‘(II) TRAVEL, PER DIEM, AND

9 EXPENSES.—A member of the Board 

10 shall be paid travel, per diem, and 

11 other necessary expenses under sub12 chapter I of chapter 57 of title 5, 

13 United States Code, while traveling 

14 away from such member’s home or 

15 regular place of business in the per16 formance of the duties of the Board. 

17 ‘‘(vii) STANDARD FOR BOARD’S DIS18 CHARGE OF RESPONSIBILITIES.—The 

19 members of the Board shall discharge their 

20 responsibilities solely in the interest of par21 ticipating individuals and the Program. 

22 ‘‘(viii) ANNUAL REPORT.—The Board 

23 shall submit an annual report to the Presi24 dent, to each House of the Congress, and 

25 to the Board of Trustees of the Federal 
35

•S 1302 IS 

1 Old-Age and Survivors Insurance Trust 

2 Fund and the Federal Disability Insurance 

3 Trust Fund regarding the financial and 

4 operating condition of the Program. 

5 ‘‘(ix) PUBLIC ACCOUNTANT.— 

6 ‘‘(I) DEFINITION.—For purposes 

7 of this subparagraph, the term ‘quali8 fied public accountant’ shall have the 

9 same meaning as provided in section 

10 103(a)(3)(D) of the Employee Retire11 ment Income Security Act of 1974 

12 (29 U.S.C. 1023(a)(3)(D)). 

13 ‘‘(II) ENGAGEMENT.—The Exec14 utive Director, in consultation with 

15 the Board, shall annually engage, on 

16 behalf of all individuals for whom a 

17 social security personal retirement ac18 count is established under this part, 

19 an independent qualified public ac20 countant, who shall conduct an exam21 ination of all records maintained in 

22 the administration of this part that 

23 the public accountant considers nec24 essary. 
36

•S 1302 IS 

1 ‘‘(III) DUTIES.—The public ac2 countant conducting an examination 

3 under clause (ii) shall determine 

4 whether the records referred to in 

5 such clause have been maintained in 

6 conformity with generally accepted ac7 counting principles. The public ac8 countant shall transmit to the Board 

9 a report on his examination. 

10 ‘‘(IV) RELIANCE ON CERTIFIED

11 ACTUARIAL MATTERS.—In making a 

12 determination under clause (iii), a 

13 public accountant may rely on the cor14 rectness of any actuarial matter cer15 tified by an enrolled actuary if the 

16 public accountant states his reliance 

17 in the report transmitted to the Board 

18 under such clause. 

19 ‘‘(2) EXECUTIVE DIRECTOR.— 

20 ‘‘(A) APPOINTMENT AND REMOVAL.—The 

21 Board shall appoint, without regard to the pro22 visions of law governing appointments in the 

23 competitive service, an Executive Director by 

24 action agreed to by a majority of the members 

25 of the Board. The Executive Director shall have 
37

•S 1302 IS 

1 substantial experience, training, and expertise 

2 in the management of financial investments and 

3 pension benefit plans. The Board may, with the 

4 concurrence of 4 members of the Board, remove 

5 the Executive Director from office for good 

6 cause shown. 

7 ‘‘(B) POWERS AND DUTIES OF EXECUTIVE

8 DIRECTOR.—The Executive Director shall— 

9 ‘‘(i) carry out the policies established 

10 by the Board, 

11 ‘‘(ii) administer the provisions of this 

12 part in accordance with the policies of the 

13 Board, 

14 ‘‘(iii) in consultation with the Board, 

15 prescribe such regulations (other than reg16 ulations relating to fiduciary responsibil17 ities) as may be necessary for the adminis18 tration of this part, and 

19 ‘‘(iv) meet from time to time with the 

20 Board upon request of the Board. 

21 ‘‘(C) ADMINISTRATIVE AUTHORITIES OF

22 EXECUTIVE DIRECTOR.—The Executive Direc23 tor may— 
38

•S 1302 IS 

1 ‘‘(i) appoint such personnel as may be 

2 necessary to carry out the provisions of 

3 this part, 

4 ‘‘(ii) subject to approval by the Board, 

5 procure the services of experts and consult6 ants under section 3109 of title 5, United 

