I

104TH CONGRESS

2D SESSION H. R. 4215

To provide for the establishment and maintenance of personal social security

investment accounts for all Americans under the social security system.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 26, 1996

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

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

Reform and Oversight, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To provide for the establishment and maintenance of personal social security investment accounts for all Americans under the social security system.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Retirement Security

5 Act of 1996’’.
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1 SEC. 2. INDIVIDUAL RETIREMENT INVESTMENT PROGRAM

2 AND PERSONAL SOCIAL SECURITY INVEST3 MENT ACCOUNTS.

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

5 is amended—

6 (1) by inserting before section 201 the follow7 ing:

8 ‘‘PART A—INSURANCE BENEFITS’’;

9 and

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

11 ‘‘PART B—INDIVIDUAL RETIREMENT INVESTMENT

12 PROGRAM

13 ‘‘DEFINITIONS

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

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

16 holder’ means an individual for whom a personal so17 cial security investment account is established under

18 section 251(a).

19 ‘‘(2) INVESTMENT ACCOUNT.—The term ‘in20 vestment account’ means a personal social security

21 investment account established under section 251(a).

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

23 means the Social Security Investment Trust Fund

24 established under section 259.

25 ‘‘(4) EXECUTIVE DIRECTOR.—The term ‘Execu26 tive Director’ means the Executive Director under
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1 this part authorized to so serve under section

2 265(b).

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

4 Board of Trustees of the Trust Fund authorized to

5 so serve under section 265(a).

6 ‘‘PERSONAL SOCIAL SECURITY INVESTMENT ACCOUNTS

7 ‘‘SEC. 252. (a) CERTIFICATION OF ACCOUNT NUM8 BERS.—Not later than July 1, 1997, the Commissioner

9 of Social Security shall certify to the Executive Director

10 and the Secretary of the Treasury the identity and social

11 security account number of each living individual who, as

12 of such date, has been issued such a number under section

13 205(c)(2). Upon the issuance thereafter to any individual

14 of a social security account number under section

15 205(c)(2), the Commissioner of Social Security shall cer16 tify to the Executive Director and the Secretary of the

17 Treasury the identity and social security account number

18 of such individual.

19 ‘‘(b) ESTABLISHMENT OF PERSONAL SOCIAL SECU20 RITY INVESTMENT ACCOUNTS.—Upon receipt of any such

21 certification with respect to an individual, the Executive

22 Director shall establish a personal social security invest23 ment account for such individual. Amounts in the Social

24 Security Investment Trust Fund shall be credited by the

25 Executive Director to the investment account in accord26 ance with this part. The investment account shall be iden-
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1 tified to the account holder by means of the account hold2 er’s social security account number. The Executive Direc3 tor shall establish an investment account for each account

4 holder not later than the later of January 1, 1998, or 30

5 days after receipt of the certification with respect to the

6 account holder.

7 ‘‘(c) INITIAL CONTRIBUTION.—Upon the establish8 ment of each account holder’s investment account, the

9 Secretary of the Treasury shall transfer, from amounts

10 not otherwise appropriated in the general fund of the

11 Treasury to the Trust Fund, for crediting by the Execu12 tive Director to such investment account under subsection

13 (b), an amount equal to $1000.00.

14 ‘‘(d) INVESTMENT ACCOUNT BALANCE.—The bal15 ance in an account holder’s investment account at any

16 time is the excess of—

17 ‘‘(1) the sum of—

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

19 Fund and credited to the investment account

20 pursuant to subsection (c);

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

22 Fund under section 253, and

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

24 made to and reductions made in the investment

25 account pursuant to subsection (e), over
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1 ‘‘(2) the amounts paid out of the Trust Fund

2 with respect to such individual under this part.

3 ‘‘(e) ALLOCATION OF EARNINGS AND LOSSES.—Pur4 suant to regulations prescribed by the Executive Director,

5 the Executive Director shall allocate to each investment

6 account an amount equal to a pro rata share of the net

7 earnings and net losses from each investment of sums in

8 the Trust Fund attributable to sums credited to such in9 vestment account, reduced by an appropriate share of the

10 administrative expenses paid out of the net earnings under

11 section 256(d), as determined by the Executive Director.

12 ‘‘(f) ENGAGEMENT OF QUALIFIED PUBLIC ACCOUNT13 ANT.—

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

15 shall annually engage, on behalf of all account hold16 ers, an independent qualified public accountant, who

17 shall conduct an examination of all accounts and

18 other books and records maintained in the adminis19 tration of this part as the public accountant consid20 ers necessary to enable the public accountant to

21 make the determination required by paragraph (2).

22 The examination shall be conducted in accordance

23 with generally accepted auditing standards and shall

24 involve such tests of the accounts, books, and

25 records as the public accountant considers necessary.
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1 ‘‘(2) EXAMINATION AND REPORT.—The public

2 accountant conducting an examination under para3 graph (1) shall determine whether the accounts,

4 books, and records referred to in such paragraph

5 have been maintained in conformity with generally

6 accepted accounting principles applied on a basis

7 consistent with the manner in which such principles

8 were applied during the examination conducted

9 under such paragraph during the preceding year.

10 The public accountant shall transmit to the Board

11 and the Comptroller General of the United States a

12 report on his examination, including his determina13 tion under this paragraph.

14 ‘‘(3) RELIANCE ON ACTUARY’S CERTIFI15 CATIONS.—In making a determination under para16 graph (2), a public accountant may rely on the cor17 rectness of any actuarial matter certified by an en18 rolled actuary if the public accountant states his re19 liance in the report transmitted to the Board under

20 such paragraph.

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

22 subsection, the term ‘‘qualified public accountant’’

23 shall have the same meaning as provided in section

24 103(a)(3)(D) of the Employee Retirement Income

25 Security Act of 1974 (29 U.S.C. 1023(a)(3)(D)).
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1 ‘‘(g) INFORMATION REQUIRED TO BE PROVIDED TO

2 ACCOUNT HOLDERS.—

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

4 regulations under which each account holder shall be

5 furnished with—

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

7 account holder’s investment account; and

8 ‘‘(B) a summary description of the invest9 ment options under section 254 covering, and

10 an evaluation of, each such option for at least

11 the 5-year period preceding the date as of

12 which such evaluation is made.

13 ‘‘(2) TIMELY PROVISION OF INFORMATION.—In14 formation under this subsection shall be provided at

15 least 30 calendar days before the date provided for

16 each election under section 254(c), and in a manner

17 designed to facilitate informed decisionmaking with

18 respect to each such election.

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

20 who elects to invest in the Fixed Income Investment Fund

21 or the Common Stock Index Investment Fund described

22 in subparagraphs (B) and (C), respectively, of section

23 254(a)(1) shall sign an acknowledgement prescribed by

24 the Executive Director which states that the account hold25 er understands that an investment in either such Fund
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1 is made at the account holder’s risk, that the account

2 holder is not protected by the Government against any loss

3 on such investment, and that a return on such investment

4 is not guaranteed by the Government.

5 ‘‘CONTRIBUTIONS TO THE SOCIAL SECURITY INVESTMENT

6 TRUST FUND

7 ‘‘SEC. 253. (a) IN GENERAL.—The Executive Direc8 tor shall prescribe regulations under which each individual

9 who is eligible to claim a deduction under section 221 of

10 the Internal Revenue Code of 1986 for contributions to

11 a personal social security investment account shall be af12 forded a reasonable opportunity to make contributions to

13 the Trust Fund, for crediting to such account, either from

14 time to time or under arrangements providing for regular,

15 periodic contributions. Such arrangements may include ar16 rangements for contributions of wages by employers on be17 half of employees. Any such arrangement shall also pro18 vide individuals a reasonable opportunity to modify the

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

20 such contributions.

