I 

112TH CONGRESS 

1ST SESSION H. R. 2109 

To provide for each American the opportunity to provide for his or her 

retirement through a S.A.F.E. account, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 3, 2011 

Mr. SESSIONS (for himself, Mrs. BLACKBURN, Mr. BURTON of Indiana, Mr. 

TERRY, Mr. SMITH of Texas, Mr. NEUGEBAUER, and Mr. HENSARLING) 

introduced the following bill; which was referred to the Committee on 

Ways and Means, and in addition to the Committee on Oversight and 

Government Reform, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To provide for each American the opportunity to provide 

for his or her retirement through a S.A.F.E. account, 

and for other purposes. 

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 AND TABLE OF CONTENTS. 

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

5 ‘‘Savings Account for Every American Act of 2011’’. 

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

7 as follows: 


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Sec. 1. Short title and table of contents. 

TITLE I—PERSONAL RETIREMENT PROGRAM 

Sec. 101. Definitions. 

Sec. 102. S.A.F.E. account payroll deduction programs. 

Sec. 103. Designation of S.A.F.E. accounts. 

Sec. 104. Self-employed individuals. 

Sec. 105. Elective participation. 

Sec. 106. Penalties. 

Sec. 107. Federal civilian and military personnel. 

TITLE II—TAX-EXEMPT S.A.F.E. ACCOUNTS 

Sec. 201. S.A.F.E. accounts. 

Sec. 202. Effective date. 

TITLE III—CONFORMING AMENDMENTS TO THE SOCIAL 

SECURITY ACT AND THE INTERNAL REVENUE CODE OF 1986 

Sec. 301. Reductions in and exemptions from FICA taxes and SECA taxes with 

respect to eligible individuals. 

Sec. 302. Exclusion of eligible individuals from old-age, survivors, and disability 

insurance coverage. 

Sec. 303. Information provided in social security account statements. 

1 TITLE I—PERSONAL 

2 RETIREMENT PROGRAM 

3 SEC. 101. DEFINITIONS. 

4 For purposes of this title— 

5 (1) ACCOUNT HOLDER.—The term ‘‘account 

6 holder’’ means, with respect to any S.A.F.E. ac7 count, the individual for whose benefit such account 

8 is maintained. 

9 (2) BUSINESS DAY.—The term ‘‘business day’’ 

10 means any day other than a Saturday, Sunday, or 

11 legal holiday in the area involved. 

12 (3) COVERED EMPLOYER.—The term ‘‘covered 

13 employer’’ means, for any calendar year, a person 


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1 for whom an eligible individual is engaged in em2 ployment during the year. 

3 (4) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible 

4 individual’’ means any individual with respect to 

5 whom there is in effect an election under section 

6 105(a). 

7 (5) EMPLOYMENT.—The term ‘‘employment’’ 

8 has the meaning provided in section 210 of the So9 cial Security Act. 

10 (6) PRESCRIBED EMPLOYEE CONTRIBUTION.— 

11 The term ‘‘prescribed employee contribution’’ means, 

12 with respect to any eligible individual who is en13 gaged in employment for a covered employer during 

14 any calendar year, an amount equal to 6.2 percent 

15 of the wages received by such employee with respect 

16 to such employment. The Commissioner of Social 

17 Security shall provide by regulation for exclusion of 

18 remuneration paid to any employee during any cal19 endar year from the total amount of remuneration 

20 treated under this paragraph as ‘‘wages’’ paid to 

21 such employee during such calendar year to the ex22 tent that such total amount exceeds the contribution 

23 and benefit base for such calendar year under sec24 tion 230 of the Social Security Act. 


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1 (7) PRESCRIBED SELF-EMPLOYMENT CON2 TRIBUTION.—The term ‘‘prescribed self-employment 

3 contribution’’ means, with respect to the self-employ4 ment income of an eligible individual for any cal5 endar year, the excess (if any) of— 

6 (A) 6.2 percent of the amount of such self7 employment income for such calendar year, to 

8 the extent that such self-employment income 

9 does not exceed, for such calendar year, the 

10 contribution and benefit base for such calendar 

11 year under section 230 of the Social Security 

12 Act, over 

13 (B) the total of all prescribed employee 

14 contributions and prescribed employer contribu15 tions payable with respect to such eligible indi16 vidual for such calendar year. 

17 Effective with the commencement of the 16th cal18 endar year for which the eligible individual’s election 

19 under section 105 is in effect, ‘‘12.4 percent’’ shall 

20 be substituted for ‘‘6.2 percent’’ in subparagraph 

21 (A). 

22 (8) PRESCRIBED EMPLOYER CONTRIBUTION.— 

23 The term ‘‘prescribed employer contribution’’ means, 

24 with respect to any eligible individual who is en25 gaged in employment for a covered employer during 


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1 any calendar year, an amount equal to 6.2 percent 

2 of the wages received by such employee with respect 

3 to such employment, to the extent that such wages 

4 do not exceed, for such calendar year, the contribu5 tion and benefit base for such calendar year under 

6 section 230 of the Social Security Act. 

7 (9) S.A.F.E. ACCOUNT.—The term ‘‘S.A.F.E. 

8 account’’ has the meaning provided in section 224(c) 

9 of the Internal Revenue Code of 1986. 

