I
107TH CONGRESS
1ST SESSION
H. R. 849
To provide for each American the opportunity to provide for his or her
retirement through a S.A.F.E. account, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 1, 2001
Mr. SESSIONS (for himself and Mr. SHADEGG) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Government Reform, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
A BILL
To provide for each American the opportunity to provide
for his or her retirement through a S.A.F.E. account,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Savings Account for Every American Act of 2001’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title and table of contents.
TITLE I—PERSONAL RETIREMENT PROGRAM
Sec. 101. Definitions.
Sec. 102. S.A.F.E. account payroll deduction programs.
Sec. 103. Designation of S.A.F.E. accounts.
Sec. 104. Self-employed individuals.
Sec. 105. Elective participation.
Sec. 106. Penalties.
Sec. 107. Federal civilian and military personnel.
TITLE II—TAX-EXEMPT S.A.F.E. ACCOUNTS
Sec. 201. S.A.F.E. accounts.
Sec. 202. Effective date.
TITLE III—CONFORMING AMENDMENTS TO THE SOCIAL
SECURITY ACT AND THE INTERNAL REVENUE CODE OF 1986
Sec. 301. Reductions in and exemptions from FICA taxes and SECA taxes with
respect to eligible individuals.
Sec. 302. Exclusion of eligible individuals from old-age, survivors, and disability
insurance coverage.
Sec. 303. Information provided in social security account statements.
TITLE I—PERSONAL
RETIREMENT PROGRAM
SEC. 101. DEFINITIONS.
For purposes of this title—
(1) ACCOUNT
HOLDER.—The term ‘‘account
holder’’ means, with respect to any S.A.F.E. ac-
count, the individual for whose benefit such account
is maintained.
(2) BUSINESS DAY.—The term ‘‘business day’’
means any day other than a Saturday, Sunday, or
legal holiday in the area involved.
(3) COVERED EMPLOYER.—The term ‘‘covered
employer’’ means, for any calendar year, a person
for whom an eligible individual is engaged in em-
ployment during the year.
(4) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible
individual’’ means any individual with respect to
whom there is in effect an election under section
105(a).
(5) EMPLOYMENT.—The term ‘‘employment’’
has the meaning provided in section 210 of the So-
cial Security Act.
(6) PRESCRIBED EMPLOYEE CONTRIBUTION.—
The term ‘‘prescribed employee contribution’’ means,
with respect to any eligible individual who is en-
gaged in employment for a covered employer during
any calendar year, an amount equal to 6.2 percent
of the wages received by such employee with respect
to such employment, to the extent that such wages
do not exceed, for such calendar year, the contribu-
tion and benefit base for such calendar year under
section 230 of the Social Security Act.
(7) 
PRESCRIBED
SELF-EMPLOYMENT
CON-
TRIBUTION.—The term ‘‘prescribed self-employment
contribution’’ means, with respect to the self-employ-
ment income of an eligible individual for any cal-
endar year, the excess (if any) of—
(A) 6.2 percent of the amount of such self-
employment income for such calendar year, to
the extent that such self-employment income
does not exceed, for such calendar year, the
contribution and benefit base for such calendar
year under section 230 of the Social Security
Act, over
(B) the total of all prescribed employee
contributions and prescribed employer contribu-
tions payable with respect to such eligible indi-
vidual for such calendar year.
Effective with the commencement of the 16th cal-
endar year for which the eligible individual’s election
under section 105 is in effect, ‘‘12.4 percent’’ shall
be substituted for ‘‘6.2 percent’’ in subparagraph
(A).
(8) PRESCRIBED EMPLOYER CONTRIBUTION.—
The term ‘‘prescribed employer contribution’’ means,
with respect to any eligible individual who is en-
gaged in employment for a covered employer during
any calendar year, an amount equal to 6.2 percent
of the wages received by such employee with respect
to such employment, to the extent that such wages
do not exceed, for such calendar year, the contribu-
tion and benefit base for such calendar year under
section 230 of the Social Security Act.
(9) S.A.F.E. ACCOUNT.—The term ‘‘S.A.F.E.
account’’ has the meaning provided in section 222(c)
of the Internal Revenue Code of 1986.
(10) SELF-EMPLOYMENT
INCOME.—The term
‘‘self-employment income’’ has the meaning provided
in section 211(b) of the Social Security Act.
(11) WAGES.—The term ‘‘wages’’ has the
meaning provided in section 209 of the Social Secu-
rity Act.