21 ‘‘(b) LIMITATION ON CONTRIBUTIONS.—Notwith22 standing any other provision of this section, no contribu23 tion may be made under this section to any account for

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

25 to prior contributions to such account for such year, ex26 ceeds $7,000.
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1 ‘‘(c) CREDITING PROCEDURES.—Amounts contrib2 uted by (or on behalf of) an account holder under this

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

4 of that account holder’s investment account in accordance

5 with such procedures as the Comptroller General of the

6 United States may, in consultation with the Executive Di7 rector, prescribe in regulations.

8 ‘‘(d) NONFORFEITABILITY OF CONTRIBUTIONS.—All

9 contributions made under this section shall be fully non10 forfeitable when made.

11 ‘‘INVESTMENT OF SOCIAL SECURITY INVESTMENT TRUST

12 FUND

13 ‘‘SEC. 254. (a) INVESTMENT FUNDS.—The Board

14 shall establish—

15 ‘‘(1) a Government Securities Investment Fund

16 under which sums in the Trust Fund are invested in

17 securities of the United States Government issued as

18 provided in subsection (e);

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

20 which sums in the Trust Fund are invested in—

21 ‘‘(A) insurance contracts,

22 ‘‘(B) certificates of deposit, or

23 ‘‘(C) other instruments or obligations se24 lected by qualified professional asset managers,
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1 which return the amount invested and pay interest,

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

3 a specified period of time;

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

5 as provided in subsection (b); and

6 ‘‘(4) such other investment fund or funds as the

7 Board may provide by regulation.

8 ‘‘(b) INDEX GOVERNING COMMON STOCK INDEX IN9 VESTMENT FUNDS.—

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

11 select an index which is a commonly recognized

12 index comprised of common stock the aggregate

13 market value of which is a reasonably complete rep14 resentation of the United States equity markets.

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

16 Index Investment Fund shall be invested in a port17 folio designed to replicate the performance of the

18 index selected under paragraph (1). The portfolio

19 shall be designed such that, to the extent prac20 ticable, the percentage of the Common Stock Index

21 Investment Fund that is invested in each stock is

22 the same as the percentage determined by dividing

23 the aggregate market value of all shares of that

24 stock by the aggregate market value of all shares of

25 all stocks included in such index.
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1 ‘‘(c) INVESTMENT ACCORDING TO ELECTIONS.—

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

3 shall invest the sums available in the Trust Fund for

4 investment as provided in elections made under sub5 section (d).

6 ‘‘(2) DEFAULT INVESTMENT IN ABSENCE OF

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

8 respect to any sums in the Trust Fund available for

9 investment, the Executive Director shall invest such

10 sums in the Government Securities Investment

11 Fund.

12 ‘‘(d) SEMIANNUAL ELECTIONS.—

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

14 account holder may elect the investment funds re15 ferred to in subsection (a) into which the sums in

16 the Trust Fund credited to such account holder’s in17 vestment account are to be invested or reinvested.

18 ‘‘(2) INVESTMENT ACCORDING TO REGULA19 TIONS.—An election may be made under paragraph

20 (1) only in accordance with regulations prescribed by

21 the Executive Director and within such period as the

22 Executive Director shall provide in such regulations.

23 ‘‘(e) ISSUANCE OF SPECIAL OBLIGATIONS.—

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

25 Treasury is authorized to issue special interest-bear-
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1 ing obligations of the United States for purchase by

2 the Trust Fund for the Government Securities In3 vestment Fund.

4 ‘‘(2) REQUIREMENTS.—

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

6 the purpose of this subsection shall have matu7 rities fixed with due regard to the needs of the

8 Trust Fund as determined by the Executive Di9 rector, and shall bear interest at a rate equal

10 to the average market yield (computed by the

11 Secretary of the Treasury on the basis of mar12 ket quotations as of the end of the calendar

13 month next preceding the date of issue of such

14 obligations) on all marketable interest-bearing

15 obligations of the United States then forming a

16 part of the public debt which are not due or

17 callable earlier than 4 years after the end of

18 such calendar month.

19 ‘‘(B) ROUNDING.—Any average market

20 yield computed under subparagraph (A) which

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

22 shall be rounded to the nearest multiple of one23 eighth of 1 percent.

24 ‘‘(f) NO VOTING RIGHTS IN SECURITIES.—The

25 Board, the Executive Director, and an account holder may
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1 not exercise voting rights associated with the ownership

2 of securities by the Social Security Investment Trust

3 Fund.

4 ‘‘DISTRIBUTIONS FROM THE SOCIAL SECURITY

5 INVESTMENT TRUST FUND

6 ‘‘SEC. 255. (a) IN GENERAL.—No distribution may

7 be made from the Social Security Investment Trust Fund

8 of any amount credited to the investment account of any

9 account holder, unless such distribution is in the form

10 of—

11 ‘‘(1) a benefit distribution described in sub12 section (b),

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

14 or

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

16 ‘‘(b) BENEFIT DISTRIBUTION.—

17 ‘‘(1) IN GENERAL.—A distribution from an in18 vestment account is in the form of a benefit distribu19 tion referred to in subsection (a)(1) if such distribu20 tion constitutes payment (in whole or in part) of a

21 monthly insurance benefit under part A based on the

22 wages and self-employment income of the account

23 holder.

24 ‘‘(2) PAYMENT OF MONTHLY INSURANCE BENE25 FITS.—Notwithstanding section 201(h), benefit pay26 ments required to be made under part A, other than
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1 benefit payments required to be made under section

2 223 or 226 and benefit payments required to be

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

4 to account holders entitled to benefits on the basis

5 of the wages and self-employment income of any

6 such account holder entitled to disability insurance

7 benefits, shall be made from amounts in the Trust

8 Fund credited to such account holder’s investment

9 account, except to the extent that such benefit pay10 ments exceed the balance credited to such account

11 holder’s investment account. Any amount of such

12 benefit payments in excess of the balance in such ac13 count holder’s investment account shall be payable

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

15 Social Security shall provide for certification to the

16 Executive Director for payment of such benefits

17 from the Trust Fund, and the Executive Director

18 shall make such payments from the Trust Fund in

19 accordance with such certification.

20 ‘‘(c) ANNUITIES AND LUMP SUM PAYMENTS.—A dis21 tribution referred to in subsection (a)(2) is described in

22 this subsection if—

23 ‘‘(1) the distribution is at the election of the ac24 count holder made (in such form and manner as

25 shall be prescribed by the Executive Director) on or
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1 after the date of the commencement of such account

2 holder’s entitlement to old-age insurance benefits

3 under section 202(a),

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

5 amount, as determined by the Executive Director,

6 which is not greater than the excess of—

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

8 holder’s investment account, over

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

10 benefit distributions as required under sub11 section (a)(1), and

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

13 of annuities and other payments under section 256.

14 ‘‘(d) DEATH DISTRIBUTION.—

15 ‘‘(1) IN GENERAL.—A distribution from an in16 vestment account is in the form of a death distribu17 tion if such distribution is in the amount remaining

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

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

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

21 is provided for distribution of benefit payments

22 under section 204(d).

23 ‘‘(2) PORTION OF ACCOUNT BALANCE ATTRIB24 UTABLE TO FEDERAL CONTRIBUTION RETURNED TO

25 UNITED STATES.—The portion of the amount re-
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1 maining credited to the account holder as of the

2 date of such account holder’s death which is attrib3 utable to the contribution made under section 252(c)

4 shall be paid to the Secretary of the Treasury for

5 deposit into the general fund of the Treasury as mis6 cellaneous receipts. For purposes of the preceding

7 sentence, distributions from a personal social secu8 rity investment account shall be treated as first

9 made from amounts attributable to the contribution

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

11 amounts.