10 (10) SELF-EMPLOYMENT INCOME.—The term 

11 ‘‘self-employment income’’ has the meaning provided 

12 in section 211(b) of the Social Security Act. 

13 (11) WAGES.—The term ‘‘wages’’ has the 

14 meaning provided in section 209 of the Social Secu15 rity Act. 

16 SEC. 102. S.A.F.E. ACCOUNT PAYROLL DEDUCTION PRO17 GRAMS. 

18 (a) IN GENERAL.—Each person who is a covered em19 ployer for any calendar year shall have in effect through20 out such calendar year a S.A.F.E. account payroll deduc21 tion program for such person’s employees who are eligible 

22 individuals. 

23 (b) REQUIREMENTS.—For purposes of this Act, the 

24 term ‘‘S.A.F.E. account payroll deduction program’’ 


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1 means a written program maintained by a covered em2 ployer if— 

3 (1) under such program, the prescribed em4 ployee contribution is deducted from the wages of 

5 each employee who is an eligible individual and paid 

6 as a contribution on behalf of the employee to a 

7 S.A.F.E. account of such employee designated in ac8 cordance with section 103, 

9 (2) under such program, the covered em10 ployer— 

11 (A) makes timely payment of the amount 

12 so deducted as a contribution to the designated 

13 S.A.F.E. account, and 

14 (B) effective upon receipt from the eligible 

15 individual of certification (in accordance with 

16 regulations which shall be prescribed by the 

17 Commissioner of Social Security) of the com18 mencement of the 16th calendar year for which 

19 the eligible employee’s election under section 

20 105 has been in effect, makes timely payment, 

21 together with the amount so deducted, of the 

22 prescribed employer contribution with respect to 

23 the eligible individual, 

24 under regulations of the Commissioner of Social Se25 curity applying the same principles relating to the 


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1 timeliness of payment as are applicable under chap2 ter 62 of the Internal Revenue Code of 1986 with 

3 respect to taxes under chapter 21 of such Code, and 

4 (3) the employer receives no compensation for 

5 the cost of administering such program. 

6 (c) AMOUNTS OTHERWISE PAYABLE MAY BE ACCU7 MULATED BY EMPLOYER IN CERTAIN CASES.—If, under 

8 the terms of the governing instruments creating a 

9 S.A.F.E. account designated under section 103, contribu10 tions below a specified amount will not be accepted, the 

11 requirements of subsection (b)(2) shall be treated as met 

12 if amounts deducted from the wages of an employee who 

13 is an eligible individual, together with prescribed employer 

14 contributions (if any), are accumulated by the covered em15 ployer and paid to such account otherwise in accordance 

16 with subsection (b)(2) with reference to the first day on 

17 which the accumulated amount exceeds such specified 

18 amount. 

19 SEC. 103. DESIGNATION OF S.A.F.E. ACCOUNTS. 

20 (a) IN GENERAL.—Except as provided in subsection 

21 (b), a S.A.F.E. account to which contributions with re22 spect to any employee who is an eligible individual are re23 quired to be paid under section 102 shall be such an ac24 count designated by such employee to such employer not 

25 later than 10 business days after the date on which such 


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1 employee becomes an employee of such employer. Any 

2 such designation shall be made in such form and manner 

3 as may be prescribed in regulations of the Commissioner 

4 of Social Security. 

5 (b) DESIGNATION IN ABSENCE OF TIMELY DESIGNA6 TION BY EMPLOYEE.—In any case in which no timely des7 ignation of a S.A.F.E. account is made, the covered em8 ployer shall designate such account in accordance with 

9 regulations of the Commissioner of Social Security. 

10 (c) SUBSEQUENT SUBSTITUTION OF ACCOUNTS.— 

11 The Commissioner of Social Security shall provide by reg12 ulation for subsequent designation of a S.A.F.E. account 

13 by an account holder in lieu of an account previously des14 ignated by such account holder under this section. 

15 SEC. 104. SELF-EMPLOYED INDIVIDUALS. 

16 (a) IN GENERAL.—In the case of an eligible indi17 vidual who has self-employment income for any calendar 

18 year, such individual shall make timely payments to a 

19 S.A.F.E. account designated by such individual of the pre20 scribed self-employment contribution with respect to such 

21 individual for such calendar year in accordance with regu22 lations of the Commissioner of Social Security, applying 

23 the same principles relating to timeliness of payment as 

24 are applicable under chapter 62 of the Internal Revenue 


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1 Code of 1986 with respect to taxes under chapter 2 of 

2 such Code. 

3 (b) DESIGNATION OF ACCOUNT.—The designation of 

4 a S.A.F.E. account for payment of prescribed self-employ5 ment contributions shall be made in such form and man6 ner as may be prescribed in regulations of the Commis7 sioner of Social Security. 

8 (c) PERIODIC PAYMENT.—The Commissioner of So9 cial Security shall provide by regulation for periodic in10 stallment payments during the calendar year of prescribed 

11 self-employment contributions for each eligible individual, 

12 taking into account, as appropriate for each period, pre13 scribed employee contributions for such individual. 