SEC. 102. S.A.F.E. ACCOUNT PAYROLL DEDUCTION PRO-
GRAMS.
(a) IN GENERAL.—Each person who is a covered em-
ployer for any calendar year shall have in effect through-
out such calendar year a S.A.F.E. account payroll deduc-
tion program for such person’s employees who are eligible
individuals.
(b) REQUIREMENTS.—For purposes of this Act, the
term ‘‘S.A.F.E. account payroll deduction program’’
means a written program maintained by a covered em-
ployer if—
(1) under such program, the prescribed em-
ployee contribution is deducted from the wages of
each employee who is an eligible individual and paid
as a contribution on behalf of the employee to a
S.A.F.E. account of such employee designated in ac-
cordance with section 103,
(2) 
under 
such 
program, 
the 
covered
employer—
(A) makes timely payment of the amount
so deducted as a contribution to the designated
S.A.F.E. account, and
(B) effective upon receipt from the eligible
individual of certification (in accordance with
regulations which shall be prescribed by the
Commissioner of Social Security) of the com-
mencement of the 16th calendar year for which
the eligible employee’s election under section
105 has been in effect, makes timely payment,
together with the amount so deducted, of the
prescribed employer contribution with respect to
the eligible individual,
under regulations of the Commissioner of Social Se-
curity applying the same principles relating to the
timeliness of payment as are applicable under chap-
ter 62 of the Internal Revenue Code of 1986 with
respect to taxes under chapter 21 of such Code, and
(3) the employer receives no compensation for
the cost of administering such program.
(c) AMOUNTS OTHERWISE PAYABLE MAY BE ACCU-
MULATED BY EMPLOYER IN CERTAIN CASES.—If, under
the terms of the governing instruments creating a
S.A.F.E. account designated under section 103, contribu-
tions below a specified amount will not be accepted, the
requirements of subsection (b)(2) shall be treated as met
if amounts deducted from the wages of an employee who
is an eligible individual, together with prescribed employer
contributions (if any), are accumulated by the covered em-
ployer and paid to such account otherwise in accordance
with subsection (b)(2) with reference to the first day on
which the accumulated amount exceeds such specified
amount.
SEC. 103. DESIGNATION OF S.A.F.E. ACCOUNTS.
(a) IN GENERAL.—Except as provided in subsection
(b), a S.A.F.E. account to which contributions with re-
spect to any employee who is an eligible individual are re-
quired to be paid under section 102 shall be such an ac-
count designated by such employee to such employer not
later than 10 business days after the date on which such
employee becomes an employee of such employer. Any
such designation shall be made in such form and manner
as may be prescribed in regulations of the Commissioner
of Social Security.
(b) DESIGNATION IN ABSENCE OF TIMELY DESIGNA-
TION BY EMPLOYEE.—In any case in which no timely des-
ignation of a S.A.F.E. account is made, the covered em-
ployer shall designate such account in accordance with
regulations of the Commissioner of Social Security.
(c) SUBSEQUENT SUBSTITUTION OF ACCOUNTS.—
The Commissioner of Social Security shall provide by reg-
ulation for subsequent designation of a S.A.F.E. account
by an account holder in lieu of an account previously des-
ignated by such account holder under this section.
SEC. 104. SELF-EMPLOYED INDIVIDUALS.
(a) IN GENERAL.—In the case of an eligible indi-
vidual who has self-employment income for any calendar
year, such individual shall make timely payments to a
S.A.F.E. account designated by such individual of the pre-
scribed self-employment contribution with respect to such
individual for such calendar year in accordance with regu-
lations of the Commissioner of Social Security, applying
the same principles relating to timeliness of payment as
are applicable under chapter 62 of the Internal Revenue
Code of 1986 with respect to taxes under chapter 2 of
such Code.
(b) DESIGNATION OF ACCOUNT.—The designation of
a S.A.F.E. account for payment of prescribed self-employ-
ment contributions shall be made in such form and man-
ner as may be prescribed in regulations of the Commis-
sioner of Social Security.
(c) PERIODIC PAYMENT.—The Commissioner of So-
cial Security shall provide by regulation for periodic in-
stallment payments during the calendar year of prescribed
self-employment contributions for each eligible individual,
taking into account, as appropriate for each period, pre-
scribed employee contributions for such individual.
SEC. 105. ELECTIVE PARTICIPATION.
