I 

110TH CONGRESS 

1ST SESSION H. R. 4922 

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 

DECEMBER 19, 2007 

Mr. SESSIONS 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 2007’’. 

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

7 as follows: 

Sec. 1. Short title and table of contents. 


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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 

14 for whom an eligible individual is engaged in em15 ployment during the year. 


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

2 individual’’ means any individual with respect to 

3 whom there is in effect an election under section 

4 105(a). 

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

6 has the meaning provided in section 210 of the So7 cial Security Act. 

8 (6) PRESCRIBED EMPLOYEE CONTRIBUTION.— 

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

10 with respect to any eligible individual who is en11 gaged in employment for a covered employer during 

12 any calendar year, an amount equal to 6.2 percent 

13 of the wages received by such employee with respect 

14 to such employment. The Commissioner of Social 

15 Security shall provide by regulation for exclusion of 

16 remuneration paid to any employee during any cal17 endar year from the total amount of remuneration 

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

19 such employee during such calendar year to the ex20 tent that such total amount exceeds the contribution 

21 and benefit base for such calendar year under sec22 tion 230 of the Social Security Act. 

23 (7) PRESCRIBED SELF-EMPLOYMENT CON24 TRIBUTION.—The term ‘‘prescribed self-employment 

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1 ment income of an eligible individual for any cal2 endar year, the excess (if any) of— 

3 (A) 6.2 percent of the amount of such self4 employment income for such calendar year, to 

5 the extent that such self-employment income 

6 does not exceed, for such calendar year, the 

7 contribution and benefit base for such calendar 

8 year under section 230 of the Social Security 

9 Act, over 

10 (B) the total of all prescribed employee 

11 contributions and prescribed employer contribu12 tions payable with respect to such eligible indi13 vidual for such calendar year. 

14 Effective with the commencement of the 16th cal15 endar year for which the eligible individual’s election 

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

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

18 (A). 

19 (8) PRESCRIBED EMPLOYER CONTRIBUTION.— 

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

21 with respect to any eligible individual who is en22 gaged in employment for a covered employer during 

23 any calendar year, an amount equal to 6.2 percent 

24 of the wages received by such employee with respect 

25 to such employment, to the extent that such wages 


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1 do not exceed, for such calendar year, the contribu2 tion and benefit base for such calendar year under 

3 section 230 of the Social Security Act. 

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

5 account’’ has the meaning provided in section 222(c) 

6 of the Internal Revenue Code of 1986. 

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

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

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

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

11 meaning provided in section 209 of the Social Secu12 rity Act. 

13 SEC. 102. S.A.F.E. ACCOUNT PAYROLL DEDUCTION PRO14 GRAMS. 

15 (a) IN GENERAL.—Each person who is a covered em16 ployer for any calendar year shall have in effect through17 out such calendar year a S.A.F.E. account payroll deduc18 tion program for such person’s employees who are eligible 

19 individuals. 

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

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

22 means a written program maintained by a covered em23 ployer if— 

24 (1) under such program, the prescribed em25 ployee contribution is deducted from the wages of 


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1 each employee who is an eligible individual and paid 

2 as a contribution on behalf of the employee to a 

3 S.A.F.E. account of such employee designated in ac4 cordance with section 103, 

5 (2) under such program, the covered em6 ployer— 

7 (A) makes timely payment of the amount 

8 so deducted as a contribution to the designated 

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

10 (B) effective upon receipt from the eligible 

11 individual of certification (in accordance with 

12 regulations which shall be prescribed by the 

13 Commissioner of Social Security) of the com14 mencement of the 16th calendar year for which 

15 the eligible employee’s election under section 

16 105 has been in effect, makes timely payment, 

17 together with the amount so deducted, of the 

18 prescribed employer contribution with respect to 

19 the eligible individual, 

20 under regulations of the Commissioner of Social Se21 curity applying the same principles relating to the 

22 timeliness of payment as are applicable under chap23 ter 62 of the Internal Revenue Code of 1986 with 

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


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1 (3) the employer receives no compensation for 

2 the cost of administering such program. 

