I 
108TH CONGRESS 
1ST SESSION H. R. 3055
To amend title II of the Social Security Act and the Internal Revenue 
Code of 1986 to provide prospectively for personalized retirement security 
through personal retirement savings accounts to allow for more control 
by individuals over their Social Security retirement income, to amend 
such title and the Balanced Budget and Emergency Deficit Control 
Act of 1985 to protect Social Security surpluses, and to provide other 
reforms relating to benefits under such title II. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 10, 2003
Mr. SMITH of Michigan (for himself, Mr. KOLBE, Mr. STENHOLM, Mr. 
TOOMEY, Mr. SHADEGG, and Mr. FLAKE) introduced the following bill; 
which was referred to the Committee on Ways and Means 
A BILL 
To amend title II of the Social Security Act and the Internal 
Revenue Code of 1986 to provide prospectively for per-
sonalized retirement security through personal retirement 
savings accounts to allow for more control by individuals 
over their Social Security retirement income, to amend 
such title and the Balanced Budget and Emergency Def-
icit Control Act of 1985 to protect Social Security sur-
pluses, and to provide other reforms relating to benefits 
under such title II.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Social Security Solvency Act of 2003’’. 
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents. 
Sec. 2. Findings and purposes. 
TITLE I—INDIVIDUAL RETIREMENT SECURITY PROGRAM 
Sec. 101. Establishment of individual retirement security program. 
Sec. 102. Adjustments in amounts appropriated to the Federal Old-Age and 
Survivors Insurance Trust Fund based on reallocation percent-
age. 
Sec. 103. Adjustments to primary insurance amounts under part A of title II 
of the Social Security Act. 
Sec. 104. Personal retirement savings accounts. 
Sec. 105. Individual retirement security program refundable credit. 
TITLE II—SOCIAL SECURITY SURPLUS PROTECTION 
Sec. 201. Regulation of flow of funds between the General Fund and the Social 
Security Trust Funds. 
TITLE III—SOCIAL SECURITY BENEFIT REFORMS 
Sec. 301. Gradual increase in retirement age and early retirement age. 
Sec. 302. Adjustments to bend points in determining primary insurance 
amounts. 
Sec. 303. Information relating to benefit limitations provided in social security 
account statements. 
Sec. 304. Coverage of newly hired State and local employees. 
Sec. 305. Increase in monthly insurance benefits for widows and widowers. 
Sec. 306. Acceleration of increase in delayed retirement credit. 
Sec. 307. Authorization for reimbursement of Federal Disability Insurance 
Trust Fund for certain costs of disability insurance benefits. 
Sec. 308. Study to develop recommendations for providing for elections under 
which individuals may opt for exclusion from social security 
coverage. 
Sec. 309. Increase in number of years disregarded in determining average an-
nual earnings on which benefit amounts are based where remu-
nerative work is precluded by need to provide child care. 
Sec. 310. Exclusion of disabled adult children from reduction in benefits under 
the family maximum provisions. 
TITLE IV—RETIREMENT SECURITY 
Sec. 401. Pensions and individual retirement arrangement provisions of the 
Economic Growth and Tax Relief Reconciliation Act of 2001 
made permanent. 
Sec. 402. Acceleration of phase-ins of scheduled increases in IRA and pension 
plan contribution limits. 
Sec. 403. Refundable credit for premiums on qualified long-term care insurance 
contracts.
Sec. 404. Tax credit for taxpayers providing care for dependent parents in their 
households. 
Sec. 405. Nonrefundable tax credit for expenses of seniors for maintaining a 
principal residence.
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—On July 15, 1999, the House Budget 
Committee Social Security Task Force adopted the fol-
lowing Findings by unanimous vote on July 15, 1999: 
(1) Time is the enemy of Social Security reform 
and we should move without delay. Prompt action 
will give us time to institute gradual reforms that 
allow workers to plan for their retirement and mini-
mizes the impact for current or near-term retirees. 
(2) The Social Security Trust Fund is a secure, 
legal entity comprised of U.S. Treasury Bonds 
backed by the full faith and credit of the U.S. Gov-
ernment. While the U.S. has never defaulted on any 
of its obligations, these represent a legal claim on 
future Federal revenue. Such securities will have to 
be redeemed from funds outside the Trust Fund 
itself. 
(3) Any reform must consider the effects on all 
generations, genders, and those currently receiving 
Social Security benefits. Since current demographic 
projections may very well underestimate future life 
expectancy, reform proposals should insure that the
intergenerational balance that has characterized this 
program remains intact. 
(4) No payroll tax increase. 
(5) A universal Social Security survivor and dis-
ability benefit program needs to be maintained. To 
shield the disabled and those who have been in the 
system a short time, general fund monies should be 
used to supplement program benefits. 
(6) Social Security surpluses should only be 
spent for Social Security and should support a re-
form program that encourages savings and overall 
economic growth. 
(7) Investment in the capital markets presents 
an opportunity to restore Social Security’s solvency. 
The investment income generated by savings-based 
reform should not be used for any purpose other 
than retirement. 
(8) Investments in personal accounts can be 
managed to minimize administrative costs, avoiding 
substantial reductions rates of return on investment. 
Individual investors can use guaranteed return secu-
rities and annuities to create a personal investment 
safety net that assures a stable retirement income 
for each worker.
(b) ADDITIONAL FINDINGS.—The Congress adds the 
following to the above Findings: 
(1) One of America’s most popular Government 
programs, Social Security, is in jeopardy. The 1998 
Board of Trustee’s report states that the current 
system faces an actuarial deficit of 2.09 percent of 
taxable payroll. According to the 1998 Board of 
Trustee’s report, the Social Security trust fund will 
begin to run a deficit by 2014 and will be exhausted 
by 2032. 
(2) Helping assure Americans retirement secu-
rity is a major national goal. 
(3) The Congress should strengthen Social Se-
curity to ensure Americans retirement security. The 
changes made to strengthen Social Security should 
create a solvent Social Security system, and avoid 
payroll tax increases. 
(4) The root causes of the weaknesses in the 
current Social Security system are its inadequate 
funding mechanism and changing demographics. So-
cial Security was designed in 1935 as a pay-as-you-
go system, in which current workers supported cur-
rent retirees. This design worked when America had 
42 workers per beneficiary in 1945, but that ratio 
has fallen over time. In 1999 there are only 3.2
workers per beneficiary, and by 2060 the ratio is 
projected to fall to 1.8 workers per beneficary. To 
pay benefits to the rising number of retirees, the 
Government has levied increasing payroll taxes on 
workers. To maintain the program in its current 
form, the Government will have to continue to raise 
payroll taxes or substantially reduce benefits.
(5) The key to a more secure Social Security 
system is increased savings and private investment. 
We should move from a financing system based on 
the Federal Government’s power to tax workers to 
one based on savings and investment accounts 
owned and controlled by workers. 
(6) Allowing workers to take advantage of high-
er investment returns will increase their income in 
retirement. Over the last 100 years, the stock mar-
ket has earned roughly 7 percent after inflation 
compared to a yield of 1.5 to 2 percent after infla-
tion projects by the Social Security Administration 
for workers’ payroll taxes. The difference is enor-
mous. For example, $1,000 invested for 50 years at 
2 percent becomes nearly $2,700. The same amount 
invested for 50 years at 7 percent becomes nearly 
$30,000.
(c) PURPOSES.—The purposes of this Act are as fol-
lows: 
(1) To give workers and retirees more owner-
ship and control over their retirement savings. 
(2) To improve the living standards of Amer-
ican seniors by allowing them to take advantage of 
low-risk investment opportunities that earn higher 
returns than those they can expect to realize under 
the current Social Security system. 
(3) To stimulate the American economy by in-
creasing savings and investment leading to higher 
productivity, more jobs, and better wages. 
(4) To ensure the solvency of the Social Secu-
rity system while maintaining an adequate reserve in 
the Social Security trust fund. 
TITLE 
I—INDIVIDUAL 
RETIRE-
MENT SECURITY PROGRAM 
SEC. 101. ESTABLISHMENT OF INDIVIDUAL RETIREMENT 
PROGRAM. 
(a) IN GENERAL.—Title II of the Social Security Act 
is amended—
(1) by inserting before section 201 the fol-
lowing: 
‘‘PART A—INSURANCE BENEFITS’’;
and
(2) by adding at the end the following new part:
‘‘PART B—INDIVIDUAL RETIREMENT SECURITY 
PROGRAM 
‘‘DEPOSITS TO PERSONAL RETIREMENT SAVINGS 
ACCOUNTS 
‘‘SEC. 251. (a) DESIGNATION OF PERSONAL RETIRE-
MENT SAVINGS ACCOUNTS BY PARTICIPATING INDIVID-
UALS.—
‘‘(1) IN
GENERAL.—Under regulations pre-
scribed by the Board of Trustees, a participating in-
dividual, and the spouse of such an individual, upon 
the attainment of a minimum deposit balance in the 
Interim Investment Fund as described in subsection 
(b), may designate, in writing filed with the Com-
missioner of Social Security in such form and man-
ner as may be prescribed in such regulations, one or 
more personal retirement savings accounts to which 
deposits with respect to the individual or spouse are 
to be made under subsection (b). The individual or 
spouse may designate other personal retirement sav-
ings accounts in lieu of or in addition to accounts 
previously designated, in accordance with regulations 
of the Board of Trustees.
