I 

109TH CONGRESS 

1ST SESSION H. R. 1800

To provide for the establishment and maintenance of personal Social Security 

investment accounts under the Social Security system. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 21, 2005

Mr. PETRI introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL

To provide for the establishment and maintenance of personal Social Security investment accounts under the Social Security system.

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 ‘‘Retirement Security Act of 2005’’. 

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

7 as follows:

Sec. 1. Short title and table of contents. 

Sec. 2. Individual retirement investment program and personal Social Security 

investment accounts. 

‘‘PART A—INSURANCE BENEFITS
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‘‘PART B—INDIVIDUAL RETIREMENT INVESTMENT PROGRAM

‘‘Sec. 251. Definitions. 

‘‘Sec. 252. Personal Social Security investment accounts. 

‘‘Sec. 253. Contributions to the Social Security Investment Trust Fund. 

‘‘Sec. 254. Investment of Social Security Investment Trust Fund. 

‘‘Sec. 255. Distributions from the Social Security Investment Trust Fund. 

‘‘Sec. 256. Annuities and lump sum payments payable from the Social Security Investment Trust Fund. 

‘‘Sec. 257. Payment of annuities. 

‘‘Sec. 258. Protections for spouses and former spouses. 

‘‘Sec. 259. Administrative provisions. 

‘‘Sec. 260. Social Security Investment Trust Fund. 

‘‘Sec. 261. Waiver, allotment and assignment of payments. 

‘‘Sec. 262. Application for annuity or other payments. 

‘‘Sec. 263. Court orders. 

‘‘Sec. 264. Withholding of State income taxes. 

‘‘Sec. 265. Tax treatment of the Social Security Investment Trust Fund. 

‘‘Sec. 266. Administration. 

Sec. 3. Financing of Government contributions to accounts. 

Sec. 4. Tax treatment of individual retirement investment program and personal Social Security investment accounts.

1 SEC. 2. INDIVIDUAL RETIREMENT INVESTMENT PROGRAM 

2 AND PERSONAL SOCIAL SECURITY INVEST3 MENT ACCOUNTS. 

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

5 is amended—

6 (1) by inserting before section 201 the fol7 lowing: 

8 ‘‘PART A—INSURANCE BENEFITS’’; 

9 and 

10 (2) by adding at the end the following new part: 

11 ‘‘PART B—INDIVIDUAL RETIREMENT 

12 INVESTMENT PROGRAM 

13 ‘‘SEC. 251. DEFINITIONS. 

14 ‘‘For purposes of this part—
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1 ‘‘(1) ACCOUNT HOLDER.—The term ‘account 

2 holder’ means an individual for whom a personal So3 cial Security investment account is established under 

4 section 252(b). 

5 ‘‘(2) INVESTMENT ACCOUNT.—The term ‘in6 vestment account’ means a personal Social Security 

7 investment account established under section 252(b). 

8 ‘‘(3) TRUST FUND.—The term ‘Trust Fund’ 

9 means the Social Security Investment Trust Fund 

10 established under section 260. 

11 ‘‘(4) EXECUTIVE DIRECTOR.—The term ‘Execu12 tive Director’ means the Executive Director under 

13 this part authorized to so serve under section 

14 266(b). 

15 ‘‘(5) BOARD.—The term ‘Board’ means the 

16 Board of Trustees of the Trust Fund authorized to 

17 so serve under section 266(a). 

18 ‘‘SEC. 252. PERSONAL SOCIAL SECURITY INVESTMENT AC19 COUNTS. 

20 ‘‘(a) CERTIFICATION OF NEW ACCOUNT HOLDERS.—

21 Upon the issuance of a Social Security account number 

22 under section 205(c)(2) to an individual born on or after 

23 January 1, 2006, the Commissioner of Social Security 

24 shall certify to the Executive Director and the Secretary 
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1 of the Treasury the identity and Social Security account 

2 number of such individual. 

3 ‘‘(b) ESTABLISHMENT OF PERSONAL SOCIAL SECU4 RITY INVESTMENT ACCOUNTS.—Upon receipt of any cer5 tification under subsection (a) with respect to an indi6 vidual, the Executive Director shall establish a personal 

7 Social Security investment account for such individual. 

8 Amounts in the Social Security Investment Trust Fund 

9 shall be credited by the Executive Director to the invest10 ment account in accordance with this part. The investment 

11 account shall be identified to the account holder by means 

12 of the account holder’s Social Security account number. 

13 The Executive Director shall establish an investment ac14 count for each account holder not later than the later of 

15 January 1, 2007, or 30 days after receipt of the certifi16 cation with respect to the account holder. 

17 ‘‘(c) INITIAL CONTRIBUTION.—Upon the establish18 ment of each account holder’s investment account, the 

19 Secretary of the Treasury shall transfer, from amounts 

20 not otherwise appropriated in the general fund of the 

21 Treasury to the Trust Fund, for crediting by the Execu22 tive Director to such investment account under subsection 

23 (b), an amount equal to $1,000.00. 
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1 ‘‘(d) INVESTMENT ACCOUNT BALANCE.—The bal2 ance in an account holder’s investment account at any 

3 time is the excess of—

4 ‘‘(1) the sum of—

5 ‘‘(A) the contribution made to the Trust 

6 Fund and credited to the investment account 

7 pursuant to subsection (c); 

8 ‘‘(B) all contributions made to the Trust 

9 Fund and credited to the investment account 

10 under section 253, and 

11 ‘‘(C) the total amount of the allocations 

12 made to and reductions made in the investment 

13 account pursuant to subsection (e), over 

14 ‘‘(2) the amounts paid out of the Trust Fund 

15 with respect to such individual under this part. 

16 ‘‘(e) ALLOCATION OF EARNINGS AND LOSSES.—Pur17 suant to regulations prescribed by the Executive Director, 

18 the Executive Director shall allocate to each investment 

19 account an amount equal to the net earnings and net 

20 losses from each investment of sums in the Trust Fund 

21 which are attributable, on a pro rata basis, to sums cred22 ited to such investment account, reduced by an appro23 priate share of the administrative expenses paid out of the 

24 net earnings under section 256(d), as determined by the 

25 Executive Director. 
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1 ‘‘(f) ENGAGEMENT OF QUALIFIED PUBLIC ACCOUNT2 ANT.—

3 ‘‘(1) IN GENERAL.—The Executive Director 

4 shall annually engage, on behalf of all account hold5 ers, an independent qualified public accountant, who 

6 shall conduct an examination of all accounts and 

7 other books and records maintained in the adminis8 tration of this part as the public accountant con9 siders necessary to enable the public accountant to 

10 make the determination required by paragraph (2). 

11 The examination shall be conducted in accordance 

12 with generally accepted auditing standards and shall 

13 involve such tests of the accounts, books, and 

14 records as the public accountant considers necessary. 

15 ‘‘(2) EXAMINATION AND REPORT.—The public 

16 accountant conducting an examination under para17 graph (1) shall determine whether the accounts, 

18 books, and records referred to in such paragraph 

19 have been maintained in conformity with generally 

20 accepted accounting principles applied on a basis 

21 consistent with the manner in which such principles 

22 were applied during the examination conducted 

23 under such paragraph during the preceding year. 

24 The public accountant shall transmit to the Board 

25 and the Comptroller General of the United States a 
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1 report on his examination, including his determina2 tion under this paragraph. 

3 ‘‘(3) RELIANCE ON ACTUARY’S CERTIFI4 CATIONS.—In making a determination under para5 graph (2), a public accountant may rely on the cor6 rectness of any actuarial matter certified by an en7 rolled actuary if the public accountant states his re8 liance in the report transmitted to the Board under 

9 such paragraph. 

10 ‘‘(4) DEFINITION.—For the purposes of this 

11 subsection, the term ‘qualified public accountant’ 

12 shall have the same meaning as is provided in sec13 tion 103(a)(3)(D) of the Employee Retirement In14 come Security Act of 1974 (29 U.S.C. 

15 1023(a)(3)(D)). 

16 ‘‘(g) INFORMATION REQUIRED TO BE PROVIDED TO

17 ACCOUNT HOLDERS.—

18 ‘‘(1) IN GENERAL.—The Board shall prescribe 

19 regulations under which each account holder shall be 

20 furnished with—

21 ‘‘(A) a periodic statement relating to the 

22 account holder’s investment account; and 

23 ‘‘(B) a summary description of the invest24 ment options under section 254 covering, and 

25 an evaluation of, each such option for at least 
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1 the 5-year period preceding the date as of 

2 which such evaluation is made. 