14 SEC. 105. ELECTIVE PARTICIPATION. 

15 (a) ELECTION.—Any individual who has been as16 signed a social security account number under section 

17 205(c)(2)(B) of the Social Security Act and has been paid 

18 wages or has derived self-employment income may, on or 

19 after January 1, 2012, elect under this section to be an 

20 eligible individual for purposes of this Act. Any such elec21 tion shall be made by filing with the Commissioner of So22 cial Security, the Secretary of the Treasury, and each per23 son (if any) who is an employer of such individual on the 

24 date of the filing, in such form and manner as shall be 

25 prescribed in regulations of the Commissioner (in conVerDate Mar 15 2010 04:34 Jun 08, 2011 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2109.IH H2109

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1 sultation with the Secretary of the Treasury), a written 

2 and signed declaration of such individual’s intention to be 

3 treated as an eligible individual for purposes of this Act. 

4 An election under this section shall be effective with re5 spect to wages paid, and self-employment income derived, 

6 on or after January 1 following the date of the filing of 

7 the election. 

8 (b) ELECTION INEFFECTIVE IF ENTITLED TO SO9 CIAL SECURITY BENEFITS.—Any election under this sec10 tion shall not take effect if, as of the effective date of the 

11 election, the individual is entitled to an old-age insurance 

12 benefit under section 202(a) of the Social Security Act or 

13 to a disability insurance benefit under section 223 of such 

14 Act. 

15 (c) IRREVOCABILITY SUBJECT TO GRACE PERIOD.— 

16 (1) IN GENERAL.—Unless revoked in accord17 ance with paragraph (2), an election under this sec18 tion shall be irrevocable. 

19 (2) FIVE-YEAR GRACE PERIOD.— 

20 (A) IN GENERAL.—An individual may re21 voke an election under this section by filing 

22 with the Commissioner of Social Security, the 

23 Secretary of the Treasury, and each person (if 

24 any) who is an employer of such individual on 

25 the date of the filing, in such form and manner 


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1 as shall be prescribed in regulations of the 

2 Commissioner (in consultation with the Sec3 retary of the Treasury), a written and signed 

4 revocation of the election at any time before the 

5 end of the five-year period beginning with the 

6 effective date of the election. A revocation 

7 under this subsection shall take effect January 

8 1 following the date of the filing of the revoca9 tion, except that a revocation filed during the 

10 90-day period beginning with the date of the fil11 ing of the election shall take effect as of the ef12 fective date of the election. Upon the effective 

13 date of a revocation under this subsection, enti14 tlement to benefits under title II of the Social 

15 Security Act shall be determined as if the re16 voked election had not occurred, except that, for 

17 purposes of any such entitlement, wages paid, 

18 and self-employment income derived, during the 

19 period for which the election was in effect shall 

20 not be taken into account. No subsequent elec21 tion under this section may take effect with re22 spect to an individual who has filed a revocation 

23 under this subsection (except a revocation filed 

24 during the 90-day period beginning with the 

25 date of the filing of the election). 


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1 (B) REDUCTION IN BENEFITS.—The pri2 mary insurance amount, as determined under 

3 section 215 of the Social Security Act, of any 

4 individual who has filed a revocation under this 

5 subsection before the end of the five-year period 

6 described in subparagraph (A) (and after the 

7 90-day period referred to in subparagraph (A)) 

8 shall be reduced (except for purposes of deter9 mining benefits under section 223 of such Act, 

10 and before any application of section 215(i) of 

11 such Act) by the applicable percentage specified 

12 in the following table: 

If the first calendar year for 

which the revocation The applicable 

is effective is: percentage is: 

The first, second, or third calendar year of such five-year 

period ............................................................................ 20 percent

The fourth calendar year of such five-year period ........... 40 percent

The fifth calendar year of such five-year period ............... 60 percent

The calendar year following such five-year period ............ 80 percent. 

13 SEC. 106. PENALTIES. 

14 (a) FAILURE TO ESTABLISH S.A.F.E. ACCOUNT

15 PAYROLL DEDUCTION PROGRAM.—Any covered employer 

16 who fails to meet the requirements of section 102 for any 

17 calendar year shall be subject to a civil penalty of not to 

18 exceed— 

19 (1) $250,000, in the case of an employer who 

20 is an individual, or 

21 (2) $500,000, in any other case. 


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1 (b) FAILURE TO MAKE DEDUCTIONS REQUIRED

2 UNDER PROGRAM.—Any covered employer who fails to 

3 timely deduct in full the amount from the wages of an 

4 employee who is an eligible individual as required under 

5 an applicable S.A.F.E. account payroll deduction program 

6 shall be subject to a civil penalty for each such failure 

7 of not to exceed— 

8 (1) $250,000, in the case of an employer who 

9 is an individual, or 

10 (2) $500,000, in any other case. 