(a) ELECTION.—Any individual who has been as-
signed a social security account number under section
205(c)(2)(B) of the Social Security Act and has been paid
wages or has derived self-employment income, may, on or
after January 1, 2002, elect under this section to be an
eligible individual for purposes of this Act. Any such elec-
tion shall be made by filing with each employer (if any)
of the individual, the Commissioner of Social Security, and
the Secretary of the Treasury, in such form and manner
as shall be prescribed in regulations of the Commissioner
(in consultation with the Secretary of the Treasury), a
written and signed declaration of such individual’s inten-
tion to be treated as an eligible individual for purposes
of this Act. An election under this section shall be effective
with respect to wages paid, and self-employment income
derived, on or after January 1 following the date of the
filing of the election.
(b) ELECTION INEFFECTIVE IF ENTITLED TO SO-
CIAL SECURITY BENEFITS.—Any election under this sec-
tion shall not take effect if, as of the effective date of the
election, the individual is entitled to an old-age insurance
benefit under section 202(a) of the Social Security Act or
to a disability insurance benefit under section 223 of such
Act.
(c) IRREVOCABILITY SUBJECT TO GRACE PERIOD.—
(1) IN GENERAL.—Unless revoked in accord-
ance with paragraph (2), an election under this sec-
tion shall be irrevocable.
(2) FIVE-YEAR GRACE PERIOD.—
(A) IN GENERAL.—An individual may re-
voke an election under this section by filing
with each employer (if any) of the individual,
the Commissioner of Social Security, and the
Secretary of the Treasury, in such form and
manner as shall be prescribed in regulations of
the Commissioner (in consultation with the Sec-
retary of the Treasury), a written and signed
revocation of the election at any time before the
end of the five-year period beginning with the
effective date of the election. A revocation
under this subsection shall take effect January
1 following the date of the filing of the revoca-
tion, except that a revocation filed during the
90-day period beginning with the date of the
filing of the election shall take effect as of the
effective date of the election. Upon the effective
date of a revocation under this subsection, enti-
tlement to benefits under title II of the Social
Security Act shall be determined as if the re-
voked election had not occurred, except that, for
purposes of any such entitlement, wages paid,
and self-employment income derived, during the
period for which the election was in effect shall
not be taken into account. No subsequent elec-
tion under this section may take effect with re-
spect to an individual who has filed a revocation
under this subsection (except a revocation filed
during the 90-day period beginning with the
date of the filing of the election).
(B) REDUCTION IN BENEFITS.—The pri-
mary insurance amount, as determined under
section 215 of the Social Security Act, of any
individual who has filed a revocation under this
subsection before the end of the five-year period
described in subparagraph (A) (and after the
90-day period referred to in subparagraph (A))
shall be reduced (except for purposes of deter-
mining benefits under section 223 of such Act,
and before any application of section 215(i) of
such Act) by the applicable percentage specified
in the following table:
If the first calendar year for
which the revocation is
effective is:
The applicable percentage is:
The first, second, or third calendar
year of such five-year period.
20 percent.
The fourth calendar year of such
five-year period.
40 percent.
The fifth calendar year of such
five-year period.
60 percent.
The calendar year following such
five-year period.
80 percent.
SEC. 106. PENALTIES.
(a) FAILURE TO ESTABLISH S.A.F.E. ACCOUNT
PAYROLL DEDUCTION PROGRAM.—Any covered employer
who fails to meet the requirements of section 102 for any
calendar year shall be subject to a civil penalty of not to
exceed—
(1) $250,000, in the case of an employer who
is an individual, or
(2) $500,000, in any other case.
(b) FAILURE TO MAKE DEDUCTIONS REQUIRED
UNDER PROGRAM.—Any covered employer who fails to
timely deduct in full the amount from the wages of an
employee who is an eligible individual as required under
an applicable S.A.F.E. account payroll deduction program
shall be subject to a civil penalty for each such failure
of not to exceed—
(1) $250,000, in the case of an employer who
is an individual, or
(2) $500,000, in any other case.
(c) FAILURE
TO
PAY
DEDUCTED
WAGES
TO
S.A.F.E. ACCOUNT.—If an amount deducted under a
S.A.F.E. account payroll deduction program from the
wages of an employee who is an eligible individual is not
timely paid in full to the designated S.A.F.E. account in
accordance with section 102, the covered employer failing
to make such payment—
(1) shall be subject to a civil penalty for each
such failure of not to exceed—
(A) $250,000, in the case of an employer
who is an individual, or
(B) $500,000, in any other case, and
(2) shall be liable to the employee for interest
on the unpaid amount at a rate equal to 10 percent-
age points in excess of the Federal short-term rate
under section 1274(d)(1) of the Internal Revenue
Code of 1986, calculated from the last day by which
such amount was required to be so paid to the date
on which such amount is paid into the designated
S.A.F.E. account.