3 ‘‘(2) TIMELY PROVISION OF INFORMATION.—In4 formation under this subsection shall be provided at 

5 least 30 calendar days before the date provided for 

6 each election under section 254(f), and in a manner 

7 designed to facilitate informed decisionmaking with 

8 respect to each such election. 

9 ‘‘(h) ASSUMPTION OF RISK.—Each account holder 

10 who elects to invest in the Fixed Income Investment Fund, 

11 the Common Stock Index Investment Fund, the Small 

12 Capitalization Stock Index Investment Fund, or the Inter13 national Stock Index Investment Fund described in para14 graphs (2), (3), (4), and (5), respectively, of section 

15 254(a) shall sign an acknowledgement prescribed by the 

16 Executive Director which states that the account holder 

17 understands that an investment in either such Fund is 

18 made at the account holder’s risk, that the account holder 

19 is not protected by the Government against any loss on 

20 such investment, and that a return on such investment 

21 is not guaranteed by the Government. 

22 ‘‘(i) TREATMENT OF MINORS AND INCOMPETENT IN23 DIVIDUALS.—An election under this part to be made by 

24 a minor, or an individual mentally incompetent or under 

25 other legal disability, may be made by the person who is 
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1 constituted guardian or other fiduciary by the law of the 

2 State of residence of the individual or is otherwise legally 

3 vested with the care of the individual or his estate. Pay4 ment under this part due a minor, or an individual men5 tally incompetent or under other legal disability, may be 

6 made to the person who is constituted guardian or other 

7 fiduciary by the law of the State of residence of the claim8 ant or is otherwise legally vested with the care of the 

9 claimant or his estate. In any case in which a guardian 

10 or other fiduciary of the individual under legal disability 

11 has not been appointed under the law of the State of resi12 dence of the individual, if any other person, in the judg13 ment of the Executive Director, is responsible for the care 

14 of such individual, any election under this part which may 

15 otherwise be made by such individual may be made by 

16 such person, any payment under this part which is other17 wise payable to such individual may be made to such per18 son, and the payment of an annuity payment under this 

19 part to such person bars recovery by any other person. 

20 ‘‘SEC. 253. CONTRIBUTIONS TO THE SOCIAL SECURITY IN21 VESTMENT TRUST FUND. 

22 ‘‘(a) IN GENERAL.—The Executive Director shall 

23 prescribe regulations under which each individual who is 

24 eligible to claim a deduction under section 224 of the In25 ternal Revenue Code of 1986 for contributions to a per-
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1 sonal Social Security investment account shall be afforded 

2 a reasonable opportunity to make contributions to the 

3 Trust Fund, for crediting to such account, either from 

4 time to time or under arrangements providing for regular, 

5 periodic contributions. Such arrangements may include ar6 rangements for contributions of wages by employers on be7 half of employees. Any such arrangement shall also pro8 vide individuals a reasonable opportunity to modify the 

9 amount to be contributed under this part, or to terminate 

10 such contributions. 

11 ‘‘(b) LIMITATION ON CONTRIBUTIONS.—Notwith12 standing any other provision of this section, no contribu13 tion may be made under this section to any account for 

14 any year to the extent that such contribution, when added 

15 to prior contributions to such account for such year, ex16 ceeds $10,000. 

17 ‘‘(c) CREDITING PROCEDURES.—Amounts contrib18 uted by (or on behalf of) an account holder under this 

19 section shall be deposited in the Trust Fund to the credit 

20 of that account holder’s investment account in accordance 

21 with such procedures as the Comptroller General of the 

22 United States may, in consultation with the Executive Di23 rector, prescribe in regulations. 
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1 ‘‘(d) NONFORFEITABILITY OF CONTRIBUTIONS.—All 

2 contributions made under this section shall be fully non3 forfeitable when made. 

4 ‘‘SEC. 254. INVESTMENT OF SOCIAL SECURITY INVESTMENT 

5 TRUST FUND. 

6 ‘‘(a) INVESTMENT FUNDS.—The Board shall estab7 lish—

8 ‘‘(1) a Government Securities Investment Fund 

9 under which sums in the Trust Fund are invested in 

10 securities of the United States Government issued as 

11 provided in subsection (e); 

12 ‘‘(2) a Fixed Income Investment Fund under 

13 which sums in the Trust Fund are invested in—

14 ‘‘(A) insurance contracts, 

15 ‘‘(B) certificates of deposit, or 

16 ‘‘(C) other instruments or obligations se17 lected by qualified professional asset managers, 

18 which return the amount invested and pay interest, 

19 at a specified rate or rates, on that amount during 

20 a specified period of time; 

21 ‘‘(3) a Common Stock Index Investment Fund 

22 as provided in subsection (b); 

23 ‘‘(4) a Small Capitalizaion Stock Index Invest24 ment Fund as provided in subsection (c); and 
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1 ‘‘(5) an International Stock Index Investment 

2 Fund as provided in subsection (d). 

3 ‘‘(b) INDEX GOVERNING COMMON STOCK INDEX IN4 VESTMENT FUNDS.—

5 ‘‘(1) SELECTION OF INDEX.—The Board shall 

6 select an index which is a commonly recognized 

7 index comprised of common stock the aggregate 

8 market value of which is a reasonably complete rep9 resentation of the United States equity markets. 

10 ‘‘(2) PORTFOLIO DESIGN.—The Common Stock 

11 Index Investment Fund shall be invested in a port12 folio designed to replicate the performance of the 

13 index selected under paragraph (1). The portfolio 

14 shall be designed such that, to the extent prac15 ticable, the percentage of the Common Stock Index 

16 Investment Fund that is invested in each stock is 

17 the same as the percentage determined by dividing 

18 the aggregate market value of all shares of that 

19 stock by the aggregate market value of all shares of 

20 all stocks included in such index. 

21 ‘‘(c) INDEX GOVERNING SMALL CAPITALIZATION

22 STOCK INDEX INVESTMENT FUNDS.—

23 ‘‘(1) SELECTION OF INDEX.—The Board shall 

24 select an index which is a commonly recognized 

25 index comprised of common stock the aggregate 
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1 market value of which represents the United States 

2 equity markets, excluding the Common Stock Index 

3 Investment Fund. 

4 ‘‘(2) PORTFOLIO DESIGN.—The Small Capital5 ization Stock Index Investment Fund shall be in6 vested in a portfolio designed to replicate the per7 formance of the index selected under paragraph (1). 

8 The portfolio shall be designed such that, to the ex9 tent practicable, the percentage of the Small Cap10 italization Stock Index Investment Fund that is in11 vested in each stock is the same as the percentage 

12 determined by dividing the aggregate market value 

13 of all shares of that stock by the aggregate market 

14 value of all shares of all stocks included in such 

15 index. 

16 ‘‘(d) INDEX GOVERNING INTERNATIONAL STOCK

17 INDEX INVESTMENT FUNDS.—

18 ‘‘(1) SELECTION OF INDEX.—The Board shall 

19 select an index which is a commonly recognized 

20 index comprised of stock the aggregate market value 

21 of which is a reasonably complete representation of 

22 the international equity markets excluding the 

23 United States equity markets. 

24 ‘‘(2) PORTFOLIO DESIGN.—The International 

25 Stock Index Investment Fund shall be invested in a 
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1 portfolio designed to replicate the performance of 

2 the index selected under paragraph (1). The port3 folio shall be designed such that, to the extent prac4 ticable, the percentage of the International Stock 

5 Index Investment Fund that is invested in each 

6 stock is the same as the percentage determined by 

7 dividing the aggregate market value of all shares of 

8 that stock by the aggregate market value of all 

9 shares of all stocks included in such index. 

10 ‘‘(e) INVESTMENT ACCORDING TO ELECTIONS.—

11 ‘‘(1) IN GENERAL.—The Executive Director 

12 shall invest the sums available in the Trust Fund for 

13 investment as provided in elections made under sub14 section (f). 

15 ‘‘(2) DEFAULT INVESTMENT IN ABSENCE OF

16 ELECTION.—If an election has not been made with 

17 respect to any sums in the Trust Fund available for 

18 investment, the Executive Director shall invest such 

19 sums in the Government Securities Investment 

20 Fund. 

21 ‘‘(f) SEMIANNUAL ELECTIONS.—

22 ‘‘(1) IN GENERAL.—At least twice each year, an 

23 account holder may elect the investment funds re24 ferred to in subsection (a) into which the sums in 
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1 the Trust Fund credited to such account holder’s in2 vestment account are to be invested or reinvested. 

