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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 263 Introduced in Senate (IS)]

  1st Session
                                 S. 263

 To amend the Social Security Act to establish the Personal Retirement 
                           Accounts Program.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 20, 1999

   Mr. Roth introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To amend the Social Security Act to establish the Personal Retirement 
                           Accounts Program.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Personal 
Retirement Accounts Act of 1999''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Save Social Security First Trust Fund.
Sec. 4. Establishment of Personal Retirement Accounts Program.
            ``TITLE I--PERSONAL RETIREMENT ACCOUNTS PROGRAM

  ``Subtitle A--Management of the Personal Retirement Accounts Program

        ``Sec. 101. Personal Retirement Accounts Board.
        ``Sec. 102. Executive director.
   ``Subtitle B--Establishment of Personal Retirement Savings Fund; 
                      Personal Retirement Accounts

        ``Sec. 111. Appropriations; annual transfers to the Personal 
                            Retirement Savings Fund.
        ``Sec. 112. Personal Retirement Savings Fund.
        ``Sec. 113. Personal retirement accounts.
  ``Subtitle C--Investment and Administration of Personal Retirement 
                                Accounts

        ``Sec. 121. Investment of personal retirement accounts.
        ``Sec. 122. Accounting and information.
        ``Sec. 123. Distribution of benefits.
        ``Sec. 124. Annuities: methods of payment; election; purchase.
        ``Sec. 125. Protections for spouses and former spouses.
        ``Sec. 126. Designation of beneficiary; order of precedence.
        ``Sec. 127. Tax treatment of the Personal Retirement Savings 
                            Fund.
        ``Sec. 128. Administrative provisions.
                 ``Subtitle D--Beneficiary Protections

        ``Sec. 131. Fiduciary responsibilities; liability and 
                            penalties.
        ``Sec. 132. Bonding.
        ``Sec. 133. Investigative authority.
        ``Sec. 134. Exculpatory provisions; insurance.''.
Sec. 5. Report and recommendations regarding investment options.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The social security program is the foundation of 
        retirement income for most Americans, and solving the financial 
        problems of the social security program is a vital national 
        priority and essential for the retirement security of today's 
        working Americans and their families.
            (2) There is a growing bipartisan consensus that personal 
        retirement accounts should be an important feature of social 
        security reform.
            (3) Personal retirement accounts can provide a substantial 
        retirement nest egg and real personal wealth. For an individual 
        28 years old on the date of enactment of this Act, earning an 
        average wage, and retiring at age 65 in 2035, just 1 percent of 
        that individual's wages deposited each year in a personal 
        retirement account and invested in securities consisting of the 
        Standard & Poors 500 would grow to $132,000, and be worth 
        approximately 20 percent of the benefits that would be provided 
        to the individual under the current provisions of the social 
        security program.
            (4) Personal retirement accounts would give the majority of 
        Americans who do not own any investment assets a new stake in 
        the economic growth of America.
            (5) Personal retirement accounts would demonstrate the 
        value of savings and the magic of compound interest to all 
        Americans. Today, Americans save less than people in almost 
        every other country.
            (6) Personal retirement accounts would help Americans to 
        better prepare for retirement generally. According to the 
        Congressional Research Service, 60 percent of Americans are not 
        actively participating in a retirement plan other than social 
        security, although social security was never intended to be the 
        sole source of retirement income.
            (7) The Federal budget will register a surplus of 
        $657,000,000,000 over fiscal years 1999 through 2004, offering 
        a unique opportunity to begin a permanent solution to social 
        security's financing.
            (8) Using the Federal budget surplus to fund personal 
        retirement accounts would be an important first step in 
        comprehensive social security reform and ensuring the delivery 
        of promised retirement benefits.

SEC. 3. SAVE SOCIAL SECURITY FIRST TRUST FUND.

    (a) Establishment of Trust Fund.--There is established in the 
Treasury of the United States a trust fund to be known as the ``Save 
Social Security First Trust Fund'' (in this section referred to as the 
``Trust Fund''), consisting of such amounts as are appropriated or 
credited to the Trust Fund as provided in this section.
    (b) Appropriation to Trust Fund.--There is appropriated to the 
Trust Fund, out of any sums in the Treasury not otherwise appropriated, 
an amount equal to $31,500,000,000 for fiscal year 1999 and 
$39,500,000,000 for fiscal year 2000. The Secretary of the Treasury 
shall transfer such amounts to the Trust Fund not later than--
            (1) September 30, 1999, in the case of the amount 
        appropriated for fiscal year 1999; and
            (2) September 30, 2000, in the case of the amount 
        appropriated for fiscal year 2000.
    (c) Investment of Trust Fund.--The Secretary of the Treasury shall 
invest the Trust Fund in public debt securities with suitable 
maturities and bearing interest at rates determined by the Secretary, 
taking into consideration current market yields on outstanding 
marketable obligations of the United States of comparable maturities. 
The income on such investments shall be credited to and form a part of 
the Trust Fund.
    (d) Limitation on Use of Trust Fund.--Amounts in the Trust Fund 
shall not be appropriated or used for any purpose other than to be 
transferred to the Personal Retirement Savings Fund established under 
section 112 of the Social Security Act in accordance with section 
111(b)(1) of such Act.
    (e) Dissolution of Trust Fund.--On the date of the transfer of all 
amounts in the Trust Fund to the Personal Retirement Savings Fund in 
accordance with section 111(b)(1) of the Social Security Act, the Trust 
Fund established under this section shall be dissolved.

SEC. 4. ESTABLISHMENT OF PERSONAL RETIREMENT ACCOUNTS PROGRAM.

    The Social Security Act (42 U.S.C. 301 et seq.) is amended--
            (1) by redesignating title I as title VI; and
            (2) by inserting before title II the following:

            ``TITLE I--PERSONAL RETIREMENT ACCOUNTS PROGRAM

  ``Subtitle A--Management of the Personal Retirement Accounts Program

``SEC. 101. PERSONAL RETIREMENT ACCOUNTS BOARD.

    ``(a) Establishment.--There is established in the Executive Branch 
of the Government a Personal Retirement Accounts Board (in this title 
referred to as the `Board').
    ``(b) Composition.--The Board shall be composed of--
            ``(1) 3 members appointed by the President, of whom 1 shall 
        be designated by the President as Chairman; and
            ``(2) 2 members appointed by the President, of whom--
                    ``(A) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the Speaker of the House of Representatives in 
                consultation with the Minority Leader of the House of 
                Representatives; and
                    ``(B) 1 shall be appointed by the President after 
                taking into consideration the recommendation made by 
                the Majority Leader of the Senate in consultation with 
                the Minority Leader of the Senate.
    ``(c) Advice and Consent.--Appointments under subsection (b) shall 
be made by and with the advice and consent of the Senate.
    ``(d) Membership Requirements.--Members of the Board shall have 
substantial experience, training, and expertise in the management of 
financial investments and pension benefit plans.
    ``(e) Length of Appointments.--
            ``(1) Terms.--A member of the Board shall be appointed for 
        a term of 4 years, except that of the members first appointed 
        under subsection (b)--
                    ``(A) the Chairman shall be appointed for a term of 
                4 years;
                    ``(B) the members appointed under subsection (b)(2) 
                shall be appointed for terms of 3 years; and
                    ``(C) the remaining members shall be appointed for 
                terms of 2 years.
            ``(2) Vacancies.--
                    ``(A) In general.--A vacancy on the Board shall be 
                filled in the manner in which the original appointment 
                was made and shall be subject to any conditions that 
                applied with respect to the original appointment.
                    ``(B) Completion of term.--An individual chosen to 
                fill a vacancy shall be appointed for the unexpired 
                term of the member replaced.
            ``(3) Expiration.--The term of any member shall not expire 
        before the date on which the member's successor takes office.
    ``(f) Duties.--The Board shall--
            ``(1) administer the program established under this title;
            ``(2) establish policies for the investment and management 
        of the Personal Retirement Savings Fund, including policies 
        applicable to the outside entities and qualified professional 
        asset managers with responsibility for managing the investment 
        options described in section 121(b), that shall provide for--
                    ``(A) prudent investments suitable for accumulating 
                funds for payment of retirement income; and
                    ``(B) low administrative costs.
            ``(3) review the performance of investments made for the 
        Personal Retirement Savings Fund;
            ``(4) review and approve the budget of the Board; and
            ``(5) comply with the provisions of subtitle D.
    ``(g) Administrative Provisions.--
            ``(1) In general.--The Board may--
                    ``(A) adopt, alter, and use a seal;
                    ``(B) except as provided in paragraph (2), direct 
                the Executive Director to take such action as the Board 
                considers appropriate to carry out the provisions of 
                this title and the policies of the Board;
                    ``(C) upon the concurring votes of 4 members, 
                remove the Executive Director from office for good 
                cause shown; and
                    ``(D) take such other actions as may be necessary 
                to carry out the functions of the Board.
            ``(2) Meetings.--The Board shall meet--
                    ``(A) not less than once during each month; and
                    ``(B) at additional times at the call of the 
                Chairman.
            ``(3) Exercise of powers.--
                    ``(A) In general.--Except as provided in paragraph 
                (1)(C) and section 102(a)(1), the Board shall perform 
                the functions and exercise the powers of the Board on a 
                majority vote of a quorum of the Board. Three members 
                of the Board shall constitute a quorum for the 
                transaction of business.
                    ``(B) Vacancies.--A vacancy on the Board shall not 
                impair the authority of a quorum of the Board to 
                perform the functions and exercise the powers of the 
                Board.
            ``(4) Limitation on investments.--Except in the case of 
        investments required by section 121 to be invested in 
        securities of the Government, the Board may not direct the 
        Executive Director to invest or to cause to be invested any 
        sums in the Personal Retirement Savings Fund in a specific 
        asset or to dispose of or cause to be disposed of any specific 
        asset of such Fund.
    ``(h) Compensation.--
            ``(1) In general.--Each member of the Board who is not an 
        officer or employee of the Federal Government shall be 
        compensated at the daily rate of basic pay for level IV of the 
        Executive Schedule for each day during which such member is 
        engaged in performing a function of the Board.
            ``(2) Expenses.--A member of the Board shall be paid 
        travel, per diem, and other necessary expenses under subchapter 
        I of chapter 57 of title 5, United States Code, while traveling 
        away from such member's home or regular place of business in 
        the performance of the duties of the Board.
            ``(3) Source of funds.--Payments authorized under this 
        subsection shall be paid from the Personal Retirement Savings 
        Fund.
    ``(i) Discharge of Responsibilities.--The members of the Board 
shall discharge their responsibilities solely in the interest of 
account holders and beneficiaries under this title.
    ``(j) Annual Independent Audit.--The Board shall annually engage an 
independent qualified public accountant to audit the activities of the 
Board.
    ``(k) Submission of Budget to Congress.--The Board shall prepare 
and submit to the President, and, at the same time, to the appropriate 
committees of Congress, an annual budget of the expenses and other 
items relating to the Board which shall be included as a separate item 
in the budget required to be transmitted to Congress under section 1105 
of title 31, United States Code.
    ``(l) Submission of Legislative Recommendations.--The Board may 
submit to the President, and, at the same time, shall submit to each 
House of Congress, any legislative recommendations of the Board 
relating to any of its functions under this title or any other 
provision of law.