3 (c) AMOUNTS OTHERWISE PAYABLE MAY BE ACCU4 MULATED BY EMPLOYER IN CERTAIN CASES.—If, under 

5 the terms of the governing instruments creating a 

6 S.A.F.E. account designated under section 103, contribu7 tions below a specified amount will not be accepted, the 

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

9 if amounts deducted from the wages of an employee who 

10 is an eligible individual, together with prescribed employer 

11 contributions (if any), are accumulated by the covered em12 ployer and paid to such account otherwise in accordance 

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

14 which the accumulated amount exceeds such specified 

15 amount. 

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

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

18 (b), a S.A.F.E. account to which contributions with re19 spect to any employee who is an eligible individual are re20 quired to be paid under section 102 shall be such an ac21 count designated by such employee to such employer not 

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

23 employee becomes an employee of such employer. Any 

24 such designation shall be made in such form and manner 


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1 as may be prescribed in regulations of the Commissioner 

2 of Social Security. 

3 (b) DESIGNATION IN ABSENCE OF TIMELY DESIGNA4 TION BY EMPLOYEE.—In any case in which no timely des5 ignation of a S.A.F.E. account is made, the covered em6 ployer shall designate such account in accordance with 

7 regulations of the Commissioner of Social Security. 

8 (c) SUBSEQUENT SUBSTITUTION OF ACCOUNTS.— 

9 The Commissioner of Social Security shall provide by reg10 ulation for subsequent designation of a S.A.F.E. account 

11 by an account holder in lieu of an account previously des12 ignated by such account holder under this section. 

13 SEC. 104. SELF-EMPLOYED INDIVIDUALS. 

14 (a) IN GENERAL.—In the case of an eligible indi15 vidual who has self-employment income for any calendar 

16 year, such individual shall make timely payments to a 

17 S.A.F.E. account designated by such individual of the pre18 scribed self-employment contribution with respect to such 

19 individual for such calendar year in accordance with regu20 lations of the Commissioner of Social Security, applying 

21 the same principles relating to timeliness of payment as 

22 are applicable under chapter 62 of the Internal Revenue 

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

24 such Code. 


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

2 a S.A.F.E. account for payment of prescribed self-employ3 ment contributions shall be made in such form and man4 ner as may be prescribed in regulations of the Commis5 sioner of Social Security. 

6 (c) PERIODIC PAYMENT.—The Commissioner of So7 cial Security shall provide by regulation for periodic in8 stallment payments during the calendar year of prescribed 

9 self-employment contributions for each eligible individual, 

10 taking into account, as appropriate for each period, pre11 scribed employee contributions for such individual. 

12 SEC. 105. ELECTIVE PARTICIPATION. 

13 (a) ELECTION.—Any individual who has been as14 signed a social security account number under section 

15 205(c)(2)(B) of the Social Security Act and has been paid 

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

17 after January 1, 2008, elect under this section to be an 

18 eligible individual for purposes of this Act. Any such elec19 tion shall be made by filing with the Commissioner of So20 cial Security, the Secretary of the Treasury, and each per21 son (if any) who is an employer of such individual on the 

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

23 prescribed in regulations of the Commissioner (in con24 sultation with the Secretary of the Treasury), a written 

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


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

2 An election under this section shall be effective with re3 spect to wages paid, and self-employment income derived, 

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

5 the election. 

6 (b) ELECTION INEFFECTIVE IF ENTITLED TO SO7 CIAL SECURITY BENEFITS.—Any election under this sec8 tion shall not take effect if, as of the effective date of the 

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

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

11 to a disability insurance benefit under section 223 of such 

12 Act. 

13 (c) IRREVOCABILITY SUBJECT TO GRACE PERIOD.— 

14 (1) IN GENERAL.—Unless revoked in accord15 ance with paragraph (2), an election under this sec16 tion shall be irrevocable. 