3 ‘‘(2) INVESTMENT ACCORDING TO REGULA4 TIONS.—An election may be made under paragraph 

5 (1) only in accordance with regulations prescribed by 

6 the Executive Director and within such period as the 

7 Executive Director shall provide in such regulations. 

8 ‘‘(g) ISSUANCE OF SPECIAL OBLIGATIONS.—

9 ‘‘(1) AUTHORIZATION.—The Secretary of the 

10 Treasury is authorized to issue special interest-bear11 ing obligations of the United States for purchase by 

12 the Trust Fund for the Government Securities In13 vestment Fund. 

14 ‘‘(2) REQUIREMENTS.—

15 ‘‘(A) IN GENERAL.—Obligations issued for 

16 the purpose of this subsection shall have matu17 rities fixed with due regard to the needs of the 

18 Trust Fund as determined by the Executive Di19 rector, and shall bear interest at a rate equal 

20 to the average market yield (computed by the 

21 Secretary of the Treasury on the basis of mar22 ket quotations as of the end of the calendar 

23 month next preceding the date of issue of such 

24 obligations) on all marketable interest-bearing 

25 obligations of the United States then forming a 
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1 part of the public debt which are not due or 

2 callable earlier than 4 years after the end of 

3 such calendar month. 

4 ‘‘(B) ROUNDING.—Any average market 

5 yield computed under subparagraph (A) which 

6 is not a multiple of one-eighth of 1 percent, 

7 shall be rounded to the nearest multiple of one8 eighth of 1 percent. 

9 ‘‘(h) NO VOTING RIGHTS IN SECURITIES.—The 

10 Board, the Executive Director, and an account holder may 

11 not exercise voting rights associated with the ownership 

12 of securities by the Social Security Investment Trust 

13 Fund. 

14 ‘‘SEC. 255. DISTRIBUTIONS FROM THE SOCIAL SECURITY IN15 VESTMENT TRUST FUND. 

16 ‘‘(a) IN GENERAL.—No distribution may be made 

17 from the Social Security Investment Trust Fund of any 

18 amount credited to the investment account of any account 

19 holder, unless such distribution is in the form of—

20 ‘‘(1) a benefit distribution described in sub21 section (b), 

22 ‘‘(2) a distribution described in subsection (c), 

23 or 

24 ‘‘(3) a death distribution under subsection (d). 

25 ‘‘(b) BENEFIT DISTRIBUTION.—
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1 ‘‘(1) IN GENERAL.—A distribution from an in2 vestment account is in the form of a benefit distribu3 tion referred to in subsection (a)(1) if such distribu4 tion constitutes payment (in whole or in part) of a 

5 monthly insurance benefit under part A based on the 

6 wages and self-employment income of the account 

7 holder. 

8 ‘‘(2) PAYMENT OF MONTHLY INSURANCE BENE9 FITS.—Notwithstanding section 201(h), benefit pay10 ments required to be made under part A, other than 

11 benefit payments required to be made under section 

12 223 or 226 and benefit payments required to be 

13 made under subsection (b), (c), or (d) of section 202 

14 to account holders entitled to benefits on the basis 

15 of the wages and self-employment income of any 

16 such account holder entitled to disability insurance 

17 benefits, shall be made from amounts in the Trust 

18 Fund credited to such account holder’s investment 

19 account, except to the extent that such benefit pay20 ments exceed the balance credited to such account 

21 holder’s investment account. Any amount of such 

22 benefit payments in excess of the balance in such ac23 count holder’s investment account shall be payable 

24 as provided in section 201(h). The Commissioner of 

25 Social Security shall provide for certification to the 
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1 Executive Director for payment of such benefits 

2 from the Trust Fund, and the Executive Director 

3 shall make such payments from the Trust Fund in 

4 accordance with such certification. 

5 ‘‘(c) ANNUITIES AND LUMP SUM PAYMENTS.—A dis6 tribution referred to in subsection (a)(2) is described in 

7 this subsection if—

8 ‘‘(1) the distribution is at the election of the ac9 count holder made (in such form and manner as 

10 shall be prescribed by the Executive Director) on or 

11 after the date of the commencement of such account 

12 holder’s entitlement to old-age insurance benefits 

13 under section 202(a), 

14 ‘‘(2) the amount of each distribution is in an 

15 amount, as determined by the Executive Director, 

16 which is not greater than the excess of—

17 ‘‘(A) the balance credited to such account 

18 holder’s investment account, over 

19 ‘‘(B) the amount necessary to provide for 

20 benefit distributions as required under sub21 section (a)(1), and 

22 ‘‘(3) the distributions shall be paid in the form 

23 of annuities and other payments under section 256. 

24 ‘‘(d) DEATH DISTRIBUTION.—
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1 ‘‘(1) IN GENERAL.—A distribution from an in2 vestment account is in the form of a death distribu3 tion if such distribution is in the amount remaining 

4 credited to the account holder as of the date of such 

5 account holder’s death and, except as provided in 

6 paragraph (2), is distributed in the same manner as 

7 is provided for distribution of benefit payments 

8 under section 204(d). 

9 ‘‘(2) PORTION OF ACCOUNT BALANCE ATTRIB10 UTABLE TO FEDERAL CONTRIBUTION RETURNED TO

11 UNITED STATES.—The portion of the amount re12 maining credited to the account holder as of the 

13 date of such account holder’s death which is attrib14 utable to the contribution made under section 252(c) 

15 shall be paid to the Secretary of the Treasury for 

16 deposit into the general fund of the Treasury as mis17 cellaneous receipts. For purposes of the preceding 

18 sentence, distributions from a personal social secu19 rity investment account shall be treated as first 

20 made from amounts attributable to the contribution 

21 made under section 252(c) and then from other 

22 amounts. 
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1 ‘‘SEC. 256. ANNUITIES AND LUMP SUM PAYMENTS PAYABLE 

2 FROM THE SOCIAL SECURITY INVESTMENT 

3 TRUST FUND. 

4 ‘‘(a) IN GENERAL.—An account holder who is enti5 tled to old-age insurance benefits under section 202(a) is 

6 entitled as provided in this section to the amount of the 

7 balance in the account holder’s investment account avail8 able for distribution under this section in accordance with 

9 section 255. 

10 ‘‘(b) ALTERNATIVE FORMS OF DISTRIBUTION.—Sub11 ject to section 258, any account holder who is entitled to 

12 old-age insurance benefits under section 202(a) is entitled 

13 and may elect—

14 ‘‘(1) to receive an immediate annuity from the 

15 Trust Fund; 

16 ‘‘(2) to defer the commencement of the pay17 ment of an annuity from the Trust Fund until such 

18 date as the account holder specifies, but not later 

19 than April 1 of the year following the year in which 

the account holder becomes 701 20 ⁄2 years of age; 

21 ‘‘(3) to withdraw the amount of the balance in 

22 the account holder’s investment account in the Trust 

23 Fund in one or more substantially equal payments 

24 to be made not less frequently than annually and to 

25 commence before April 1 of the year following the 
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year in which the account holder becomes 701 1 ⁄2

2 years of age; or 

3 ‘‘(4) to transfer the amount of the balance in 

4 the account holder’s investment account in the Trust 

5 Fund to an eligible retirement plan as provided in 

6 subsection (c). 

7 ‘‘(c) TRANSFERS TO ELIGIBLE RETIREMENT

8 PLANS.—

9 ‘‘(1) IN GENERAL.—The Executive Director 

10 shall make each transfer elected under subsection 

11 (b)(4) directly to an eligible retirement plan or plans 

12 (as defined in section 402(c)(8)(B) of the Internal 

13 Revenue Code of 1986) identified by the account 

14 holder for whom the transfer is made. 

15 ‘‘(2) TRANSFER CONTINGENT UPON RECEIPT

16 OF NECESSARY INFORMATION.—A transfer may not 

17 be made for an account holder under paragraph (1) 

18 until the Executive Director receives from such ac19 count holder the information required by the Execu20 tive Director specifically to identify the eligible re21 tirement plan or plans to which the transfer is to be 

22 made. 

23 ‘‘(d) MODIFICATION OF ELECTIONS.—

24 ‘‘(1) IN GENERAL.—Subject to paragraph 

25 (3)(A) and subsections (a) and (d) of section 258, 
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1 an account holder may change an election previously 

2 made under this section. 

3 ‘‘(2) MODIFICATION OF DATE FOR DELAYED

4 DISTRIBUTIONS.—Subject to paragraph (3)(B) and 

5 section 258(d), an account holder who has made an 

6 election pursuant to subsection (b)(2) may modify 

7 the date specified in such election or in a previous 

8 modification under this paragraph. 

9 ‘‘(3) LIMITATIONS.—

10 ‘‘(A) MODIFICATIONS DISALLOWED UPON

11 COMMENCEMENT OF DISTRIBUTION.—An ac12 count holder may not change an election under 

13 this section on or after the date on which a 

14 payment is made in accordance with such elec15 tion or, in the case of an election to receive an 

16 annuity, the date on which an annuity contract 

17 is purchased to provide for the annuity elected 

18 by the account holder. 