11 (c) FAILURE TO PAY DEDUCTED WAGES TO

12 S.A.F.E. ACCOUNT.—If an amount deducted under a 

13 S.A.F.E. account payroll deduction program from the 

14 wages of an employee who is an eligible individual is not 

15 timely paid in full to the designated S.A.F.E. account in 

16 accordance with section 102, the covered employer failing 

17 to make such payment— 

18 (1) shall be subject to a civil penalty for each 

19 such failure of not to exceed— 

20 (A) $250,000, in the case of an employer 

21 who is an individual, or 

22 (B) $500,000, in any other case, and 

23 (2) shall be liable to the employee for interest 

24 on the unpaid amount at a rate equal to 10 percent25 age points in excess of the Federal short-term rate 


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1 under section 1274(d)(1) of the Internal Revenue 

2 Code of 1986, calculated from the last day by which 

3 such amount was required to be so paid to the date 

4 on which such amount is paid into the designated 

5 S.A.F.E. account. 

6 (d) FAILURE TO PAY PRESCRIBED SELF-EMPLOY7 MENT CONTRIBUTIONS TO S.A.F.E. ACCOUNT.—Any eli8 gible individual failing to timely pay in full a prescribed 

9 self-employment contribution to a designated S.A.F.E. ac10 count as required under section 104 shall be subject to 

11 a civil penalty for each such failure of not to exceed 

12 $250,000, plus interest on the unpaid amount at a rate 

13 equal to 10 percentage points in excess of the Federal 

14 short-term rate under section 1274(d)(1) of the Internal 

15 Revenue Code of 1986, calculated from the last day by 

16 which such amount was required to be so paid to the date 

17 on which such amount is paid into the designated 

18 S.A.F.E. account. 

19 (e) RULES FOR APPLICATION OF SECTION.— 

20 (1) PENALTIES ASSESSED BY COMMISSIONER

21 OF SOCIAL SECURITY.—Any civil penalty assessed by 

22 this section shall be imposed by the Commissioner of 

23 Social Security and collected in a civil action. 


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1 (2) COMPROMISES.—The Commissioner may 

2 compromise the amount of any civil penalty imposed 

3 by this section. 

4 (3) AUTHORITY TO WAIVE PENALTY IN CER5 TAIN CASES.—The Commissioner may waive the ap6 plication of this section with respect to any failure 

7 if the Commissioner determines that such failure is 

8 due to reasonable cause and not to intentional dis9 regard of rules and regulations. 

10 SEC. 107. FEDERAL CIVILIAN AND MILITARY PERSONNEL. 

11 (a) IN GENERAL.—Not later than December 31, 

12 2011, the Office of Personnel Management, after appro13 priate study, shall submit to the President and each House 

14 of Congress a written report containing recommendations 

15 on how to provide for the application of this Act with re16 spect to Federal civilian and military personnel. 

17 (b) REQUIREMENTS.—The report— 

18 (1) shall be prepared in consultation with the 

19 Social Security Administration, the Securities and 

20 Exchange Commission, and other appropriate agen21 cies; and 

22 (2) shall be accompanied by draft legislation 

23 which, if enacted, would carry out the recommenda24 tions contained in such report. 


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1 (c) PROVISIONS RELATING TO THE CONTINUED OP2 ERATION OF EXISTING RETIREMENT SYSTEMS.—To the 

3 extent that the report and draft legislation relate to provi4 sions of law in effect before the date of enactment of this 

5 Act, each shall address at least the following: 

6 (1) FEDERAL EMPLOYEES’ RETIREMENT SYS7 TEM.— 

8 (A) Section 8401(11) of title 5, United 

9 States Code (relating to the definition of an 

10 ‘‘employee’’), which includes the requirement 

11 that the individual concerned be someone whose 

12 civilian service is employment for the purposes 

13 of title II of the Social Security Act and chap14 ter 21 of the Internal Revenue Code of 1986. 

15 (B) Section 8421 of such title (relating to 

16 annuity supplement), which includes provisions 

17 incorporating the notion of the period of time 

18 for which the individual is or would be entitled 

19 to old-age insurance benefits under title II of 

20 the Social Security Act, and provisions for com21 puting the amount of such supplement based on 

22 the amount of certain benefits to which the in23 dividual would be entitled under such Act. 

24 (C) Section 8442 of such title (relating to 

25 rights of a widow or widower), which includes 


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1 provisions under which a supplementary annu2 ity for a widow or widower is not payable to 

3 anyone who would not be entitled to certain 

4 benefits under the Social Security Act, and pro5 visions for the computation of any such annuity 

6 based on the amount of certain benefits which 

7 would be payable to that individual under the 

8 Social Security Act. 

9 (D) Section 8443 of such title (relating to 

10 rights of a child), which includes provisions 

11 under which, as part of the formula for com12 puting the amount of a survivor annuity for a 

13 child, there is incorporated the notion of the 

14 amount of child’s insurance benefits which are 

15 or would be payable under title II of the Social 

16 Security Act. 

17 (2) CIVIL SERVICE RETIREMENT SYSTEM.— 

18 (A) Section 8334(k) of such title (relating 

19 to special rules for determining deductions and 

20 contributions for individuals subject to ‘‘offset21 83’’ treatment), which incorporates the notion 

22 of the OASDI contribution made from Federal 

23 wages of the individual concerned. 

24 (B) Section 8349 of such title (relating to 

25 offset based on certain benefits under the Social 


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1 Security Act), which incorporates notions relat2 ing to actual or constructive eligibility for bene3 fits under the Social Security Act, and the 

4 amount of those benefits. 

5 (3) COORDINATION PROVISIONS.—Provisions of 

6 law involving a reduction or other adjustment in re7 tirement benefits (or eligibility therefor), based on 

8 any individual’s eligibility for benefits under title II 

9 of the Social Security Act. 