7 States Code, 

8 ‘‘(iii) secure directly from any agency 

9 or instrumentality of the Federal Govern10 ment any information which, in the judg11 ment of the Executive Director, is nec12 essary to carry out the provisions of this 

13 part and the policies of the Board, and 

14 which shall be provided by such agency or 

15 instrumentality upon the request of the 

16 Executive Director, 

17 ‘‘(iv) pay the compensation, per diem, 

18 and travel expenses of individuals ap19 pointed under clauses (i), (ii), and (v) of 

20 this subparagraph, subject to such limits 

21 as may be established by the Board, 

22 ‘‘(v) accept and use the services of in23 dividuals employed intermittently in the 

24 Government service and reimburse such in25 dividuals for travel expenses, as authorized 
39

•S 1302 IS 

1 by section 5703 of title 5, United States 

2 Code, including per diem as authorized by 

3 section 5702 of such title, and 

4 ‘‘(vi) except as otherwise expressly 

5 prohibited by law or the policies of the 

6 Board, delegate any of the Executive Di7 rector’s functions to such employees under 

8 the Board as the Executive Director may 

9 designate and authorize such successive re10 delegations of such functions to such em11 ployees under the Board as the Executive 

12 Director may consider to be necessary or 

13 appropriate. 

14 ‘‘(3) ROLE OF THE COMMISSIONER OF SOCIAL

15 SECURITY.—The Commissioner shall— 

16 ‘‘(A) prescribe such regulations (supple17 mentary to and consistent with the regulations 

18 prescribed by the Board and the Executive Di19 rector) as may be necessary for carrying out the 

20 duties of the Commissioner under this part, 

21 ‘‘(B) meet from time to time with, and 

22 provide information to, the Board upon request 

23 of the Board regarding matters relating to the 

24 Social Security Personal Retirement Accounts 

25 Program, and 
40

•S 1302 IS 

1 ‘‘(C) in consultation with the Board and 

2 utilizing available Federal agencies and re3 sources, develop a campaign to educate workers 

4 about the Program. 

5 ‘‘(b) CERTIFICATION AND OVERSIGHT OF ACCOUNT

6 MANAGERS.— 

7 ‘‘(1) CERTIFICATION BY THE BOARD.— 

8 ‘‘(A) IN GENERAL.—Any person that is a 

9 qualified professional asset manager (as defined 

10 in section 8438(a)(8) of title 5, United States 

11 Code) may apply to the Board (in such form 

12 and manner as shall be provided by the Board 

13 by regulation) for certification under this sub14 section as a certified account manager. In mak15 ing certification decisions, the Board shall con16 sider the applicant’s general character and fit17 ness, financial history and future earnings pros18 pects, and ability to serve participating individ19 uals under the Program, and such other criteria 

20 as the Board deems necessary to carry out this 

21 part. Certification of any person under this sub22 section shall be contingent upon entry into a 

23 contractual arrangement between the Board 

24 and such person. 
41

•S 1302 IS 

1 ‘‘(B) NONDELEGATION REQUIREMENT.—

2 The authority of the Board to make any deter3 mination to deny any application under this 

4 subsection may not be delegated by the Board. 

5 ‘‘(2) OVERSIGHT OF CERTIFIED ACCOUNT MAN6 AGERS.— 

7 ‘‘(A) ROLE OF REGULATORY AGENCIES.—

8 The Board may enter into cooperative arrange9 ments with Federal and State regulatory agen10 cies identified by the Board as having jurisdic11 tion over persons eligible for certification under 

12 this subsection so as to ensure that the provi13 sions of this part are enforced with respect to 

14 certified account managers in a manner con15 sistent with and supportive of the requirements 

16 of other provisions of Federal law applicable to 

17 them. Such Federal regulatory agencies shall 

18 cooperate with the Board to the extent that the 

19 Board determines that such cooperation is nec20 essary and appropriate to ensure that the provi21 sions of this part are effectively implemented. 