(d) FAILURE TO PAY PRESCRIBED SELF-EMPLOY-
MENT CONTRIBUTIONS TO S.A.F.E. ACCOUNT.—Any eli-
gible individual failing to timely pay in full a prescribed
self-employment contribution to a designated S.A.F.E. ac-
count as required under section 104 shall be subject to
a civil penalty for each such failure of not to exceed
$250,000, plus interest on the unpaid amount at a rate
equal to 10 percentage points in excess of the Federal
short-term rate under section 1274(d)(1) of the Internal
Revenue Code of 1986, calculated from the last day by
which such amount was required to be so paid to the date
on which such amount is paid into the designated
S.A.F.E. account.
(e) RULES FOR APPLICATION OF SECTION.—
(1) PENALTIES
ASSESSED
BY
COMMISSIONER
OF SOCIAL SECURITY.—Any civil penalty assessed by
this section shall be imposed by the Commissioner of
Social Security and collected in a civil action.
(2) COMPROMISES.—The Commissioner may
compromise the amount of any civil penalty imposed
by this section.
(3) AUTHORITY TO WAIVE PENALTY IN CER-
TAIN CASES.—The Commissioner may waive the ap-
plication of this section with respect to any failure
if the Commissioner determines that such failure is
due to reasonable cause and not to intentional dis-
regard of rules and regulations.
SEC. 107. FEDERAL CIVILIAN AND MILITARY PERSONNEL.
(a) IN GENERAL.—Not later than December 31,
2001, the Office of Personnel Management, after appro-
priate study, shall submit to the President and each House
of Congress a written report containing recommendations
on how to provide for the application of this Act with re-
spect to Federal civilian and military personnel.
(b) REQUIREMENTS.—The report—
(1) shall be prepared in consultation with the
Social Security Administration, the Securities and
Exchange Commission, and other appropriate agen-
cies; and
(2) shall be accompanied by draft legislation
which, if enacted, would carry out the recommenda-
tions contained in such report.
(c) PROVISIONS RELATING TO THE CONTINUED OP-
ERATION OF EXISTING RETIREMENT SYSTEMS.—To the
extent that the report and draft legislation relate to provi-
sions of law in effect before the date of enactment of this
Act, each shall address at least the following:
(1) FEDERAL EMPLOYEES’ RETIREMENT SYS-
TEM.—
would be payable to that individual under the
Social Security Act.
(D) Section 8443 of such title (relating to
rights of a child), which includes provisions
under which, as part of the formula for com-
puting the amount of a survivor annuity for a
child, there is incorporated the notion of the
amount of child’s insurance benefits which are
or would be payable under title II of the Social
Security Act.
(2) CIVIL SERVICE RETIREMENT SYSTEM.—
(A) Section 8334(k) of such title (relating
to special rules for determining deductions and
contributions for individuals subject to ‘‘offset-
83’’ treatment), which incorporates the notion
of the OASDI contribution made from Federal
wages of the individual concerned.
(B) Section 8349 of such title (relating to
offset based on certain benefits under the Social
Security Act), which incorporates notions relat-
ing to actual or constructive eligibility for bene-
fits under the Social Security Act, and the
amount of those benefits.
(3) COORDINATION PROVISIONS.—Provisions of
law involving a reduction or other adjustment in re-
tirement benefits (or eligibility therefor), based on
any individual’s eligibility for benefits under title II
of the Social Security Act.
(4) OTHER
RETIREMENT
SYSTEMS.—Similar
provisions of law under other retirement systems
covering Federal civilian or military personnel.
(d) PROVISIONS RELATING TO THE NEW SYSTEM.—
To the extent that the report and draft legislation relate
to the implementation of any other title of this Act, each
shall address at least the following:
(1) What the specifications for the S.A.F.E. ac-
count payroll deduction program or programs cov-
ering Federal civilian and military personnel shall be
or, alternatively, how those specifications shall be de-
veloped.
(2) Which agencies or instrumentalities of the
Federal Government shall be responsible for oper-
ating or maintaining which aspects of the program
or programs referred to in paragraph (1).