``SEC. 102. EXECUTIVE DIRECTOR.

    ``(a) Appointment of Executive Director.--
            ``(1) In general.--The Board shall appoint, without regard 
        to the provisions of law governing appointments in the 
        competitive service, an Executive Director by action agreed to 
        by a majority of the members of the Board.
            ``(2) Requirements.--The Executive Director shall have 
        substantial experience, training, and expertise in the 
        management of financial investments and pension benefit plans.
    ``(b) Duties.--The Executive Director shall--
            ``(1) carry out the policies established by the Board;
            ``(2) invest and manage the Personal Retirement Savings 
        Fund in accordance with the investment policies and other 
        policies established by the Board;
            ``(3) purchase annuity contracts and provide for the 
        payment of benefits under this title;
            ``(4) administer the provisions of this title; and
            ``(5) prescribe such regulations (other than regulations 
        relating to fiduciary responsibilities) as may be necessary for 
        the administration of this title.
    ``(c) Administrative Authority.--The Executive Director may--
            ``(1) prescribe such regulations as may be necessary to 
        carry out the responsibilities of the Executive Director under 
        this section, other than regulations relating to fiduciary 
        responsibilities;
            ``(2) appoint such personnel as may be necessary to carry 
        out the provisions of this title;
            ``(3) subject to approval by the Board, procure the 
        services of experts and consultants under section 3109 of title 
        5, United States Code;
            ``(4) secure directly from an Executive agency, the United 
        States Postal Service, or the Postal Rate Commission any 
        information necessary to carry out the provisions of this title 
        and the policies of the Board;
            ``(5) make such payments out of sums in the Personal 
        Retirement Savings Fund as the Executive Director determines 
        are necessary to carry out the provisions of this title and the 
        policies of the Board;
            ``(6) pay the compensation, per diem, and travel expenses 
        of individuals appointed under paragraphs (2), (3), and (7) 
        from the Personal Retirement Savings Fund;
            ``(7) accept and use the services of individuals employed 
        intermittently in the Government service and reimburse such 
        individuals for travel expenses, as authorized by section 5703 
        of title 5, United States Code, including per diem as 
        authorized by section 5702 of such title;
            ``(8) except as otherwise expressly prohibited by law or 
        the policies of the Board, delegate any of the Executive 
        Director's functions to such employees under the Board as the 
        Executive Director may designate and authorize such successive 
        redelegations of such functions to such employees under the 
        Board as the Executive Director may consider to be necessary or 
        appropriate; and
            ``(9) take such other actions as are appropriate to carry 
        out the functions of the Executive Director.

   ``Subtitle B--Establishment of Personal Retirement Savings Fund; 
                      Personal Retirement Accounts

``SEC. 111. APPROPRIATIONS; ANNUAL TRANSFERS TO THE PERSONAL RETIREMENT 
              SAVINGS FUND.

    ``(a) Appropriations.--Out of any money in the Treasury of the 
United States not otherwise appropriated, there are appropriated for 
the purpose of making the transfers required under subsection (b)--
            ``(1) for fiscal year 2001, $43,000,000,000;
            ``(2) for fiscal year 2002, $69,500,000,000;
            ``(3) for fiscal year 2003, $68,000,000,000; and
            ``(4) for fiscal year 2004, $77,000,000,000.
    ``(b) Transfers to the Personal Retirement Savings Fund.--
            ``(1) Transfer of amounts in the save social security first 
        trust fund.--Not later than October 1, 2000, the Secretary of 
        the Treasury shall transfer the obligations held by the 
        Secretary for the Save Social Security First Trust Fund 
        established under section 3 of the Personal Retirement Accounts 
        Act of 1999, and the amount standing to the credit of such 
        Trust Fund on the books of the Treasury on such date to the 
        Personal Retirement Savings Fund established under section 112.
            ``(2) Transfer of appropriated amounts.--With respect to a 
        fiscal year for which an amount is appropriated under 
        subsection (a), the Secretary of the Treasury shall transfer to 
        the Personal Retirement Savings Fund established under section 
        112 the amount appropriated under subsection (a) for that 
        fiscal year not later than--
                    ``(A) September 30, 2001, in the case of the amount 
                appropriated under such subsection for fiscal year 
                2001;
                    ``(B) September 30, 2002, in the case of the amount 
                appropriated under such subsection for fiscal year 
                2002;
                    ``(C) September 30, 2003, in the case of the amount 
                appropriated under such subsection for fiscal year 
                2003; and
                    ``(D) September 30, 2004, in the case of the amount 
                appropriated under such subsection for fiscal year 
                2004.

``SEC. 112. PERSONAL RETIREMENT SAVINGS FUND.

    ``(a) Establishment of Trust Fund.--There is established in the 
Treasury of the United States a Personal Retirement Savings Fund, 
consisting of all amounts deposited by the Secretary of the Treasury in 
accordance with section 111(b), increased by the total net earnings 
from investments of sums in the Personal Retirement Savings Fund or 
reduced by the total net losses from investments of the Fund, and 
reduced by the total amount of payments made from the Fund (including 
payments for administrative expenses).
    ``(b) Availability.--The sums in the Personal Retirement Savings 
Fund are appropriated and shall remain available without fiscal year 
limitation--
            ``(1) to invest under section 121;
            ``(2) to pay benefits or purchase annuity contracts under 
        this title;
            ``(3) to pay the administrative expenses of the Board;
            ``(4) to make distributions in accordance with sections 123 
        and 124; and
            ``(5) to purchase insurance as provided in section 
        134(b)(2).
    ``(c) Limitations on Use of Funds.--
            ``(1) In general.--Sums in the Personal Retirement Savings 
        Fund credited to the account of an individual may not be used 
        for, or diverted to, purposes other than for the exclusive 
        benefit of the account holder or the account holder's 
        beneficiaries under this title.
            ``(2) Assignments.--Except as provided in paragraph (3), 
        sums in the Personal Retirement Savings Fund may not be 
        assigned or alienated and are not subject to execution, levy, 
        attachment, garnishment, or other legal process.
            ``(3) Support obligations.--Moneys due or payable from the 
        Personal Retirement Savings Fund to any account holder shall be 
        subject to legal process for the enforcement of the account 
        holder's legal obligations to provide child support or make 
        alimony payments as provided in section 459 or for the 
        enforcement of a court order or other similar process in the 
        nature of a garnishment for the enforcement of a judgment 
        rendered against the account holder for physically, sexually, 
        or emotionally abusing a child.
    ``(d) Payment of Administrative Expenses.--Administrative expenses 
incurred to carry out this title shall be paid out of net earnings in 
the Personal Retirement Savings Fund in conjunction with the allocation 
of investment earnings and losses under section 122(a)(2).
    ``(e) Limitation.--The sums in the Personal Retirement Savings Fund 
shall not be appropriated for any purpose other than the purposes 
specified in this section and may not be used for any other purpose.
    ``(f) Funds Held in Trust.--All sums transferred to the Personal 
Retirement Savings Fund for the benefit of individuals eligible for 
personal retirement accounts, and all net earnings in such Fund 
attributable to investment of such sums, are held in such Fund in trust 
for such individuals.