17 (2) FIVE-YEAR GRACE PERIOD.— 

18 (A) IN GENERAL.—An individual may re19 voke an election under this section by filing 

20 with the Commissioner of Social Security, the 

21 Secretary of the Treasury, and each person (if 

22 any) who is an employer of such individual on 

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

24 as shall be prescribed in regulations of the 

25 Commissioner (in consultation with the SecVerDate Aug 31 2005 20:35 Dec 27, 2007 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4922.IH H4922

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1 retary of the Treasury), a written and signed 

2 revocation of the election at any time before the 

3 end of the five-year period beginning with the 

4 effective date of the election. A revocation 

5 under this subsection shall take effect January 

6 1 following the date of the filing of the revoca7 tion, except that a revocation filed during the 

8 90-day period beginning with the date of the fil9 ing of the election shall take effect as of the ef10 fective date of the election. Upon the effective 

11 date of a revocation under this subsection, enti12 tlement to benefits under title II of the Social 

13 Security Act shall be determined as if the re14 voked election had not occurred, except that, for 

15 purposes of any such entitlement, wages paid, 

16 and self-employment income derived, during the 

17 period for which the election was in effect shall 

18 not be taken into account. No subsequent elec19 tion under this section may take effect with re20 spect to an individual who has filed a revocation 

21 under this subsection (except a revocation filed 

22 during the 90-day period beginning with the 

23 date of the filing of the election). 

24 (B) REDUCTION IN BENEFITS.—The pri25 mary insurance amount, as determined under 


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1 section 215 of the Social Security Act, of any 

2 individual who has filed a revocation under this 

3 subsection before the end of the five-year period 

4 described in subparagraph (A) (and after the 

5 90-day period referred to in subparagraph (A)) 

6 shall be reduced (except for purposes of deter7 mining benefits under section 223 of such Act, 

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

9 such Act) by the applicable percentage specified 

10 in the following table: 

If the first calendar year for which the 

revocation is effective is: 

The applicable 

percentage is: 

The first, second, or third calendar year of such fiveyear 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. 

11 SEC. 106. PENALTIES. 

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

13 PAYROLL DEDUCTION PROGRAM.—Any covered employer 

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

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

16 exceed— 

17 (1) $250,000, in the case of an employer who 

18 is an individual, or 

19 (2) $500,000, in any other case. 

20 (b) FAILURE TO MAKE DEDUCTIONS REQUIRED

21 UNDER PROGRAM.—Any covered employer who fails to 


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

2 employee who is an eligible individual as required under 

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

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

5 of not to exceed— 

6 (1) $250,000, in the case of an employer who 

7 is an individual, or 

8 (2) $500,000, in any other case. 

9 (c) FAILURE TO PAY DEDUCTED WAGES TO

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

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

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

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

14 accordance with section 102, the covered employer failing 

15 to make such payment— 

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

17 such failure of not to exceed— 

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

19 who is an individual, or 

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

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

22 on the unpaid amount at a rate equal to 10 percent23 age points in excess of the Federal short-term rate 

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

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


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

2 on which such amount is paid into the designated 

3 S.A.F.E. account. 

4 (d) FAILURE TO PAY PRESCRIBED SELF-EMPLOY5 MENT CONTRIBUTIONS TO S.A.F.E. ACCOUNT.—Any eli6 gible individual failing to timely pay in full a prescribed 

7 self-employment contribution to a designated S.A.F.E. ac8 count as required under section 104 shall be subject to 

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

10 $250,000, plus interest on the unpaid amount at a rate 

11 equal to 10 percentage points in excess of the Federal 

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

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

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

15 on which such amount is paid into the designated 

16 S.A.F.E. account. 

17 (e) RULES FOR APPLICATION OF SECTION.— 

18 (1) PENALTIES ASSESSED BY COMMISSIONER

19 OF SOCIAL SECURITY.—Any civil penalty assessed by 

20 this section shall be imposed by the Commissioner of 

21 Social Security and collected in a civil action. 

22 (2) COMPROMISES.—The Commissioner may 

23 compromise the amount of any civil penalty imposed 

24 by this section. 