(3) Which penalty provisions are appropriate or
inappropriate with respect to the Federal Govern-
ment in its capacity as a ‘‘covered employer’’, sub-
ject to what modifications (if any).
TITLE II—TAX-EXEMPT S.A.F.E.
ACCOUNTS
SEC. 201. S.A.F.E. ACCOUNTS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions for individuals) is amended
by redesignating section 222 as section 223 and by insert-
ing after section 221 the following new section:
‘‘SEC. 222. S.A.F.E. ACCOUNTS.
‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual, there shall be allowed as a deduction the aggregate
amount paid in cash during the taxable year by or on be-
half of such individual to a S.A.F.E. account of such indi-
vidual.
‘‘(b) LIMITATION.—The amount allowable as a de-
duction under subsection (a) for any taxable year shall not
exceed 6.2 percent of the lesser of—
‘‘(1) the contribution and benefit base (as de-
termined under section 230 of the Social Security
Act) for the calendar year which ends with or within
such taxable year, or
‘‘(2) the sum of—
‘‘(A) the amount of wages (as defined in
section 3121(a)) received during such calendar
year, and
‘‘(B) the amount of the self-employment
income (as defined in section 1402) of such in-
dividual for the taxable year.
Effective with the commencement of the 16th calendar
year for which the individual’s election under section 105
of the Savings Account for Every American Act of 2001
is effective, the limitation under the preceding sentence
shall be increased by any prescribed employer contribution
paid to a personal retirement account of such individual
pursuant to section 102(b)(2)(B) of such Act and the por-
tion of any prescribed self-employment contribution paid
to such an account which is attributable to the increase
in such contribution required by the last sentence of sec-
tion 101(7) of such Act.
‘‘(c) S.A.F.E. ACCOUNT.—For purposes of this sec-
tion, the term ‘S.A.F.E. account’ means a trust created
or organized in the United States exclusively for the ben-
efit of an individual or his beneficiaries, but only if the
written governing instrument creating the trust meets the
following requirements:
‘‘(1) Except in the case of rollover contributions
from another S.A.F.E. account of such individual—
‘‘(A) no contribution will be accepted un-
less it is in cash,
‘‘(B) contributions will not be accepted for
the taxable year in excess of 6.2 percent of the
contribution and benefit base (as determined
under section 230 of the Social Security Act)
for the calendar year which ends with or within
such taxable year, and
‘‘(C) any contributions with respect to an
account holder which are not accepted pursuant
to this paragraph are promptly refunded di-
rectly to the account holder.
In the case of any such individual, effective for tax-
able years beginning with or after the 16th calendar
year for which the individual’s election under section
105 of the Savings Account for Every American Act
of 2001 is effective, ‘12.4 percent’ shall be sub-
stituted for ‘6.2 percent’ in subparagraph (B).
‘‘(2) The trustee is a bank (as defined in sec-
tion 408(n)) or such other person who demonstrates
to the satisfaction of the Secretary that the manner
in which such other person will administer the trust
will be consistent with the requirements of this sec-
tion.
‘‘(3) No part of the trust funds will be invested
in life insurance contracts.
‘‘(4) The interest of an individual in the bal-
ance in his account is nonforfeitable.
‘‘(5) The assets of the trust will not be commin-
gled with other property except in a common trust
fund or common investment fund.
‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, any amount distributed out
of a S.A.F.E. account shall be included in gross in-
come of the distributee for the taxable year in which
the distribution is received. Notwithstanding any
other provision of this title (including chapters 11
and 12), the basis of any person in such an account
is zero.
‘‘(2) EXCEPTIONS FOR DISTRIBUTIONS AFTER
AGE 591⁄2 OR DEATH.—Paragraph (1) shall not apply
to any distribution out of a S.A.F.E. account—
‘‘(A) made on or after the date on which
the account beneficiary attains age 591⁄2, or
‘‘(B) made to the account beneficiary (or
to the estate of the beneficiary) on or after the
death of the account beneficiary.
‘‘(3) EXCEPTIONS FOR DISTRIBUTIONS TO PUR-
CHASE CERTAIN INSURANCE.—Paragraph (1) shall
not apply to any distribution out of a S.A.F.E. ac-
count to the account beneficiary to the extent such
distributions do not exceed the sum of the expenses
paid or incurred during the taxable year for—
‘‘(A) any qualified long-term care insur-
ance contract (but only to the extent of eligible
long-term care premiums (as defined in section
213(d)(10)),
‘‘(B) disability insurance, or
‘‘(C) term life insurance.