12 ‘‘ANNUITIES AND LUMP SUM PAYMENTS PAYABLE FROM

13 THE SOCIAL SECURITY INVESTMENT TRUST FUND

14 ‘‘SEC. 256. (a) IN GENERAL.—An account holder

15 who is entitled to old-age insurance benefits under section

16 202(a) is entitled as provided in this section to the amount

17 of the balance in the account holder’s investment account

18 as provided in this section available for distribution under

19 this section in accordance with section 255.

20 ‘‘(b) ALTERNATIVE FORMS OF DISTRIBUTION.—Sub21 ject to section 258, any account holder who is entitled to

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

23 and may elect—

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

25 Trust Fund;
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1 ‘‘(2) to defer the commencement of the pay2 ment of an annuity from the Trust Fund until such

3 date as the account holder specifies, but not later

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

the account holder becomes 701 5 ⁄2 years of age;

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

7 the account holder’s investment account in the Trust

8 Fund in one or more substantially equal payments

9 to be made not less frequently than annually and to

10 commence before April 1 of the year following the

year in which the account holder becomes 701 11 ⁄2

12 years of age; or

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

14 the account holder’s investment account in the Trust

15 Fund to an eligible retirement plan as provided in

16 subsection (c).

17 ‘‘(c) TRANSFERS TO ELIGIBLE RETIREMENT

18 PLANS.—

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

20 shall make each transfer elected under subsection

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

22 (as defined in section 402(a)(5)(E) of the Internal

23 Revenue Code of 1986) identified by the account

24 holder for whom the transfer is made.
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1 ‘‘(2) TRANSFER CONTINGENT UPON RECEIPT

2 OF NECESSARY INFORMATION.—A transfer may not

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

4 until the Executive Director receives from such ac5 count holder the information required by the Execu6 tive Director specifically to identify the eligible re7 tirement plan or plans to which the transfer is to be

8 made.

9 ‘‘(d) MODIFICATION OF ELECTIONS.—

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

11 (3)(A) and subsections (a) and (d) of section 258,

12 an account holder may change an election previously

13 made under this section.

14 ‘‘(2) MODIFICATION OF DATE FOR DELAYED

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

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

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

18 the date specified in such election or in a previous

19 modification under this paragraph.

20 ‘‘(3) LIMITATIONS.—

21 ‘‘(A) MODIFICATIONS DISALLOWED UPON

22 COMMENCEMENT OF DISTRIBUTION.—An ac23 count holder may not change an election under

24 this section on or after the date on which a

25 payment is made in accordance with such elec-
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1 tion or, in the case of an election to receive an

2 annuity, the date on which an annuity contract

3 is purchased to provide for the annuity elected

4 by the account holder.

5 ‘‘(B) OTHER LIMITATIONS.—A modifica6 tion of a date may not be made under para7 graph (2) on or after the date on which an an8 nuity contract is purchased to provide for the

9 annuity involved, and may not specify a date

10 for the commencement of an annuity earlier

11 than 90 days after the date on which the modi12 fication is submitted to the Executive Director

13 (or such period shorter than 90 days as the Ex14 ecutive Director may by regulation prescribe).

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

16 ‘‘(1) LUMP SUM DISTRIBUTIONS OF MINIMAL

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

18 account holder becomes entitled to old-age insurance

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

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

21 or less, the Executive Director shall pay the balance

22 to the account holder in a single payment unless the

23 account holder elects, at such time and otherwise in

24 such manner as the Executive Director prescribes,

25 one of the options available under subsection (b).
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1 ‘‘(2) DEFAULT ANNUITY COMMENCEMENT

2 DATE.—Unless otherwise elected under this section,

3 and subject to paragraph (1), the balance in an ac4 count holder’s investment account shall be paid as

5 an annuity commencing for the account holder on

6 February 1 of the year following the year in which

7 the account holder becomes entitled to old-age insur8 ance benefits under section 202(a).

9 ‘‘PAYMENT OF ANNUITIES

10 ‘‘SEC. 257. (a) METHODS OF PAYMENT.—The Board

11 shall prescribe methods of payment of annuities under this

12 part. The methods of payment prescribed under this sub13 section shall include, but not be limited to—

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

15 of a monthly annuity only to an annuitant during

16 the life of the annuitant;

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

18 of a monthly annuity to an annuitant for the joint

19 lives of the annuitant and the spouse of the annu20 itant and an appropriate monthly annuity to the one

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

22 of the survivor;

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

24 provides for automatic adjustments in the amount of

25 the annuity payable so long as the amount of the
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1 annuity payable in any one year shall not be less

2 than the amount payable in the previous year;

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

4 provides for automatic adjustments in the amount of

5 the annuity payable so long as the amount of the an6 nuity payable in any one year shall not be less than

7 the amount payable in the previous year; and

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

9 of a monthly annuity—

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

11 the annuitant and an individual who is des12 ignated by the annuitant under regulations pre13 scribed by the Executive Director and (i) is a

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

15 insurable interest in the annuitant; and

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

17 other of them for the life of the survivor.

18 ‘‘(b) REQUIREMENT OF ELECTION.—Subject to sec19 tion 258(c), under such regulations as the Executive Di20 rector shall prescribe, an account holder who elects under

21 section 256 to receive an annuity under this part shall

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

23 is purchased to provide for that annuity, one of the meth24 ods of payment prescribed under subsection (a).
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1 ‘‘(c) CONTINUED PERIOD OF 5 YEARS AVAILABILITY

2 FOR ELIMINATED METHODS.—Notwithstanding an elimi3 nation of a method of payment by the Board, an account

4 holder may elect the eliminated method if the elimination

5 of such method became effective less than 5 years before

6 the date on which the annuity commences.

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

8 ‘‘(1) TIME LIMIT FOR ENTERING INTO CON9 TRACT.—Not earlier than 90 days (or such shorter

10 period as the Executive Director may by regulation

11 prescribe) before an annuity is to commence under

12 this part, the Executive Director shall expend the

13 balance in the annuitant’s account to purchase an

14 annuity contract from any entity which, in the nor15 mal course of its business, sells and provides annu16 ities.

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

18 The Executive Director shall assure, by contract en19 tered into with each entity from which an annuity

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

21 annuity shall be provided in accordance with the

22 provisions of this part.

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

24 contract purchased under paragraph (1) shall in-
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1 clude such terms and conditions as the Executive

2 Director requires for the protection of the annuitant.

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

4 require, from each entity from which an annuity

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

6 or proof of financial responsibility sufficient to pro7 tect the annuitant.

8 ‘‘(e) EXEMPTION FROM LOCAL TAXATION OF

9 AMOUNTS PAID TO PURCHASE ANNUITIES.—

10 ‘‘(1) IN GENERAL.—No tax, fee, or other mone11 tary payment may be imposed or collected by any

12 State, or by any political subdivision or other gov13 ernmental authority thereof, on, or with respect to,

14 any amount paid to purchase an annuity contract

15 under this section.