10 (4) OTHER RETIREMENT SYSTEMS.—Similar 

11 provisions of law under other retirement systems 

12 covering Federal civilian or military personnel. 

13 (d) PROVISIONS RELATING TO THE NEW SYSTEM.— 

14 To the extent that the report and draft legislation relate 

15 to the implementation of any other title of this Act, each 

16 shall address at least the following: 

17 (1) What the specifications for the S.A.F.E. ac18 count payroll deduction program or programs cov19 ering Federal civilian and military personnel shall be 

20 or, alternatively, how those specifications shall be de21 veloped. 

22 (2) Which agencies or instrumentalities of the 

23 Federal Government shall be responsible for oper24 ating or maintaining which aspects of the program 

25 or programs referred to in paragraph (1). 


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1 (3) Which penalty provisions are appropriate or 

2 inappropriate with respect to the Federal Govern3 ment in its capacity as a ‘‘covered employer’’, sub4 ject to what modifications (if any). 

5 TITLE II—TAX-EXEMPT S.A.F.E. 

6 ACCOUNTS 

7 SEC. 201. S.A.F.E. ACCOUNTS. 

8 (a) IN GENERAL.—Part VII of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 (relating to 

10 additional itemized deductions for individuals) is amended 

11 by redesignating section 224 as section 225 and by insert12 ing after section 223 the following new section: 

13 ‘‘SEC. 224. S.A.F.E. ACCOUNTS. 

14 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi15 vidual, there shall be allowed as a deduction the aggregate 

16 amount paid in cash during the taxable year by or on be17 half of such individual to a S.A.F.E. account of such indi18 vidual. 

19 ‘‘(b) LIMITATION.—The amount allowable as a de20 duction under subsection (a) for any taxable year shall not 

21 exceed 6.2 percent of the lesser of— 

22 ‘‘(1) the contribution and benefit base (as de23 termined under section 230 of the Social Security 

24 Act) for the calendar year which ends with or within 

25 such taxable year, or 


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1 ‘‘(2) the sum of— 

2 ‘‘(A) the amount of wages (as defined in 

3 section 3121(a)) received during such calendar 

4 year, and 

5 ‘‘(B) the amount of the self-employment 

6 income (as defined in section 1402) of such in7 dividual for the taxable year. 

8 Effective with the commencement of the 16th calendar 

9 year for which the individual’s election under section 105 

10 of the Savings Account for Every American Act of 2011 

11 is effective, the limitation under the preceding sentence 

12 shall be increased by any prescribed employer contribution 

13 paid to a personal retirement account of such individual 

14 pursuant to section 102(b)(2)(B) of such Act and the por15 tion of any prescribed self-employment contribution paid 

16 to such an account which is attributable to the increase 

17 in such contribution required by the last sentence of sec18 tion 101(7) of such Act. 

19 ‘‘(c) S.A.F.E. ACCOUNT.—For purposes of this sec20 tion, the term ‘S.A.F.E. account’ means a trust created 

21 or organized in the United States exclusively for the ben22 efit of an individual or his beneficiaries, but only if the 

23 written governing instrument creating the trust meets the 

24 following requirements: 


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1 ‘‘(1) Except in the case of rollover contributions 

2 from another S.A.F.E. account of such individual— 

3 ‘‘(A) no contribution will be accepted un4 less it is in cash, 

5 ‘‘(B) contributions will not be accepted for 

6 the taxable year in excess of 6.2 percent of the 

7 contribution and benefit base (as determined 

8 under section 230 of the Social Security Act) 

9 for the calendar year which ends with or within 

10 such taxable year, and 

11 ‘‘(C) any contributions with respect to an 

12 account holder which are not accepted pursuant 

13 to this paragraph are promptly refunded di14 rectly to the account holder. 

15 In the case of any such individual, effective for tax16 able years beginning with or after the 16th calendar 

17 year for which the individual’s election under section 

18 105 of the Savings Account for Every American Act 

19 of 2011 is effective, ‘12.4 percent’ shall be sub20 stituted for ‘6.2 percent’ in subparagraph (B). 

21 ‘‘(2) The trustee is a bank (as defined in sec22 tion 408(n)) or such other person who demonstrates 

23 to the satisfaction of the Secretary that the manner 

24 in which such other person will administer the trust 


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1 will be consistent with the requirements of this sec2 tion. 

3 ‘‘(3) No part of the trust funds will be invested 

4 in life insurance contracts. 

5 ‘‘(4) The interest of an individual in the bal6 ance in his account is nonforfeitable. 

7 ‘‘(5) The assets of the trust will not be commin8 gled with other property except in a common trust 

9 fund or common investment fund. 

10 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.— 

11 ‘‘(1) IN GENERAL.—Except as otherwise pro12 vided in this subsection, any amount distributed out 

13 of a S.A.F.E. account shall be included in gross in14 come of the distributee for the taxable year in which 

15 the distribution is received. Notwithstanding any 

16 other provision of this title (including chapters 11 

17 and 12), the basis of any person in such an account 

18 is zero. 