22 ‘‘(B) ACCESS TO RECORDS.—The Board 

23 may from time to time require any certified ac24 count manager to file such reports as the Board 

25 may specify by regulation as necessary for the 
42

•S 1302 IS 

1 administration of this part. In prescribing such 

2 regulations, the Board shall minimize the regu3 latory burden imposed upon certified account 

4 managers while taking into account the benefit 

5 of the information to the Board in carrying out 

6 its functions under this part. 

7 ‘‘(3) REVOCATION OF CERTIFICATION.—The 

8 Board shall provide, in the contractual arrangements 

9 entered into under this subsection with each certified 

10 account manager, for revocation of such person’s 

11 status as a certified account manager upon deter12 mination by the Board of such person’s failure to 

13 comply with the requirements of such contractual ar14 rangements. Such arrangements shall include provi15 sion for notice and opportunity for review of any 

16 such revocation. 

17 ‘‘(c) FIDUCIARY RESPONSIBILITIES.— 

18 ‘‘(1) IN GENERAL.—Rules similar to the provi19 sions of section 8477 of title 5, United States Code 

20 (relating to fiduciary responsibilities; liability and 

21 penalties) shall apply in connection with account as22 sets, in accordance with regulations which shall be 

23 issued by the Board. The Board shall issue regula24 tions with respect to the investigative authority of 
43

•S 1302 IS 

1 appropriate Federal agencies in cases involving ac2 count assets. 

3 ‘‘(2) EXCULPATORY PROVISIONS VOIDED.—Any 

4 provision in an agreement or instrument which pur5 ports to relieve a fiduciary from responsibility or li6 ability for any responsibility, obligation, or duty 

7 under this part shall be void. 

8 ‘‘(d) CIVIL ACTIONS BY BOARD.—If any person fails 

9 to meet any requirement of this part or of any contract 

10 entered into under this part, the Board may bring a civil 

11 action in any district court of the United States within 

12 the jurisdiction of which such person’s assets are located 

13 or in which such person resides or is found, without regard 

14 to the amount in controversy, for appropriate relief to re15 dress the violation or enforce the provisions of this part, 

16 and process in such an action may be served in any dis17 trict. 

18 ‘‘(e) PREEMPTION OF INCONSISTENT STATE LAW.—

19 A provision of this part shall not be construed to preempt 

20 any provision of the law of any State or political subdivi21 sion thereof, or prevent a State or political subdivision 

22 thereof from enacting any provision of law with respect 

23 to the subject matter of this part, except to the extent 

24 that such provision of State law is inconsistent with this 

25 part, and then only to the extent of the inconsistency.’’. 
44

•S 1302 IS 

1 (b) CONFORMING AMENDMENT TO PART A.—Section 

2 202 of such Act (42 U.S.C. 402) is amended by adding 

3 at the end the following new subsection: 

4 ‘‘Adjustments Under Part B 

5 ‘‘(z) The amount of benefits under subsection (a), 

6 (b), (c), or (h), subsection (e) or (f) other than on the 

7 basis of disability, or any combination thereof which are 

8 otherwise payable under this part shall be subject to ad9 justment as provided under section 256(f).’’. 

10 (c) ADDITIONAL CONFORMING AMENDMENTS.—(1) 

11 Section 701(b) of the Social Security Act (42 U.S.C. 

12 901(b)) is amended by striking ‘‘title II’’ and inserting 

13 ‘‘part A of title II, the Social Security Personal Retire14 ment Accounts Program under part B of title II,’’. 

15 (2) Section 702(a)(4) of the Social Security Act (42 

16 U.S.C. 902(a)(4)) is amended by inserting ‘‘other than 

17 those of the Social Security Personal Savings Board’’ after 

18 ‘‘Administration’’, and by striking ‘‘thereof’’ and inserting 

19 ‘‘of the Administration in connection with the exercise of 

20 such powers and the discharge of such duties’’. 