16 ‘‘(2) TAXATION OF ISSUER PERMITTED.—Para17 graph (1) shall not be construed to exempt any com18 pany or other entity issuing an annuity contract

19 under this section from the imposition, payment, or

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

21 on the net income or profit accruing to or realized

22 by that entity from the sale of an annuity contract

23 under this section if that tax, fee, or payment is ap24 plicable to a broad range of business activity.
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1 ‘‘PROTECTIONS FOR SPOUSES AND FORMER SPOUSES

2 ‘‘SEC. 258. (a) REQUIREMENT OF SPOUSAL CON3 SENT.—

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

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

6 (b)(4) of section 256 or change an election pre7 viously made under subsection (b)(1) or (b)(2) of

8 such section only if the account holder and the ac9 count holder’s spouse jointly waive, by written elec10 tion, any right which the spouse may have to a sur11 vivor annuity with respect to such account holder

12 under section 257 or subsection (b).

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

14 apply to an election or change of election by an ac15 count holder who establishes to the satisfaction of

16 the Executive Director (at the time of the election

17 or change and in accordance with regulations pre18 scribed by the Executive Director)—

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

20 be determined; or

21 ‘‘(B) that, due to exceptional cir22 cumstances, requiring the spouse’s waiver would

23 otherwise be inappropriate.

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

25 UNLESS OTHERWISE ELECTED.—
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1 ‘‘(1) IN GENERAL.—Notwithstanding any elec2 tion under subsection (b) of section 257, the method

3 described in subsection (a)(2)(B) of such section (or,

4 if more than one form of such method is available,

5 the form which the Board determines to be the one

6 which provides for a surviving spouse a survivor an7 nuity most closely approximating the annuity of a

8 surviving spouse under section 8442 of title 5, Unit9 ed States Code) shall be deemed the applicable

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

11 account holder who is married on the date on which

12 an annuity contract is purchased to provide for the

13 account holder’s annuity under this part.

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

15 apply if—

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

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

18 spouse; or

19 ‘‘(B) the account holder waives such meth20 od, in writing, after establishing to the satisfac21 tion of the Executive Director that cir22 cumstances described under subsection (a)(2)

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

24 waiver inappropriate.
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1 ‘‘(c) ELECTIONS AND OTHER CHANGES SUBJECT TO

2 COURT ORDERS.—

3 ‘‘(1) IN GENERAL.—An election, change of elec4 tion, or modification of the commencement date of

5 a deferred annuity shall not be effective under this

6 part to the extent that the election, change, modi7 fication, or transfer conflicts with any court decree,

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

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

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

11 respect to an account holder, a court decree of di12 vorce, annulment, or legal separation issued in the

13 case of such account holder and any former spouse

14 of the account holder or any court order or court15 approved property settlement agreement incident to

16 such decree if—

17 ‘‘(A) the decree, order, or agreement ex18 pressly relates to any portion of the balance in

19 the account holder’s investment account; and

20 ‘‘(B) notice of the decree, order, or agree21 ment was received by the Executive Director be22 fore—

23 ‘‘(i) the date on which payment is

24 made, or
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1 ‘‘(ii) in the case of an annuity, the

2 date on which an annuity contract is pur3 chased to provide for the annuity,

4 in accordance with the election, change, modi5 fication, or contribution referred to in para6 graph (1).

7 ‘‘(3) TREATMENT OF 2 OR MORE COURT OR8 DERS.—The Executive Director shall prescribe regu9 lations under which this subsection shall be applied

10 in any case in which the Executive Director receives

11 two or more decrees, orders, or agreements referred

12 to in paragraph (1).

13 ‘‘(d) RIGHTS OF FORMER SPOUSES.—

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

15 through (7), a former spouse of a deceased account

16 holder who died as a fully insured individual is enti17 tled to a survivor annuity under this subsection if

18 and to the extent that—

19 ‘‘(A) an election under section

20 257(a)(2)(E), or

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

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

23 to subparagraph (B) of such subsection) which

24 relates to such deceased account holder and

25 such former spouse,
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•HR 4215 IH

1 expressly provides for such survivor annuity.

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

3 (1) shall apply only to payments made by the Execu4 tive Director after the date on which the Executive

5 Director receives written notice of the election, de6 cree, order, or agreement, and such additional infor7 mation and documentation as the Executive Director

8 may require.

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

10 the survivor annuity payable from the Trust Fund

11 to a former spouse of a deceased account holder

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

13 of—

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

15 determined for a surviving spouse of the de16 ceased account holder under the method de17 scribed in subsection (b)(1), over

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

19 annuities payable under part to other former

20 spouses of such deceased account holder based

21 on the order of precedence provided in para22 graph (4).

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

24 one former spouse of a deceased account holder is

25 entitled to a survivor annuity pursuant to this sub-
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•HR 4215 IH

1 section, the amount of each such survivor annuity

2 shall be limited appropriately to carry out paragraph

3 (3) in the order of precedence established for the en4 titlements by the chronological order of the dates on

5 which elections are properly made pursuant to sec6 tion 257(a)(2)(E) and the dates on which the court

7 decrees, orders, or agreements applicable to the enti8 tlement were issued, as the case may be.

9 ‘‘(5) RULES FOR COMMENCEMENT AND TERMI10 NATION UNDER COURT ORDERS.—The commence11 ment and termination of an annuity payable under

12 this section shall be governed by the terms of the ap13 plicable order, decree, agreement, or election, as the

14 case may be, except that any such annuity—

15 ‘‘(A) shall not commence before—

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

17 dies; or

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

19 beginning after the date on which the Ex20 ecutive Director receives written notice of

21 the order, decree, agreement, or election,

22 as the case may be, together with such ad23 ditional information or documentation as

24 the Executive Director may prescribe;

25 whichever is later; and
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•HR 4215 IH

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

2 day of the month before the former spouse re3 marries before becoming 55 years of age or

4 dies.

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

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

7 order, agreement, or election referred to in this sec8 tion shall not be effective—

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

10 retirement or death of the account holder or an11 nuitant concerned; and

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

13 involves an annuity under this part.

14 ‘‘(7) COURT ORDERS SUBJECT TO PREVIOUS

15 JOINT WAIVERS.—For the purposes of this section,

16 a court decree, order, or agreement or an election re17 ferred to in subsection (a) of this section shall not

18 be effective, in the case of a former spouse, to the

19 extent that the election is inconsistent with any joint

20 waiver previously executed with respect to such

21 former spouse under subsection (a)(2) or (b)(2).

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

23 under this subsection to any individual bars recovery

24 by any other individual.
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1 ‘‘(f) WAIVERS AND MODIFICATIONS SUBJECT TO

2 PRESCRIBED PROCEDURES.—Waivers and notifications

3 required by this section and waivers of the requirements

4 for such waivers and notifications (as authorized by this

5 section) may be made only in accordance with procedures

6 prescribed by the Executive Director.

7 ‘‘(g) INAPPLICABILITY TO MINIMAL ACCOUNT BAL8 ANCES.—None of the provisions of this section requiring

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

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

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

12 account is $3,500 or less.

13 ‘‘(h) APPLICABLE COURT ORDERS.—The protections

14 provided by this section are in addition to the protections

15 provided by section 263.

16 ‘‘ADMINISTRATIVE PROVISIONS

17 ‘‘SEC. 259. (a) PAYMENTS AND TRANSFERS IN AC18 CORDANCE WITH ELECTION.—The Executive Director

19 shall make or provide for payments and transfers in ac20 cordance with an election of an account holder under sec21 tion 256 or 257(b) or, if applicable, in accordance with

22 section 258.

23 ‘‘(b) ELECTIONS AND MODIFICATIONS OF DEFERRED

24 COMMENCEMENT DATES IN WRITING.—Any election,

25 change of election, or modification of a deferred annuity

26 commencement date made under this part shall be in writ-
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•HR 4215 IH

1 ing and shall be filed with the Executive Director in ac2 cordance with regulations prescribed by the Executive Di3 rector.