19 ‘‘(2) EXCEPTIONS FOR DISTRIBUTIONS AFTER

20 SOCIAL SECURITY RETIREMENT AGE OR DEATH.— 

21 Paragraph (1) shall not apply to any distribution 

22 out of a S.A.F.E. account— 

23 ‘‘(A) made on or after the date on which 

24 the account beneficiary attains retirement age 


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1 (as defined in section 216(l) of the Social Secu2 rity Act), or 

3 ‘‘(B) made to the account beneficiary (or 

4 to the estate of the beneficiary) on or after the 

5 death of the account beneficiary. 

6 ‘‘(3) EXCEPTIONS FOR DISTRIBUTIONS TO PUR7 CHASE CERTAIN INSURANCE.—Paragraph (1) shall 

8 not apply to any distribution out of a S.A.F.E. ac9 count to the account beneficiary to the extent such 

10 distributions do not exceed the sum of the expenses 

11 paid or incurred during the taxable year for— 

12 ‘‘(A) any qualified long-term care insur13 ance contract (but only to the extent of eligible 

14 long-term care premiums (as defined in section 

15 213(d)(10)), 

16 ‘‘(B) disability insurance, or 

17 ‘‘(C) term life insurance. 

18 ‘‘(4) EXCEPTIONS FOR CERTAIN OTHER DIS19 TRIBUTIONS.—Rules similar to the rules of para20 graphs (3), (4), (5), and (6) of section 408(d) shall 

21 apply for purposes of this section. 

22 ‘‘(e) TAX TREATMENT OF ACCOUNTS.— 

23 ‘‘(1) EXEMPTION FROM TAX.—A S.A.F.E. ac24 count is exempt from taxation under this subtitle 

25 unless such account has ceased to be a S.A.F.E. acVerDate Mar 15 2010 04:34 Jun 08, 2011 Jkt 099200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\H2109.IH H2109

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1 count by reason of paragraph (2). Notwithstanding 

2 the preceding sentence, any such account is subject 

3 to the taxes imposed by section 511 (relating to im4 position of tax on unrelated business income of char5 itable, etc. organizations). 

6 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

7 to the rules of paragraphs (2) and (4) of section 

8 408(e) shall apply to S.A.F.E. accounts, and any 

9 amount treated as distributed under such rules shall 

10 be treated as not used to pay expenses described in 

11 subsection (d)(3). 

12 ‘‘(f) ADDITIONAL TAX ON AMOUNTS INCLUDED IN

13 GROSS INCOME.—If any distribution from a S.A.F.E. ac14 count is includible in gross income of the account bene15 ficiary, the tax liability of such beneficiary under this 

16 chapter for the taxable year in which the distribution is 

17 received shall be increased by an amount equal to 20 per18 cent of the amount of the distribution. 

19 ‘‘(g) OTHER DEFINITION AND SPECIAL RULES.— 

20 ‘‘(1) ACCOUNT BENEFICIARY.—For purposes of 

21 this section, the term ‘account beneficiary’ means 

22 the individual for whose benefit the S.A.F.E. ac23 count was established. 


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1 ‘‘(2) CERTAIN RULES TO APPLY.—Rules similar 

2 to the following rules shall apply for purposes of this 

3 section: 

4 ‘‘(A) Section 219(d)(2) (relating to no de5 duction for rollovers). 

6 ‘‘(B) Section 219(f)(3) (relating to time 

7 when contributions deemed made). 

8 ‘‘(C) Section 219(f)(5) (relating to em9 ployer payments). 

10 ‘‘(D) Section 408(g) (relating to commu11 nity property laws). 

12 ‘‘(E) Section 408(h) (relating to custodial 

13 accounts). 

14 ‘‘(h) REPORTS.—The trustee of a S.A.F.E. account 

15 shall make such reports regarding such account to the 

16 Secretary and to the individual for whose benefit the ac17 count is maintained with respect to contributions, dis18 tributions, and such other matters as the Secretary may 

19 by regulation prescribe. The reports required by this sub20 section shall be filed at such time and in such manner, 

21 and furnished to such individuals at such time and in such 

22 manner, as may be required by such regulations.’’. 

23 (b) DEDUCTION ALLOWED IN ARRIVING AT AD24 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 


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1 the Internal Revenue Code of 1986 is amended by insert2 ing after paragraph (21) the following new paragraph: 

3 ‘‘(22) S.A.F.E. ACCOUNT CONTRIBUTIONS.— 

4 The deduction allowed by section 224.’’. 

5 (c) TAX ON EXCESS CONTRIBUTIONS.— 

6 (1) Subsection (a) of section 4973 of such Code 

7 (relating to tax on excess contributions to individual 

8 retirement accounts, etc.) is amended by striking 

9 ‘‘or’’ at the end of paragraph (4), by inserting ‘‘or’’ 

10 at the end of paragraph (5), and by inserting after 

11 paragraph (5) the following new paragraph: 

12 ‘‘(6) a S.A.F.E. account (within the meaning of 

13 section 224(c)),’’. 