19 ‘‘(B) OTHER LIMITATIONS.—A modifica20 tion of a date may not be made under para21 graph (2) on or after the date on which an an22 nuity contract is purchased to provide for the 

23 annuity involved, and may not specify a date 

24 for the commencement of an annuity earlier 

25 than 90 days after the date on which the modi-
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1 fication is submitted to the Executive Director 

2 (or such period shorter than 90 days as the Ex3 ecutive Director may by regulation prescribe). 

4 ‘‘(e) DEFAULT MEANS OF DISTRIBUTION.—

5 ‘‘(1) LUMP SUM DISTRIBUTIONS OF MINIMAL

6 AMOUNTS.—Notwithstanding subsection (b), if an 

7 account holder becomes entitled to old-age insurance 

8 benefits under section 202(a) and the balance in 

9 such account holder’s investment account is $3,500 

10 or less, the Executive Director shall pay the balance 

11 to the account holder in a single payment unless the 

12 account holder elects, at such time and otherwise in 

13 such manner as the Executive Director prescribes, 

14 one of the options available under subsection (b). 

15 ‘‘(2) DEFAULT ANNUITY COMMENCEMENT

16 DATE.—Unless otherwise elected under this section, 

17 and subject to paragraph (1), the balance in an ac18 count holder’s investment account shall be paid as 

19 an annuity commencing for the account holder on 

20 February 1 of the year following the year in which 

21 the account holder becomes entitled to old-age insur22 ance benefits under section 202(a). 

23 ‘‘SEC. 257. PAYMENT OF ANNUITIES. 

24 ‘‘(a) METHODS OF PAYMENT.—The Board shall pre25 scribe methods of payment of annuities under this part. 
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1 The methods of payment prescribed under this subsection 

2 shall include, but not be limited to—

3 ‘‘(1) a method which provides for the payment 

4 of a monthly annuity only to an annuitant during 

5 the life of the annuitant; 

6 ‘‘(2) a method which provides for the payment 

7 of a monthly annuity to an annuitant for the joint 

8 lives of the annuitant and the spouse of the annu9 itant and an appropriate monthly annuity to the one 

10 of them who survives the other of them for the life 

11 of the survivor; 

12 ‘‘(3) a method described in paragraph (1) which 

13 provides for automatic adjustments in the amount of 

14 the annuity payable so long as the amount of the an15 nuity payable in any one year shall not be less than 

16 the amount payable in the previous year; 

17 ‘‘(4) a method described in paragraph (2) which 

18 provides for automatic adjustments in the amount of 

19 the annuity payable so long as the amount of the an20 nuity payable in any one year shall not be less than 

21 the amount payable in the previous year; and 

22 ‘‘(5) a method which provides for the payment 

23 of a monthly annuity—

24 ‘‘(A) to the annuitant for the joint lives of 

25 the annuitant and an individual who is des-
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1 ignated by the annuitant under regulations pre2 scribed by the Executive Director and (i) is a 

3 former spouse of the annuitant, or (ii) has an 

4 insurable interest in the annuitant; and 

5 ‘‘(B) to the one of them who survives the 

6 other of them for the life of the survivor. 

7 ‘‘(b) REQUIREMENT OF ELECTION.—Subject to sec8 tion 258(c), under such regulations as the Executive Di9 rector shall prescribe, an account holder who elects under 

10 section 256 to receive an annuity under this part shall 

11 elect, on or before the date on which an annuity contract 

12 is purchased to provide for that annuity, one of the meth13 ods of payment prescribed under subsection (a). 

14 ‘‘(c) CONTINUED PERIOD OF 5 YEARS AVAILABILITY

15 FOR ELIMINATED METHODS.—Notwithstanding an elimi16 nation of a method of payment by the Board, an account 

17 holder may elect the eliminated method if the elimination 

18 of such method became effective less than 5 years before 

19 the date on which the annuity commences. 

20 ‘‘(d) CONTRACTS FOR PURCHASE OF ANNUITIES.—

21 ‘‘(1) TIME LIMIT FOR ENTERING INTO CON22 TRACT.—Not earlier than 90 days (or such shorter 

23 period as the Executive Director may by regulation 

24 prescribe) before an annuity is to commence under 

25 this part, the Executive Director shall expend the 
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•HR 1800 IH 

1 balance in the annuitant’s account to purchase an 

2 annuity contract from any entity which, in the nor3 mal course of its business, sells and provides annu4 ities. 

5 ‘‘(2) ASSURANCE OF PROVISION OF ANNUITY.—

6 The Executive Director shall assure, by contract en7 tered into with each entity from which an annuity 

8 contract is purchased under paragraph (1), that the 

9 annuity shall be provided in accordance with the 

10 provisions of this part. 

11 ‘‘(3) TERMS AND CONDITIONS.—An annuity 

12 contract purchased under paragraph (1) shall in13 clude such terms and conditions as the Executive 

14 Director requires for the protection of the annuitant. 

15 ‘‘(4) BONDING.—The Executive Director shall 

16 require, from each entity from which an annuity 

17 contract is purchased under paragraph (1), a bond 

18 or proof of financial responsibility sufficient to pro19 tect the annuitant. 

20 ‘‘(e) EXEMPTION FROM LOCAL TAXATION OF

21 AMOUNTS PAID TO PURCHASE ANNUITIES.—

22 ‘‘(1) IN GENERAL.—No tax, fee, or other mone23 tary payment may be imposed or collected by any 

24 State, or by any political subdivision or other gov25 ernmental authority thereof, on, or with respect to, 
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•HR 1800 IH 

1 any amount paid to purchase an annuity contract 

2 under this section. 

3 ‘‘(2) TAXATION OF ISSUER PERMITTED.—Para4 graph (1) shall not be construed to exempt any com5 pany or other entity issuing an annuity contract 

6 under this section from the imposition, payment, or 

7 collection of a tax, fee, or other monetary payment 

8 on the net income or profit accruing to or realized 

9 by that entity from the sale of an annuity contract 

10 under this section if that tax, fee, or payment is ap11 plicable to a broad range of business activity. 

12 ‘‘SEC. 258. PROTECTIONS FOR SPOUSES AND FORMER 

13 SPOUSES. 

14 ‘‘(a) REQUIREMENT OF SPOUSAL CONSENT.—

15 ‘‘(1) IN GENERAL.—A married account holder 

16 may make an election under subsection (b)(3) or 

17 (b)(4) of section 256 or change an election pre18 viously made under subsection (b)(1) or (b)(2) of 

19 such section only if the account holder and the ac20 count holder’s spouse jointly waive, by written elec21 tion, any right which the spouse may have to a sur22 vivor annuity with respect to such account holder 

23 under section 257 or subsection (b). 

24 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

25 apply to an election or change of election by an ac-
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•HR 1800 IH 

1 count holder who establishes to the satisfaction of 

2 the Executive Director (at the time of the election 

3 or change and in accordance with regulations pre4 scribed by the Executive Director)—

5 ‘‘(A) that the spouse’s whereabouts cannot 

6 be determined; or 

7 ‘‘(B) that, due to exceptional cir8 cumstances, requiring the spouse’s waiver would 

9 otherwise be inappropriate. 

10 ‘‘(b) JOINT AND SURVIVOR ANNUITY FORM APPLIES

11 UNLESS OTHERWISE ELECTED.—

12 ‘‘(1) IN GENERAL.—Notwithstanding any elec13 tion under subsection (b) of section 257, the method 

14 described in subsection (a)(2) of such section (or, if 

15 more than one form of such method is available, the 

16 form which the Board determines to be the one 

17 which provides for a surviving spouse a survivor an18 nuity most closely approximating the annuity of a 

19 surviving spouse under section 8442 of title 5, 

20 United States Code) shall be deemed the applicable 

21 method under such subsection (b) in the case of an 

22 account holder who is married on the date on which 

23 an annuity contract is purchased to provide for the 

24 account holder’s annuity under this part. 
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•HR 1800 IH 

1 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

2 apply if—

3 ‘‘(A) a joint waiver of such method is 

4 made, in writing, by the account holder and the 

5 spouse; or 

6 ‘‘(B) the account holder waives such meth7 od, in writing, after establishing to the satisfac8 tion of the Executive Director that cir9 cumstances described under subsection (a)(2) 

10 (A) or (B) make the requirement of a joint 

11 waiver inappropriate. 