4 ‘‘SOCIAL SECURITY INVESTMENT TRUST FUND

5 ‘‘SEC. 260. (a) IN GENERAL.—There is established

6 in the Treasury of the United States a Social Security In7 vestment Trust Fund.

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

9 Trust Fund consists of the sum of all amounts contributed

10 under sections 252(a) and 253, increased by the total net

11 earnings from investments of sums in the Trust Fund

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

13 investments of the Trust Fund under such section, and

14 reduced by the total amount of payments made from the

15 Trust Fund (including payments for administrative ex16 penses).

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

18 The sums in the Trust Fund are appropriated and shall

19 remain available without fiscal year limitation—

20 ‘‘(1) to invest under section 254;

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

22 contracts under this part;

23 ‘‘(3) to pay the administrative expenses in24 curred in carrying out this part under subsection

25 (d); and
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•HR 4215 IH

1 ‘‘(4) to purchase insurance as provided in sub2 section (h)(3)(B).

3 ‘‘(d) ADMINISTRATIVE EXPENSES.—Administrative

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

5 of net earnings in the Trust Fund.

6 ‘‘(e) ASSIGNMENT OR ALIENATION AND RELATED

7 MATTERS.—

8 ‘‘(1) EXCLUSIVE BENEFIT OF THE ACCOUNT

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

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

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

12 or diverted to, purposes other than for the exclusive

13 benefit of the account holder or other persons to

14 whom distributions are made under section 255.

15 ‘‘(2) IMMUNITY FROM ASSIGNMENT, ALIEN16 ATION, AND CERTAIN OTHER LEGAL PROCESS.—Ex17 cept as provided in paragraph (3), sums in the

18 Trust Fund may not be assigned or alienated and

19 are not subject to execution, levy, attachment, gar20 nishment, or other legal process. For the purposes of

21 this paragraph, a loan made from the Trust Fund

22 to an account holder shall not be considered to be

23 an assignment or alienation.

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

25 from the Trust Fund to any person and, in the case
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•HR 4215 IH

1 of an account holder, the balance in the individual

2 account of the account holder, shall be subject to

3 legal process for the enforcement of the legal obliga4 tions of such person or account holder to provide

5 child support or make alimony payments as provided

6 in section 459 or relating to the enforcement of a

7 judgment for physically, sexually, or emotionally

8 abusing a child as provided under section 263.

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

10 Trust Fund shall not be appropriated for any purpose

11 other than the purposes specified in this section and may

12 not be used for any other purpose.

13 ‘‘(g) CONTRIBUTIONS AND EARNINGS HELD IN

14 TRUST FOR ACCOUNT HOLDERS.—All sums contributed

15 to the Trust Fund by an account holder and all net earn16 ings in the Trust Fund attributable to investment of such

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

18 holder.

19 ‘‘(h) FIDUCIARY RESPONSIBILITIES; ENFORCEMENT

20 UNDER THE SECRETARY OF LABOR.—

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

22 Secretary of Labor, the provisions of sections 8477

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

24 in connection with the Trust Fund in the same man-
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•HR 4215 IH

1 ner and to the same extent as such provisions apply

2 in connection with the Thrift Savings Fund.

3 ‘‘(2) INVESTIGATIVE AUTHORITY.—Any author4 ity available to the Secretary of Labor under section

5 504 of the Employee Retirement Income Security

6 Act of 1974 is hereby made available to the Sec7 retary of Labor, and any officer designated by the

8 Secretary of Labor, to determine whether any person

9 has violated, or is about to violate, any provision ap10 plicable under paragraph (1).

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

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

13 agreement or instrument which purports to re14 lieve a fiduciary from responsibility or liability

15 for any responsibility, obligation, or duty under

16 this part shall be void.

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

18 be available and may be used at the discretion

19 of the Executive Director to purchase insurance

20 to cover potential liability of persons who serve

21 in a fiduciary capacity with respect to the Trust

22 Fund, without regard to whether a policy of in23 surance permits recourse by the insurer against

24 the fiduciary in the case of a breach of a fidu25 ciary obligation.
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•HR 4215 IH

1 ‘‘WAIVER, ALLOTMENT AND ASSIGNMENT OF PAYMENTS

2 ‘‘SEC. 261. (a) WAIVER OF ENTITLEMENT.—An indi3 vidual entitled to an annuity or other payment payable

4 from the Trust Fund may decline to accept all or any part

5 of the amount of the payment by a waiver signed and filed

6 with the Executive Director. The waiver may be revoked

7 in writing at any time. Payment of the annuity waived

8 may not be made for the period during which the waiver

9 is in effect.

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

11 entitled to an annuity or other payment payable from the

12 Trust Fund may make allotments or assignments of

13 amounts from the annuity or other payment for such pur14 poses as the Executive Director considers appropriate.

15 ‘‘APPLICATION FOR ANNUITY OR OTHER PAYMENTS

16 ‘‘SEC. 262. (a) APPLICATIONS REQUIRED.—No pay17 ment of an annuity or other payment from the Social Se18 curity Investment Trust Fund under this part may be

19 made unless an application for payment of the annuity or

20 other payment is received by the Executive Director before

21 the one hundred and fifteenth anniversary of the birth of

22 the account holder.

23 ‘‘(b) APPLICATIONS WITH RESPECT TO DECEASED

24 ACCOUNT HOLDERS.—Notwithstanding subsection (a),

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

26 annuity or other payment shall not be paid unless an ap-
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•HR 4215 IH

1 plication therefor is received by the Executive Director

2 within 30 years after the death or other event which estab3 lishes the entitlement to the annuity or other payment.

4 ‘‘(c) PAYMENTS DUE TO MINORS.—Payment due a

5 minor, or an individual mentally incompetent or under

6 other legal disability, may be made to the person who is

7 constituted guardian or other fiduciary by the law of the

8 State of residence of the claimant or is otherwise legally

9 vested with the care of the claimant or his estate. An elec10 tion to be made by a minor, or an individual mentally in11 competent or under other legal disability, may be made

12 by the person who is constituted guardian or other fidu13 ciary by the law of the State of residence of the individual

14 or is otherwise legally vested with the care of the individ15 ual or his estate. In any case in which a guardian or other

16 fiduciary of the individual under legal disability has not

17 been appointed under the law of the State of residence

18 of the individual, if any other person, in the judgment of

19 the Executive Director, is responsible for the care of such

20 individual, any payment which is otherwise payable to

21 such individual may be made to such person, and any elec22 tion under this part which may otherwise be made by such

23 individual may be made by such person, and the payment

24 of an annuity payment to such person bars recovery by

25 any other person.
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1 ‘‘COURT ORDERS

2 ‘‘SEC. 263. (a) ALTERNATIVE PAYEES UNDER

3 COURT ORDERS.—Payments under this part which would

4 otherwise be made to an account holder or an annuitant

5 shall be paid (in whole or in part) by the Executive Direc6 tor to another person if and to the extent expressly pro7 vided for in the terms of—

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

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

10 court-approved property settlement agreement inci11 dent to any court decree of divorce, annulment, or

12 legal separation; or

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

14 the nature of garnishment for the enforcement of a

15 judgment rendered against such account holder or

16 annuitant, for physically, sexually, or emotionally

17 abusing a child.