‘‘(4) EXCEPTIONS
FOR
CERTAIN
OTHER
DIS-
TRIBUTIONS.—Rules similar to the rules of para-
graphs (3), (4), (5), and (6) of section 408(d) shall
apply for purposes of this section.
‘‘(e) TAX TREATMENT OF ACCOUNTS.—
‘‘(1) EXEMPTION FROM TAX.—A S.A.F.E. ac-
count is exempt from taxation under this subtitle
unless such account has ceased to be a S.A.F.E. ac-
count by reason of paragraph (2). Notwithstanding
the preceding sentence, any such account is subject
to the taxes imposed by section 511 (relating to im-
position of tax on unrelated business income of char-
itable, etc. organizations).
‘‘(2) ACCOUNT TERMINATIONS.—Rules similar
to the rules of paragraphs (2) and (4) of section
408(e) shall apply to S.A.F.E. accounts, and any
amount treated as distributed under such rules shall
be treated as not used to pay expenses described in
subsection (d)(3).
‘‘(f) ADDITIONAL TAX ON AMOUNTS INCLUDED IN
GROSS INCOME.—If any distribution from a S.A.F.E. ac-
count is includible in gross income of the account bene-
ficiary, the tax liability of such beneficiary under this
chapter for the taxable year in which the distribution is
received shall be increased by an amount equal to 20 per-
cent of the amount of the distribution.
‘‘(g) OTHER DEFINITION AND SPECIAL RULES.—
‘‘(1) ACCOUNT BENEFICIARY.—For purposes of
this section, the term ‘account beneficiary’ means
the individual for whose benefit the S.A.F.E. ac-
count was established.
‘‘(2) CERTAIN RULES TO APPLY.—Rules similar
to the following rules shall apply for purposes of this
section:
‘‘(A) Section 219(d)(2) (relating to no de-
duction for rollovers).
‘‘(B) Section 219(f)(3) (relating to time
when contributions deemed made).
‘‘(C) Section 219(f)(5) (relating to em-
ployer payments).
‘‘(D) Section 408(g) (relating to commu-
nity property laws).
‘‘(E) Section 408(h) (relating to custodial
accounts).
‘‘(h) REPORTS.—The trustee of a S.A.F.E. account
shall make such reports regarding such account to the
Secretary and to the individual for whose benefit the ac-
count is maintained with respect to contributions, dis-
tributions, and such other matters as the Secretary may
require under regulations. The reports required by this
subsection shall be filed at such time and in such manner
and furnished to such individuals at such time and in such
manner as may be required by those regulations.’’.
(b) DEDUCTION ALLOWED
IN ARRIVING
AT AD-
JUSTED GROSS INCOME.—Subsection (a) of section 62 of
such Code is amended by inserting after paragraph (17)
the following new paragraph:
‘‘(18) S.A.F.E. ACCOUNT
CONTRIBUTIONS.—
The deduction allowed by section 222.’’.
(c) TAX ON EXCESS CONTRIBUTIONS.—
(1) Subsection (a) of section 4973 of such Code
(relating to tax on excess contributions to individual
retirement accounts, etc.) is amended by striking
‘‘or’’ at the end of paragraph (3), by inserting ‘‘or’’
at the end of paragraph (4), and by inserting after
paragraph (4) the following new paragraph:
‘‘(5) a S.A.F.E. account (within the meaning of
section 222(c)),’’.
(2) Section 4973 of such Code is amended by
adding at the end the following new subsection:
‘‘(g) EXCESS
CONTRIBUTIONS
TO
S.A.F.E. AC-
COUNTS.—For purposes of this section, in the case of
S.A.F.E. accounts (within the meaning of section 222(c)),
the term ‘excess contributions’ means the sum of—
‘‘(1) the excess (if any) of—
‘‘(A) the aggregate amount contributed for
the taxable year to the accounts (other than
rollover contributions), over
‘‘(B) the amount allowable as a deduction
under section 222 for such contributions, and
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by
the sum of—
‘‘(A) the distributions out of the accounts
which were included in gross income under
rules similar to the rules of section 408(d)(5)
which apply to such accounts by reason of sec-
tion 222(d)(4), and
‘‘(B) the excess (if any) of—
‘‘(i) the maximum amount allowable
as a deduction under section 222(b) for
the taxable year, over
‘‘(ii) the amount contributed to the
accounts for the taxable year.