Fund to such personal retirement savings accounts 
as are designated under subsection (a) with respect 
to such individual. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ANNUAL
REPORTING
MONTH.—The 
term ‘annual reporting month’ means, in con-
nection with a participating individual, a cal-
endar month of the calendar year assigned to 
such individual as his or her annual reporting 
month according to a schedule that shall be 
prescribed in regulations of the Board of Trust-
ees. 
‘‘(B) MINIMUM DEPOSIT BALANCE.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the term ‘minimum deposit balance’ 
means an amount equal to $2,500. 
‘‘(ii) ADJUSTMENTS.—The Secretary 
of the Treasury shall adjust annually (ef-
fective for annual reporting months occur-
ring after December 2005) the dollar 
amount set forth in clause (i) under proce-
dures providing for adjustments in the 
same manner and to the same extent as 
adjustments are provided for under the
procedures used to adjust benefit amounts 
under section 215(i)(2)(A), except that any 
amount so adjusted that is not a multiple 
of $1.00 shall be rounded to the nearest 
multiple of $1.00. 
‘‘(c) LUMP SUM PAYMENT TO ESTATE UPON DEATH 
OF ACCOUNT HOLDER.—Upon the death of the account 
holder, the amount of any assets in the personal retire-
ment savings account shall be transferred in a lump sum, 
under rules established by the Board of Trustees, to the 
account holder’s estate. 
‘‘(d) PUBLIC EDUCATION EFFORT.—Under regula-
tions prescribed by the Board of Trustees, the Commis-
sioner of Social Security shall conduct a public education 
effort. Such effort shall include dissemination to partici-
pating individuals of information that will assist them in 
making educated investment decisions under the program 
established under this part. 
‘‘INTERIM INVESTMENT FUND 
‘‘SEC. 252. (a) ESTABLISHMENT OF INTERIM IN-
VESTMENT FUND.—There is established in the Treasury 
of the United States an Interim Investment Fund. The 
Board of Trustees shall serve as trustees of such Fund. 
The Fund consists of all amounts derived from payments 
into the Fund under subsection (b) and remaining after 
investment of such amounts under subsection (c), includ-
ing additional amounts derived as income from such in-
vestments. The amounts held in the Fund are appro-
priated and shall remain available without fiscal year limi-
tation to be held for investment under subsection (c), to 
pay the administrative expenses related to the Fund and 
to investment under subsection (c), and to make transfers 
to personal retirement savings accounts under section 
251(b)(1). 
‘‘(b) 
PAYMENTS
INTO
INTERIM
INVESTMENT 
FUND.—
‘‘(1) IN GENERAL.—During each calendar year, 
the Secretary of the Treasury shall deposit into the 
Interim Investment Fund, from amounts otherwise 
available in the general fund of the Treasury, a total 
amount equal, in the aggregate, to 100 percent of 
the redirected social security taxes for such calendar 
year of each individual who is a participating indi-
vidual for such calendar year. 
‘‘(2) TRANSFERS BASED ON ESTIMATES.—The 
amounts deposited pursuant to paragraph (1) shall 
be transferred in at least monthly payments from 
the general fund in the Treasury to the Interim In-
vestment Fund, such amounts to be determined on 
the basis of estimates by the Secretary of the Treas-
ury of the taxes, specified in section 251(b)(1), paid
to or deposited into the Treasury; and proper adjust-
ments shall be made in amounts subsequently trans-
ferred to the extent prior estimates were in excess 
of or were less than actual amounts. 
‘‘(3) 
SEPARATE
ACCOUNTING
AND
CRED-
ITING.—Subject to this paragraph, the Secretary of 
the Treasury shall provide for prompt, separate ac-
counting of the amounts deposited in the Interim In-
vestment Fund with respect to each individual dur-
ing each calendar year, together with any increases 
or decreases therein for such year so as to reflect 
the net returns and losses from investment thereof 
while held in the Fund during such year. Such ac-
counting shall also take into account any adjust-
ments made pursuant to paragraph (2). Under such 
accounting, amounts initially deposited into the 
Fund during each fiscal year with respect to the re-
directed social security taxes of each participating 
individual (including net returns and losses from the 
investment thereof) shall be credited, not later than 
the end of the succeeding fiscal year, as follows: 
‘‘(A) If the participating individual is not 
married as of the end of the fiscal year in which 
the amounts to be credited were deposited, such
amount shall be credited to such participating 
individual. 
‘‘(B) If the participating individual is mar-
ried as of the end of such fiscal year—
‘‘(i) 50 percent of such amounts shall 
be credited to such participating individual, 
and 
‘‘(ii) 50 percent of such amounts shall 
be credited to the individual who is the 
spouse of such individual as of the end of 
such fiscal year. 
‘‘(4) REDIRECTED SOCIAL SECURITY TAXES.—
For purposes of paragraph (1), the term ‘redirected 
social security taxes’ of an individual for a calendar 
year means the product derived by multiplying—
‘‘(A) the sum of the total taxes paid under 
sections 3101(a) and 3111(a) of the Internal 
Revenue Code of 1986 with respect to such in-
dividual during such calendar year, and the 
total taxes paid under section 1401(a) of such 
Code with respect to such individual during 
such calendar year, by 
‘‘(B) the reallocation percentage declared 
for such calendar year under section 201(n)(2) 
of this Act.
‘‘(c) INVESTMENT
IN COMMON STOCK
AND COR-
PORATE BONDS IN 3 ALTERNATIVE INVESTMENT AC-
COUNTS.—
‘‘(1) IN GENERAL.—For purposes of investment 
of the Interim Investment Fund, the Board of 
Trustees shall divide the Fund into 3 investment ac-
counts. Such accounts shall consist of the 60/40 in-
vestment account, the 40/60 investment account, 
and the 80/20 investment account. The Board of 
Trustees shall contract with appropriate investment 
managers selected for investment of amounts held in 
each investment account. 
‘‘(2) RULES RELATING TO THE 60/40 INVEST-
MENT ACCOUNT.—
‘‘(A) DEFAULT INVESTMENT ACCOUNT.—
Except as provided in an election in effect 
under paragraph (3), amounts held in the In-
terim Investment Fund shall be credited to the 
60/40 investment account and invested as pro-
vided in subparagraph (B). 
‘‘(B) 
INVESTMENT.—Each 
investment 
manager selected under paragraph (1) for in-
vestment of amounts held in the 60/40 invest-
ment account shall invest such amounts under 
regulations which shall be prescribed by the
Board of Trustees so as to ensure, to the max-
imum extent practicable, that, of the total bal-
ance in the Fund credited to such account and 
available for investment (after allowing for ad-
ministrative expenses)—
‘‘(i) 60 percent is invested in common 
stock in accordance with paragraph (4), 
and 
‘‘(ii) 40 percent is invested in cor-
porate bonds in accordance with paragraph 
(5). 
‘‘(3) ELECTION OF TRANSFERS TO THE 40/60 
INVESTMENT ACCOUNT AND THE 80/20 INVESTMENT 
ACCOUNT.—
‘‘(A) IN GENERAL.—Pursuant to any indi-
vidual’s written election filed in accordance with 
regulations of the Board of Trustees and re-
ceived by the Secretary of the Treasury during 
the period beginning January 1 of each year 
and ending March 31 of such year, the Sec-
retary of the Treasury shall transfer to any of 
the investment accounts in the Interim Invest-
ment Fund (whichever is designated in such 
election), from either of the other investment 
accounts in the Interim Investment Fund, the
amount credited to such other investment ac-
count as of the end of the fiscal year ending on 
September 30 of the prior calendar year. 
‘‘(B) INVESTMENT OF 40/60 INVESTMENT 
ACCOUNT.—Each investment manager selected 
under paragraph (1) for investment of amounts 
held in the 40/60 investment account shall in-
vest such amounts under regulations which 
shall be prescribed by the Board of Trustees so 
as to ensure, to the maximum extent prac-
ticable, that, of the total balance in the Fund 
credited to such account and available for in-
vestment (after allowing for administrative ex-
penses)—
‘‘(i) 40 percent is invested in common 
stock in accordance with paragraph (4), 
and 
‘‘(ii) 60 percent is invested in cor-
porate bonds in accordance with paragraph 
(5). 
‘‘(C) INVESTMENT OF 80/20 INVESTMENT 
ACCOUNT.—Each investment manager selected 
under paragraph (1) for investment of amounts 
held in the 80/20 investment account shall in-
vest such amounts under regulations which
shall be prescribed by the Board of Trustees so 
as to ensure, to the maximum extent prac-
ticable, that, of the total balance in the Fund 
credited to such account and available for in-
vestment (after allowing for administrative ex-
penses)—
‘‘(i) 80 percent is invested in common 
stock in accordance with paragraph (4), 
and 
‘‘(ii) 20 percent is invested in cor-
porate bonds in accordance with paragraph 
(5). 