12 ‘‘(c) ELECTIONS AND OTHER CHANGES SUBJECT TO

13 COURT ORDERS.—

14 ‘‘(1) IN GENERAL.—An election, change of elec15 tion, or modification of the commencement date of 

16 a deferred annuity shall not be effective under this 

17 part to the extent that the election, change, modi18 fication, or transfer conflicts with any court decree, 

19 order, or agreement described in paragraph (2). 

20 ‘‘(2) REQUIREMENTS.—A court decree, order, 

21 or agreement referred to in paragraph (1) is, with 

22 respect to an account holder, a court decree of di23 vorce, annulment, or legal separation issued in the 

24 case of the account holder and any former spouse of 

25 the account holder or any court order or court-ap-
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•HR 1800 IH 

1 proved property settlement agreement incident to 

2 the decree if—

3 ‘‘(A) the decree, order, or agreement ex4 pressly relates to any portion of the balance in 

5 the account holder’s investment account; and 

6 ‘‘(B) notice of the decree, order, or agree7 ment was received by the Executive Director be8 fore—

9 ‘‘(i) the date on which payment is 

10 made, or 

11 ‘‘(ii) in the case of an annuity, the 

12 date on which an annuity contract is pur13 chased to provide for the annuity, 

14 in accordance with the election, change, modi15 fication, or contribution referred to in para16 graph (1). 

17 ‘‘(3) TREATMENT OF 2 OR MORE COURT OR18 DERS.—The Executive Director shall prescribe regu19 lations under which this subsection shall be applied 

20 in any case in which the Executive Director receives 

21 two or more decrees, orders, or agreements referred 

22 to in paragraph (1). 

23 ‘‘(d) RIGHTS OF FORMER SPOUSES.—

24 ‘‘(1) IN GENERAL.—Subject to paragraphs (2) 

25 through (7), a former spouse of a deceased account 
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•HR 1800 IH 

1 holder who died as a fully insured individual is enti2 tled to a survivor annuity under this subsection if 

3 and to the extent that—

4 ‘‘(A) an election under section 257(a)(5), 

5 or 

6 ‘‘(B) any court decree, order, or agreement 

7 (described in subsection (c)(2), without regard 

8 to subparagraph (B) of such subsection) which 

9 relates to such deceased account holder and 

10 such former spouse, 

11 expressly provides for such survivor annuity. 

12 ‘‘(2) WRITTEN NOTICE REQUIRED.—Paragraph 

13 (1) shall apply only to payments made by the Execu14 tive Director after the date on which the Executive 

15 Director receives written notice of the election, de16 cree, order, or agreement, and such additional infor17 mation and documentation as the Executive Director 

18 may require. 

19 ‘‘(3) LIMITATION ON AMOUNT.—The amount of 

20 the survivor annuity payable from the Trust Fund 

21 to a former spouse of a deceased account holder 

22 under this section may not exceed the excess, if any, 

23 of—

24 ‘‘(A) the amount of the survivor annuity 

25 determined for a surviving spouse of the de-
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•HR 1800 IH 

1 ceased account holder under the method de2 scribed in subsection (b)(1), over 

3 ‘‘(B) the total amount of all other survivor 

4 annuities payable under this part to other 

5 former spouses of such deceased account holder 

6 based on the order of precedence provided in 

7 paragraph (4). 

8 ‘‘(4) ORDER OF PRECEDENCE.—If more than 

9 one former spouse of a deceased account holder is 

10 entitled to a survivor annuity pursuant to this sub11 section, the amount of each such survivor annuity 

12 shall be limited appropriately to carry out paragraph 

13 (3) in the order of precedence established for the en14 titlements by the chronological order of the dates on 

15 which elections are properly made pursuant to sec16 tion 257(a)(5) and the dates on which the court de17 crees, orders, or agreements applicable to the entitle18 ment were issued, as the case may be. 

19 ‘‘(5) RULES FOR COMMENCEMENT AND TERMI20 NATION UNDER COURT ORDERS.—The commence21 ment and termination of an annuity payable under 

22 this section shall be governed by the terms of the ap23 plicable order, decree, agreement, or election, as the 

24 case may be, except that any such annuity—

25 ‘‘(A) shall not commence before—
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•HR 1800 IH 

1 ‘‘(i) the day after the account holder 

2 dies; or 

3 ‘‘(ii) the first day of the second month 

4 beginning after the date on which the Ex5 ecutive Director receives written notice of 

6 the order, decree, agreement, or election, 

7 as the case may be, together with such ad8 ditional information or documentation as 

9 the Executive Director may prescribe; 

10 whichever is later; and 

11 ‘‘(B) shall terminate no later than the last 

12 day of the month before the former spouse re13 marries before becoming 55 years of age or 

14 dies. 

15 ‘‘(6) RESTRICTION ON MODIFICATIONS.—For 

16 purposes of this part, a modification in a decree, 

17 order, agreement, or election referred to in this sec18 tion shall not be effective—

19 ‘‘(A) if such modification is made after the 

20 retirement or death of the account holder or an21 nuitant concerned; and 

22 ‘‘(B) to the extent that such modification 

23 involves an annuity under this part. 

24 ‘‘(7) COURT ORDERS SUBJECT TO PREVIOUS

25 JOINT WAIVERS.—For the purposes of this section, 
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•HR 1800 IH 

1 a court decree, order, or agreement or an election re2 ferred to in subsection (a) shall not be effective, in 

3 the case of a former spouse, to the extent that the 

4 election is inconsistent with any joint waiver pre5 viously executed with respect to such former spouse 

6 under subsection (a)(2) or (b)(2). 

7 ‘‘(8) EXCLUSIVE RECOVERY.—Any payment 

8 under this subsection to any individual bars recovery 

9 by any other individual. 

10 ‘‘(e) WAIVERS AND MODIFICATIONS SUBJECT TO

11 PRESCRIBED PROCEDURES.—Waivers and notifications 

12 required by this section and waivers of the requirements 

13 for such waivers and notifications (as authorized by this 

14 section) may be made only in accordance with procedures 

15 prescribed by the Executive Director. 

16 ‘‘(f) INAPPLICABILITY TO MINIMAL ACCOUNT BAL17 ANCES.—None of the provisions of this section requiring 

18 notification to, or the consent or waiver of, a spouse or 

19 former spouse of an account holder shall apply in any case 

20 in which the balance in the account holder’s investment 

21 account is $3,500 or less. 

22 ‘‘(g) APPLICABLE COURT ORDERS.—The protections 

23 provided by this section are in addition to the protections 

24 provided by section 263. 
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•HR 1800 IH 

1 ‘‘SEC. 259. ADMINISTRATIVE PROVISIONS. 

2 ‘‘(a) PAYMENTS AND TRANSFERS IN ACCORDANCE

3 WITH ELECTION.—The Executive Director shall make or 

4 provide for payments and transfers in accordance with an 

5 election of an account holder under section 256 or 257(b) 

6 or, if applicable, in accordance with section 258. 

7 ‘‘(b) ELECTIONS AND MODIFICATIONS OF DEFERRED

8 COMMENCEMENT DATES IN WRITING.—Any election, 

9 change of election, or modification of a deferred annuity 

10 commencement date made under this part shall be in writ11 ing and shall be filed with the Executive Director in ac12 cordance with regulations prescribed by the Executive Di13 rector. 

14 ‘‘SEC. 260. SOCIAL SECURITY INVESTMENT TRUST FUND. 

15 ‘‘(a) IN GENERAL.—There is established in the 

16 Treasury of the United States a Social Security Invest17 ment Trust Fund. 

18 ‘‘(b) AMOUNT COMPRISING THE TRUST FUND.—The 

19 Trust Fund consists of the sum of all amounts contributed 

20 under sections 252(c) and 253, increased by the total net 

21 earnings from investments of sums in the Trust Fund 

22 under section 254 or reduced by the total net losses from 

23 investments of the Trust Fund under such section, and 

24 reduced by the total amount of payments made from the 

25 Trust Fund (including payments for administrative ex26 penses). 
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•HR 1800 IH 

1 ‘‘(c) APPROPRIATION OF TRUST FUND AMOUNTS.—

2 The sums in the Trust Fund are appropriated and shall 

3 remain available without fiscal year limitation—

4 ‘‘(1) to invest under section 254; 

5 ‘‘(2) to make distributions or purchase annuity 

6 contracts under this part; 

7 ‘‘(3) to pay the administrative expenses in8 curred in carrying out this part under subsection 

9 (d); and 

10 ‘‘(4) to purchase insurance as provided in sub11 section (h)(3)(B). 

12 ‘‘(d) ADMINISTRATIVE EXPENSES.—Administrative 

13 expenses incurred to carry out this part shall be paid out 

14 of net earnings in the Trust Fund. 