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1 (3) AUTHORITY TO WAIVE PENALTY IN CER2 TAIN CASES.—The Commissioner may waive the ap3 plication of this section with respect to any failure 

4 if the Commissioner determines that such failure is 

5 due to reasonable cause and not to intentional dis6 regard of rules and regulations. 

7 SEC. 107. FEDERAL CIVILIAN AND MILITARY PERSONNEL. 

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

9 2007, the Office of Personnel Management, after appro10 priate study, shall submit to the President and each House 

11 of Congress a written report containing recommendations 

12 on how to provide for the application of this Act with re13 spect to Federal civilian and military personnel. 

14 (b) REQUIREMENTS.—The report— 

15 (1) shall be prepared in consultation with the 

16 Social Security Administration, the Securities and 

17 Exchange Commission, and other appropriate agen18 cies; and 

19 (2) shall be accompanied by draft legislation 

20 which, if enacted, would carry out the recommenda21 tions contained in such report. 

22 (c) PROVISIONS RELATING TO THE CONTINUED OP23 ERATION OF EXISTING RETIREMENT SYSTEMS.—To the 

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1 sions of law in effect before the date of enactment of this 

2 Act, each shall address at least the following: 

3 (1) FEDERAL EMPLOYEES’ RETIREMENT SYS4 TEM.— 

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

6 States Code (relating to the definition of an 

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

8 that the individual concerned be someone whose 

9 civilian service is employment for the purposes 

10 of title II of the Social Security Act and chap11 ter 21 of the Internal Revenue Code of 1986. 

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

13 annuity supplement), which includes provisions 

14 incorporating the notion of the period of time 

15 for which the individual is or would be entitled 

16 to old-age insurance benefits under title II of 

17 the Social Security Act, and provisions for com18 puting the amount of such supplement based on 

19 the amount of certain benefits to which the in20 dividual would be entitled under such Act. 

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

22 rights of a widow or widower), which includes 

23 provisions under which a supplementary annu24 ity for a widow or widower is not payable to 

25 anyone who would not be entitled to certain 


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1 benefits under the Social Security Act, and pro2 visions for the computation of any such annuity 

3 based on the amount of certain benefits which 

4 would be payable to that individual under the 

5 Social Security Act. 

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

7 rights of a child), which includes provisions 

8 under which, as part of the formula for com9 puting the amount of a survivor annuity for a 

10 child, there is incorporated the notion of the 

11 amount of child’s insurance benefits which are 

12 or would be payable under title II of the Social 

13 Security Act. 

14 (2) CIVIL SERVICE RETIREMENT SYSTEM.— 

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

16 to special rules for determining deductions and 

17 contributions for individuals subject to ‘‘offset18 83’’ treatment), which incorporates the notion 

19 of the OASDI contribution made from Federal 

20 wages of the individual concerned. 

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

22 offset based on certain benefits under the Social 

23 Security Act), which incorporates notions relat24 ing to actual or constructive eligibility for beneVerDate Aug 31 2005 20:35 Dec 27, 2007 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H4922.IH H4922

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1 fits under the Social Security Act, and the 

2 amount of those benefits. 

3 (3) COORDINATION PROVISIONS.—Provisions of 

4 law involving a reduction or other adjustment in re5 tirement benefits (or eligibility therefor), based on 

6 any individual’s eligibility for benefits under title II 

7 of the Social Security Act. 

8 (4) OTHER RETIREMENT SYSTEMS.—Similar 

9 provisions of law under other retirement systems 

10 covering Federal civilian or military personnel. 

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

12 To the extent that the report and draft legislation relate 

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

14 shall address at least the following: 

15 (1) What the specifications for the S.A.F.E. ac16 count payroll deduction program or programs cov17 ering Federal civilian and military personnel shall be 

18 or, alternatively, how those specifications shall be de19 veloped. 

20 (2) Which agencies or instrumentalities of the 

21 Federal Government shall be responsible for oper22 ating or maintaining which aspects of the program 

23 or programs referred to in paragraph (1). 

24 (3) Which penalty provisions are appropriate or 

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1 ment in its capacity as a ‘‘covered employer’’, sub2 ject to what modifications (if any). 