‘‘(4) INVESTMENT IN COMMON STOCK.—In ac-
cordance with regulations which shall be prescribed 
by the Board of Trustees, the Board of Trustees 
shall establish standards which must be met by com-
mon stock selected for investment of the balance of 
the Interim Investment Fund pursuant to paragraph 
(2)(B)(i), (3)(B)(i), or (3)(C)(i). In conformity with 
such standards, the Board of Trustees shall select, 
for purposes of such investment, indices which are 
comprised of common stock the aggregate market 
value of which is, in each case, a reasonably broad 
representation of publicly held companies whose 
shares are traded on the equity markets. Amounts
invested in common stock by each investment man-
ager shall beheld in a portfolio designed to replicate 
the performance of one or more of such indices. 
‘‘(5) INVESTMENT IN CORPORATE BONDS.—In 
accordance with regulations which shall be pre-
scribed by the Board of Trustees, the Board of 
Trustees shall establish standards which must be 
met by corporate bonds selected for investment of 
the balance of the Interim Investment Fund pursu-
ant to paragraph (2)(B)(ii), (3)(B)(ii), or (3)(C)(ii). 
Such standards shall take into account the com-
peting considerations of risk and return. Amounts 
invested in corporate bonds by each investment man-
ager shall be held in a portfolio which shall consist 
of a diverse range of corporate bonds, taking into 
full account the opposing considerations of risk and 
maximization of return. 
‘‘(d) LUMP SUM PAYMENT TO ESTATE UPON DEATH 
OF PARTICIPATING INDIVIDUAL.—Upon the death of a 
participating individual, the amount of any assets in the 
Interim Investment Fund credited to such individual shall 
be transferred in a lump sum, under rules established by 
the Board of Trustees, to such individual’s estate. 
‘‘PERIODIC REPORTS BY ACCOUNT TRUSTEE 
‘‘SEC. 253. (a) IN GENERAL.—The trustee of a per-
sonal retirement savings account shall make periodic re-
‘‘(c) REPORTS
TO
BOARD
OF
TRUSTEES.—The 
Board of Trustees may require the periodic report to be 
filed with the Board at such time as the Board may speci-
fy in regulations under this section. 
‘‘(d) FAILURE BY TRUSTEE TO MAKE TIMELY PERI-
ODIC REPORTS.—
‘‘(1) IN GENERAL.—The trustee of a personal 
retirement savings account shall be subject to a civil 
penalty of not to exceed $100 a day from the date 
of such trustee’s failure or refusal to furnish the 
periodic report required to be furnished by the trust-
ee under this section until the date on which such 
report is furnished. 
‘‘(2) PENALTIES
ASSESSED
BY
BOARD
OF 
TRUSTEES.—Any civil penalty assessed by this sub-
section shall be imposed by the Board of Trustees 
and collected in a civil action. The Board of Trust-
ees may compromise the amount of any civil penalty 
imposed by this subsection. The Board of Trustees 
may waive the application of this subsection with re-
spect to any failure if the Board of Trustees deter-
mines that such failure is due to reasonable cause 
and not to intentional disregard of rules and regula-
tions. 
‘‘DEFINITIONS 
‘‘SEC. 254. For purposes of this title—
‘‘(1) PERSONAL
RETIREMENT
SAVINGS
AC-
COUNT.—The term ‘personal retirement savings ac-
count’ has the meaning provided in section 531 of 
the Internal Revenue Code of 1986. 
‘‘(2) COVERED EMPLOYER.—The term ‘covered 
employer’ means, for any calendar year, any person 
on whom an excise tax is imposed under section 
3111 of the Internal Revenue Code of 1986 with re-
spect to having an individual in his employ to whom 
wages are paid by such person during such calendar 
year. 
‘‘(3) PARTICIPATING INDIVIDUAL.—
‘‘(A) IN
GENERAL.—The term ‘partici-
pating individual’ means any individual—
‘‘(i) with respect to whose employment 
by a person who is a covered employer for 
any calendar year beginning after Decem-
ber 31, 2004, there is imposed an excise 
tax under section 3111 of the Internal 
Revenue Code of 1986, or 
‘‘(ii) on whose self-employment income 
for a taxable year beginning after Decem-
ber 31, 2004, there is imposed a tax under 
section 1401(a) of the Internal Revenue 
Code of 1986,
and who has not filed an election for exemption 
under subparagraph (B). 
‘‘(B) ELECTION FOR EXEMPTION.—
‘‘(i) 
IN
GENERAL.—An 
individual 
may, prior to attaining retirement age (as 
defined in section 216(l)) and receiving 
any distribution from a personal retire-
ment savings account, file with the Com-
missioner of Social Security under this 
subparagraph, in such form and manner as 
shall be prescribed in regulations of the 
Commissioner, a written form electing to 
be exempted from the status of ‘partici-
pating individual’ for purposes of this part. 
Upon completion of the procedures pro-
vided for under clause (ii), an individual 
who has filed such an election and has not 
received a distribution from a personal re-
tirement savings account shall not be 
treated as a participating individual under 
this part. Any such election shall be irrev-
ocable. 
‘‘(ii) PROCEDURE.—The Board of 
Trustees shall prescribe by regulation pro-
cedures governing the termination of an in-
dividual’s status as ‘participating indi-
vidual’ pursuant to an election for exemp-
tion filed under this subparagraph. Such 
procedures shall include—
‘‘(I) prompt closing of all per-
sonal retirement savings accounts of 
such individual and prompt transfer 
to the Federal Old-Age and Survivors 
Insurance Trust Fund and the Fed-
eral Disability Insurance Trust Fund 
of the balance in such accounts, and 
‘‘(II) prompt transfer to such 
Trust Funds of any amount credited 
to such person in the Interim Invest-
ment Fund. 
The Commissioner of Social Security shall 
determine, in accordance with such regula-
tions, the allocation between such Trust 
Funds of amounts transferred to such 
Trust Funds pursuant to this clause. 
‘‘(4) BUSINESS DAY.—The term ‘business day’ 
means any day other than a Saturday, Sunday, or 
legal holiday in the area involved. 
‘‘(5) BOARD OF TRUSTEES.—
‘‘(A) IN GENERAL.—The term ‘Board of 
Trustees’ means the Board of Trustees of the 
Federal Old-Age and Survivors Insurance Trust 
Fund and the Federal Disability Insurance 
Trust Fund. 
‘‘(B) ROLE OF SECRETARY OF THE TREAS-
URY.—
‘‘(i) IN GENERAL.—In connection with 
the duties of the Board of Trustees under 
this part, the Secretary of the Treasury 
shall serve as Executive Director of the 
Board of Trustees. 
‘‘(ii) STAFF.—Upon request of the 
Board of Trustees, the Secretary may de-
tail, on a reimbursable basis, any of the 
personnel of the Department of the Treas-
ury to the Board of Trustees to assist it in 
carrying out its duties under this part. 
‘‘(iii) ADMINISTRATIVE
SUPPORT.—
Upon the request of the Board, the Sec-
retary shall provide to the Board of Trust-
ees from the Department of the Treasury, 
on a reimbursable basis, the administrative 
support services necessary for the Board to
carry out its responsibilities under this 
part.’’. 
(b) EFFECTIVE
DATE
AND
NOTICE
REQUIRE-
MENTS.—
(1) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall apply with respect to wages 
paid after December 31, 2004, for pay periods end-
ing after such date and self-employment income for 
taxable years beginning after such date. 
(2) NOTICE REQUIREMENTS.—
(A) IN GENERAL.—Not later than October 
1, 2004, the Commissioner of Social Security, 
pursuant to direction by the Board of Trustees 
of the Federal Old-Age and Survivors Insurance 
Trust Fund and the Federal Disability Insur-
ance Trust Fund, shall—
(i) send to the last known address of 
each eligible individual a description of the 
program established by the amendments 
made by this Act, which shall be written in 
the form of a pamphlet in language which 
may be readily understood by the average 
worker, 
(ii) provide for toll-free access by tele-
phone from all localities in the United
States to the Social Security Administra-
tion and for a site on the Internet through 
which individuals may obtain information 
and answers to questions regarding such 
program, and 
(iii) provide information to the media 
in all localities of the United States about 
such program, such toll-free access by tele-
phone, and such site on the Internet. 
(B) ELIGIBLE INDIVIDUAL.—For purposes 
of this paragraph, the term ‘‘eligible individual’’ 
means an individual who, as of the date of the 
pamphlet sent pursuant to subparagraph (A), is 
indicated within the records of the Social Secu-
rity Administration as—
(i) not having attained age 65, and 
(ii) being credited with one or more 
quarters of coverage under section 213 of 
the Social Security Act. 
(C) MATTERS
TO
BE
INCLUDED.—The 
Commissioner of Social Security shall include 
with the pamphlet sent to each eligible indi-
vidual pursuant to subparagraph (A)—
(i) a statement of the number of quar-
ters of coverage indicated in the records of
the Social Security Administration as of 
the date of the description as credited to 
such individual under section 213 of the 
Social Security Act and the date as of 
which such records may be considered ac-
curate, and 
(ii) the number for toll-free access by 
telephone established by the Commissioner 
pursuant to subparagraph (A). 