15 ‘‘(e) ASSIGNMENT OR ALIENATION AND RELATED

16 MATTERS.—

17 ‘‘(1) EXCLUSIVE BENEFIT OF THE ACCOUNT

18 HOLDER.—Subject to subsection (d) and paragraphs 

19 (2) and (3), sums in the Trust Fund credited to the 

20 account of any account holder may not be used for, 

21 or diverted to, purposes other than for the exclusive 

22 benefit of the account holder or other persons to 

23 whom distributions are made under section 255. 

24 ‘‘(2) IMMUNITY FROM ASSIGNMENT, ALIEN25 ATION, AND CERTAIN OTHER LEGAL PROCESS.—Ex-
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•HR 1800 IH 

1 cept as provided in paragraph (3), sums in the 

2 Trust Fund may not be assigned or alienated and 

3 are not subject to execution, levy, attachment, gar4 nishment, or other legal process. 

5 ‘‘(3) EXCEPTIONS.—Moneys due or payable 

6 from the Trust Fund to any person and, in the case 

7 of an account holder, the balance in the individual 

8 account of the account holder, shall be subject to 

9 legal process for the enforcement of the legal obliga10 tions of such person or account holder to provide 

11 child support or make alimony payments as provided 

12 in section 459 or relating to the enforcement of a 

13 judgment for physically, sexually, or emotionally 

14 abusing a child as provided under section 263. 

15 ‘‘(f) EXCLUSIVE APPROPRIATION.—The sums in the 

16 Trust Fund shall not be appropriated for any purpose 

17 other than the purposes specified in this section and may 

18 not be used for any other purpose. 

19 ‘‘(g) CONTRIBUTIONS AND EARNINGS HELD IN

20 TRUST FOR ACCOUNT HOLDERS.—All sums contributed 

21 to the Trust Fund by an account holder and all net earn22 ings in the Trust Fund attributable to investment of such 

23 sums are held in the Trust Fund in trust for such account 

24 holder. 
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•HR 1800 IH 

1 ‘‘(h) FIDUCIARY RESPONSIBILITIES; ENFORCEMENT

2 UNDER THE SECRETARY OF LABOR.—

3 ‘‘(1) IN GENERAL.—Under regulations of the 

4 Secretary of Labor, the provisions of sections 8477 

5 and 8478 of title 5, United States Code, shall apply 

6 in connection with the Trust Fund in the same man7 ner and to the same extent as such provisions apply 

8 in connection with the Thrift Savings Fund. 

9 ‘‘(2) INVESTIGATIVE AUTHORITY.—Any author10 ity available to the Secretary of Labor under section 

11 504 of the Employee Retirement Income Security 

12 Act of 1974 is hereby made available to the Sec13 retary of Labor, and any officer designated by the 

14 Secretary of Labor, to determine whether any person 

15 has violated, or is about to violate, any provision ap16 plicable under paragraph (1). 

17 ‘‘(3) EXCULPATORY PROVISIONS; INSURANCE.—

18 ‘‘(A) IN GENERAL.—Any provision in an 

19 agreement or instrument which purports to re20 lieve a fiduciary from responsibility or liability 

21 for any responsibility, obligation, or duty under 

22 this part shall be void. 

23 ‘‘(B) INSURANCE.—The Trust Fund shall 

24 be available and may be used at the discretion 

25 of the Executive Director to purchase insurance 
39

•HR 1800 IH 

1 to cover potential liability of persons who serve 

2 in a fiduciary capacity with respect to the Trust 

3 Fund, without regard to whether a policy of in4 surance permits recourse by the insurer against 

5 the fiduciary in the case of a breach of a fidu6 ciary obligation. 

7 ‘‘SEC. 261. WAIVER, ALLOTMENT AND ASSIGNMENT OF PAY8 MENTS. 

9 ‘‘(a) WAIVER OF ENTITLEMENT.—An individual enti10 tled to an annuity or other payment payable from the 

11 Trust Fund may decline to accept all or any part of the 

12 amount of the payment by a waiver signed and filed with 

13 the Executive Director. The waiver may be revoked in 

14 writing at any time. Payment of the annuity waived may 

15 not be made for the period during which the waiver is in 

16 effect. 

17 ‘‘(b) ALLOTMENTS OR ASSIGNMENTS.—An individual 

18 entitled to an annuity or other payment payable from the 

19 Trust Fund may make allotments or assignments of 

20 amounts from the annuity or other payment for such pur21 poses as the Executive Director considers appropriate. 

22 ‘‘SEC. 262. APPLICATION FOR ANNUITY OR OTHER PAY23 MENTS. 

24 ‘‘(a) APPLICATIONS REQUIRED.—No payment of an 

25 annuity or other payment from the Social Security Invest-
40

•HR 1800 IH 

1 ment Trust Fund under this part may be made unless an 

2 application for payment of the annuity or other payment 

3 is received by the Executive Director before the one hun4 dred and fifteenth anniversary of the birth of the account 

5 holder. 

6 ‘‘(b) APPLICATIONS WITH RESPECT TO DECEASED

7 ACCOUNT HOLDERS.—Notwithstanding subsection (a), 

8 after the death of an account holder, a payment of the 

9 annuity or other payment shall not be paid unless an ap10 plication therefor is received by the Executive Director 

11 within 30 years after the death or other event which estab12 lishes the entitlement to the annuity or other payment. 

13 ‘‘SEC. 263. COURT ORDERS. 

14 ‘‘(a) ALTERNATIVE PAYEES UNDER COURT OR15 DERS.—Payments under this part which would otherwise 

16 be made to an account holder or an annuitant shall be 

17 paid (in whole or in part) by the Executive Director to 

18 another person if and to the extent expressly provided for 

19 in the terms of—

20 ‘‘(1) any court decree of divorce, annulment, or 

21 legal separation, or the terms of any court order or 

22 court-approved property settlement agreement inci23 dent to any court decree of divorce, annulment, or 

24 legal separation; or 
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•HR 1800 IH 

1 ‘‘(2) any court order or other similar process in 

2 the nature of garnishment for the enforcement of a 

3 judgment rendered against such account holder or 

4 annuitant, for physically, sexually, or emotionally 

5 abusing a child. 

6 In the event that the Executive Director, as the case may 

7 be, is served with more than 1 decree, order, or other legal 

8 process with respect to the same moneys due or payable 

9 to any individual, such moneys shall be available to satisfy 

10 such processes on a first-come, first-served basis, with any 

11 such process being satisfied out of such moneys as remain 

12 after the satisfaction of all such processes which have been 

13 previously served. 

14 ‘‘(b) WRITTEN NOTICE REQUIREMENTS.—Sub15 section (a) shall apply only to payments made by the Exec16 utive Director under this part after the date on which the 

17 Executive Director receives written notice of such decree, 

18 order, other legal process, or agreement, and such addi19 tional information and documentation as the Executive 

20 Director may require. 

21 ‘‘(c) DEFINITIONS.—For the purpose of this sec22 tion—

23 ‘‘(1) the term ‘judgment rendered for phys24 ically, sexually, or emotionally abusing a child’ 

25 means any legal claim perfected through a final en-
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•HR 1800 IH 

1 forceable judgment, which claim is based in whole or 

2 in part upon the physical, sexual, or emotional abuse 

3 of a child, whether or not that abuse is accompanied 

4 by other actionable wrongdoing, such as sexual ex5 ploitation or gross negligence; and 

6 ‘‘(2) the term ‘child’ means an individual under 

7 18 years of age. 

8 ‘‘SEC. 264. WITHHOLDING OF STATE INCOME TAXES. 

9 ‘‘(a) WITHHOLDING AGREEMENTS.—The Executive 

10 Director shall, in accordance with this section, enter into 

11 an agreement with any State within 120 days of a request 

12 for agreement from the proper State official. The agree13 ment shall provide that the Executive Director shall with14 hold State income tax in the case of the monthly annuity 

15 of any annuitant who voluntarily requests, in writing, such 

16 withholding. The amounts withheld during any calendar 

17 quarter shall be held in the Trust Fund and disbursed 

18 to the States during the month following that calendar 

19 quarter. 

20 ‘‘(b) NO MULTIPLE REQUESTS.—An annuitant may 

21 have in effect at any time only one request for withholding 

22 under this section, and an annuitant may not have more 

23 than two such requests in effect during any one calendar 

24 year. 
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•HR 1800 IH 

1 ‘‘(c) CHANGES AND REVOCATIONS.—Subject to sub2 section (b), an annuitant may change the State designated 

3 by that annuitant for purposes of having withholdings 

4 made, and may request that the withholdings be remitted 

5 in accordance with such change. An annuitant also may 

6 revoke any request of that annuitant for withholding. Any 

7 change in the State designated or revocation is effective 

8 on the first day of the month after the month in which 

9 the request or the revocation is processed by the Executive 

10 Director, but in no event later than on the first day of 

11 the second month beginning after the day on which such 

12 request or revocation is received by the Executive Direc13 tor. 