``SEC. 113. PERSONAL RETIREMENT ACCOUNTS.

    ``(a) Establishment of Individual Accounts.--
            ``(1) Fiscal year 2001.--Not later than October 1, 2000, 
        the Executive Director shall establish and maintain a personal 
        retirement savings account for any individual who has worked 4 
        qualifying quarters of coverage, as determined under title II, 
        in calendar year 1999.
            ``(2) Subsequent fiscal years.--Not later than October 1 of 
        each fiscal year beginning after fiscal year 2001, the 
        Executive Director shall establish and maintain a personal 
        retirement savings account for any individual who has worked 4 
        qualifying quarters of coverage, as determined under title II, 
        in the calendar year ending on December 31 of the preceding 
        fiscal year and for whom the Executive Director has not 
        previously established an account.
    ``(b) Allocation of Funds to Accounts.--Beginning on October 1, 
2000, and annually thereafter, the Executive Director shall allocate to 
each personal retirement savings account maintained on such date for 
the benefit of an individual who has worked 4 qualifying quarters of 
coverage, as determined under title II, in the calendar year ending on 
December 31 of the preceding fiscal year the amount determined under 
subsection (c).
    ``(c) Amount Determined.--
            ``(1) In general.--For any fiscal year, the amount 
        determined under this subsection is equal to the sum of--
                    ``(A) $250, plus
                    ``(B) the amount determined under paragraph (2) (if 
                any).
            ``(2) Pro rata share of remainder.--For any fiscal year, 
        the amount determined under this paragraph with respect to the 
        account of each individual maintained on October 1 of such 
        fiscal year is equal to the product of--
                    ``(A) the remainder of the Fund Balance for such 
                fiscal year, determined after the application of 
                paragraph (1)(A); and
                    ``(B) the ratio determined under paragraph (3).
            ``(3) Ratio determined.--The ratio determined under this 
        paragraph is the ratio, expressed as a percentage, of--
                    ``(A) the excess of--
                            ``(i) the sum of--
                                    ``(I) the total tax imposed on the 
                                individual's wages under section 
                                3101(a) of the Internal Revenue Code of 
                                1986 (relating to taxes on employees) 
                                for the taxable year ending in the 
                                preceding fiscal year, plus
                                    ``(II) 50 percent of the total tax 
                                imposed on the individual's self-
                                employment income under section 1401(a) 
                                of such Code (relating to tax on self-
                                employment income) for such taxable 
                                year, over
                            ``(ii) $250; to
                    ``(B) the total amount of such excess for all such 
                individuals for such fiscal year.
            ``(4) Definition of fund balance.--In this subsection, the 
        term `Fund balance' means the net earnings and net losses from 
        the investment of the sums transferred to the Personal 
        Retirement Savings Fund in accordance with section 111(b), 
        reduced by the appropriate share of the administrative expenses 
        paid out of the net earnings under section 112(d), as 
        determined by the Executive Director.

  ``Subtitle C--Investment and Administration of Personal Retirement 
                                Accounts

``SEC. 121. INVESTMENT OF PERSONAL RETIREMENT ACCOUNTS.

    ``(a) Definitions.--In this section--
            ``(1) the term `Common Stock Index Investment Fund' means 
        the Common Stock Index Investment Fund established under 
        subsection (b)(1)(C);
            ``(2) the term `equity capital' means common and preferred 
        stock, surplus, undivided profits, contingency reserves, and 
        other capital reserves;
            ``(3) the term `Fixed Income Investment Fund' means the 
        Fixed Income Investment Fund established under subsection 
        (b)(1)(B);
            ``(4) the term `Government Securities Investment Fund' 
        means the Government Securities Investment Fund established 
        under subsection (b)(1)(A);
            ``(5) the term `net worth' means capital, paid-in and 
        contributed surplus, unassigned surplus, contingency reserves, 
        group contingency reserves, and special reserves;
            ``(6) the term `plan' means an employee benefit plan, as 
        defined in section 3(3) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1002(3));
            ``(7) the term `qualified professional asset manager' 
        means--
                    ``(A) a bank, as defined in section 202(a)(2) of 
                the Investment Advisers Act of 1940 (15 U.S.C. 80b-
                2(a)(2)) which--
                            ``(i) has the power to manage, acquire, or 
                        dispose of assets of a plan; and
                            ``(ii) has, as of the last day of its 
                        latest fiscal year ending before the date of a 
                        determination for the purpose of this clause, 
                        equity capital in excess of $1,000,000;
                    ``(B) a savings and loan association, the accounts 
                of which are insured by the Federal Deposit Insurance 
                Corporation, which--
                            ``(i) has applied for and been granted 
                        trust powers to manage, acquire, or dispose of 
                        assets of a plan by a State or Government 
                        authority having supervision over savings and 
                        loan associations; and
                            ``(ii) has, as of the last day of its 
                        latest fiscal year ending before the date of a 
                        determination for the purpose of this clause, 
                        equity capital or net worth in excess of 
                        $1,000,000;
                    ``(C) an insurance company which--
                            ``(i) is qualified under the laws of more 
                        than 1 State to manage, acquire, or dispose of 
                        any assets of a plan;
                            ``(ii) has, as of the last day of its 
                        latest fiscal year ending before the date of a 
                        determination for the purpose of this clause, 
                        net worth in excess of $1,000,000; and
                            ``(iii) is subject to supervision and 
                        examination by a State authority having 
                        supervision over insurance companies; or
                    ``(D) an investment adviser registered under 
                section 203 of the Investment Advisers Act of 1940 (15 
                U.S.C. 80b-3) if the investment adviser has, on the 
                last day of its latest fiscal year ending before the 
                date of a determination for the purpose of this 
                subparagraph, total client assets under its management 
and control in excess of $50,000,000, and--
                            ``(i) the investment adviser has, on such 
                        day, shareholder's or partner's equity in 
                        excess of $750,000; or
                            ``(ii) payment of all of the investment 
                        adviser's liabilities, including any 
                        liabilities which may arise by reason of a 
                        breach or violation of a duty described in 
                        section 131, is unconditionally guaranteed by--
                                    ``(I) a person (as defined in 
                                paragraph (9)) who directly or 
                                indirectly, through 1 or more 
                                intermediaries, controls, is controlled 
                                by, or is under common control with the 
                                investment adviser and who has, on the 
                                last day of the person's latest fiscal 
                                year ending before the date of a 
                                determination for the purpose of this 
                                clause, shareholder's or partner's 
                                equity in an amount which, when added 
                                to the amount of the shareholder's or 
                                partner's equity of the investment 
                                adviser on such day, exceeds $750,000;
                                    ``(II) a qualified professional 
                                asset manager described in subparagraph 
                                (A), (B), or (C); or
                                    ``(III) a broker or dealer 
                                registered under section 15 of the 
                                Securities Exchange Act of 1934 (15 
                                U.S.C. 78o) that has, on the last day 
                                of the broker's or dealer's latest 
                                fiscal year ending before the date of a 
                                determination for the purpose of this 
                                clause, net worth in excess of 
                                $750,000;
            ``(8) the term `shareholder's or partner's equity', as used 
        in paragraph (7)(D) with respect to an investment adviser or a 
        person (as defined in paragraph (9)) who is affiliated with the 
        investment adviser in a manner described in clause (ii)(I) of 
        such paragraph, means the equity shown in the most recent 
        balance sheet prepared for such investment adviser or 
        affiliated person, in accordance with generally accepted 
        accounting principles, within 2 years before the date on which 
        the investment adviser's status as a qualified professional 
        asset manager is determined for the purposes of this section; 
        and
            ``(9) the term `person' means an individual, partnership, 
        joint venture, corporation, mutual company, joint-stock 
        company, trust, estate, unincorporated organization, 
        association, or labor organization.
    ``(b) Establishment of Investment Options.--
            ``(1) Initial funds.--The Board shall establish--
                    ``(A) a Government Securities Investment Fund under 
                which sums in the Personal Retirement Savings Fund are 
                invested in securities of the United States Government 
                issued as provided in subsection (e);
                    ``(B) a Fixed Income Investment Fund under which 
                sums in the Personal Retirement Savings Fund are 
                invested in--
                            ``(i) insurance contracts;
                            ``(ii) certificates of deposits; or
                            ``(iii) other instruments or obligations 
                        selected by qualified professional asset 
                        managers,
                that return the amount invested and pay interest, at a 
                specified rate or rates, on that amount during a 
                specified period of time;
                    ``(C) a Common Stock Index Investment Fund as 
                provided in paragraph (3).
            ``(2) Additional funds.--The Board may approve diversified, 
        indexed funds that are not described in paragraph (1) and that 
        meet such other criteria as the Board may establish for 
        inclusion among the investment choices offered to account 
        holders under this title.
            ``(3) Common stock fund requirements.--
                    ``(A) Selection of index.--The Board shall select 
                an index which is a commonly recognized index comprised 
                of common stock the aggregate market value of which is 
                a reasonably complete representation of the United 
                States equity markets.
                    ``(B) Investment in portfolio.--The Common Stock 
                Index Investment Fund shall be invested in a portfolio 
                designed to replicate the performance of the index 
                selected under subparagraph (A). The portfolio shall be 
                designed such that, to the extent practicable, the 
                percentage of the Common Stock Index Investment Fund 
                that is invested in each stock is the same as the 
                percentage determined by dividing the aggregate market 
                value of all shares of that stock by the aggregate 
                market value of all shares of all stocks included in 
                such index.
    ``(c) Investment of Fund.--
            ``(1) In general.--The Executive Director shall invest the 
        sums available in the Personal Retirement Savings Fund for 
        investment as provided in elections made under subsection (d).
            ``(2) Investment if no election.--If an election has not 
        been made with respect to any sums in the Personal Retirement 
        Savings Fund available for investment, the Executive Director 
        shall invest such sums in the Government Securities Investment 
        Fund.
    ``(d) Election of Investments.--
            ``(1) Twice yearly.--At least twice each year, an account 
        holder may elect the investment funds referred to in subsection 
        (b) into which the sums in the Personal Retirement Savings Fund 
        credited to such individual's account are to be invested or 
        reinvested.
            ``(2) Regulations.--An election may be made under paragraph 
        (1) only in accordance with regulations prescribed by the 
        Executive Director and within such period as the Executive 
        Director shall provide in such regulations.
    ``(e) Government Securities Investment Fund.--
            ``(1) Authorization to issue certain obligations.--The 
        Secretary of the Treasury is authorized to issue special 
        interest-bearing obligations of the United States for purchase 
        by the Personal Retirement Savings Fund for the Government 
        Securities Investment Fund.
            ``(2) Requirements.--
                    ``(A) In general.--Obligations issued for the 
                purpose of this subsection shall have maturities fixed 
                with due regard to the needs of such Fund as determined 
                by the Executive Director, and shall bear interest at a 
                rate equal to the average market yield (computed by the 
                Secretary of the Treasury on the basis of market 
                quotations as of the end of the calendar month next 
                preceding the date of issue of such obligations) on all 
                marketable interest-bearing obligations of the United 
                States then forming a part of the public debt which are 
                not due or callable earlier than 4 years after the end 
                of such calendar month.
                    ``(B) Rounding.--Any average market yield computed 
                under subparagraph (A) which is not a multiple of \1/8\ 
                of 1 percent, shall be rounded to the nearest multiple 
                of \1/8\ of 1 percent.
    ``(f) Limitation on Voting Rights.--The Board, other Government 
agencies, the Executive Director, and an account holder may not 
exercise voting rights associated with the ownership of securities by 
the Personal Retirement Savings Fund.