SEC. 102. ADJUSTMENTS IN AMOUNTS APPROPRIATED TO 
THE FEDERAL OLD-AGE AND SURVIVORS IN-
SURANCE 
TRUST 
FUND 
BASED 
ON 
RE-
ALLOCATION PERCENTAGE. 
(a) IN GENERAL.—Section 201 of the Social Security 
Act (42 U.S.C. 401) is amended by adding at the end the 
following new subsection: 
‘‘Reduction in Appropriations to Federal Old-Age and 
Survivors Insurance Trust Fund Based on Realloca-
tion Percentage 
‘‘(n)(1) Under regulations prescribed by the Board 
of Trustees of the Trust Funds (in consultation with the 
Secretary of the Treasury) to carry out this subsection, 
the amounts transferred from the general fund in the 
Treasury to each Trust Fund under subsections (a) and
(b) during any calendar year shall be reduced by an 
amount equal to the product derived by multiplying—
‘‘(A) the total amount which would (but for this 
subsection) be so transferred during such year, by 
‘‘(B) the reallocation percentage for such year. 
‘‘(2)(A) The Board of Trustees shall declare and pub-
lish in the Federal Register on or before July 1 of each 
calendar year the reallocation percentage for amounts oth-
erwise transferrable to the Trust Funds under this section 
during the next following calendar year. 
‘‘(B) For purposes of this subsection, the term ‘re-
allocation percentage’ for amounts otherwise transferrable 
during any calendar year means—
‘‘(i) in the case of calendar years preceding 
2026, 20.16 percent, 
‘‘(ii) in the case of calendar years following 
2025 and preceding 2039, 22.18 percent, and 
‘‘(iii) in the case of each calendar year following 
2038, the best estimate of the Board of Trustees of 
the maximum percentage by which the amounts de-
scribed in subparagraph (A) for the calendar year 
may be reduced so as to maintain a reserve in each 
Trust Fund as of the end of such calendar year 
equal to 15 percent of the amount of benefits pro-
jected to be paid from the Trust Fund during the 
next calendar year, except that such percentage—
‘‘(I) shall be adjusted as necessary for the 
calendar year so as to avoid a reduction in the 
percentage below the percentage in effect for 
the preceding calendar year and to amortize 
any substantially deviant annual increase over 
the remaining calendar years ending with or 
prior to 2038 to the extent necessary, in ac-
cordance with regulations of the Board of 
Trustees, to avoid instability arising from such 
annual increase, and 
‘‘(II) may not exceed for any year 64.52 
percent. 
In determining the percentage for any year under clause 
(iii), the Board of Trustees shall utilize the intermediate 
actuarial assumptions utilized by the Board of Trustees 
for its most recent annual report issued under subsection 
(c).’’. 
(b) RECOMMENDATIONS REGARDING REDUCTIONS IN 
SOCIAL SECURITY TAXES.—In any case in which the 
Board of Trustees of the Federal Old-Age and Survivors 
Insurance Trust Fund and the Federal Disability Insur-
ance Trust Fund at any time estimates that the realloca-
tion percentage (as defined in section 201(n)(2)(B)(i) of
the Social Security Act) for any of the next following 5 
calendar years will equal 64.52 percent, the Board of 
Trustees shall include within its next annual report to the 
Congress and the President its recommendations for re-
ductions in taxes under chapters 2 and 21 of the Internal 
Revenue Code of 1986 so as to avoid unnecessary sur-
pluses in such Trust Funds. 
SEC. 
103. 
ADJUSTMENTS 
TO 
PRIMARY 
INSURANCE 
AMOUNTS UNDER PART A OF TITLE II OF THE 
SOCIAL SECURITY ACT. 
(a) IN GENERAL.—Section 215 of the Social Security 
Act (42 U.S.C. 415) is amended by adding at the end the 
following new subsection: 
‘‘Adjustment of Primary Insurance Amount in Relation 
to Deposits Made to Personal Retirement Savings 
Accounts
‘‘(j)(1) Except as provided in paragraph (2), an indi-
vidual’s primary insurance amount as determined in ac-
cordance with this section (before adjustments made 
under subsection (i)) shall be equal to the excess (if any) 
of—
‘‘(A) the amount which would be so determined 
without the application of this subsection, over
‘‘(B) the applicable monthly amount, which 
shall be determined under clause (i), (ii), or (iii) as 
follows: 
‘‘(i) Except as provided in clauses (ii) and 
(iii), the applicable monthly amount shall be the 
initial monthly amount of an immediate joint 
and survivor annuity, determined on the basis 
of the total amount of the individual’s redi-
rected social security taxes (as defined in sec-
tion 252(a)(4)) for calendar years ending before 
the date of the determination of the individual’s 
primary insurance amount, plus 50 percent of 
the amounts paid to designated accounts of the 
individual for such calendar years under section 
3511(d) of the Internal Revenue Code of 1986, 
(indexed in the same manner as is applicable 
with respect to average indexed monthly earn-
ings under subsection (b)). 
‘‘(ii) In the case of an individual who, as 
of the first day of the first month for which 
such primary insurance amount is determined, 
is married, the applicable monthly amount shall 
be the sum of—
‘‘(I) 2⁄3 of the initial monthly amount 
of an immediate joint and survivor annu-
ity, determined on the basis of the total 
amount of the individual’s redirected social 
security taxes (as defined in section 
252(a)(4)) for calendar years ending be-
fore the date of the determination of the 
individual’s primary insurance amount, 
plus 50 percent of the amounts paid to 
designated accounts of the individual for 
such calendar years under section 3511(d) 
of the Internal Revenue Code of 1986, (in-
dexed in the same manner as is applicable 
with respect to average indexed monthly 
earnings under subsection (b)); plus 
‘‘(II) 1⁄3 of the initial monthly amount 
of an immediate joint and survivor annu-
ity, determined on the basis of the total 
amount of the redirected social security 
taxes (as defined in section 252(a)(4)) of 
such individual’s spouse for calendar years 
ending before the date of the determina-
tion of the individual’s primary insurance 
amount, plus 50 percent of the amounts 
paid to designated accounts of the individ-
ual’s spouse for such calendar years under 
section 3511(d) of such Code, (indexed in
the same manner as is applicable with re-
spect to average indexed monthly earnings 
under subsection (b)). 
‘‘(iii) In the case of an individual who, as 
of the first day of the first month for which 
such primary insurance amount is determined, 
is divorced (and has not remarried since such 
divorce), the applicable monthly amount shall 
be the sum of—
‘‘(I) 1⁄2 of the initial monthly amount 
of an immediate joint and survivor annu-
ity, determined on the basis of the total 
amount of such individual’s redirected so-
cial security taxes (as defined in section 
252(a)(4)) for calendar years ending be-
fore the date of the determination of the 
individual’s primary insurance amount, 
plus 50 percent of the amounts paid to 
designated accounts of the individual for 
such calendar years under section 3511(d) 
of the Internal Revenue Code of 1986, (in-
dexed in the same manner as is applicable 
with respect to average indexed monthly 
earnings under subsection (b)); plus
‘‘(II) 1⁄2 of the initial monthly amount 
of an immediate joint and survivor annu-
ity, determined on the basis of the total 
amount of the redirected social security 
taxes (as defined in section 252(a)(4)) of 
the individual’s former spouse in connec-
tion with such divorce for calendar years 
ending before the date of the determina-
tion of the individual’s primary insurance 
amount, plus 50 percent of the amounts 
paid to designated accounts of such former 
spouse for such calendar years under sec-
tion 3511(d) of such Code, (indexed in the 
same manner as is applicable with respect 
to average indexed monthly earnings under 
subsection (b)). 
‘‘(2) In making determinations under this subsection, 
the Commissioner shall employ the intermediate assump-
tions used by the Board of Trustees of the Federal Old-
Age and Survivors Insurance Trust Fund and the Federal 
Disability Insurance Trust Fund in its most recent annual 
report, including mortality tables consistent with such as-
sumptions, except that the Commissioner shall assume an 
interest rate equal to the sum of the projected average 
market yield (as assumed by the Commissioner) on all
marketable interest-bearing obligations of the United 
States forming a part of the public debt which are not
due or callable until after the expiration of 4 years, plus 
0.7 percent. 
‘‘(3) In the case of an individual described in para-
graph (1) who becomes entitled to disability insurance 
benefits under section 223, such individual’s primary in-
surance amount shall be determined without regard to 
paragraph (1). 
‘‘(4) For purposes of this subsection—
‘‘(A) The term ‘immediate joint and survivor 
annuity’ means an annuity—
‘‘(i) the annuity starting date (as defined 
in section 72(c)(4) of the Internal Revenue 
Code of 1986) of which commences with the 
first month following the date of the determina-
tion, 
‘‘(ii) which provides for a series of substan-
tially equal monthly payments over the life ex-
pectancy of the individual described in para-
graph (1), subject to annual percentage adjust-
ments equal to the annual percentage adjust-
ments taking effect under subsection (i), 
‘‘(iii) which provides for a survivor annuity 
for such individual’s spouse in the form of a se-
ries of substantially equal monthly payments 
over the life expectancy of such spouse, the ini-
tial monthly payment of which is equal to the 
amount of the last monthly payment payable 
during the joint lives of such individual and 
such spouse, subject to annual percentage ad-
justments equal to the annual percentage ad-
justments taking effect under subsection (i), 
and 
‘‘(iv) which is the actuarial equivalent of 
an immediate life annuity for the life of such 
individual. 