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

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

20 process with respect to the same moneys due or payable

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

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

23 such process being satisfied out of such moneys as remain

24 after the satisfaction of all such processes which have been

25 previously served.
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1 ‘‘(b) WRITTEN NOTICE REQUIREMENTS.—Sub2 section (a) shall apply only to payments made by the Exec3 utive Director under this part after the date on which the

4 Executive Director receives written notice of such decree,

5 order, other legal process, or agreement, and such addi6 tional information and documentation as the Executive

7 Director may require.

8 ‘‘(c) DEFINITIONS.—For the purpose of this sec9 tion—

10 ‘‘(1) the term ‘judgment rendered for phys11 ically, sexually, or emotionally abusing a child’

12 means any legal claim perfected through a final en13 forceable judgment, which claim is based in whole or

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

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

16 by other actionable wrongdoing, such as sexual ex17 ploitation or gross negligence; and

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

19 18 years of age.

20 ‘‘WITHHOLDING OF STATE INCOME TAXES

21 ‘‘SEC. 264. (a) WITHHOLDING AGREEMENTS.—The

22 Executive Director shall, in accordance with this section,

23 enter into an agreement with any State within 120 days

24 of a request for agreement from the proper State official.

25 The agreement shall provide that the Executive Director

26 shall withhold State income tax in the case of the monthly
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•HR 4215 IH

1 annuity of any annuitant who voluntarily requests, in writ2 ing, such withholding. The amounts withheld during any

3 calendar quarter shall be held in the Trust Fund and dis4 bursed to the States during the month following that cal5 endar quarter.

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

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

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

9 than two such requests in effect during any one calendar

10 year.

11 ‘‘(c) CHANGES AND REVOCATIONS.—Subject to sub12 section (b), an annuitant may change the State designated

13 by that annuitant for purposes of having withholdings

14 made, and may request that the withholdings be remitted

15 in accordance with such change. An annuitant also may

16 revoke any request of that annuitant for withholding. Any

17 change in the State designated or revocation is effective

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

19 the request or the revocation is processed by the Executive

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

21 the second month beginning after the day on which such

22 request or revocation is received by the Executive Direc23 tor.

24 ‘‘(d) RESERVATIONS TO THE UNITED STATES; RE25 PAYMENTS OF ERRONEOUS WITHHOLDINGS.—This sec-
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1 tion does not give the consent of the United States to the

2 application of a statute which imposes more burdensome

3 requirements on the United States than on employers gen4 erally, or which subjects the United States or any annu5 itant to a penalty or liability because of this section. The

6 Executive Director may not accept pay from a State for

7 services performed in withholding State income taxes from

8 annuities. Any amount erroneously withheld from an an9 nuity and paid to a State by the Executive Director shall

10 be repaid by the State in accordance with regulations is11 sued by the Executive Director.

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

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

14 an annuity from the Trust Fund.

15 ‘‘TAX TREATMENT OF THE SOCIAL SECURITY

16 INVESTMENT TRUST FUND

17 ‘‘SEC. 265. The Trust Fund shall be exempt from

18 taxation under subtitle A of the Internal Revenue Code

19 of 1986.

20 ‘‘ADMINISTRATION

21 ‘‘SEC. 266. (a) BOARD OF TRUSTEES.—

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

23 Thrift Investment Board established by section

24 8472(a) of title 5, United States Code, shall also

25 serve as the Board of Trustees of the Social Security

26 Investment Trust Fund.
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1 ‘‘(2) DUTIES.—It shall be the duty of the

2 Board to—

3 ‘‘(A) hold the Trust Fund;

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

5 the first day of April of each year on the oper6 ation and status of the Trust Fund during the

7 preceding fiscal year and on its expected oper8 ation and status during the next ensuing 5 fis9 cal years;

10 ‘‘(C) develop investment policies which pro11 vide for—

12 ‘‘(i) prudent investments suitable for

13 accumulating funds for payment of retire14 ment income, and

15 ‘‘(ii) low administrative costs;

16 ‘‘(D) recommend improvements in adminis17 trative procedures and policies designed to ef18 fectuate the proper coordination of the program

19 established under this part with the old-age,

20 survivors, and disability insurance program es21 tablished under part A; and

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

23 managing the Trust Fund and recommend

24 changes in such policies, including necessary

25 changes in the provisions of the law which gov-
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1 ern the way in which the Trust Funds are to

2 be managed and invested.

3 ‘‘(b) EXECUTIVE DIRECTOR.—

4 ‘‘(1) IN GENERAL.—The Executive Director ap5 pointed under section 8474(a) of title 5, United

6 States Code, shall also serve as Executive Director

7 under this part.

8 ‘‘(2) DUTIES.—The Executive Director shall—

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

10 the Board under this part;

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

12 accordance with the investment policies and

13 other policies established by the Board under

14 this part;

15 ‘‘(C) purchase annuity contracts and pro16 vide for the payment of other benefits under

17 this part;

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

19 and

20 ‘‘(E) prescribe such regulations (other

21 than regulations relating to fiduciary respon22 sibilities) as may be necessary for the adminis23 tration of this part.

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

25 Director may—
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•HR 4215 IH

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

2 necessary to carry out the responsibilities of the

3 Executive Director under this part, other than

4 regulations relating to fiduciary responsibilities;

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

6 necessary to carry out the provisions of this

7 part;

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

9 procure the services of experts and consultants

10 under section 3109 of title 5, United States

11 Code;

12 ‘‘(D) secure directly from other agencies

13 and instrumentalities of the Federal Govern14 ment any information necessary to carry out

15 the provisions of this part and policies of the

16 Board under this part;

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

18 the Trust Fund as the Executive Director de19 termines are necessary to carry out the provi20 sions of this part and the policies of the Board

21 under this part;

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

23 travel expenses of individuals appointed under

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

25 Trust Fund;
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•HR 4215 IH

1 ‘‘(G) accept and use the services of individ2 uals employed intermittently in the Government

3 service and reimburse such individuals for trav4 el expenses, as authorized by section 5703 of

5 title 5, United States Code, including per diem

6 as authorized by section 5702 of such title;

7 ‘‘(H) except as otherwise expressly prohib8 ited by law or the policies of the Board, dele9 gate any of the Executive Director’s functions

10 to such employees under the Board as the Ex11 ecutive Director may designate and authorize

12 such successive redelegations of such functions

13 to such employees under the Board as the Ex14 ecutive Director may consider to be necessary

15 or appropriate; and

16 ‘‘(I) take such other actions as are appro17 priate to carry out the functions of the Execu18 tive Director.

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

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

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

22 to each member of the Board (and each officer and em23 ployee of the Board) shall be paid from the Trust Fund

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

25 bears the same ratio to the total amount of basic pay paid
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•HR 4215 IH

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

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

3 of such fiscal year bears to the total amount of such bal4 ance and the balance in the Thrift Savings Fund as of

5 the beginning of such fiscal year.

6 ‘‘FINANCING OF GOVERNMENT CONTRIBUTIONS

7 ‘‘SEC. 267. (a) AVAILABILITY OF RECEIPTS FROM

8 ASSET SALES.—

9 ‘‘(1) DEPOSIT OF FEDERAL SHARE OF RE10 CEIPTS.—Except as provided in paragraph (2), the

11 Federal share of receipts received by the United

12 States pursuant to a payment law that, but for this

13 subsection, would be covered into miscellaneous re14 ceipts in the Treasury without restrictions, shall be

15 available for each fiscal year solely for purposes of

16 making initial contributions to investment accounts

17 pursuant to section 252(b).

18 ‘‘(2) REVERSION OF EXCESS RECEIPTS.—Any

19 amounts made available for any fiscal year for the

20 purposes described in paragraph (2) which remain

21 available as of the end of such fiscal year shall re22 vert to the general fund of the Treasury as mis23 cellaneous receipts.