3 TITLE II—TAX-EXEMPT S.A.F.E. 

4 ACCOUNTS 

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

6 (a) IN GENERAL.—Part VII of subchapter B of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to 

8 additional itemized deductions for individuals) is amended 

9 by redesignating section 224 as section 225 and by insert10 ing after section 223 the following new section: 

11 ‘‘SEC. 224. S.A.F.E. ACCOUNTS. 

12 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi13 vidual, there shall be allowed as a deduction the aggregate 

14 amount paid in cash during the taxable year by or on be15 half of such individual to a S.A.F.E. account of such indi16 vidual. 

17 ‘‘(b) LIMITATION.—The amount allowable as a de18 duction under subsection (a) for any taxable year shall not 

19 exceed 6.2 percent of the lesser of— 

20 ‘‘(1) the contribution and benefit base (as de21 termined under section 230 of the Social Security 

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

23 such taxable year, or 

24 ‘‘(2) the sum of— 


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

2 section 3121(a)) received during such calendar 

3 year, and 

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

5 income (as defined in section 1402) of such in6 dividual for the taxable year. 

7 Effective with the commencement of the 16th calendar 

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

9 of the Savings Account for Every American Act of 2007 

10 is effective, the limitation under the preceding sentence 

11 shall be increased by any prescribed employer contribution 

12 paid to a personal retirement account of such individual 

13 pursuant to section 102(b)(2)(B) of such Act and the por14 tion of any prescribed self-employment contribution paid 

15 to such an account which is attributable to the increase 

16 in such contribution required by the last sentence of sec17 tion 101(7) of such Act. 

18 ‘‘(c) S.A.F.E. ACCOUNT.—For purposes of this sec19 tion, the term ‘S.A.F.E. account’ means a trust created 

20 or organized in the United States exclusively for the ben21 efit of an individual or his beneficiaries, but only if the 

22 written governing instrument creating the trust meets the 

23 following requirements: 

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

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


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1 ‘‘(A) no contribution will be accepted un2 less it is in cash, 

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

4 the taxable year in excess of 6.2 percent of the 

5 contribution and benefit base (as determined 

6 under section 230 of the Social Security Act) 

7 for the calendar year which ends with or within 

8 such taxable year, and 

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

10 account holder which are not accepted pursuant 

11 to this paragraph are promptly refunded di12 rectly to the account holder. 

13 In the case of any such individual, effective for tax14 able years beginning with or after the 16th calendar 

15 year for which the individual’s election under section 

16 105 of the Savings Account for Every American Act 

17 of 2005 is effective, ‘12.4 percent’ shall be sub18 stituted for ‘6.2 percent’ in subparagraph (B). 

19 ‘‘(2) The trustee is a bank (as defined in sec20 tion 408(n)) or such other person who demonstrates 

21 to the satisfaction of the Secretary that the manner 

22 in which such other person will administer the trust 

23 will be consistent with the requirements of this sec24 tion. 


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

2 in life insurance contracts. 

3 ‘‘(4) The interest of an individual in the bal4 ance in his account is nonforfeitable. 

5 ‘‘(5) The assets of the trust will not be commin6 gled with other property except in a common trust 

7 fund or common investment fund. 

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

9 ‘‘(1) IN GENERAL.—Except as otherwise pro10 vided in this subsection, any amount distributed out 

11 of a S.A.F.E. account shall be included in gross in12 come of the distributee for the taxable year in which 

13 the distribution is received. Notwithstanding any 

14 other provision of this title (including chapters 11 

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

16 is zero. 

17 ‘‘(2) EXCEPTIONS FOR DISTRIBUTIONS AFTER

AGE 591 18 ⁄2 OR DEATH.—Paragraph (1) shall not apply 

19 to any distribution out of a S.A.F.E. account— 

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

the account beneficiary attains age 591 21 ⁄2, or 

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

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

24 death of the account beneficiary. 