``SEC. 122. ACCOUNTING AND INFORMATION.

    ``(a) Balance of Personal Retirement Accounts.--
            ``(1) In general.--The balance in an individual's account 
        established under section 113 at any time is the excess of--
                    ``(A) the sum of--
                            ``(i) all allocations made to the account 
                        under section 113(b); and
                            ``(ii) the total amount of the allocations 
                        made to and reductions made in the account 
                        pursuant to paragraph (2), over
                    ``(B) the amounts paid out of the Personal 
                Retirement Savings Fund with respect to such 
                individual.
            ``(2) Allocation of investment earnings and losses.--
        Pursuant to regulations prescribed by the Executive Director, 
        the Executive Director shall allocate to each account an amount 
        equal to a pro rata share of the net earnings and net losses 
        from each investment of sums in the Personal Retirement Savings 
        Fund attributable to sums credited to such account, reduced by 
        an appropriate share of the administrative expenses paid out of 
        the net earnings under section 112(d), as determined by the 
        Executive Director.
    ``(b) Annual, Independent Audits.--
            ``(1) Definition.--In this subsection, the term `qualified 
        public accountant' shall have the same meaning as provided in 
        section 103(a)(3)(D) of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1023(a)(3)(D)).
            ``(2) Independent accountant.--The Executive Director shall 
        annually engage, on behalf of all account holders under this 
        title, an independent qualified public accountant, who shall 
        conduct an examination of all accounts and other books and 
        records maintained in the administration of this title as the 
        public accountant considers necessary to enable the public 
        accountant to make the determination required by paragraph (3). 
        The examination shall be conducted in accordance with generally 
        accepted auditing standards and shall involve such tests of the 
        accounts, books, and records as the public accountant considers 
        necessary.
            ``(3) Determination required.--The public accountant 
        conducting an examination under paragraph (2) shall determine 
        whether the accounts, books, and records referred to in such 
        paragraph have been maintained in conformity with generally 
        accepted accounting principles applied on a basis consistent 
        with the manner in which such principles were applied during 
        the examination conducted under such paragraph during the 
        preceding year. The public accountant shall transmit to the 
        Board a report on his examination, including his determination 
        under this paragraph.
            ``(4) Reliance on actuarial matter.--In making a 
        determination under paragraph (3), a public accountant may rely 
        on the correctness of any actuarial matter certified by an 
        enrolled actuary if the public accountant states his reliance 
        in the report transmitted to the Board under such paragraph.
    ``(c) Statements.--
            ``(1) In general.--The Board shall prescribe regulations 
        under which each account holder under this title shall be 
        furnished with--
                    ``(A) a periodic statement relating to the 
                individual's account; and
                    ``(B) a summary description of the investment 
                options under section 121 covering, and an evaluation 
                of, each such option the 5-year period preceding the 
                date as of which such evaluation is made.
            ``(2) Timing.--Information under this subsection shall be 
        provided at least 30 calendar days before the beginning of each 
        election period under section 121(d), and in a manner designed 
        to facilitate informed decisionmaking with respect to elections 
        under section 121.
    ``(d) Acknowledgement.--Each account holder who elects to invest in 
the Common Stock Index Investment Fund, the Fixed Income Investment 
Fund, or any other Fund designated by the Board shall sign an 
acknowledgement prescribed by the Executive Director which states that 
the account holder understands that an investment in such Fund is made 
at the account holder's risk, that the account holder is not protected 
by the Government against any loss on such investment, and that a 
return on such investment is not guaranteed by the Government.

``SEC. 123. DISTRIBUTION OF BENEFITS.

    ``(a) Timing of Distributions.--Notwithstanding any other provision 
of law, distributions may only be made from a personal retirement 
savings account of an individual on or after the earlier of the date on 
which the individual begins receiving old-age benefits under title II 
or the date of the individual's death.
    ``(b) Form of Distribution.--
            ``(1) In general.--Subject to section 125, an individual is 
        entitled and may elect to withdraw from the Personal Retirement 
        Savings Fund the balance of the individual's personal 
        retirement savings account as--
                    ``(A) an annuity; or
                    ``(B) substantially equal payments to be made over 
                a period not greater than the life expectancy of the 
                individual or the joint life expectancies of the 
                individual and the individual's designated beneficiary.
            ``(2) Lump-sum required for minimum amounts.--
        Notwithstanding paragraph (1), if the balance in an 
        individual's personal retirement savings account is below such 
        minimum amount as the Board, by regulation, shall establish, 
        the account shall be distributed in a single lump-sum payment.
    ``(c) Change of Election of Distribution.--
            ``(1) In general.--Subject to paragraph (2) and subsections 
        (a) and (c) of section 125, an account holder may change an 
        election previously made under this section.
            ``(2) Limitation.--An account holder may not change an 
        election under this section on or after the date on which a 
        payment is made in accordance with such election or, in the 
        case of an election to receive an annuity, the date on which an 
        annuity contract is purchased to provide for the annuity 
        elected by the account holder.
    ``(d) Rules if No Election.--If an account holder dies without 
having made an election under this section or after having elected an 
annuity under this section but before making an election under section 
124, an amount equal to the value of that individual's account (as of 
death) shall, subject to any decree, order, or agreement referred to in 
section 125(c)(2), be paid in a manner consistent with section 126(b).

``SEC. 124. ANNUITIES: METHODS OF PAYMENT; ELECTION; PURCHASE.