‘‘(B) The term ‘immediate life annuity’ means 
an annuity—
‘‘(i) the annuity starting date (as defined 
in section 72(c)(4) of the Internal Revenue 
Code of 1986) of which commences with the 
first month following the date of the determina-
tion, and 
‘‘(ii) which provides for a series of substan-
tially equal monthly payments over the life ex-
pectancy of the individual described in para-
graph (1), subject to annual percentage adjust-
ments equal to the annual percentage adjust-
ments taking effect under subsection (i).’’.
(b) CONFORMING AMENDMENT TO RAILROAD RE-
TIREMENT ACT OF 1974.—Section 1 of the Railroad Re-
tirement Act of 1974 (45 U.S.C. 231) is amended by add-
ing at the end the following: 
‘‘(s) In applying applicable provisions of the Social 
Security Act for purposes of determining the amount of 
the annuity to which an individual is entitled under this 
Act, section 215(j) of the Social Security Act and part 
B of title II of such Act shall be disregarded.’’
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to computations and 
recomputations of primary insurance amounts occurring 
after December 31, 2004. 
SEC. 104. PERSONAL RETIREMENT SAVINGS ACCOUNTS. 
(a) DEDUCTION
FOR
CONTRIBUTIONS
BY
TAX-
PAYER.—Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional 
itemized deductions) is amended by redesignating section 
223 as section 224 and by inserting after section 222 the 
following new section: 
‘‘SEC. 223. CONTRIBUTIONS TO PERSONAL RETIREMENT 
SAVINGS ACCOUNTS. 
‘‘(a) IN GENERAL.—In the case of an individual who 
is an electing personal retirement savings account partici-
pant for the taxable year, there shall be allowed as a de-
duction an amount equal to 50 percent of the amount con-
tributed during such taxable year by such individual to 
a personal retirement savings account maintained for the 
benefit of such individual. 
‘‘(b) LIMITATION.—The amount of contributions 
which may be taken into account under subsection (a) 
shall not exceed $2,000. 
‘‘(c) ELECTING PERSONAL RETIREMENT SAVINGS 
ACCOUNT PARTICIPANT.—An individual is an electing 
personal retirement savings account participant for any 
taxable year if any amount is deposited under section 
251(b) of the Social Security Act for such taxable year 
to a personal retirement savings account maintained for 
the benefit of such individual. 
‘‘(d) SPECIAL RULES.—
‘‘(1) NO DEDUCTION FOR TRUSTEE-TO-TRUST-
EE TRANSFERS.—No deduction shall be allowed for 
amounts transferred to an account in a rollover con-
tribution described in section 531(b)(2). 
‘‘(2) TIME
WHEN
CONTRIBUTIONS
DEEMED 
MADE.—For purposes of this section, a taxpayer 
shall be deemed to have made a contribution to a 
personal retirement savings account on the last day 
of the preceding taxable year if the contribution is 
made on account of such taxable year and is made
not later than the time prescribed by law for filing 
the return for such taxable year (not including ex-
tensions thereof).’’
(b) PERSONAL RETIREMENT SAVINGS ACCOUNTS.—
Subchapter F of chapter 1 of such Code (relating to ex-
empt organizations) is amended by adding at the end the 
following new part: 
‘‘PART IX—PERSONAL RETIREMENT SAVINGS 
ACCOUNTS
‘‘Sec. 531. Personal retirement savings accounts.
‘‘SEC. 531. PERSONAL RETIREMENT SAVINGS ACCOUNTS. 
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any amount deposited in a personal retirement sav-
ings account under section 251(b) of the Social Security 
Act. 
‘‘(b) PERSONAL RETIREMENT SAVINGS ACCOUNT.—
‘‘(1) IN GENERAL.—For purposes of this title, 
the term ‘personal retirement savings account’ 
means a trust created or organized in the United 
States for the exclusive benefit of an individual or 
his beneficiaries, but only if the written governing 
instrument creating the trust meets the following re-
quirements: 
‘‘(A) No contribution will be accepted 
other than—
‘‘(i) deposits under section 251(b) of 
the Social Security Act, 
‘‘(ii) amounts paid under section 
3511(d), 
‘‘(iii) contributions made in cash, ex-
cept that contributions under this subpara-
graph may not be accepted for any taxable 
year in excess of $2,000, and 
‘‘(iv) a contribution which is a rollover 
contribution described in paragraph (2).
‘‘(B) Except as provided in paragraph (3) 
and subsection (f)(2), no amount may be paid 
or distributed from such trust—
‘‘(i) before the date on which the ac-
count holder attains age 591⁄2 or dies, or 
‘‘(ii) in a manner not meeting the re-
quirements of subsection (d). 
‘‘(C) The trustee of which is a regulated 
investment company (as defined in section 851) 
which is approved by the Secretary for purposes 
of this section. 
‘‘(D) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) TRANSFER PURSUANT TO ELECTION FOR 
EXEMPTION.—If the account holder makes an elec-
tion of exemption under section 254(3)(B) of the So-
cial Security Act, so much of the amounts in the 
personal retirement savings account as are attrib-
utable to contributions under section 251(b) of such 
Act, and payments under section 3511(d), and earn-
ings thereon, shall be paid to the Federal Old-Age 
and Survivors Insurance Trust Fund and the Fed-
eral Disability Insurance Trust Fund in accordance 
with the regulations under such section 254(3)(B). 
‘‘(3) ROLLOVER
CONTRIBUTIONS.—For pur-
poses of paragraph (1)(A), a rollover contribution is 
described in this paragraph if such contribution is—
‘‘(A) a direct trustee-to-trustee transfer de-
scribed in subsection (f)(2), or 
‘‘(B) a transfer from an eligible retirement 
plan (as defined in section 402(c)(8)) to the 
personal retirement savings account if no 
amount is includible in gross income by reason 
of such transfer, determined by treating such 
account as the same type of plan as the plan 
from which such transfer were made. 
‘‘(c) INVESTMENT REQUIREMENTS.—
‘‘(1) IN GENERAL.—Amounts in a personal re-
tirement savings account may be invested only in 
regulated investment companies (as defined in sec-
tion 851) which are approved by the Secretary for 
purposes of this section. 
‘‘(2) CRITERIA FOR SECRETARIAL APPROVAL.—
The Secretary may approve a regulated investment 
company for purposes of this section only if—
‘‘(A) an election is in effect under section 
851(b)(1) for such company, and 
‘‘(B) the portfolio assets of such com-
pany—
‘‘(i) replicate the assets of a broad-
based index of stocks which is approved by 
the Secretary, or 
‘‘(ii) are of a type determined by the 
Secretary not to involve high risks for the 
investor.
‘‘(3) DIVERSIFICATION REQUIRED.—To the ex-
tent possible, the Secretary shall approve under sub-
paragraph (B)(i) funds in each of the following 4 
categories: domestic stocks, domestic bonds, stocks 
of companies having small capitalization, and foreign 
stocks. Nothing in this subsection shall be construed 
to preclude the use of managed funds devised so as 
to minimize risk. 
‘‘(4) 
CONSIDERATION
OF
MANAGEMENT 
COSTS.—The Secretary shall take into account man-
agement costs in determining whether to approve a 
company for purposes of this section. 
‘‘(d) DISTRIBUTION REQUIREMENTS.—
‘‘(1) IN GENERAL.—The requirements of this 
subsection are met with respect to distributions from 
a personal retirement savings account (other than 
reasonable administrative fees meeting such require-
ments as may be prescribed in regulations of the 
Secretary) only if such distributions are in accord-
ance with a payment option under paragraph (2). 
The preceding sentence shall not apply to direct 
trustee-to-trustee transfers described in subsection 
(f)(2) or distributions to a deceased account holder’s 
estate under section 251(c) of the Social Security 
Act. 
‘‘(2) PAYMENT OPTIONS.—The payment options 
under this paragraph are the following: 
‘‘(A) LIFETIME OPTION.—Distributions in 
equal annual or more frequent periodic install-
ments payable to the account holder in equal 
annual or more frequent periodic installments 
over the life of the account holder. The trustee 
of the account shall be liable under the terms 
of the account to the account holder for the 
timely payment of such periodic payments.
‘‘(B) NONLIFETIME OPTION.—
‘‘(i) IN
GENERAL.—Distributions in 
equal annual or more frequent periodic in-
stallments of interest only, or of interest 
and principal. Any such payment of equal 
installments shall continue until—
‘‘(I) payment ceases at the direc-
tion of the account holder to the 
trustee, 
‘‘(II) payment continues in ac-
cordance with this subparagraph but 
at an adjusted level at the direction of 
the account holder to the trustee, or 
‘‘(III) the distribution converts to 
an option described in subparagraph 
(A) at the direction of the account 
holder to the trustee. 