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1 ‘‘(3) EXCEPTIONS FOR DISTRIBUTIONS TO PUR2 CHASE CERTAIN INSURANCE.—Paragraph (1) shall 

3 not apply to any distribution out of a S.A.F.E. ac4 count to the account beneficiary to the extent such 

5 distributions do not exceed the sum of the expenses 

6 paid or incurred during the taxable year for— 

7 ‘‘(A) any qualified long-term care insur8 ance contract (but only to the extent of eligible 

9 long-term care premiums (as defined in section 

10 213(d)(10)), 

11 ‘‘(B) disability insurance, or 

12 ‘‘(C) term life insurance. 

13 ‘‘(4) EXCEPTIONS FOR CERTAIN OTHER DIS14 TRIBUTIONS.—Rules similar to the rules of para15 graphs (3), (4), (5), and (6) of section 408(d) shall 

16 apply for purposes of this section. 

17 ‘‘(e) TAX TREATMENT OF ACCOUNTS.— 

18 ‘‘(1) EXEMPTION FROM TAX.—A S.A.F.E. ac19 count is exempt from taxation under this subtitle 

20 unless such account has ceased to be a S.A.F.E. ac21 count by reason of paragraph (2). Notwithstanding 

22 the preceding sentence, any such account is subject 

23 to the taxes imposed by section 511 (relating to im24 position of tax on unrelated business income of char25 itable, etc. organizations). 


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

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

3 408(e) shall apply to S.A.F.E. accounts, and any 

4 amount treated as distributed under such rules shall 

5 be treated as not used to pay expenses described in 

6 subsection (d)(3). 

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

8 GROSS INCOME.—If any distribution from a S.A.F.E. ac9 count is includible in gross income of the account bene10 ficiary, the tax liability of such beneficiary under this 

11 chapter for the taxable year in which the distribution is 

12 received shall be increased by an amount equal to 20 per13 cent of the amount of the distribution. 

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

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

16 this section, the term ‘account beneficiary’ means 

17 the individual for whose benefit the S.A.F.E. ac18 count was established. 

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

20 to the following rules shall apply for purposes of this 

21 section: 

22 ‘‘(A) Section 219(d)(2) (relating to no de23 duction for rollovers). 

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

25 when contributions deemed made). 


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1 ‘‘(C) Section 219(f)(5) (relating to em2 ployer payments). 

3 ‘‘(D) Section 408(g) (relating to commu4 nity property laws). 

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

6 accounts). 

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

8 shall make such reports regarding such account to the 

9 Secretary and to the individual for whose benefit the ac10 count is maintained with respect to contributions, dis11 tributions, and such other matters as the Secretary may 

12 by regulation prescribe. The reports required by this sub13 section shall be filed at such time and in such manner, 

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

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

16 (b) DEDUCTION ALLOWED IN ARRIVING AT AD17 JUSTED GROSS INCOME.—Subsection (a) of section 62 of 

18 such Code is amended by inserting after paragraph (17) 

19 the following new paragraph: 

20 ‘‘(18) S.A.F.E. ACCOUNT CONTRIBUTIONS.— 

21 The deduction allowed by section 224.’’. 

22 (c) TAX ON EXCESS CONTRIBUTIONS.— 

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

24 (relating to tax on excess contributions to individual 

25 retirement accounts, etc.) is amended by striking 


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

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

3 paragraph (5) the following new paragraph: 

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

5 section 224(c)),’’. 

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

7 adding at the end the following new subsection: 

8 ‘‘(g) EXCESS CONTRIBUTIONS TO S.A.F.E. AC9 COUNTS.—For purposes of this section, in the case of 

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

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

12 ‘‘(1) the excess (if any) of— 

13 ‘‘(A) the aggregate amount contributed for 

14 the taxable year to the accounts (other than 

15 rollover contributions), over 

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

17 under section 224 for such contributions, and 

18 ‘‘(2) the amount determined under this sub19 section for the preceding taxable year, reduced by 

20 the sum of— 

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

22 which were included in gross income under 

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

24 which apply to such accounts by reason of sec25 tion 224(d)(4), and 


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1 ‘‘(B) the excess (if any) of— 

2 ‘‘(i) the maximum amount allowable 

3 as a deduction under section 224(b) for 

4 the taxable year, over 

5 ‘‘(ii) the amount contributed to the 

6 accounts for the taxable year. 