14 ‘‘(d) RESERVATIONS TO THE UNITED STATES; RE15 PAYMENTS OF ERRONEOUS WITHHOLDINGS.—This sec16 tion does not give the consent of the United States to the 

17 application of a statute which imposes more burdensome 

18 requirements on the United States than on employers gen19 erally, or which subjects the United States or any annu20 itant to a penalty or liability because of this section. The 

21 Executive Director may not accept pay from a State for 

22 services performed in withholding State income taxes from 

23 annuities. Any amount erroneously withheld from an an24 nuity and paid to a State by the Executive Director shall 
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•HR 1800 IH 

1 be repaid by the State in accordance with regulations 

2 issued by the Executive Director. 

3 ‘‘(e) DEFINITION.—For the purpose of this section, 

4 the term ‘annuitant’ includes a survivor who is receiving 

5 an annuity from the Trust Fund. 

6 ‘‘SEC. 265. TAX TREATMENT OF THE SOCIAL SECURITY IN7 VESTMENT TRUST FUND. 

8 ‘‘The Trust Fund shall be exempt from taxation 

9 under subtitle A of the Internal Revenue Code of 1986. 

10 ‘‘SEC. 266. ADMINISTRATION. 

11 ‘‘(a) BOARD OF TRUSTEES.—

12 ‘‘(1) IN GENERAL.—The Federal Retirement 

13 Thrift Investment Board established by section 

14 8472(a) of title 5, United States Code, shall also 

15 serve as the Board of Trustees of the Social Security 

16 Investment Trust Fund. 

17 ‘‘(2) DUTIES.—It shall be the duty of the 

18 Board to—

19 ‘‘(A) hold the Trust Fund; 

20 ‘‘(B) report to the Congress not later than 

21 the first day of April of each year on the oper22 ation and status of the Trust Fund during the 

23 preceding fiscal year and on its expected oper24 ation and status during the next ensuing 5 fis25 cal years; 
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•HR 1800 IH 

1 ‘‘(C) develop investment policies which pro2 vide for—

3 ‘‘(i) prudent investments suitable for 

4 accumulating funds for payment of retire5 ment income, and 

6 ‘‘(ii) low administrative costs; 

7 ‘‘(D) recommend improvements in adminis8 trative procedures and policies designed to ef9 fectuate the proper coordination of the program 

10 established under this part with the old-age, 

11 survivors, and disability insurance program es12 tablished under part A; and 

13 ‘‘(E) review the general policies followed in 

14 managing the Trust Fund and recommend 

15 changes in such policies, including necessary 

16 changes in the provisions of the law which gov17 ern the way in which the Trust Funds are to 

18 be managed and invested. 

19 ‘‘(b) EXECUTIVE DIRECTOR.—

20 ‘‘(1) IN GENERAL.—The Executive Director ap21 pointed under section 8474(a) of title 5, United 

22 States Code, shall also serve as Executive Director 

23 under this part. 

24 ‘‘(2) DUTIES.—The Executive Director shall—
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•HR 1800 IH 

1 ‘‘(A) carry out the policies established by 

2 the Board under this part; 

3 ‘‘(B) invest and manage the Trust Fund in 

4 accordance with the investment policies and 

5 other policies established by the Board under 

6 this part; 

7 ‘‘(C) purchase annuity contracts and pro8 vide for the payment of other benefits under 

9 this part; 

10 ‘‘(D) administer the provisions of this part; 

11 and 

12 ‘‘(E) prescribe such regulations (other 

13 than regulations relating to fiduciary respon14 sibilities) as may be necessary for the adminis15 tration of this part. 

16 ‘‘(3) AUTHORIZED FUNCTIONS.—The Executive 

17 Director may—

18 ‘‘(A) prescribe such regulations as may be 

19 necessary to carry out the responsibilities of the 

20 Executive Director under this part, other than 

21 regulations relating to fiduciary responsibilities; 

22 ‘‘(B) appoint such personnel as may be 

23 necessary to carry out the provisions of this 

24 part; 
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•HR 1800 IH 

1 ‘‘(C) subject to approval by the Board, 

2 procure the services of experts and consultants 

3 under section 3109 of title 5, United States 

4 Code; 

5 ‘‘(D) secure directly from other agencies 

6 and instrumentalities of the Federal Govern7 ment any information necessary to carry out 

8 the provisions of this part and policies of the 

9 Board under this part; 

10 ‘‘(E) make such payments out of sums in 

11 the Trust Fund as the Executive Director de12 termines are necessary to carry out the provi13 sions of this part and the policies of the Board 

14 under this part; 

15 ‘‘(F) pay the compensation, per diem, and 

16 travel expenses of individuals appointed under 

17 subparagraphs (B), (C), and (G) from the 

18 Trust Fund; 

19 ‘‘(G) accept and use the services of individ20 uals employed intermittently in the Government 

21 service and reimburse such individuals for trav22 el expenses, as authorized by section 5703 of 

23 title 5, United States Code, including per diem 

24 as authorized by section 5702 of such title; 
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•HR 1800 IH 

1 ‘‘(H) except as otherwise expressly prohib2 ited by law or the policies of the Board, dele3 gate any of the Executive Director’s functions 

4 to such employees under the Board as the Ex5 ecutive Director may designate and authorize 

6 such successive redelegations of such functions 

7 to such employees under the Board as the Ex8 ecutive Director may consider to be necessary 

9 or appropriate; and 

10 ‘‘(I) take such other actions as are appro11 priate to carry out the functions of the Execu12 tive Director. 

13 ‘‘(c) SOURCE OF COMPENSATION.—Notwithstanding 

14 paragraph (3) of section 8476(d) of title 5, United States 

15 Code, basic pay paid for any fiscal year as compensation 

16 to each member of the Board (and each officer and em17 ployee of the Board) shall be paid from the Trust Fund 

18 (in lieu of the Thrift Savings Fund) in an amount which 

19 bears the same ratio to the total amount of basic pay paid 

20 to such member (or officer or employee) for such fiscal 

21 year as the balance in the Trust Fund as of the beginning 

22 of such fiscal year bears to the total amount of such bal23 ance and the balance in the Thrift Savings Fund as of 

24 the beginning of such fiscal year.’’. 
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•HR 1800 IH 

1 (b) CONFORMING AMENDMENTS.—Section 201(h) of 

2 such Act (42 U.S.C. 401(h)) is amended—

3 (1) by striking ‘‘All other’’ in the second sen4 tence and inserting ‘‘Except as provided in section 

5 255, all other’’; and 

6 (2) by adding at the end the following new sen7 tence: ‘‘Any reference in this part to benefits under 

8 this title shall be deemed a reference to benefits en9 titlement to which arises under this part.’’. 

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

11 this section shall apply with respect to payments of old12 age insurance benefits for months after December 2006. 

13 SEC. 3. FINANCING OF GOVERNMENT CONTRIBUTIONS TO 

14 ACCOUNTS. 

15 (a) PRIMARY FINANCING FROM SOCIAL SECURITY

16 CONTRIBUTIONS OF INDIVIDUALS WORKING ILLEGALLY

17 IN THE UNITED STATES.—Section 201(a) of the Social 

18 Security Act (42 U.S.C. 401(a)) is amended, in the matter 

19 following clause (4)—

20 (1) by striking ‘‘The amounts appropriated by 

21 clauses (3) and (4)’’ and inserting the following: ‘‘So 

22 much of the amounts described in clauses (3) and 

23 (4) for any fiscal year as are attributable to wages 

24 paid to, and self-employment income derived by, in25 dividuals with respect to whom the criterion speci-
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•HR 1800 IH 

1 fied in section 214(c) is not satisfied in determining 

2 such individuals’ quarters of coverage, as determined 

3 by the Secretary of the Treasury in consultation 

4 with the Commissioner of Social Security, shall be 

5 reduced by the amounts equivalent to the aggregate 

6 of initial contributions to investment accounts made 

7 during such fiscal year pursuant to section 252(c). 

8 The amounts appropriated by clauses (3) and (4)’’; 

9 (2) by inserting ‘‘and initial contributions to in10 vestment accounts to be made pursuant to section 

11 252(c)’’ after ‘‘paid to or deposited into the Treas12 ury’’; and 

13 (3) by striking ‘‘the taxes specified in such 

14 clauses (3) and (4) of this subsection’’ and inserting 

15 ‘‘the amounts required to be transferred’’. 