‘‘(ii) LIMITATIONS.—Payments from 
the account under a distribution described 
in clause (i) shall be limited as of any date 
to the extent necessary to ensure that 
funds in the account are sufficient at all 
times to provide a monthly payment over 
the life expectancy of the account holder 
(determined under reasonable actuarial as-
sumptions) which, when added to the ac-
count holder’s monthly benefit under part 
A (if any), is at least equal to an amount 
equal to 1⁄12 of the poverty line (as deter-
mined under section 673(2) of the Commu-
nity Services Block Grant Act (42 U.S.C. 
9902(2)) and determined on such date for 
a family of the size involved). 
‘‘(C) ADDITIONAL OPTIONS.—Distributions 
in any other manner permitted under regula-
tions prescribed by the Secretary. 
‘‘(e) ACCOUNT EXEMPT FROM TAX.—
‘‘(1) GENERAL RULE.—Any personal retirement 
savings account is exempt from taxation under this 
subtitle. Notwithstanding the preceding sentence, 
any such account is subject to the taxes imposed by 
section 511 (relating to imposition of tax on unre-
lated business income of charitable, etc. organiza-
tions). 
‘‘(2) APPLICATION
OF
PROHIBITED
TRANS-
ACTIONS RULES, ETC.—Rules similar to the rules of 
paragraphs (2), (3), and (4) of section 408(e) shall 
apply to personal retirement savings accounts. 
‘‘(f) DISTRIBUTIONS TAXED AS IF SOCIAL SECURITY 
BENEFITS.—
‘‘(1) GENERAL RULE.—Amounts paid or dis-
tributed from a personal retirement savings account 
shall be includible in gross income only if so includ-
ible under section 86, determined by treating such 
amounts as social security benefits (as defined in 
such section). 
‘‘(2) TRUSTEE-TO-TRUSTEE
TRANSFERS.—No 
amount shall be includible in gross income by reason 
of a direct trustee-to-trustee transfer between per-
sonal retirement savings accounts of the same indi-
vidual. 
‘‘(3) RETURN
OF
EXCESS
CONTRIBUTIONS.—
Paragraph (1) shall not apply to the distribution of 
any contribution (other than a deposit made under 
section 251(b) of the Social Security Act) made dur-
ing a taxable year to the extent that such contribu-
tion exceeds the dollar amount specified in sub-
section (b)(1)(B) if—
‘‘(A) such distribution is received on or be-
fore the last day prescribed by law (including 
extensions) for filing such individual’s return 
for such taxable year, 
‘‘(B) such contribution is not taken into 
account in determining the deduction allowed 
under section 223, and
‘‘(C) such distribution is accompanied by 
the amount of net income attributable to such 
contribution. 
Any net income described in subparagraph (C) shall 
be included in gross income for the taxable year in 
which such contribution is made. 
‘‘(g) CERTAIN OTHER RULES TO APPLY.—The fol-
lowing rules shall apply to personal retirement savings ac-
counts in the same manner that such rules apply to indi-
vidual retirement accounts: 
‘‘(1) Section 408(h) (relating to custodial ac-
counts). 
‘‘(2) Section 408(i) (relating to reports). 
‘‘(h) TREATMENT
AFTER
DEATH
OF
ACCOUNT 
HOLDER.—A personal retirement savings account shall 
cease to be such on the date of the account holder’s death, 
but no amount shall be includible in gross income by rea-
son of such cessation.’’
(c) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 
of section 62 of such Code is amended by inserting after 
paragraph (18) the following new paragraph: 
‘‘(19) PERSONAL
RETIREMENT
SAVINGS
AC-
COUNTS.—The deduction allowed by section 223.’’
(d) TAX ON EXCESS CONTRIBUTIONS.—
(1) IN
GENERAL.—Subsection (a) of section 
4973 of such Code is amended by striking ‘‘or’’ at 
the end of paragraph (3), by adding ‘‘or’’ at the end 
of paragraph (4), and by inserting after paragraph 
(4) the following new paragraph: 
‘‘(5) a personal retirement savings account (as 
defined in section 531),’’. 
(2) EXCESS CONTRIBUTION DEFINED.—Section 
4973 of such Code is amended by adding at the end 
the following new subsection: 
‘‘(g) EXCESS CONTRIBUTIONS
TO PERSONAL RE-
TIREMENT SAVINGS ACCOUNTS.—For purposes of this 
section—
‘‘(1) IN GENERAL.—In the case of personal re-
tirement savings accounts maintained for the benefit 
of any 1 beneficiary, the term ‘excess contributions’ 
means the amount by which the amount contributed 
for the taxable year to such accounts exceeds 
$2,000.
‘‘(2) SPECIAL RULES.—For purposes of para-
graph (1), the following contributions shall not be 
taken into account: 
‘‘(A) Any contributions under section 
251(b) of the Social Security Act. 
‘‘(B) Any trustee-to-trustee transfer.’’
(e) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 4975(e) of such 
Code (relating to tax on prohibited transactions) is 
amended by redesignating subparagraph (F) as sub-
paragraph (G), by striking ‘‘or’’ at the end of sub-
paragraph (E), and by inserting after subparagraph 
(E) the following new subparagraph: 
‘‘(F) a personal retirement savings account 
described in section 531(b), or’’. 
(2) Paragraph (2) of section 6693(a) of such 
Code (relating to failure to provide reports on cer-
tain tax favored accounts or annuities) is amended 
by redesignating subparagraphs (C) and (D) as sub-
paragraphs (D) and (E), respectively, and by insert-
ing after subparagraph (B) the following new sub-
paragraph: 
‘‘(C) section 531(g)(2) (relating to per-
sonal retirement savings 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 last item and inserting the following 
new items:
‘‘Sec. 223. Contributions to personal retirement savings accounts. 
‘‘Sec. 224. Cross reference.’’
(2) The table of parts for subchapter F of 
chapter 1 of such Code is amended by adding after 
the item relating to part VIII the following new 
item:
‘‘Part IX—Personal retirement savings accounts.’’.
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
SEC. 105. INDIVIDUAL RETIREMENT SECURITY PROGRAM 
REFUNDABLE CREDIT. 
(a) IN GENERAL.—Chapter 25 of the Internal Rev-
enue Code of 1986 (relating to general provisions relating 
to employment taxes) is amended by adding at the end 
the following new section: 
‘‘SEC. 3511. INDIVIDUAL RETIREMENT SECURITY PROGRAM 
REFUNDABLE CREDIT. 
‘‘(a) IN GENERAL.—The designated account of each 
participating individual shall receive for each calendar 
year the lesser of—
‘‘(1) the credit amount, or 
‘‘(2) the amount of compensation includible in 
the such individual’s gross income for such year. 
‘‘(b) CREDIT AMOUNT.—
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the term ‘credit amount’ means—
‘‘(A) $300 in the case of modified adjusted 
gross income for the taxable year greater than 
$5,000 but less than or equal to $25,000, 
‘‘(B) $150 in the case of modified adjusted 
gross income for the taxable year greater than 
$25,000 but less than or equal to $35,000, and 
‘‘(C) zero in any other case. 
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
For purposes of paragraph (1), the term ‘modified 
adjusted gross income’ means adjusted gross income 
determined without regard to sections 911, 931, and 
933. 
‘‘(c) COMPENSATION.—For purposes of subsection 
(a), the term ‘compensation’ means with respect to an in-
dividual—
‘‘(1) wages (as defined in section 3121(a)) re-
ceived by such individual during such year on which 
tax is imposed by section 3101, and 
‘‘(2) self-employment income (as defined in 
1402(b)) of such individual for the taxable year of 
such individual ending in such calendar year on 
which tax is imposed by section 1401. 
‘‘(d) PAYMENT
TO DESIGNATED ACCOUNT.—Not-
withstanding any other provision of this title, the Sec-
retary, as soon as practicable, shall transfer from amounts
otherwise available in the general fund of the Treasury, 
amounts equal to the amount required to be paid under 
subsection (a) to the designated account of each partici-
pating individual in accordance with regulations which the 
Secretary shall prescribe to carry out this section. 
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULE.—For 
purposes of this section—
‘‘(1) DESIGNATED ACCOUNT.—The term ‘des-
ignated account’ means the separate account in the 
Interim Investment Fund provided for under section 
252 of the Social Security Act or, in lieu thereof, the 
personal retirement savings account of the partici-
pating individual designated under section 251 of 
the Social Security Act. 
‘‘(2) PARTICIPATING
INDIVIDUAL.—The term 
‘participating individual’ shall have the meaning 
given to such term by section 254 of the Social Se-
curity Act. 
‘‘(3) SPECIAL RULE RELATING TO AGREEMENTS 
BY
AMERICAN
EMPLOYERS
OF
FOREIGN
AFFILI-
ATES.—Any amounts paid pursuant to an agreement 
under section 3121(l) (relating to agreements en-
tered into by American employers with respect to 
foreign affiliates) which are equivalent to the taxes
referred to in subsection (b)(1)(A) shall be treated 
as taxes referred to in such subsection.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 25 of such Code is amended by adding 
at the end the following new item:
‘‘Sec. 3511. Individual retirement security program refundable 
credit.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to remuneration received, and net 
earnings for self-employment for services performed, after 
December 31, 2004. 