7 For purposes of this subsection, any contribution 

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

9 a distribution to which the rules similar to the rules 

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

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

12 amount not contributed.’’. 

13 (d) TAX ON PROHIBITED TRANSACTIONS.— 

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

15 4975(e) of such Code (relating to prohibited trans16 actions) is amended by striking ‘‘or’’ at the end of 

17 subparagraph (F), by redesignating subparagraph 

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

19 subparagraph (F) the following new subparagraph: 

20 ‘‘(G) a S.A.F.E. account described in sec21 tion 224(c), or’’. 

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

23 4975 of such Code is amended by adding at the end 

24 the following new paragraph: 


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

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

3 is established shall be exempt from the tax imposed 

4 by this section with respect to any transaction con5 cerning such account (which would otherwise be tax6 able under this section) if section 224(e)(2) applies 

7 with respect to such transaction.’’. 

8 (e) FAILURE TO PROVIDE REPORTS ON S.A.F.E. AC9 COUNTS.—Paragraph (2) of section 6693(a) of such Code 

10 (relating to failure to provide reports on individual retire11 ment accounts or annuities) is amended by striking ‘‘and’’ 

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

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

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

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

16 accounts).’’. 

17 (f) CLERICAL AMENDMENTS.— 

18 (1) The table of sections for part VII of sub19 chapter B of chapter 1 of such Code is amended by 

20 striking the item relating to section 224 and insert21 ing the following new items: 

‘‘Sec. 224. S.A.F.E. accounts. 

‘‘Sec. 225. Cross references.’’. 

22 (2) The table of sections for chapter 43 of such 

23 Code is amended by striking the item relating to sec24 tion 4973 and inserting the following new item: 


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‘‘Sec. 4973. Tax on excess contributions to certain tax-favored accounts and 

annuities, etc.’’. 

1 SEC. 202. EFFECTIVE DATE. 

2 The amendments made by this title shall apply to 

3 contributions made for taxable years beginning after De4 cember 31, 2007. 

5 TITLE III—CONFORMING 

6 AMENDMENTS TO THE SO7 CIAL SECURITY ACT AND THE 

8 INTERNAL REVENUE CODE 

9 OF 1986 

10 SEC. 301. REDUCTIONS IN AND EXEMPTIONS FROM FICA 

11 TAXES AND SECA TAXES WITH RESPECT TO 

12 ELIGIBLE INDIVIDUALS. 

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

14 Internal Revenue Code of 1986 (relating to OASDI tax 

15 on employees) is amended— 

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

17 and inserting ‘‘Subject to subsection (c), in addi18 tion’’; 

19 (2) by redesignating subsection (c) as sub20 section (d); and 

21 (3) by inserting after subsection (b) the fol22 lowing new subsection: 

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

24 INDIVIDUALS.—Subsection (a) shall not apply with reVerDate Aug 31 2005 20:35 Dec 27, 2007 Jkt 059200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\H4922.IH H4922

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1 spect to wages received by an eligible individual (as de2 fined in section 101(4) of the Savings Account for Every 

3 American Act of 2005).’’ 

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

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

6 amended— 

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

8 and inserting ‘‘Subject to subsection (c), in addi9 tion’’; 

10 (2) by redesignating subsection (c) as sub11 section (d); and 

12 (3) by inserting after subsection (b) the fol13 lowing new subsection: 

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

15 TO ELIGIBLE INDIVIDUALS.—In the case of an eligible in16 dividual (as defined in section 101(4) of the Savings Ac17 count for Every American Act of 2005), effective with the 

18 16th calendar year for which such individual’s election 

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

20 shall not apply with respect to wages received by such indi21 vidual.’’ 