    ``(a) Methods of Payment.--
            ``(1) In general.--The Board shall prescribe methods of 
        payment of annuities under this title.
            ``(2) Requirements.--The methods of payment prescribed 
        under paragraph (1) shall include--
                    ``(A) a method that provides for the payment of a 
                monthly annuity only to an annuitant during the life of 
                the annuitant;
                    ``(B) a method that provides for the payment of a 
                monthly annuity to an annuitant for the joint lives of 
                the annuitant and the spouse of the annuitant and an 
                appropriate monthly annuity to the one of them who 
                survives the other of them for the life of the 
                survivor;
                    ``(C) a method described in subparagraph (A) that 
                provides for automatic adjustments in the amount of the 
                annuity payable so long as the amount of the annuity 
                payable in any 1 year shall not be less than the amount 
                payable in the previous year;
                    ``(D) a method described in subparagraph (B) that 
                provides for automatic adjustments in the amount of the 
                annuity payable so long as the amount of the annuity 
                payable in any 1 year shall not be less than the amount 
                payable in the previous year; and
                    ``(E) a method which provides for the payment of a 
                monthly annuity--
                            ``(i) to the annuitant for the joint lives 
                        of the annuitant and an individual who is 
                        designated by the annuitant under regulations 
                        prescribed by the Executive Director and--
                                    ``(I) is a former spouse of the 
                                annuitant; or
                                    ``(II) has an insurable interest in 
                                the annuitant; and
                            ``(ii) to the one of them who survives the 
                        other of them for the life of the survivor.
    ``(b) Timing.--Subject to section 125(b), under such regulations as 
the Executive Director shall prescribe, an account holder who elects 
under section 123 to receive an annuity under this title shall elect, 
on or before the date on which an annuity contract is purchased to 
provide for that annuity, one of the methods of payment prescribed 
under subsection (a).
    ``(c) Elimination of Methods.--Notwithstanding the elimination of a 
method of payment by the Board, an account holder may elect the 
eliminated method if the elimination of such method becomes effective 
less than 5 years before the date on which that account holder's 
annuity commences.
    ``(d) Purchase Requirements.--
            ``(1) Timing.--Not earlier than 90 days (or such shorter 
        period as the Executive Director may by regulation prescribe) 
        before an annuity is to commence under this title, the 
        Executive Director shall expend the balance in the annuitant's 
        account to purchase an annuity contract from any entity which, 
        in the normal course of its business, sells and provides 
        annuities.
            ``(2) Compliance with program requirements.--The Executive 
        Director shall ensure, by contract entered into with each 
        entity from which an annuity contract is purchased under 
        paragraph (1), that the annuity shall be provided in accordance 
        with the provisions of this title.
            ``(3) Additional terms and conditions.--An annuity contract 
        purchased under paragraph (1) shall include such terms and 
        conditions as the Executive Director requires for the 
        protection of the annuitant.
            ``(4) Bonding requirements.--The Executive Director shall 
        require, from each entity from which an annuity contract is 
        purchased under paragraph (1), a bond or proof of financial 
        responsibility sufficient to protect the annuitant.
    ``(e) Nonapplication of State Tax.--
            ``(1) In general.--No tax, fee, or other monetary payment 
        may be imposed or collected by any State, the District of 
        Columbia, or the Commonwealth of Puerto Rico, or by any 
        political subdivision or other governmental authority thereof, 
        on, or with respect to, any amount paid to purchase an annuity 
        contract under this section.
            ``(2) Rule of construction.--Paragraph (1) shall not be 
        construed to exempt any company or other entity issuing an 
        annuity contract under this section from the imposition, 
        payment, or collection of a tax, fee, or other monetary payment 
        on the net income or profit accruing to or realized by that 
        entity from the sale of an annuity contract under this section 
        if that tax, fee, or payment is applicable to a broad range of 
        business activity.

``SEC. 125. PROTECTIONS FOR SPOUSES AND FORMER SPOUSES.

    ``(a) Limitation on Withdrawals.--
            ``(1) Application of requirements.--
                    ``(A) In general.--A married account holder may 
                withdraw all or part of a personal retirement savings 
                account under section 123 or change a withdrawal 
                election only if the account holder satisfies the 
                requirements of subparagraph (B).
                    ``(B) Joint written waiver.--An account holder may 
                make an election or change referred to in subparagraph 
                (A) if the account holder and the account holder's 
                spouse jointly waive, by written election, any right 
                that the spouse may have to a survivor annuity with 
                respect to such account holder under section 124 or 
                subsection (b).
            ``(2) Exception.--Paragraph (1) shall not apply to an 
        election or change of election by an account holder who 
        establishes to the satisfaction of the Executive Director (at 
        the time of the election or change and in accordance with 
        regulations prescribed by the Executive Director)--
                    ``(A) that the spouse's whereabouts cannot be 
                determined; or
                    ``(B) that, due to exceptional circumstances, 
                requiring the spouse's waiver would otherwise be 
                inappropriate.
    ``(b) Method of Annuity.--
            ``(1) Survivor annuities.--Notwithstanding any election 
        under section 124(b), the method described in section 
        124(a)(2)(B) (or, if more than one form of such method is 
        available, the form that the Board determines to be the one 
        that for a surviving spouse a survivor annuity most closely 
        approximating the annuity of a surviving spouse under section 
        8442 of title 5, United States Code) shall be deemed the 
        applicable method under section 124(b) in the case of an 
        account holder who is married on the date on which an annuity 
        contract is purchased to provide for the account holder's 
        annuity under this title.
            ``(2) Exceptions.--Paragraph (1) shall not apply if--
                    ``(A) a joint waiver of such method is made, in 
                writing, by the account holder and the spouse; or
                    ``(B) the account holder waives such method, in 
                writing, after establishing to the satisfaction of the 
                Executive Director that circumstances described under 
                subparagraph (A) or (B) of subsection (a)(2) make the 
                requirement of a joint waiver inappropriate.
    ``(c) Nonapplication of Election.--
            ``(1) In general.--An election or change of election shall 
        not be effective under this title to the extent that the 
        election, change, or transfer conflicts with any court decree, 
        order, or agreement described in paragraph (2).
            ``(2) Court decree, order, or agreement described.--A court 
        decree, order, or agreement described in this paragraph is, 
        with respect to an account holder, a court decree of divorce, 
        annulment, or legal separation issued in the case of such 
        account holder and any former spouse of the account holder or 
        any court order or court-approved property settlement agreement 
        incident to such decree if--
                    ``(A) the decree, order, or agreement expressly 
                relates to any portion of the balance in the 
                individual's personal retirement savings account; and
                    ``(B) notice of the decree, order, or agreement was 
                received by the Executive Director before--
                            ``(i) the date on which payment is made, or
                            ``(ii) in the case of an annuity, the date 
                        on which an annuity contract is purchased to 
                        provide for the annuity,
                in accordance with the election, change, or 
                contribution referred to in paragraph (1).
            ``(3) 2 or more cases.--The Executive Director shall 
        prescribe regulations under which this subsection shall be 
        applied in any case in which the Executive Director receives 2 
        or more decrees, orders, or agreements referred to in paragraph 
        (1).
    ``(d) Procedures for Waivers.--Waivers and notifications required 
by this section and waivers of the requirements for such waivers and 
notifications (as authorized by this section) may be made only in 
accordance with procedures prescribed by the Executive Director.
    ``(e) Nonapplication.--None of the provisions of this section 
requiring notification to, or the consent or waiver of, a spouse or 
former spouse of an account holder shall apply in any case in which the 
account balance of the individual is equal to or less than such amount 
as the Board, by regulation, shall prescribe.

``SEC. 126. DESIGNATION OF BENEFICIARY; ORDER OF PRECEDENCE.

    ``(a) Designation of Beneficiaries.--Under regulations prescribed 
by the Board, an account holder may designate 1 or more beneficiaries 
under this section.
    ``(b) Payments.--
            ``(1) In general.--Benefits authorized to be paid to an 
        account holder to individuals surviving the account holder and 
        alive at the time of distribution shall be made according to 
        the following:
                    ``(A) First, to the beneficiary or beneficiaries 
                designated by the account holder in a signed and 
                witnessed writing received by the Executive Director 
                before the death of such account holder. For this 
                purpose, a designation, change, or cancellation of 
                beneficiary in a will or other document not so executed 
                and filed has no force or effect.
                    ``(B) Second, if there is no designated 
                beneficiary, to the widow or widower of the account 
                holder.
                    ``(C) Third, if none of the above, to the child or 
                children of the account holder and descendants of 
                deceased children by representation.
                    ``(D) Fourth, if none of the above, to the parents 
                of the account holder or the survivor of them.
                    ``(E) Fifth, if none of the above, to the duly 
                appointed executor or administrator of the estate of 
                the account holder.
                    ``(F) Sixth, if none of the above, to such other 
                next of kin of the account holder as the Board 
determines to be entitled under the laws of the domicile of the account 
holder at the date of death of the account holder.
            ``(2) Bar on other recoveries.--A payment made in 
        accordance with paragraph (1) shall bar any other recovery by--
                    ``(A) the individual receiving the payment; and
                    ``(B) any other individual.
            ``(3) Definition of child.--In this section, the term 
        `child' includes a natural child and an adopted child, but does 
        not include a stepchild.
    ``(c) Termination of an Annuity.--Any annuity accrued and unpaid on 
the termination, except by death, of the annuity of an annuitant or 
survivor shall be paid to that individual. Annuity accrued and unpaid 
on the death of a survivor shall be paid in the following order of 
precedence, and the payment bars recovery by any other person:
            ``(1) First, to the duly appointed executor or 
        administrator of the estate of the survivor.
            ``(2) Second, if there is no executor or administrator, 
        payment may be made, after 30 days from the date of death of 
        the survivor, to such next of kin of the survivor as the Board 
        determines to be entitled under the laws of the domicile of the 
        survivor at the date of death.

``SEC. 127. TAX TREATMENT OF THE PERSONAL RETIREMENT SAVINGS FUND.

    ``For purposes of the Internal Revenue Code of 1986--
            ``(1) the Personal Retirement Savings Fund shall be treated 
        as a trust described in section 401(a) of such Code that is 
        exempt from taxation under section 501(a) of such Code;
            ``(2) any contribution to, or distribution from, such Fund 
        shall be treated in the same manner as contributions to or 
        distributions from such a trust; and
            ``(3) allocations made to an account holder's personal 
        retirement savings account shall not be treated as distributed 
        or made available to the account holder.