For purposes of this subsection, any contribution
which is distributed out of the S.A.F.E. account in
a distribution to which the rules similar to the rules
of section 408(d)(4) which apply to such accounts by
reason of section 222(d)(4) shall be treated as an
amount not contributed.’’.
(d) TAX ON PROHIBITED TRANSACTIONS.—
(1) IN
GENERAL.—Paragraph (1) of section
4975(e) of such Code (relating to prohibited trans-
actions) is amended by striking ‘‘or’’ at the end of
subparagraph (E), by redesignating subparagraph
(F) as subparagraph (G), and by inserting after sub-
paragraph (E) the following new subparagraph:
‘‘(F) a S.A.F.E. account described in sec-
tion 222(c), or’’.
(2) SPECIAL RULE.—Subsection (c) of section
4975 of such Code is amended by adding at the end
the following new paragraph:
‘‘(6) SPECIAL RULE FOR S.A.F.E. ACCOUNTS.—
An individual for whose benefit a S.A.F.E. account
is established shall be exempt from the tax imposed
by this section with respect to any transaction con-
cerning such account (which would otherwise be tax-
able under this section) if section 222(e)(2) applies
with respect to such transaction.’’.
(e) FAILURE TO PROVIDE REPORTS ON S.A.F.E. AC-
COUNTS.—Paragraph (2) of section 6693(a) of such Code
(relating to failure to provide reports on individual retire-
ment accounts or annuities) is amended by striking ‘‘and’’
at the end of subparagraph (C), by striking the period at
the end of subparagraph (D) and inserting ‘‘, and’’, and
by adding at the end the following new subparagraph:
‘‘(E) Section 222(h) (relating to S.A.F.E.
accounts).’’.
(f) CLERICAL AMENDMENTS.—
(1) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by
striking the item relating to section 222 and insert-
ing the following new items:
‘‘Sec. 222. S.A.F.E. accounts.
‘‘Sec. 223. Cross references.’’.
(2) The table of sections for chapter 43 of such
Code is amended by striking the item relating to sec-
tion 4973 and inserting the following new item:
‘‘Sec. 4973. Tax on excess contributions to certain tax-favored ac-
counts and annuities, etc.’’.
SEC. 202. EFFECTIVE DATE.
The amendments made by this title shall apply to
contributions made for taxable years beginning after De-
cember 31, 2001.
TITLE 
III—CONFORMING
AMENDMENTS TO THE SO-
CIAL SECURITY ACT AND THE
INTERNAL 
REVENUE 
CODE
OF 1986
SEC. 301. REDUCTIONS IN AND EXEMPTIONS FROM FICA
TAXES AND SECA TAXES WITH RESPECT TO
ELIGIBLE INDIVIDUALS.
(a) FICA TAX ON EMPLOYEES.—Section 3101 of the
Internal Revenue Code of 1986 (relating to OASDI tax
on employees) is amended—
(1) in subsection (a), by striking ‘‘In addition’’
and inserting ‘‘Subject to subsection (c), in addi-
tion’’;
(2) by redesignating subsection (c) as sub-
section (d); and
(3) by inserting after subsection (b) the fol-
lowing new subsection:
‘‘(c) EXEMPTION FROM OASDI TAX FOR ELIGIBLE
INDIVIDUALS.—Subsection (a) shall not apply with re-
spect to wages received by an eligible individual (as de-
fined in section 101(4) of the Savings Account for Every
American Act of 2001).’’
(b) FICA TAX ON EMPLOYERS.—Section 3111 of
such Code (relating to OASDI tax on employees) is
amended—
(1) in subsection (a), by striking ‘‘In addition’’
and inserting ‘‘Subject to subsection (c), in addi-
tion’’;
(2) by redesignating subsection (c) as sub-
section (d); and
(3) by inserting after subsection (b) the fol-
lowing new subsection:
‘‘(c) EXEMPTION FROM OASDI TAX WITH RESPECT
TO ELIGIBLE INDIVIDUALS.—In the case of an eligible in-
dividual (as defined in section 101(4) of the Savings Ac-
count for Every American Act of 2001), effective with the
16th calendar year for which such individual’s election
under section 105 of such Act is effective, subsection (a)
shall not apply with respect to wages received by such indi-
vidual.’’