TITLE II—SOCIAL SECURITY 
SURPLUS PROTECTION 
SEC. 201. REGULATION OF FLOW OF FUNDS BETWEEN THE 
GENERAL FUND AND THE SOCIAL SECURITY 
TRUST FUNDS. 
Section 201 of the Social Security Act (as amended 
by the preceding provisions of this Act) is amended further 
by adding at the end the following new subsection: 
‘‘Additional Transfers Between the General Fund and 
the Trust Funds 
‘‘(o)(1) In addition to the amounts otherwise appro-
priated to the Federal Old-Age and Survivors Insurance 
Trust Fund and the Federal Disability Insurance Trust 
Fund for each fiscal year after fiscal year 2006 and before 
fiscal year 2014, there is hereby appropriated to such
Trust Funds for each such fiscal year the applicable
amount for such fiscal year. Amounts appropriated to 
such Trust Funds under this paragraph shall be distrib-
uted between the Trust Funds for any fiscal year in the 
same proportion as amounts are appropriated to such 
Trust Funds under subsections (a) and (b). The amounts 
appropriated by this paragraph shall be transferred from 
time to time during the fiscal year from the general fund 
in the Treasury to the Trust Funds, such amounts to be 
determined on the basis of estimates by the Secretary of 
the Treasury, and proper adjustments shall be made in 
amounts subsequently transferred to the extent prior esti-
mates were in excess of or were less than the actual 
amounts. All amounts transferred to each Trust Fund 
under this paragraph shall be invested by the Managing 
Trustee in the same manner and to the same extent as 
the other assets of such Trust Fund. 
‘‘(2) For purposes of paragraph (1), the applicable 
amount for any fiscal year is the amount set forth in the 
following table:
‘‘In the case of fiscal year—
The amount is—
2007 ............................................................................................. $21 billion
2008 ............................................................................................. $47 billion
2009 ............................................................................................. $78 billion
2010 .............................................................................................$106 billion
2011 .............................................................................................$147 billion
2012 .............................................................................................$184 billion
2013 .............................................................................................$283 billion.
‘‘(3)(A) The Board of Trustees shall determine, prior 
to the beginning of each calendar year after 2018—
‘‘(i) the projected reduction under subsection 
(n) in the the amount which would (but for sub-
section (n)) be transferred during such year from 
the general fund in the Treasury to the Trust Funds 
under subsections (a) and (b), 
‘‘(ii) the projected payroll for such year, and 
‘‘(iii) whether there will be a surplus appropria-
tion (as defined in subparagraph (E)(ii)) to the Fed-
eral Old-Age and Survivors Insurance Trust Fund 
for such year and the amount of such surplus appro-
priation. 
Projections under this paragraph shall be based on the 
best estimates of the Board of Trustees. 
‘‘(B) In any case in which, for any calendar year after 
2018, the projected reduction determined under subpara-
graph (A)(i) exceeds 5 percent of the projected payroll de-
termined under subparagraph (A)(ii), if the Board of 
Trustees determines under subparagraph (A)(iii) that 
there will be a surplus appropriation to the Federal Old-
Age and Survivors Insurance Trust Fund for such year, 
the Board of Trustees shall certify such determinations 
to the Secretary of the Treasury prior to such year, and 
such Secretary shall, during such year, transfer from such
Trust Fund to the general fund of the Treasury an 
amount equal to such surplus appropriation. 
‘‘(C) The transfers required under subparagraph (B) 
shall be made from time to time during the year from the 
Trust Funds to the general fund of the Treasury, such 
amounts to be determined on the basis of the estimates 
made by the Board of Trustees under subparagraph (A). 
The Board of Trustees may, during the year, certify re-
vised estimates under subparagraph (A) for the year, and, 
upon certification of such revised estimates to such Sec-
retary, proper adjustments shall be made in amounts sub-
sequently transferred to the extent the prior estimates 
were in excess of or were less than the latest estimated 
amounts. 
‘‘(D) In any case in which the transfer of any amount 
to the general fund of the Treasury from either Trust 
Fund pursuant to subparagraph (B) for any calendar year 
would (but for this subparagraph) cause—
‘‘(i) the total amount transferred from such 
Trust Fund pursuant to subparagraph (B) (includ-
ing accrued net earnings thereon) to exceed 
‘‘(ii) the total amount transferred to such Trust 
Fund pursuant to paragraph (1) (including accrued 
net earnings thereon),
the amount of such transfer shall be limited to the extent 
necessary to ensure that the total amount described in 
clause (i) does not exceed the total amount described in 
clause (ii), and this paragraph shall not be effective for 
subsequent calendar years in connection with such Trust 
Fund. 
‘‘(E) For purposes of this paragraph—
‘‘(i) The term ‘social security payroll’ for any 
year means the sum of the wages (as defined in sec-
tion 3121 of the Internal Revenue Code of 1986) re-
ported to the Secretary of the Treasury or his dele-
gate during such year pursuant to subtitle F of such 
Code and the self-employment income (as defined in 
section 1402 of such Code) reported to the Secretary 
of the Treasury or his delegate during such year 
pursuant to subtitle F of such Code. 
‘‘(ii) The term ‘surplus appropriation’ for any 
year, in connection with the Federal Old-Age and 
Survivors Insurance Trust Fund, means the excess 
of—
‘‘(I) the total amount transferred to such 
Trust Fund during such year pursuant to ap-
propriations under paragraphs (3) and (4) of 
subsection (a), after reduction under subsection 
(n), over
‘‘(II) the total amount necessary to be 
transferred to such Trust Fund during such 
year so as to maintain a reserve in such Trust 
Fund as of the end of such year equal to 50 
percent of the amount of benefits paid from the 
Trust Fund during such year.’’. 
TITLE III—SOCIAL SECURITY 
BENEFIT REFORMS 
SEC. 301. GRADUAL INCREASE IN RETIREMENT AGE AND 
EARLY RETIREMENT AGE. 
(a) NORMAL RETIREMENT AGE.—Section 216(l) of 
the Social Security Act (42 U.S.C. 416(l) is amended—
(1) in paragraph (1), by striking subparagraphs 
(A), (B), (C), (D), and (E) and inserting the fol-
lowing:
‘‘(A) with respect to an individual who at-
tains age 62 (or in the case of a widow’s or 
widower’s insurance benefit, age 60) before 
January 1, 2000, 65 years of age; 
‘‘(B) with respect to an individual who at-
tains age 62 (or in the case of a widow’s or 
widower’s insurance benefit, age 60) after De-
cember 31, 1999 and before January 1, 2011, 
65 years of age plus 2⁄12 of the number of 
months in the period beginning with January
2000 and ending with December of the year in 
which the individual attains age 62 (or in the 
case of a widow’s or widower’s insurance ben-
efit, age 60); 
‘‘(C) with respect to an individual who at-
tains age 62 (or in the case of a widow’s or 
widower’s insurance benefit, age 60) after De-
cember 31, 2010, and before January 1, 2012, 
67 years of age; and 
‘‘(D) with respect to an individual who at-
tains age 62 (or in the case of a widow’s or 
widower’s insurance benefit, age 60) after De-
cember 31, 2011, 67 years of age plus 1⁄24 of 
the number of months in the period beginning 
with January 2012 and ending with December 
of the year in which the individual attains age 
62 (rounded down to a full month).’’; and 
(2) by striking paragraph (3). 
SEC. 302. ADJUSTMENTS TO BEND POINTS IN DETER-
MINING PRIMARY INSURANCE AMOUNTS. 
(a) 
ADDITIONAL
BEND
POINT.—Section 
215(a)(1)(A) of the Social Security Act (42 U.S.C. 
415(a)(1)(A)) is amended—
(1) in clause (ii), by striking ‘‘and’’ at the end;
(2) in clause (iii), by striking ‘‘clause (ii),’’ and 
inserting the following: ‘‘clause (ii) but do not exceed 
the amount established for purposes of this clause 
by subparagraph (B), and’’; and 
(3) by inserting after clause (iii) the following 
new clause: 
‘‘(iv) the applicable percentage of the individ-
ual’s average indexed monthly earnings to the extent 
that such earnings exceed the amount established 
for purposes of clause (iii), determined, in connec-
tion with the calendar year in which the individual 
initially becomes eligible for old-age or disability in-
surance benefits, or dies (before becoming eligible 
for such benefits), in accordance with the following 
table:
‘‘Calendar year: 
Applicable Percentage: 
2005 ......................................................................................... 13 percent
2006 ......................................................................................... 11 percent
2007 .........................................................................................
9 percent
2008 .........................................................................................
7 percent
After 2008 ................................................................................
5 percent,’’.
(b) INITIAL LEVEL OF ADDITIONAL BEND POINT.—
Section 
215(a)(1)(B)(i) 
of 
such 
Act 
(42 
U.S.C. 
415(a)(1)(B)(i)) is amended by adding at the end the fol-
lowing new sentence: ‘‘For individuals who initially become 
eligible for old-age or disability insurance benefits, or who 
die (before becoming eligible for such benefit), in the cal-
endar year 2004, the amount established for purposes of 
clause (iii) of subparagraph (A) shall be $3,720.’’. 