``SEC. 128. ADMINISTRATIVE PROVISIONS.

    ``(a) Duty of Executive Director.--The Executive Director shall 
make or provide for payments and transfers in accordance with an 
election of an account holder under section 123 or 124(b) or, if 
applicable, in accordance with section 125.
    ``(b) Written Requirements.--Any election, change of election, or 
modification of a deferred annuity commencement date made under this 
title shall be in writing and shall be filed with the Executive 
Director in accordance with regulations prescribed by the Executive 
Director.

                 ``Subtitle D--Beneficiary Protections

``SEC. 131. FIDUCIARY RESPONSIBILITIES; LIABILITY AND PENALTIES.

    ``(a) Definitions.--For the purposes of this section--
            ``(1) the term `account' is not limited to the personal 
        retirement savings account established for an individual under 
        section 113;
            ``(2) the term `adequate consideration' means--
                    ``(A) in the case of a security for which there is 
                a generally recognized market--
                            ``(i) the price of the security prevailing 
                        on a national securities exchange that is 
                        registered under section 6 of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78f); or
                            ``(ii) if the security is not traded on 
                        such a national securities exchange, a price 
                        not less favorable to the Personal Retirement 
                        Savings Fund than the offering price for the 
                        security as established by the current bid and 
                        asked prices quoted by persons independent of 
                        the issuer and of any party in interest; and
                    ``(B) in the case of an asset other than a security 
                for which there is a generally recognized market, the 
                fair market value of the asset as determined in good 
                faith by a fiduciary or fiduciaries in accordance with 
                regulations prescribed by the Secretary of Labor;
            ``(3) the term `fiduciary' means--
                    ``(A) a member of the Board;
                    ``(B) the Executive Director;
                    ``(C) any person who has or exercises discretionary 
                authority or discretionary control over the management 
                or disposition of the assets of the Personal Retirement 
                Savings Fund; and
                    ``(D) any person who, with respect to the Personal 
                Retirement Savings Fund, is described in section 
                3(21)(A) of the Employee Retirement Income Security Act 
                of 1974 (29 U.S.C. 1002(21)(A)); and
            ``(4) the term `party in interest' includes--
                    ``(A) any fiduciary;
                    ``(B) any counsel to a person who is a fiduciary, 
                with respect to the actions of such person as a 
                fiduciary;
                    ``(C) any individual for which a personal 
                retirement account is established under section 113;
                    ``(D) any person providing services to the Board 
                and, with respect to the actions of the Executive 
                Director as a fiduciary, any person providing services 
                to the Executive Director;
                    ``(E) a spouse, sibling, ancestor, lineal 
                descendant, or spouse of a lineal descendant of a 
                person described in subparagraph (A), (B), or (D);
                    ``(F) a corporation, partnership, or trust or 
                estate of which, or in which, at least 50 percent of--
                            ``(i) the combined voting power of all 
                        classes of stock entitled to vote or the total 
                        value of shares of all classes of stock of such 
                        corporation;
                            ``(ii) the capital interest or profits 
                        interest of such partnership; or
                            ``(iii) the beneficial interest of such 
                        trust or estate;
                is owned directly or indirectly, or held by a person 
                described in subparagraph (A), (B), or (D);
                    ``(G) an official (including a director) of, or an 
                individual employed by, a person described in 
                subparagraph (A), (B), (D), or (F), or an individual 
                having powers or responsibilities similar to those of 
                such an official;
                    ``(H) a holder (directly or indirectly) of at least 
                10 percent of the shares in a person described in any 
                subparagraph referred to in subparagraph (G); and
                    ``(I) a person who, directly or indirectly, is at 
                least a 10 percent partner or joint venturer (measured 
                in capital or profits) in a person described in any 
                subparagraph referred to in subparagraph (G).
    ``(b) Discharge of Responsibilities.--
            ``(1) In general.--To the extent not inconsistent with the 
        provisions of this title and the policies prescribed by the 
        Board, a fiduciary shall discharge his or her responsibilities 
        with respect to the Personal Retirement Savings Fund or any 
        applicable portion thereof solely in the interest of the 
        account holders and beneficiaries of such Fund and--
                    ``(A) for the exclusive purpose of--
                            ``(i) providing benefits to such account 
                        holders and beneficiaries; and
                            ``(ii) defraying reasonable expenses of 
                        administering the Personal Retirement Savings 
                        Fund or applicable portions thereof;
                    ``(B) with the care, skill, prudence, and diligence 
                under the circumstances then prevailing that a prudent 
                individual acting in a like capacity and familiar with 
                such matters would use in the conduct of an enterprise 
                of a like character and with like objectives; and
                    ``(C) to the extent permitted by section 121, by 
                diversifying the investments of the Personal Retirement 
                Savings Fund or applicable portions thereof so as to 
                minimize the risk of large losses, unless under the 
                circumstances it is clearly prudent not to do so.
            ``(2) Limitation on ownership.--No fiduciary may maintain 
        the indicia of ownership of any assets of the Personal 
        Retirement Savings Fund outside the jurisdiction of the 
        district courts of the United States.
    ``(c) Limitations on Transactions.--
            ``(1) Prohibited transactions.--A fiduciary shall not 
        permit the Personal Retirement Savings Fund to engage in any of 
        the following transactions, except in exchange for adequate 
        consideration:
                    ``(A) A transfer of any assets of the Personal 
                Retirement Savings Fund to any person the fiduciary 
                knows or should know to be a party in interest or the 
                use of such assets by any such person.
                    ``(B) An acquisition of any property from or sale 
                of any property to the Personal Retirement Savings Fund 
                by any person the fiduciary knows or should know to be 
                a party in interest.
                    ``(C) A transfer or exchange of services between 
                the Personal Retirement Savings Fund and any person the 
                fiduciary knows or should know to be a party in 
                interest.
            ``(2) Other prohibitions.--Notwithstanding paragraph (1), a 
        fiduciary with respect to the Personal Retirement Savings Fund 
        shall not--
                    ``(A) deal with any assets of the Personal 
                Retirement Savings Fund in his or her own interest or 
                for his or her own account;
                    ``(B) act, in an individual capacity or any other 
                capacity, in any transaction involving the Personal 
                Retirement Savings Fund on behalf of a party, or 
                representing a party, whose interests are adverse to 
                the interests of the Personal Retirement Savings Fund 
                or the interests of the account holders and 
                beneficiaries of such Fund; or
                    ``(C) receive any consideration for his or her own 
                personal account from any party dealing with sums 
                credited to the Personal Retirement Savings Fund in 
                connection with a transaction involving assets of the 
                Personal Retirement Savings Fund.
            ``(3) Exemption by the secretary of labor.--
                    ``(A) In general.--The Secretary of Labor may, in 
                accordance with procedures which the Secretary shall by 
                regulation prescribe, grant a conditional or 
                unconditional exemption of any fiduciary or 
                transaction, or class of fiduciaries or transactions, 
                from all or part of the restrictions imposed by 
                paragraph (2).
                    ``(B) Nonapplication to other applicable 
                provisions.--An exemption granted under this paragraph 
                shall not relieve a fiduciary from any other applicable 
                provision of this title.
                    ``(C) Requirements.--The Secretary of Labor may not 
                grant an exemption under this paragraph unless the 
                Secretary finds that such exemption is--
                            ``(i) administratively feasible;
                            ``(ii) in the interests of the Personal 
                        Retirement Savings Fund and of the account 
                        holders and beneficiaries of such Fund; and
                            ``(iii) protective of the rights of such 
                        account holders and beneficiaries.
                    ``(D) Notice.--An exemption under this paragraph 
                may not be granted unless--
                            ``(i) notice of the proposed exemption is 
                        published in the Federal Register;
                            ``(ii) interested persons are given an 
                        opportunity to present views; and
                            ``(iii) the Secretary of Labor affords an 
                        opportunity for a hearing and makes a 
                        determination on the record with respect to the 
                        respective requirements of clauses (i), (ii), 
                        and (iii) of subparagraph (C).
                    ``(E) ERISA exemptions.--Notwithstanding 
                subparagraph (D), the Secretary of Labor may determine 
                that an exemption granted for any class of fiduciaries 
                or transactions under section 408(a) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1108(a)) shall, upon publication of notice in the 
                Federal Register under this subparagraph, constitute an 
                exemption for purposes of the provisions of paragraph 
                (2).
    ``(d) Benefits and Compensation.--This section does not prohibit 
any fiduciary from--
            ``(1) receiving any benefit that the fiduciary is entitled 
        to receive under this title as a beneficiary of the Personal 
        Retirement Savings Fund;
            ``(2) receiving any reasonable compensation authorized by 
        this title for services rendered, or for reimbursement of 
        expenses properly and actually incurred, in the performance of 
        the fiduciary's duties under this title; or
            ``(3) serving as a fiduciary in addition to being an 
        officer, employee, agent, or other representative of a party in 
        interest.
    ``(e) Breach of Duties.--
            ``(1) Personal liability.--
                    ``(A) In general.--Any fiduciary that breaches the 
                responsibilities, duties, and obligations set out in 
                subsection (b) or violates subsection (c) shall be 
                personally liable to the Personal Retirement Savings 
                Fund for any losses to such Fund resulting from each 
                such breach or violation and to restore to such Fund 
                any profits made by the fiduciary through use of assets 
                of such Fund by the fiduciary, and shall be subject to 
                such other equitable or remedial relief as a court 
                considers appropriate, except as provided in paragraphs 
                (3) and (4). A fiduciary may be removed for a breach 
                referred to in the preceding sentence.
                    ``(B) Civil penalties.--The Secretary of Labor may 
                assess a civil penalty against a party in interest with 
                respect to each transaction that is engaged in by the 
                party in interest and is prohibited by subsection (c). 
                The amount of such penalty shall be equal to 5 percent 
                of the amount involved in each such transaction (as 
                defined in section 4975(f)(4) of the Internal Revenue 
                Code of 1986) for each year or part thereof during 
                which the prohibited transaction continues, except 
                that, if the transaction is not corrected (in such 
                manner as the Secretary of Labor shall prescribe by 
                regulation consistent with section 4975(f)(5) of such 
                Code) within 90 days after the date the Secretary of 
                Labor transmits notice to the party in interest (or 
                such longer period as the Secretary of Labor may 
                permit), such penalty may be in an amount not more than 
                100 percent of the amount involved.
                    ``(C) Acts committed prior to or after service.--A 
                fiduciary shall not be liable under subparagraph (A) 
                with respect to a breach of fiduciary duty under 
                subsection (b) committed before becoming a fiduciary or 
                after ceasing to be a fiduciary.
                    ``(D) Joint and several liability.--A fiduciary 
                shall be jointly and severally liable under 
                subparagraph (A) for a breach of fiduciary duty under 
                subsection (b) by another fiduciary only if--
                            ``(i) the fiduciary participates knowingly 
                        in, or knowingly undertakes to conceal, an act 
                        or omission of such other fiduciary, knowing 