14 (2) Section 4973 of such Code is amended by 

15 adding at the end the following new subsection: 

16 ‘‘(h) EXCESS CONTRIBUTIONS TO S.A.F.E. AC17 COUNTS.—For purposes of this section, in the case of 

18 S.A.F.E. accounts (within the meaning of section 224(c)), 

19 the term ‘excess contributions’ means the sum of— 

20 ‘‘(1) the excess (if any) of— 

21 ‘‘(A) the aggregate amount contributed for 

22 the taxable year to the accounts (other than 

23 rollover contributions), over 

24 ‘‘(B) the amount allowable as a deduction 

25 under section 224 for such contributions, and 


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1 ‘‘(2) the amount determined under this sub2 section for the preceding taxable year, reduced by 

3 the sum of— 

4 ‘‘(A) the distributions out of the accounts 

5 which were included in gross income under 

6 rules similar to the rules of section 408(d)(5) 

7 which apply to such accounts by reason of sec8 tion 224(d)(4), and 

9 ‘‘(B) the excess (if any) of— 

10 ‘‘(i) the maximum amount allowable 

11 as a deduction under section 224(b) for 

12 the taxable year, over 

13 ‘‘(ii) the amount contributed to the 

14 accounts for the taxable year. 

15 For purposes of this subsection, any contribution 

16 which is distributed out of the S.A.F.E. account in 

17 a distribution to which the rules similar to the rules 

18 of section 408(d)(4) which apply to such accounts by 

19 reason of section 224(d)(4) shall be treated as an 

20 amount not contributed.’’. 

21 (d) TAX ON PROHIBITED TRANSACTIONS.— 

22 (1) IN GENERAL.—Paragraph (1) of section 

23 4975(e) of such Code (relating to prohibited trans24 actions) is amended by striking ‘‘or’’ at the end of 

25 subparagraph (F), by redesignating subparagraph 


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1 (G) as subparagraph (H), and by inserting after 

2 subparagraph (F) the following new subparagraph: 

3 ‘‘(G) a S.A.F.E. account described in sec4 tion 224(c), or’’. 

5 (2) SPECIAL RULE.—Subsection (c) of section 

6 4975 of such Code is amended by adding at the end 

7 the following new paragraph: 

8 ‘‘(7) SPECIAL RULE FOR S.A.F.E. ACCOUNTS.— 

9 An individual for whose benefit a S.A.F.E. account 

10 is established shall be exempt from the tax imposed 

11 by this section with respect to any transaction con12 cerning such account (which would otherwise be tax13 able under this section) if section 224(e)(2) applies 

14 with respect to such transaction.’’. 

15 (e) FAILURE TO PROVIDE REPORTS ON S.A.F.E. AC16 COUNTS.—Paragraph (2) of section 6693(a) of such Code 

17 (relating to failure to provide reports on individual retire18 ment accounts or annuities) is amended by striking ‘‘and’’ 

19 at the end of subparagraph (D), by striking the period 

20 at the end of subparagraph (E) and inserting ‘‘, and’’, 

21 and by adding at the end the following new subparagraph: 

22 ‘‘(F) Section 224(h) (relating to S.A.F.E. 

23 accounts).’’. 

24 (f) CLERICAL AMENDMENT.—The table of sections 

25 for part VII of subchapter B of chapter 1 of such Code 


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1 is amended by striking the item relating to section 224 

2 and inserting the following new items: 

‘‘Sec. 224. S.A.F.E. accounts. 

‘‘Sec. 225. Cross references.’’. 

3 SEC. 202. EFFECTIVE DATE. 

4 The amendments made by this title shall apply to 

5 contributions made for taxable years beginning after De6 cember 31, 2011. 

7 TITLE III—CONFORMING 

8 AMENDMENTS TO THE SO9 CIAL SECURITY ACT AND THE 

10 INTERNAL REVENUE CODE 

11 OF 1986 

12 SEC. 301. REDUCTIONS IN AND EXEMPTIONS FROM FICA 

13 TAXES AND SECA TAXES WITH RESPECT TO 

14 ELIGIBLE INDIVIDUALS. 

15 (a) FICA TAX ON EMPLOYEES.—Section 3101 of the 

16 Internal Revenue Code of 1986 (relating to OASDI tax 

17 on employees) is amended— 

18 (1) in subsection (a), by striking ‘‘In addition’’ 

19 and inserting ‘‘Subject to subsection (c), in addi20 tion’’; 

21 (2) by redesignating subsection (c) as sub22 section (d); and 

23 (3) by inserting after subsection (b) the fol24 lowing new subsection: 


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1 ‘‘(c) EXEMPTION FROM OASDI TAX FOR ELIGIBLE

2 INDIVIDUALS.—Subsection (a) shall not apply with re3 spect to wages received by an eligible individual (as de4 fined in section 101(4) of the Savings Account for Every 

5 American Act of 2011).’’ 

6 (b) FICA TAX ON EMPLOYERS.—Section 3111 of 

7 such Code (relating to OASDI tax on employees) is 

8 amended— 

9 (1) in subsection (a), by striking ‘‘In addition’’ 

10 and inserting ‘‘Subject to subsection (c), in addi11 tion’’; 

12 (2) by redesignating subsection (c) as sub13 section (d); and 

14 (3) by inserting after subsection (b) the fol15 lowing new subsection: 

16 ‘‘(c) EXEMPTION FROM OASDI TAX WITH RESPECT

17 TO ELIGIBLE INDIVIDUALS.—In the case of an eligible in18 dividual (as defined in section 101(4) of the Savings Ac19 count for Every American Act of 2011), effective with the 

20 16th calendar year for which such individual’s election 

21 under section 105 of such Act is effective, subsection (a) 

22 shall not apply with respect to wages received by such indi23 vidual.’’ 