21 SEC. 102. ANNUAL ACCOUNT STATEMENTS. 

22 Section 1143 of the Social Security Act (42 U.S.C. 

23 1320b–13) is amended by adding at the end the following 

24 new subsection: 
45

•S 1302 IS 

1 ‘‘Performance of Social Security Personal Retirement 

2 Accounts 

3 ‘‘(d) Beginning not later than 1 year after the date 

4 of the first deposit is made to an eligible individual’s So5 cial Security personal retirement account, each statement 

6 provided to such eligible individual under this section shall 

7 include information determined by the Social Security 

8 Personal Savings Board as sufficient to fully inform such 

9 eligible individual annually of the balance, investment per10 formance, and administrative expenses of such account.’’. 

11 TITLE II—TAX TREATMENT 

12 SEC. 201. TAX TREATMENT OF SOCIAL SECURITY PER13 SONAL RETIREMENT ACCOUNTS. 

14 Section 7701 of the Internal Revenue Code of 1986 

15 (relating to definitions) is amended by redesignating sub16 section (o) as subsection (p) and by inserting after sub17 section (n) the following new subsection: 

18 ‘‘(o) TAX TREATMENT OF SOCIAL SECURITY PER19 SONAL RETIREMENT ACCOUNTS.—All social security per20 sonal retirement accounts established under part B of title 

21 II of the Social Security Act shall be exempt from taxation 

22 under this title.’’. 
46 

•S 1302 IS 

1 SEC. 202. BENEFITS TAXABLE AS SOCIAL SECURITY BENE2 FITS. 

3 (a) SPECIAL RULES RELATING TO DISTRIBUTION OF

4 CLOSED ACCOUNT UNDER SECTION 257(d) OF SOCIAL

5 SECURITY ACT.—Section 86(a) of such Code (as amended 

6 by paragraph (2)) is amended by adding at the end the 

7 following new paragraph: 

8 ‘‘(4) EXTENSION OF PARAGRAPH (2)(B) TO DIS9 TRIBUTIONS OF CLOSED ACCOUNT UNDER SECTION

10 257(d) OF SOCIAL SECURITY ACT.—Notwithstanding 

11 any other provision of this subsection, in the case of 

12 any amount received pursuant to the closing of an 

13 account under section 257(d) of the Social Security 

14 Act, paragraph (2)(B) shall apply to such amounts, 

15 and for such purposes the amount allocated to the 

16 investment in the contract shall be zero.’’. 

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

18 this subsection shall apply to taxable years beginning after 

19 the end of the calendar year in which this Act is enacted. 

20 (c) ESTATE TAX NOT TO APPLY TO ASSETS OF SO21 CIAL SECURITY PERSONAL RETIREMENT ACCOUNTS.— 

22 (1) IN GENERAL.—Part IV of subchapter A of 

23 chapter 11 of such Code (relating to taxable estate) 

24 is amended by adding at the end the following new 

25 section: 
47 

•S 1302 IS 

1 ‘‘SEC. 2059. SOCIAL SECURITY PERSONAL RETIREMENT AC2 COUNTS. 

3 ‘‘For purposes of the tax imposed by section 2001, 

4 the value of the taxable estate shall be determined by de5 ducting from the value of the gross estate an amount 

6 equal to the value of the assets of a social security per7 sonal retirement account transferred from such account 

8 by the Secretary under section 257 of the Social Security 

9 Act.’’. 

10 (2) CLERICAL AMENDMENT.—The table of sec11 tions for part IV of subchapter A of chapter 11 of 

12 such Code is amended by adding at the end the fol13 lowing new item: 

‘‘Sec. 2059. Social security personal retirement accounts.’’. 

14 (3) EFFECTIVE DATE.—The amendments made 

15 by this subsection shall apply to decedents dying in 

16 or after the calendar year in which this Act is en17 acted. 

Æ