24 ‘‘(3) PAYMENT LAW DEFINED.—For the pur25 poses of paragraph (1), the term ‘payment law’ has
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•HR 4215 IH

1 the meaning given such term by section 6903(1) of

2 title 31, United States Code.

3 ‘‘(b) CONGRESSIONAL CONSIDERATION OF PRESI4 DENTIAL RECOMMENDATIONS FOR ADDITIONAL ASSET

5 SALES.—

6 ‘‘(1) PRESIDENTIAL FINDINGS.—As soon as

7 practicable after the date of the enactment of the

8 Retirement Security Act of 1996, the President shall

9 make findings regarding the extent to which addi10 tional funds are or will be required to make initial

11 contributions to the Social Security Investment

12 Trust Fund pursuant to section 252(b) and shall

13 recommend what additional sales of Federal assets

14 should be undertaken to obtain such additional

15 funds.

16 ‘‘(2) RECOMMENDATIONS.—

17 ‘‘(A) IN GENERAL.—The President shall

18 make specific recommendations to the Congress

19 regarding the President’s findings under para20 graph (1) not later than January 1, 1997, and

21 from time to time thereafter as the President

22 deems appropriate. The President shall include

23 with such recommendations legislative language

24 necessary for carrying out such recommenda25 tions. The President shall actively consult with
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1 the appropriate Committees of each House of

2 the Congress, the Comptroller General of the

3 United States, and the Director of the Office of

4 Management and Budget in compiling such leg5 islative language. The President shall promptly

6 provide, upon request, to any Member of Con7 gress a description of any information used by

8 the President in making such recommendations.

9 ‘‘(B) ACCOMPANYING REPORT BY CBO.—

10 The Comptroller General of the United States

11 shall provide appropriate assistance to the

12 President in the preparation of the President’s

13 report and shall transmit to each House of the

14 Congress at the time of the President’s trans15 mittal a report containing a detailed analysis of

16 the President’s recommendations.

17 ‘‘(3) INTRODUCTION OF RECOMMENDATIONS.—

18 The legislative language transmitted pursuant to

19 paragraph (2) with the recommendations of the

20 President shall be in the form of a joint resolution.

21 Such joint resolution may be introduced in either

22 House of the Congress by any member thereof.

23 ‘‘(4) TERMS OF THE RESOLUTION.—For pur24 poses of this subsection, the term ‘joint resolution’

25 means a joint resolution that—
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1 ‘‘(A) does not have a preamble;

2 ‘‘(B) sets forth after the resolving clause

3 only the legislative language contained in the

4 report from the President; and

5 ‘‘(C) is entitled a ‘Joint resolution approv6 ing the recommendations of the President re7 garding additional Federal asset sales for pur8 poses of part B of title II of the Social Security

9 Act.’.

10 ‘‘(5) EXPEDITED PROCEDURE.—

11 ‘‘(A) REFERRAL.—A joint resolution that

12 is introduced in the House of Representatives

13 shall be referred to the Committee on Resources

14 of the House of Representatives. A joint resolu15 tion that is introduced in the Senate shall be

16 referred to the Committee on Environment and

17 Public Works of the Senate.

18 ‘‘(B) DISCHARGE.—If the committee to

19 which a joint resolution is referred has not re20 ported the resolution (or an identical resolution)

21 by the end of the 90-day period beginning on

22 the date on which the President transmits the

23 report to the Congress, such committee shall, at

24 the end of that period, be discharged from fur25 ther consideration of the resolution, and the
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1 resolution shall be placed on the appropriate

2 calendar of the House of Representatives or the

3 Senate, as the case may be.

4 ‘‘(C) CONSIDERATION.—

5 ‘‘(i) IN GENERAL.—On or after the

6 first day after the date on which the com7 mittee to which a joint resolution is re8 ferred has reported, or has been discharged

9 (under subparagraph (B)) from further

10 consideration of, such a resolution, it is in

11 order (even though a previous motion to

12 the same effect has been disagreed to) for

13 any member of the House of Representa14 tives or the Senate, respectively, to move to

15 proceed to the consideration of the resolu16 tion (but only on the date after the cal17 endar day on which the member announces

18 to the House concerned the member’s in19 tention to do so).

20 ‘‘(ii) POINTS OF ORDER WAIVED.—All

21 points of order against a joint resolution

22 (and against consideration of the resolu23 tion) are waived.

24 ‘‘(iii) MOTION TO PROCEED.—A mo25 tion to proceed to the consideration of a
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1 joint resolution is highly privileged in the

2 House of Representatives and is privileged

3 in the Senate and is not debatable. The

4 motion is not subject to amendment, to a

5 motion to postpone consideration of the

6 resolution, or to a motion to proceed to the

7 consideration of other business. A motion

8 to reconsider the vote by which the motion

9 to proceed is agreed to or not agreed to

10 shall not be in order. If the motion to pro11 ceed is agreed to, the House of Represent12 atives or the Senate, as the case may be,

13 shall immediately proceed to consideration

14 of the joint resolution without intervening

15 motion, order, or other business, and the

16 resolution shall remain the unfinished busi17 ness of the House of Representatives or

18 the Senate, as the case may be, until dis19 posed of.

20 ‘‘(iv) LIMITED DEBATE.—Debate on a

21 joint resolution and on all debatable mo22 tions and appeals in connection therewith

23 shall be limited to not more than 5 hours,

24 which shall be divided equally between

25 those favoring and those opposing the reso-
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1 lution. A motion further to limit debate on

2 a joint resolution is in order and not de3 batable.

4 ‘‘(v) AMENDMENTS NOT IN ORDER.—

5 An amendment to a joint resolution is not

6 in order.

7 ‘‘(vi) OTHER MOTIONS NOT IN

8 ORDER.—A motion to postpone consider9 ation of a joint resolution, a motion to pro10 ceed to the consideration of other business,

11 or a motion to recommit the resolution is

12 not in order. A motion to reconsider the

13 vote by which a joint resolution is agreed

14 to or not agreed to is not in order.

15 ‘‘(vii) VOTE ON FINAL PASSAGE.—Im16 mediately following the conclusion of the

17 debate on a joint resolution and a single

18 quorum call at the conclusion of the debate

19 if requested in accordance with the rules of

20 the House of Representatives or the Sen21 ate, as the case may be, the vote on final

22 passage of the resolution shall occur.

23 ‘‘(viii) APPEALS.—Appeals from the

24 decisions of the Chair relating to the appli25 cation of the rules of the House of Rep-
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1 resentatives or of the Senate, as the case

2 may be, to the procedure relating to a joint

3 resolution shall be decided without debate.

4 ‘‘(D) CONSIDERATION BY OTHER

5 HOUSE.—If, before the passage by one House

6 of a joint resolution that was introduced in such

7 House, such House receives from the other

8 House a joint resolution as passed by such

9 other House—

10 ‘‘(i) the resolution of the other House

11 shall not be referred to a committee and

12 may not be considered in the House that

13 receives it otherwise than on final passage

14 under subparagraph (C);

15 ‘‘(ii) the procedure in the House in re16 ceipt of the resolution of the other House,

17 with respect to the joint resolution that

18 was introduced in the House in receipt of

19 the resolution of the other House, shall be

20 the same as if no resolution had been re21 ceived from the other House; and

22 ‘‘(iii) notwithstanding clause (ii), the

23 vote on final passage shall be on the reso24 lution of the other House.
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1 Upon disposition of a joint resolution that is re2 ceived by one House from the other House, it

3 shall no longer be in order to consider the joint

4 resolution that was introduced in the receiving

5 House.

6 ‘‘(E) DATE CERTAIN.—If the Senate and

7 the House of Representatives have not acted

8 upon the joint resolution by the 120-day period

9 beginning on the date on which the President

10 transmits the report to the Congress, then on

11 that day or the next day of session thereafter

12 the joint resolution shall be called up by the

13 Presiding Officer of each House upon convening

14 and a roll call vote shall be conducted on pas15 sage. If the joint resolution passes one House

16 a vote on final passage shall be immediately

17 conducted in the other House.