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1 (c) REDUCTION IN AND EXEMPTION FROM SELF-EM2 PLOYMENT TAX.—Section 1401 of such Code (relating to 

3 OASDI tax on self-employment income) is amended— 

4 (1) in subsection (a), by striking ‘‘In addition’’ 

5 and inserting ‘‘Subject to subsection (c), in addi6 tion’’; 

7 (2) by redesignating subsection (c) as sub8 section (d); and 

9 (3) by inserting after subsection (b) the fol10 lowing new subsection: 

11 ‘‘(c) ADJUSTMENT TO OASDI TAX.— 

12 ‘‘(1) REDUCTION.—In the case of an eligible in13 dividual (as defined in section 101(4) of the Savings 

14 Account for Every American Act of 2011), for tax15 able years beginning with or during the 1st 15 cal16 endar years for which such individual’s election is in 

17 effect under section 105 of such Act, the rate of tax 

18 under subsection (a) shall be 6.20 percent. 

19 ‘‘(2) EXEMPTION.—In the case of such an eligi20 ble individual, effective for taxable years beginning 

21 with or during the 16th calendar year for which 

22 such individual’s election under such section 105 is 

23 effective, subsection (a) shall not apply.’’ 

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

25 this section shall apply with respect to wages received 


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1 after December 31, 2012, and with respect to self-employ2 ment income for taxable years beginning after such date. 

3 SEC. 302. EXCLUSION OF ELIGIBLE INDIVIDUALS FROM 

4 OLD-AGE, SURVIVORS, AND DISABILITY IN5 SURANCE COVERAGE. 

6 (a) MONTHLY INSURANCE BENEFITS UNDER SEC7 TION 202.—Section 202 of the Social Security Act (42 

8 U.S.C. 402) is amended by adding at the end the following 

9 new subsection: 

10 ‘‘Limitation on Payment to Eligible Individuals Under 

11 Savings Account for Every American Act of 2011 

12 ‘‘(z)(1) Notwithstanding any other provision of this 

13 title, no monthly benefits shall be paid under this section 

14 based on the wages and self-employment income of an eli15 gible individual (as defined in section 101(4) of the Sav16 ings Account for Every American Act of 2011). 

17 ‘‘(2) Determinations of entitlement to hospital insur18 ance benefits under section 226 or 226A shall be made 

19 without regard to paragraph (1).’’. 

20 (b) DISABILITY INSURANCE BENEFITS UNDER SEC21 TION 223.—Section 223 of such Act (42 U.S.C. 423) is 

22 amended by adding at the end the following new sub23 section: 


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1 ‘‘Limitation on Payment to Eligible Individuals Under 

2 Savings Account for Every American Act of 2011 

3 ‘‘(k)(1) Notwithstanding any other provision of this 

4 title, no monthly benefits shall be paid under this section 

5 based on the wages and self-employment income of an eli6 gible individual (as defined in section 101(4) of the Sav7 ings Account for Every American Act of 2011). 

8 ‘‘(2) Determinations of entitlement to hospital insur9 ance benefits under section 226 or 226A shall be made 

10 without regard to paragraph (1).’’. 

11 SEC. 303. INFORMATION PROVIDED IN SOCIAL SECURITY 

12 ACCOUNT STATEMENTS. 

13 (a) IN GENERAL.—Section 1143 of the Social Secu14 rity Act (42 U.S.C. 1320b–13) is amended to read as fol15 lows: 

16 ‘‘SOCIAL SECURITY ACCOUNT STATEMENT

17 ‘‘Provision of Annual Statements 

18 ‘‘SEC. 1143. (a) The Commissioner of Social Security 

19 shall provide an annual social security account statement 

20 (hereinafter in this section referred to as the ‘statement’) 

21 to each eligible individual who is not receiving benefits 

22 under title II and for whom a mailing address can be de23 termined through such methods as the Commissioner de24 termines to be appropriate. 

25 ‘‘Contents of Statement 

26 ‘‘(b) Each statement shall contain— 


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1 ‘‘(1) the amount of wages paid to and self-em2 ployment income derived by the eligible individual as 

3 shown by the records of the Commissioner; 

4 ‘‘(2) an estimate of the aggregate of the em5 ployer, employee, and self-employment contributions 

6 of the eligible individual for old-age, survivors, and 

7 disability insurance as shown by the records of the 

8 Commissioner; 

9 ‘‘(3) a separate estimate of the aggregate of the 

10 employer, employee, and self-employment contribu11 tions of the eligible individual for hospital insurance 

12 as shown by the records of the Commissioner; and 

13 ‘‘(4) an estimate of the potential monthly re14 tirement, disability, survivor, and auxiliary benefits 

15 payable on the eligible individual’s account together 

16 with a description of the benefits payable under the 

17 medicare program of title XVIII. 

18 ‘‘Eligible Individual 

19 ‘‘(c) For purposes of this section, the term ‘eligible 

20 individual’ means an individual who— 

21 ‘‘(1) has a social security account number, and 

22 ‘‘(2) has wages or net earnings from self-em23 ployment.’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 subsection (a) shall apply with respect to statements pro3 vided on or after October 1, 2012. 

Æ 


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