16 (b) SECONDARY FINANCING FROM TAXES ON SOCIAL

17 SECURITY BENEFITS.—Section 121(e) of the Social Secu18 rity Amendments of 1983 (42 U.S.C. 401 note) is amend19 ed—

20 (1) by striking ‘‘less (ii) the amounts’’ in para21 graph (1) and inserting ‘‘less (ii) the sum of (I) the 

22 amounts’’; 

23 (2) by inserting before the period at the end of 

24 paragraph (1) the following: ‘‘, and (II) the amounts 

25 equivalent to the excess (if any) of the aggregate of 
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1 initial contributions to investment accounts to be 

2 made pursuant to section 252(c) of the Social Secu3 rity Act for any fiscal year over the amount of the 

4 reduction for such fiscal year described in the first 

5 sentence following clause (4) of section 201(a) of the 

6 Social Security Act’’; and 

7 (3) by inserting before the period at the end of 

8 the second sentence of paragraph (2) the following: 

9 ‘‘and initial contributions to investment accounts 

10 pursuant to section 252(c) of the Social Security Act 

11 estimated to be made during such quarter’’. 

12 SEC. 4. TAX TREATMENT OF INDIVIDUAL RETIREMENT IN13 VESTMENT PROGRAM AND PERSONAL SO14 CIAL SECURITY INVESTMENT ACCOUNTS. 

15 (a) SOCIAL SECURITY INVESTMENT TRUST FUND.—

16 Section 7701 of the Internal Revenue Code of 1986 (relat17 ing to definitions) is amended by redesignating subsection 

18 (o) as subsection (p) and by inserting after subsection (n) 

19 the following new subsection: 

20 ‘‘(o) TAX TREATMENT OF THE SOCIAL SECURITY IN21 VESTMENT TRUST FUND.—The Social Security Invest22 ment Trust Fund established under section 260 of the So23 cial Security Act shall be exempt from taxation under sub24 title A of the Internal Revenue Code of 1986.’’. 
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1 (b) PERSONAL SOCIAL SECURITY INVESTMENT AC2 COUNTS.—Part VII of subchapter B of chapter 1 of such 

3 Code (relating to additional itemized deductions for indi4 viduals) is amended by redesignating section 224 as sec5 tion 225 and by inserting after section 223 the following 

6 new section: 

7 ‘‘SEC. 224. PERSONAL SOCIAL SECURITY INVESTMENT AC8 COUNTS. 

9 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 

10 individual, there shall be allowed as a deduction for the 

11 taxable year an amount equal to the amount contributed 

12 in cash for such taxable year to the personal social security 

13 investment account of any eligible individual. 

14 ‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—

15 ‘‘(1) IN GENERAL.—The amount allowable as a 

16 deduction under subsection (a) for any taxable year 

17 for contributions to the personal social security in18 vestment account of an eligible individual shall not 

19 exceed $5,000. 

20 ‘‘(2) SPECIAL RULE.—If the account holder of 

21 any personal social security investment account 

22 makes a contribution to such account for any tax23 able year, no other taxpayer shall be allowed a de24 duction for any amount contributed to such account 

25 for such taxable year. 
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1 ‘‘(c) DEFINITIONS.—For purposes of this section—

2 ‘‘(1) PERSONAL SOCIAL SECURITY INVESTMENT

3 ACCOUNT.—The term ‘personal social security in4 vestment account’ means an account established 

5 under section 252 of the Social Security Act. 

6 ‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

7 individual’ means, with respect to the taxpayer—

8 ‘‘(A) the taxpayer, 

9 ‘‘(B) the taxpayer’s spouse, and 

10 ‘‘(C) any individual with respect to whom 

11 a deduction under section 151(c) (determined 

12 without regard to subsections (b)(1), (b)(2), 

13 and (d)(1)(B) thereof) is allowed to the tax14 payer. 

15 Subparagraph (B) shall not apply unless the tax16 payer files a joint return for the taxable year. 

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

18 ‘‘(1) IN GENERAL.—Except as otherwise pro19 vided in this subsection, any amount paid or distrib20 uted out of a personal social security investment ac21 count shall be included in gross income by the payee 

22 or distributee, as the case may be, in the manner 

23 provided under section 72. 
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1 ‘‘(2) SPECIAL RULES FOR APPLYING SECTION

2 72.—For purposes of applying section 72 to any 

3 amount described in paragraph (1)—

4 ‘‘(A) all personal social security investment 

5 accounts of the same individual shall be treated 

6 as 1 contract, 

7 ‘‘(B) all distributions during any taxable 

8 year shall be treated as 1 distribution, and 

9 ‘‘(C) the value of the contract, income on 

10 the contract, and investment in the contract 

11 shall be computed as of the close of the cal12 endar year in which the taxable year begins. 

13 For purposes of subparagraph (C), the value of the 

14 contract shall be increased by the amount of any dis15 tributions during the calendar year. 

16 ‘‘(3) TREATMENT OF DISTRIBUTIONS OF SO17 CIAL SECURITY BENEFITS.—

18 ‘‘(A) IN GENERAL.—Notwithstanding para19 graph (1), the amount of any benefit distribu20 tion described in section 255(b) of the Social 

21 Security Act shall be included in gross income 

22 (to the extent provided in section 86) as if such 

23 distribution were a social security benefit (as 

24 defined in section 86). 
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1 ‘‘(B) ALLOCATION OF INVESTMENT IN THE

2 CONTRACT.—For purposes of section 72, the 

3 portion of the account which the Executive Di4 rector (as defined in section 251 of the Social 

5 Security Act) determines is necessary to fund 

6 the benefit distributions referred to in subpara7 graph (A) for the taxable year and all suc8 ceeding taxable years shall be treated as a sepa9 rate contract with respect to which no premium 

10 or other consideration was paid. 

11 ‘‘(4) CROSS REFERENCE.—For excise tax on 

12 certain distributions, see section 72(t). 

13 ‘‘(e) SPECIAL RULES.—

14 ‘‘(1) TIME WHEN CONTRIBUTIONS DEEMED

15 MADE.—For purposes of this section, a taxpayer 

16 shall be deemed to have made a contribution to a 

17 personal social security investment account on the 

18 last day of the preceding taxable year if the con19 tribution is made on account of such taxable year 

20 and is made not later than the time prescribed by 

21 law for filing the return for such taxable year (not 

22 including extensions thereof). 

23 ‘‘(2) BENEFICIARY MUST BE UNDER AGE

701 24 ⁄2.—No deduction shall be allowed under this sec25 tion with respect to any contribution to a personal 
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1 social security investment account if the account 

holder has attained age 701 2 ⁄2 before the close of 

3 such holder’s taxable year for which the contribution 

4 was made.’’. 

5 (c) DEDUCTION ALLOWED WHETHER OR NOT TAX6 PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

7 of section 62 of such Code is amended—

8 (1) by redesignating the second paragraph (19) 

9 as paragraph (20); and 

10 (2) by inserting after paragraph (20) (as redes11 ignated) the following new paragraph: 

12 ‘‘(21) PERSONAL SOCIAL SECURITY INVEST13 MENT ACCOUNT CONTRIBUTIONS.—The deduction 

14 allowed by section 224.’’. 

15 (d) CONFORMING AMENDMENTS.—

16 (1) PENALTY FOR FAILURE TO MEET MINIMUM

17 DISTRIBUTION REQUIREMENT.—Subsection (c) of 

18 section 4974 of such Code is amended by striking 

19 ‘‘or’’ at the end of paragraph (4), by striking the pe20 riod at the end of paragraph (5) and inserting ‘‘, 

21 or’’, and by inserting after paragraph (5) the fol22 lowing new paragraph: 

23 ‘‘(6) any personal social security investment ac24 count (as defined in section 224(c)).’’. 
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1 (2) TREATMENT LIKE INDIVIDUAL RETIREMENT

2 PLAN UNDER EXCISE TAX ON CERTAIN PREMATURE

3 DISTRIBUTIONS.—Subparagraph (A) of section 

4 72(t)(3) of such Code is amended—

5 (A) by inserting ‘‘or from a personal social 

6 security investment account (as defined in sec7 tion 224(c))’’ before the period at the end, and 

8 (B) by inserting ‘‘OR FROM PERSONAL SO9 CIAL SECURITY INVESTMENT ACCOUNTS’’ after 

10 ‘‘PLANS’’ in the subparagraph heading. 

11 (e) CLERICAL AMENDMENT.—The table of sections 

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

13 is amended by redesignating the item relating to section 

14 224 as an item relating to section 225 and by inserting 

15 after the item relating to section 223 the following new 

16 item:

‘‘Sec. 224. Personal Social Security investment accounts.’’.

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2006.

Æ