                        such act or omission is such a breach;
                            ``(ii) by the fiduciary's failure to comply 
                        with subsection (b) in the administration of 
                        the fiduciary's specific responsibilities that 
                        give rise to the fiduciary status, the 
                        fiduciary has enabled such other fiduciary to 
                        commit such a breach; or
                            ``(iii) the fiduciary has knowledge of a 
                        breach by such other fiduciary, unless the 
                        fiduciary makes reasonable efforts under the 
                        circumstances to remedy the breach.
                    ``(E) Regulations.--The Secretary of Labor shall 
                prescribe, in regulations, procedures for allocating 
                fiduciary responsibilities among fiduciaries, including 
                investment managers. Any fiduciary who, pursuant to 
                such procedures, allocates to a person or persons any 
                fiduciary responsibility shall not be liable for an act 
                or omission of such person or persons unless--
                            ``(i) such fiduciary violated subsection 
                        (b) with respect to the allocation, with 
                        respect to the implementation of the procedures 
                        prescribed by the Secretary of Labor (or the 
                        Board), or in continuing such allocation; or
                            ``(ii) such fiduciary would otherwise be 
                        liable in accordance with subparagraph (D).
            ``(2) Requirements for civil actions.--
                    ``(A) In general.--No civil action may be 
                maintained against any fiduciary with respect to the 
                responsibilities, liabilities, and penalties authorized 
                or provided for in this section except in accordance 
                with subparagraphs (B) and (C).
                    ``(B) Jurisdiction.--A civil action may be brought 
                in the district courts of the United States--
                            ``(i) by the Secretary of Labor against any 
                        fiduciary other than a Member of the Board or 
                        the Executive Director of the Board--
                                    ``(I) to determine and enforce a 
                                liability under paragraph (1)(A);
                                    ``(II) to collect any civil penalty 
                                under paragraph (1)(B);
                                    ``(III) to enjoin any act or 
                                practice that violates any provision of 
                                subsection (b) or (c);
                                    ``(IV) to obtain any other 
                                appropriate equitable relief to redress 
                                a violation of any such provision; or
                                    ``(V) to enjoin any act or practice 
                                that violates subsection (g)(3) or (i) 
                                of section 101;
                            ``(ii) by any beneficiary or fiduciary 
                        against any fiduciary--
                                    ``(I) to enjoin any act or practice 
                                that violates any provision of 
                                subsection (b) or (c);
                                    ``(II) to obtain any other 
                                appropriate equitable relief to redress 
                                a violation of any such provision; or
                                    ``(III) to enjoin any act or 
                                practice that violates subsection 
                                (g)(3) or (i) of section 101; or
                            ``(iii) by any beneficiary or fiduciary--
                                    ``(I) to recover benefits of the 
                                beneficiary under the provisions of 
                                this title, to enforce any right of the 
                                beneficiary under such provisions, or 
                                to clarify any such right to future 
                                benefits under such provisions; or
                                    ``(II) to enforce any claim 
                                otherwise cognizable under sections 
                                1346(b) and 2671 through 2680 of title 
                                28, United States Code, provided that 
                                the remedy against the United States 
                                provided by sections 1346(b) and 2672 
                                of such title for damages for injury or 
                                loss of property caused by the 
                                negligent or wrongful act or omission 
                                of any fiduciary while acting within 
                                the scope of his duties or employment 
                                shall be exclusive of any other civil 
                                action or proceeding by the beneficiary 
                                for recovery of money by reason of the 
                                same subject matter against the 
                                fiduciary (or the estate of such 
                                fiduciary) whose act or omission gave 
                                rise to such action or proceeding, 
                                whether or not such action or 
                                proceeding is based on an alleged 
                                violation of subsection (b) or (c).
                    ``(C) Legal representation.--
                            ``(i) Department of labor.--In all civil 
                        actions under subparagraph (B)(i), attorneys 
                        appointed by the Secretary of Labor may 
                        represent the Secretary (except as provided in 
                        section 518(a) of title 28, United States 
                        Code), however all such litigation shall be 
                        subject to the direction and control of the 
                        Attorney General.
                            ``(ii) Department of justice.--The Attorney 
                        General shall defend any civil action or 
                        proceeding brought in any court against any 
                        fiduciary referred to in subparagraph 
                        (B)(iii)(II) (or the estate of such fiduciary) 
                        for any such injury. Any fiduciary against whom 
                        such a civil action or proceeding is brought 
                        shall deliver, within such time after date of 
                        service or knowledge of service as determined 
                        by the Attorney General, all process served 
                        upon such fiduciary (or an attested copy 
                        thereof) to the Executive Director of the 
                        Board, who shall promptly furnish copies of the 
                        pleading and process to the Attorney General 
                        and the United States Attorney for the district 
                        wherein the action or proceeding is brought.
                            ``(iii) Removal.--Upon certification by the 
                        Attorney General that a fiduciary described in 
                        subparagraph (B)(iii)(II) was acting in the 
                        scope of such fiduciary's duties or employment 
                        as a fiduciary at the time of the occurrence or 
                        omission out of which the action arose, any 
                        such civil action or proceeding commenced in a 
                        State court shall be--
                                    ``(I) removed without bond at any 
                                time before trial by the Attorney 
                                General to the district court of the 
                                United States for the district and 
                                division in which it is pending; and
                                    ``(II) deemed a tort action brought 
                                against the United States under the 
                                provisions of title 28, United States 
                                Code, and all references thereto.
                            ``(iv) Settlement.--The Attorney General 
                        may compromise or settle any claim asserted in 
                        such civil action or proceeding in the manner 
                        provided in section 2677 of title 28, United 
                        States Code, and with the same effect. To the 
                        extent section 2672 of such title provides that 
                        persons other than the Attorney General or his 
                        designee may compromise and settle claims, and 
                        that payment of such claims may be made from 
                        agency appropriations, such provisions shall 
                        not apply to claims based upon an alleged 
                        violation of subsection (b) or (c).
                            ``(v) Nonapplication of provision.--For the 
                        purposes of subparagraph (B)(iii)(II), the 
                        provisions of section 2680(h) of title 28, 
                        United States Code, shall not apply to any 
                        claim based upon an alleged violation of 
                        subsection (b) or (c).
                            ``(vi) Payment.--Notwithstanding sections 
                        1346(b) and 2671 through 2680 of title 28, 
                        United States Code, whenever an award, 
                        compromise, or settlement is made under such 
                        sections upon any claim based upon an alleged 
                        violation of subsection (b) or (c), payment of 
                        such award, compromise, or settlement shall be 
                        made to the appropriate account within the 
                        Personal Retirement Savings Fund, or where 
                        there is no such appropriate account, to the 
                        beneficiary bringing the claim.
                            ``(vii) Limitation on definition of 
                        fiduciary.--For purposes of subparagraph 
                        (B)(iii)(II), fiduciary includes only the 
                        members of the Board and the Board's Executive 
                        Director.
                    ``(D) Limitation on recovery.--Any relief awarded 
                against a member of the Board or the Executive Director 
                of the Board in a civil action authorized by 
                subparagraph (B) may not include any monetary damages 
                or any other recovery of money.
                    ``(E) Limitation on commencement of actions.--An 
                action may not be commenced under subparagraph (B) with 
                respect to a fiduciary's breach of any responsibility, 
                duty, or obligation under subsection (b) or a violation 
                of subsection (c) after the earlier of--
                            ``(i) 6 years after--
                                    ``(I) the date of the last action 
                                that constituted a part of the breach 
                                or violation; or
                                    ``(II) in the case of an omission, 
                                the latest date on which the fiduciary 
                                could have cured the breach or 
                                violation; or
                            ``(ii) 3 years after the earliest date on 
                        which the plaintiff had actual knowledge of the 
                        breach or violation, except that, in the case 
                        of fraud or concealment, such action may be 
                        commenced not later than 6 years after the date 
                        of discovery of such breach or violation.
                    ``(F) Exclusive jurisdiction.--
                            ``(i) In general.--The district courts of 
                        the United States shall have exclusive 
                        jurisdiction of civil actions under this 
                        subsection.
                            ``(ii) Venue.--An action under this 
                        subsection may be brought in the District Court 
                        of the United States for the District of 
                        Columbia or a district court of the United 
                        States in the district where the breach alleged 
                        in the complaint or petition filed in the 
                        action took place or in the district where a 
                        defendant resides or may be found. Process may 
                        be served in any other district where a 
                        defendant resides or may be found.
                    ``(G) Filing of complaint.--
                            ``(i) Service.--A copy of the complaint or 
                        petition filed in any action brought under this 
                        subsection (other than by the Secretary of 
                        Labor) shall be served on the Executive 
                        Director, the Secretary of Labor, and the 
                        Secretary of the Treasury by certified mail.
                            ``(ii) Intervention.--Any officer referred 
                        to in clause (i) of this subparagraph shall 
                        have the right in his or her discretion to 
                        intervene in any action. If the Secretary of 
                        Labor brings an action under this paragraph on 
                        behalf of a beneficiary, the officer shall 
                        notify the Executive Director and the Secretary 
                        of the Treasury.
    ``(f) Regulations.--The Secretary of Labor may prescribe 
regulations to carry out this section.
    ``(g) Audits.--
            ``(1) In general.--The Secretary of Labor shall establish a 
        program to carry out audits to determine the level of 
        compliance with the requirements of this section relating to 
        fiduciary responsibilities and prohibited activities of 
        fiduciaries.
            ``(2) Conduct.--An audit under this subsection may be 
        conducted by the Secretary of Labor, by contract with a 
        qualified nongovernmental organization, or in cooperation with 
        the Comptroller General of the United States, as the Secretary 
        considers appropriate.