(c) REDUCTION IN AND EXEMPTION FROM SELF-EM-
PLOYMENT TAX.—Subsection (a) of section 1401 of such
Code (relating to OASDI tax on self-employment income)
is amended—
(1) in subsection (a), by striking ‘‘In addition’’
and inserting ‘‘Subject to subsection (c), in addi-
tion’’;
(2) by redesignating subsection (c) as sub-
section (d); and
(3) by inserting after subsection (b) the fol-
lowing new subsection:
‘‘(c) ADJUSTMENT TO OASDI TAX.—
‘‘(1) REDUCTION.—In the case of an eligible in-
dividual (as defined in section 101(4) of the Savings
Account for Every American Act of 2001), for tax-
able years beginning with or during the 1st 15 cal-
endar years for which such individual’s election is in
effect under section 105 of such Act, the rate of tax
under subsection (a) shall be 6.20 percent.
‘‘(2) EXEMPTION.—In the case of such an eligi-
ble individual, effective for taxable years beginning
with or during the 16th calendar year for which
such individual’s election under such section 105 is
effective, subsection (a) shall not apply.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to wages received
after December 31, 2002, and with respect to self-employ-
ment income for taxable years beginning after such date.
SEC. 302. EXCLUSION OF ELIGIBLE INDIVIDUALS FROM
OLD-AGE, SURVIVORS, AND DISABILITY IN-
SURANCE COVERAGE.
(a) MONTHLY INSURANCE BENEFITS UNDER SEC-
TION 202.—Section 202 of the Social Security Act (42
U.S.C. 402) is amended by adding at the end the following
new subsection:
‘‘Limitation on Payment to Eligible Individuals Under
Savings Account for Every American Act of 2001
‘‘(z)(1) Notwithstanding any other provision of this
title, no monthly benefits shall be paid under this section
based on the wages and self-employment income of an eli-
gible individual (as defined in section 101(4) of the Sav-
ings Account for Every American Act of 2001).
‘‘(2) Determinations of entitlement to hospital insur-
ance benefits under section 226 or 226A shall be made
without regard to paragraph (1).’’.
(b) DISABILITY INSURANCE BENEFITS UNDER SEC-
TION 223.—Section 223 of such Act (42 U.S.C. 423) is
amended by adding at the end the following new sub-
section:
‘‘Limitation on Payment to Eligible Individuals Under
Savings Account for Every American Act of 2001
‘‘(k)(1) Notwithstanding any other provision of this
title, no monthly benefits shall be paid under this section
based on the wages and self-employment income of an eli-
gible individual (as defined in section 101(4) of the Sav-
ings Account for Every American Act of 2001).
‘‘(2) Determinations of entitlement to hospital insur-
ance benefits under section 226 or 226A shall be made
without regard to paragraph (1).’’.
SEC. 303. INFORMATION PROVIDED IN SOCIAL SECURITY
ACCOUNT STATEMENTS.
(a) IN GENERAL.—Section 1143 of the Social Secu-
rity Act (42 U.S.C. 1320b–13) is amended to read as fol-
lows:
‘‘SOCIAL SECURITY ACCOUNT STATEMENTS
‘‘Provision of Annual Statements
‘‘SEC. 1143. (a) The Commissioner of Social Security
shall provide an annual social security account statement
(hereinafter in this section referred to as the ‘statement’)
to each eligible individual who is not receiving benefits
under title II and for whom a mailing address can be de-
termined through such methods as the Commissioner de-
termines to be appropriate.
‘‘Contents of Statement
‘‘(b) Each statement shall contain—
‘‘(1) the amount of wages paid to and self-em-
ployment income derived by the eligible individual as
shown by the records of the Commissioner;
‘‘(2) an estimate of the aggregate of the em-
ployer, employee, and self-employment contributions
of the eligible individual for old-age, survivors, and
disability insurance as shown by the records of the
Commissioner;
‘‘(3) a separate estimate of the aggregate of the
employer, employee, and self-employment contribu-
tions of the eligible individual for hospital insurance
as shown by the records of the Commissioner; and
‘‘(4) an estimate of the potential monthly re-
tirement, disability, survivor, and auxiliary benefits
payable on the eligible individual’s account together
with a description of the benefits payable under the
medicare program of title XVIII.
‘‘Eligible Individual
‘‘(c) For purposes of this section, the term ‘‘eligible
individual’’ means an individual who—
‘‘(1) has a social security account number, and
‘‘(2) has wages or net earnings from self-em-
ployment.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to statements pro-
vided on or after October 1, 2002.
Æ