22 (c) REDUCTION IN AND EXEMPTION FROM SELF-EM23 PLOYMENT TAX.—Subsection (a) of section 1401 of such 

24 Code (relating to OASDI tax on self-employment income) 

25 is amended— 


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

2 and inserting ‘‘Subject to subsection (c), in addi3 tion’’; 

4 (2) by redesignating subsection (c) as sub5 section (d); and 

6 (3) by inserting after subsection (b) the fol7 lowing new subsection: 

8 ‘‘(c) ADJUSTMENT TO OASDI TAX.— 

9 ‘‘(1) REDUCTION.—In the case of an eligible in10 dividual (as defined in section 101(4) of the Savings 

11 Account for Every American Act of 2005), for tax12 able years beginning with or during the 1st 15 cal13 endar years for which such individual’s election is in 

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

15 under subsection (a) shall be 6.20 percent. 

16 ‘‘(2) EXEMPTION.—In the case of such an eligi17 ble individual, effective for taxable years beginning 

18 with or during the 16th calendar year for which 

19 such individual’s election under such section 105 is 

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

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

22 this section shall apply with respect to wages received 

23 after December 31, 2008, and with respect to self-employ24 ment income for taxable years beginning after such date. 


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1 SEC. 302. EXCLUSION OF ELIGIBLE INDIVIDUALS FROM 

2 OLD-AGE, SURVIVORS, AND DISABILITY IN3 SURANCE COVERAGE. 

4 (a) MONTHLY INSURANCE BENEFITS UNDER SEC5 TION 202.—Section 202 of the Social Security Act (42 

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

7 new subsection: 

8 ‘‘Limitation on Payment to Eligible Individuals Under 

9 Savings Account for Every American Act of 2007 

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

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

12 based on the wages and self-employment income of an eli13 gible individual (as defined in section 101(4) of the Sav14 ings Account for Every American Act of 2007). 

15 ‘‘(2) Determinations of entitlement to hospital insur16 ance benefits under section 226 or 226A shall be made 

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

18 (b) DISABILITY INSURANCE BENEFITS UNDER SEC19 TION 223.—Section 223 of such Act (42 U.S.C. 423) is 

20 amended by adding at the end the following new sub21 section: 

22 ‘‘Limitation on Payment to Eligible Individuals Under 

23 Savings Account for Every American Act of 2007 

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

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

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1 gible individual (as defined in section 101(4) of the Sav2 ings Account for Every American Act of 2007). 

3 ‘‘(2) Determinations of entitlement to hospital insur4 ance benefits under section 226 or 226A shall be made 

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

6 SEC. 303. INFORMATION PROVIDED IN SOCIAL SECURITY 

7 ACCOUNT STATEMENTS. 

8 (a) IN GENERAL.—Section 1143 of the Social Secu9 rity Act (42 U.S.C. 1320b–13) is amended to read as fol10 lows: 

11 ‘‘SOCIAL SECURITY ACCOUNT STATEMENT

12 ‘‘Provision of Annual Statements 

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

14 shall provide an annual social security account statement 

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

16 to each eligible individual who is not receiving benefits 

17 under title II and for whom a mailing address can be de18 termined through such methods as the Commissioner de19 termines to be appropriate. 

20 ‘‘Contents of Statement 

21 ‘‘(b) Each statement shall contain— 

22 ‘‘(1) the amount of wages paid to and self-em23 ployment income derived by the eligible individual as 

24 shown by the records of the Commissioner; 

25 ‘‘(2) an estimate of the aggregate of the em26 ployer, employee, and self-employment contributions 


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

2 disability insurance as shown by the records of the 

3 Commissioner; 

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

5 employer, employee, and self-employment contribu6 tions of the eligible individual for hospital insurance 

7 as shown by the records of the Commissioner; and 

8 ‘‘(4) an estimate of the potential monthly re9 tirement, disability, survivor, and auxiliary benefits 

10 payable on the eligible individual’s account together 

11 with a description of the benefits payable under the 

12 medicare program of title XVIII. 

13 ‘‘Eligible Individual 

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

15 individual’ means an individual who— 

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

17 ‘‘(2) has wages or net earnings from self-em18 ployment.’’. 

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

20 subsection (a) shall apply with respect to statements pro21 vided on or after October 1, 2008. 

Æ 


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