``SEC. 132. BONDING.

    ``(a) Requirement.--
            ``(1) In general.--Except as provided in paragraph (2), 
        each fiduciary and each person who handles funds or property of 
        the Personal Retirement Savings Fund shall be bonded as 
        provided in this section.
            ``(2) Exceptions.--
                    ``(A) In general.--Bond shall not be required of a 
                fiduciary (or of any officer or employee of such 
                fiduciary) if such fiduciary--
                            ``(i) is a corporation organized and doing 
                        business under the laws of the United States or 
                        of any State;
                            ``(ii) is authorized under such laws to 
                        exercise trust powers or to conduct an 
                        insurance business;
                            ``(iii) is subject to supervision or 
                        examination by Federal or State authority; and
                            ``(iv) has at all times a combined capital 
                        and surplus in excess of such minimum amount 
                        (not less than $1,000,000) as the Secretary of 
                        Labor prescribes in regulations.
                    ``(B) Banks or other financial institutions.--If--
                            ``(i) a bank or other financial institution 
                        would, but for this subparagraph, not be 
                        required to be bonded under this section by 
                        reason of the application of the exception 
                        provided in subparagraph (A);
                            ``(ii) the bank or financial institution is 
                        authorized to exercise trust powers; and
                            ``(iii) the deposits of the bank or 
                        financial institution are not insured by the 
                        Federal Deposit Insurance Corporation,
                such exception shall apply to such bank or financial 
                institution only if the bank or institution meets 
                bonding requirements under State law which the 
                Secretary of Labor determines are at least equivalent 
                to those imposed on banks by Federal law.
    ``(b) Amount of Bond.--
            ``(1) Minimum requirements.--The Secretary of Labor shall 
        prescribe the amount of a bond under this section at the 
        beginning of each fiscal year. Except as otherwise provided in 
        this paragraph, such amount shall not be less than 10 percent 
        of the amount of funds handled. In no case shall such bond be 
        less than $1,000 nor more than $500,000, except that the 
        Secretary of Labor, after due notice and opportunity for 
        hearing to all interested parties, and other consideration of 
        the record, may prescribe an amount in excess of $500,000.
            ``(2) Determination of amount of funds.--For the purpose of 
        prescribing the amount of a bond under paragraph (1), the 
        amount of funds handled shall be determined by reference to the 
        amount of the funds handled by the person, group, or class to 
        be covered by such bond or by their predecessor or 
        predecessors, if any, during the preceding fiscal year, or to 
        the amount of funds to be handled during the current fiscal 
        year by such person, group, or class, estimated as provided in 
        regulations prescribed by the Secretary of Labor.
    ``(c) Other Requirements.--A bond required by subsection (a)--
            ``(1) shall include such terms and conditions as the 
        Secretary of Labor considers necessary to protect the Personal 
        Retirement Savings Fund against loss by reason of acts of fraud 
        or dishonesty on the part of the bonded person directly or 
        through connivance with others;
            ``(2) shall have as surety thereon a corporate surety 
        company that is an acceptable surety on Federal bonds under 
        authority granted by the Secretary of the Treasury pursuant to 
        sections 9304 through 9308 of title 31, United States Code; and
            ``(3) shall be in a form or of a type approved by the 
        Secretary of Labor, including individual bonds or schedule or 
        blanket forms of bonds that cover a group or class.
    ``(d) Prohibitions.--
            ``(1) Bond required.--It shall be unlawful for any person 
        to whom subsection (a) applies, to receive, handle, disburse, 
        or otherwise exercise custody or control of any of the funds or 
        other property of the Personal Retirement Savings Fund without 
        being bonded as required by this section.
            ``(2) Meet all requirements.--It shall be unlawful for any 
        fiduciary, or any other person having authority to direct the 
        performance of functions described in paragraph (1), to permit 
        any such function to be performed by any person to whom 
        subsection (a) applies unless such person has met the 
        requirements of such subsection.
    ``(e) Nonapplication of Other Laws.--Notwithstanding any other 
provision of law, any person who is required to be bonded as provided 
in subsection (a) shall be exempt from any other provision of law that, 
but for this subsection, would require such person to be bonded for the 
handling of the funds or other property of the Personal Retirement 
Savings Fund.
    ``(f) Regulations.--The Secretary of Labor shall prescribe such 
regulations as may be necessary to carry out the provisions of this 
section, including exempting a person or class of persons from the 
requirements of this section.

``SEC. 133. INVESTIGATIVE AUTHORITY.

    ``Any authority available to the Secretary of Labor under section 
504 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1134) is hereby made available to the Secretary of Labor, and any 
officer designated by the Secretary of Labor, to determine whether any 
person has violated, or is about to violate, any provision of section 
131 or 132.

``SEC. 134. EXCULPATORY PROVISIONS; INSURANCE.

    ``(a) Nonapplication of Exculpatory Provisions.--Any provision in 
an agreement or instrument that purports to relieve a fiduciary from 
responsibility or liability for any responsibility, obligation, or duty 
under this title shall be void.
    ``(b) Liability Insurance.--Sums credited to the Personal 
Retirement Savings Fund may be used at the discretion of the Executive 
Director to purchase insurance to cover the potential liability of 
persons who serve in a fiduciary capacity with respect to the Personal 
Retirement Savings Fund, without regard to whether a policy of 
insurance permits recourse by the insurer against the fiduciary in the 
case of a breach of a fiduciary obligation.''.

SEC. 5. REPORT AND RECOMMENDATIONS REGARDING INVESTMENT OPTIONS.

    Not later than 36 months after the date of enactment of this Act, 
the Personal Retirement Accounts Board established under section 101 of 
the Social Security Act (as amended by section 4 of this Act) shall 
submit to the appropriate committees of Congress a report regarding 
recommendations for additional investment options for individuals with 
personal retirement accounts established under title I of the Social 
Security Act (as so amended). The report shall include recommendations 
regarding--
            (1) whether the Board should make available to such account 
        holders investment funds managed by qualified professional 
        asset managers (as defined in section 121(a)(7) of the Social 
        Security Act (as amended by section 4 of this Act));
            (2) whether such account holders should be permitted to 
        transfer all or a portion of the balance in their personal 
        retirement accounts to a new form of individual retirement 
        account that would be managed by qualified professional asset 
        managers (as so defined);
            (3) whether the Board should provide an alternative for the 
        investment of a personal retirement account for which no 
        investment election is made to investment in the Government 
        Securities Investment Fund provided for under section 121(c)(2) 
        of the Social Security Act (as so amended); and
            (4) whether the Board should offer diversified investment 
        selections for such account holders that takes into 
        consideration the age of the individual.
                                 <all>
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