18 ‘‘(F) RULES OF THE SENATE AND HOUSE

19 OF REPRESENTATIVES.—This subsection is en20 acted by Congress—

21 ‘‘(i) as an exercise of the rulemaking

22 power of the Senate and House of Rep23 resentatives, respectively, and is deemed to

24 be part of the rules of each House, respec25 tively, but applicable only with respect to
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1 the procedure to be followed in that House

2 in the case of a joint resolution, and it su3 persedes other rules only to the extent that

4 it is inconsistent with such rules; and

5 ‘‘(ii) with full recognition of the con6 stitutional right of either House to change

7 the rules (so far as they relate to the pro8 cedure of that House) at any time, in the

9 same manner, and to the same extent as in

10 the case of any other rule of that House.’’.

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

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

13 (1) by striking ‘‘All other’’ in the second sen14 tence and inserting ‘‘Except as provided in section

15 255, all other’’; and

16 (2) by adding at the end the following new sen17 tence: ‘‘Any reference in this part to benefits under

18 this title shall be deemed a reference to benefits en19 titlement to which arises under this part.’’.

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

21 this section shall apply with respect to payments of old22 age insurance benefits for months after December 1997.
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1 SEC. 3. TAX TREATMENT OF AMOUNTS CONTRIBUTED TO,

2 AND DISTRIBUTIONS FROM, PERSONAL SO3 CIAL SECURITY INVESTMENT ACCOUNTS.

4 (a) IN GENERAL.—Part VII of subchapter B of chap5 ter 1 of the Internal Revenue Code of 1986 (relating to

6 additional itemized deductions for individuals) is amended

7 by redesignating section 221 as section 222 and by insert8 ing after section 220 the following new section:

9 ‘‘SEC. 221. PERSONAL SOCIAL SECURITY INVESTMENT AC10 COUNTS.

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

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

13 taxable year an amount equal to the amount contributed

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

15 investment account of any eligible individual.

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

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

18 deduction under subsection (a) for any taxable year

19 for contributions to the personal social security in20 vestment account of an eligible individual shall not

21 exceed $2,000.

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

23 any personal social security investment account

24 makes a contribution to such account for any tax25 able year, no other taxpayer shall be allowed a de-
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1 duction for any amount contributed to such account

2 for such taxable year.

3 ‘‘(c) DEFINITIONS.—For purposes of this section—

4 ‘‘(1) PERSONAL SOCIAL SECURITY INVESTMENT

5 ACCOUNT.—The term ‘personal social security in6 vestment account’ means an account established

7 under section 251 of the Social Security Act.

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

9 individual’ means, with respect to the taxpayer—

10 ‘‘(A) the taxpayer,

11 ‘‘(B) the taxpayer’s spouse, and

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

13 a deduction under section 151(c) is allowed to

14 the taxpayer.

15 Subparagraph (B) shall not apply unless the taxpayer files

16 a joint return for the taxable year.

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

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

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

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

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

3 amount described in paragraph (1)—

4 ‘‘(A) all personal social security investment

5 accounts of the same individual shall be treated

6 as 1 contract,

7 ‘‘(B) all distributions during any taxable

8 year shall be treated as 1 distribution, and

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

10 the contract, and investment in the contract

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

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

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

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

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

21 Security Act shall be included in gross income

22 to the extent provided in section 86.

23 ‘‘(B) ALLOCATION OF INVESTMENT IN THE

24 CONTRACT.—For purposes of section 72, the

25 portion of the account which the Executive Di-
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1 rector (as defined in section 251 of the Social

2 Security Act) determines is necessary to fund

3 the benefit distributions referred to in subpara4 graph (A) for the taxable year and all succeed5 ing taxable years shall be treated as a separate

6 contract with respect to which no premium or

7 other consideration was paid.

8 ‘‘(4) CROSS REFERENCE.—

‘‘For excise tax on certain distributions, see section 72(t).

9 ‘‘(e) SPECIAL RULES.—

10 ‘‘(1) TIME WHEN CONTRIBUTIONS DEEMED

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

12 shall be deemed to have made a contribution to a

13 personal social security investment account on the

14 last day of the preceding taxable year if the con15 tribution is made on account of such taxable year

16 and is made not later than the time prescribed by

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

18 including extensions thereof).

19 ‘‘(2) BENEFICIARY MUST BE UNDER AGE

701 20 ⁄2.—No deduction shall be allowed under this sec21 tion with respect to any contribution to personal so22 cial security investment account if the account holder has attained age 701 23 ⁄2 before the close of such
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1 holder’s taxable year for which the contribution was

2 made.’’

3 (b) DEDUCTION ALLOWED WHETHER OR NOT TAX4 PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)

5 of section 62 of such Code is amended by inserting after

6 paragraph (15) the following new paragraph:

7 ‘‘(16) PERSONAL SOCIAL SECURITY INVEST8 MENT ACCOUNT CONTRIBUTIONS.—The deduction

9 allowed by section 221.’’.

10 (c) CONFORMING AMENDMENTS.—

11 (1) PENALTY FOR FAILURE TO MEET MINIMUM

12 DISTRIBUTION REQUIREMENT.—Subsection (c) of

13 section 4974 of such Code is amended by striking

14 ‘‘or’’ at the end of paragraph (4), by striking the pe15 riod at the end of paragraph (5) and inserting ‘‘,

16 or’’, and by inserting after paragraph (5) the follow17 ing new paragraph:

18 ‘‘(6) any personal social security investment ac19 count (as defined in section 221(c)).’’.

20 (2) TAX ON EXCESS DISTRIBUTIONS FROM

21 QUALIFIED RETIREMENT PLANS TO APPLY.—

22 (A) Subparagraph (A) of section

23 4980A(d)(3) of such Code is amended by strik24 ing ‘‘and individual retirement plans’’ and in25 serting ‘‘, individual retirement plans, and per-
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1 sonal social security investment accounts (as

2 defined in section 221(c))’’.

3 (B) Paragraph (1) of section 4980A(e) of

4 such Code is amended by striking ‘‘and’’ at the

5 end of subparagraph (A), by striking the period

6 at the end of subparagraph (B) and inserting ‘‘,

7 and’’, and by adding at the end the following

8 new paragraph:

9 ‘‘(C) any personal social security invest10 ment account (as defined in section 221(c)).’’.

11 (3) TREATMENT LIKE INDIVIDUAL RETIREMENT

12 PLAN UNDER EXCISE TAX ON CERTAIN PREMATURE

13 DISTRIBUTIONS.—Subparagraph (A) of section 72(t)

14 of such Code is amended—

15 (1) by inserting ‘‘or from a personal social secu16 rity investment account (as defined in section

17 221(c))’’ before the period at the end, and

18 (2) by inserting ‘‘OR FROM PERSONAL SOCIAL

19 SECURITY INVESTMENT ACCOUNTS’’ after ‘‘PLANS’’

20 in the subparagraph heading.

21 (d) CLERICAL AMENDMENT.—The table of sections

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

23 is amended by striking the last item and inserting the fol24 lowing new items:

‘‘Sec. 221. Personal social security investment accounts.

‘‘Sec. 222. Cross reference.’’.
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1997.

Æ