(c) ANNUAL ADJUSTMENTS TO PIA FORMULA.—
(1) IN
GENERAL.—Section 215(a)(1)(B) of 
such Act (42 U.S.C. 415(a)(1)(B)) is amended fur-
ther—
(A) by redesignating clause (iii) as clause 
(x); 
(B) in clause (ii), by inserting ‘‘for pur-
poses of clauses (i) and (ii) of subparagraph 
(A)’’ after ‘‘each of the amounts so estab-
lished’’; 
(C) by inserting after clause (ii) the fol-
lowing new clauses: 
‘‘(iii) For individuals who initially become eligible for 
old-age or disability insurance benefits, or who die (before 
becoming eligible for such benefits), in any calendar year 
after 2004, effective for such calendar year, each of the 
amounts established under clause (i) for purposes of 
clauses (ii) and (iii) of subparagraph (A) shall equal the 
corresponding amount in effect for the preceding calendar 
year, increased by the same percentage as the percentage 
by which the Consumer Price Index for the calendar quar-
ter ending with September 30 of such preceding calendar 
year exceeds the Consumer Price Index for the calendar
quarter ending with the preceding September 30. For pur-
poses of this clause, the Consumer Price Index for a cal-
endar quarter shall be the arithmetical mean of the Con-
sumer Price Index for Wage Earners and Clerical Workers 
(CPI-W), as prepared by the Department of Labor, for 
the 3 months in such quarter. 
‘‘(iv) For individuals who initially become eligible for 
old-age or disability insurance benefits, or who die (before 
becoming eligible for such benefits), in any calendar year 
after 2004, the amount established under clause (i) for 
purposes of clause (iii) of subparagraph (A) shall equal 
the product of the corresponding amount established with 
respect to the calendar year 2002 under clause (i) of this 
subparagraph and the quotient obtained by dividing—
‘‘(I) the national average wage index (as de-
fined in section 209(k)(1)) for the second calendar 
year preceding the calendar year for which the de-
termination is made, by 
‘‘(II) the national average wage index (as so de-
fined) for 2002. 
‘‘(v) For individuals who initially become eligible for 
old-age or disability insurance benefits, or who die (before 
becoming eligible for such benefits), in any calendar year 
after 2004, effective for such calendar year—
‘‘(I) the percentage in effect under clause (ii) of 
subparagraph (A) shall be equal to the product de-
rived by multiplying the percentage in effect under 
such clause for the preceding calendar year by 0.98, 
and 
‘‘(II) the percentage in effect under clause (iii) 
of subparagraph (A) shall be equal to the product 
derived by multiplying the percentage in effect under 
such clause for the preceding calendar year by 
0.975. 
‘‘(vi) For individuals who initially become eligible for 
old-age or disability insurance benefits, or who die (before 
becoming eligible for such benefits), in any calendar year 
after 2009, effective for such calendar year, the percent-
age in effect under clause (iv) of subparagraph (A) shall 
be equal to the product derived by multiplying the percent-
age in effect under such clause for the preceding calendar 
year by 0.975. 
‘‘(vii)(I) Subject to section 201(p), in the case of an 
individual who is entitled to disability insurance benefits 
and to whom this clause applies, this subparagraph shall 
apply as if the amendments made by the Social Security 
Solvency Act of 2003 had not been enacted. 
‘‘(II) This clause applies to any individual who first 
becomes eligible for such benefits in 2004, and whose aver-
age indexed monthly earnings (determined under sub-
section (b)) do not exceed the amount established for pur-
poses of this subclause by clause (viii). 
‘‘(III) This clause also applies to any individual who 
first becomes eligible for such benefits in any year after 
2004, and whose average indexed monthly earnings (deter-
mined under subsection (b)) do not exceed the dollar 
amount referred to in subclause (II), after applying 
clauses (ii) and (iii) of subsection (a)(1)(B) to such dollar 
amount, in connection with such year, in the same manner 
and to the same extent as they apply to dollar amounts 
in subsection (a)(1)(B)(i), except that, for purposes of this 
subclause, the references in such clauses to 1979 and 
1977 shall be deemed to be references to 2004 and 2002, 
respectively. 
‘‘(viii) For individuals who initially become eligible for 
disability insurance benefits in calendar year 2004, the 
amount established for purposes of subclause (II) of clause 
(vii) shall be $1,6662⁄3. For individuals who initially be-
come eligible for disability insurance benefits in any cal-
endar year after 2004, the dollar amount so established 
shall equal the product of $1,6662⁄3 and the quotient ob-
tained by dividing—
‘‘(I) the national average wage index (as de-
fined in section 209(k)(1)) for the second calendar
year preceding the calendar year for which the de-
termination is made, by 
‘‘(II) the national average wage index (as so de-
fined) for 2002. 
‘‘(ix) Subject to section 201(p), in the case of an indi-
vidual who is entitled to disability insurance benefits, who 
first becomes eligible for such benefits in any year after 
2003, and to whom clause (vii) does not apply, the pri-
mary insurance amount of such individual shall not be less 
than the primary insurance amount that would be deter-
mined for such individual under this section if such indi-
vidual’s average indexed monthly earnings (determined 
under subsection (b)) were equal to the dollar amount re-
ferred to in clause (vii) in connection with such year.’’; 
and 
(D) in clause (x) (as redesignated), by 
striking 
‘‘amount’’ 
and 
inserting 
‘‘dollar 
amount’’, by striking ‘‘clause (ii)’’ and inserting 
‘‘clauses (ii) and (iii)’’, and by adding at the 
end the following new sentence: ‘‘Each percent-
age established under clause (v) for any cal-
endar year shall be rounded to the nearest 
0.001 percent, except that any percentage so 
established which is a multiple of 0.0005 per-
cent but not of 0.001 percent shall be rounded 
to the next higher 0.001 percent.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to pri-
mary insurance amounts of individuals initially be-
coming eligible for old-age or disability insurance 
benefits, or dying, after December 31, 2003. 
(d) MAXIMUM PERCENT REDUCTION IN PRIMARY IN-
SURANCE AMOUNTS.—
(1) IN GENERAL.—Section 215(a)(1) of such 
Act (42 U.S.C. 415(a)(1)) is amended further by 
adding at the end the following new subparagraph: 
‘‘(E)(i) Except in any case described in clause (iii), 
an individual’s primary insurance amount as otherwise de-
termined under this section shall in no case be less than 
such individual’s primary insurance amount determined 
under this section as if the amendments made by section 
302 of the Social Security Solvency Act of 2003 had not 
been enacted, reduced by the maximum percent reduction 
specified, in connection with the specified year in which 
such individual initially becomes eligible for old-age insur-
ance benefits and in connection with the specified next 
higher amount of the annual equivalent of average indexed 
monthly earnings (determined under subsection (b)), in 
the following table:
‘‘Year of initial eligibility 
Average indexed monthly earnings (annual equivalent) 
$5,000
$10,000
$15,000
$20,000
$21,000
$22,000
$23,000
$24,000
$25,000
2005 ......................................................
0.0
0.0
0.0
0.0
1.0
2.0
3.0
4.0
5.0
2006 ......................................................
0.0
0.0
0.0
0.0
1.0
2.0
3.0
4.0
5.0
2007 ......................................................
1.0
1.0
1.0
1.0
2.0
3.0
4.0
5.0
6.0
2008 ......................................................
2.0
2.0
2.0
2.0
3.0
4.0
5.0
6.0
7.0
2009 ......................................................
3.0
3.0
3.0
3.0
4.0
5.0
6.0
7.0
8.0
2010 ......................................................
4.0
4.0
4.0
4.0
5.0
6.0
7.0
8.0
9.0
2011 ......................................................
5.0
5.0
5.0
5.0
6.0
7.0
8.0
9.0
10.0
2012 ......................................................
6.0
6.0
6.0
6.0
7.0
8.0
9.0
10.0
11.0
2013 ......................................................
7.0
7.0
7.0
7.0
8.0
9.0
10.0
11.0
12.0
2014 ......................................................
8.0
8.0
8.0
8.0
9.0
10.0
11.0
12.0
13.0
2015 ......................................................
9.0
9.0
9.0
9.0
10.0
11.0
12.0
13.0
14.0
2016 ......................................................
10.0
10.0
10.0
10.0
11.0
12.0
13.0
14.0
15.0
2017 ......................................................
11.0
11.0
11.0
11.0
12.0
13.0
14.0
15.0
16.0
2018 or later year .................................
12.0
12.0
12.0
12.0
13.0
14.0
15.0
16.0
17.0
‘‘(ii) Each of the dollar amounts set forth in the table 
under clause (i) in connection with any year after 2005 
shall be deemed to be the product derived by multiplying 
such dollar amount by the quotient obtained by dividing—
‘‘(I) the national average wage index (as de-
fined in section 209(k)(1)) for the second calendar 
year preceeding such calendar year, by 
‘‘(II) the national average wage index (as so de-
fined) for 2003. 
‘‘(iii) In the case of an individual who becomes enti-
tled to old-age insurance benefits by reason entitlement 
to disability insurance benefits for the month preceding 
the month in which such individual attains retirement age 
(as described in section 202(a)(3)), the individual’s pri-
mary insurance amount shall be the sum of—
‘‘(I) the product derived by multiplying the in-
dividual’s primary insurance amount (as determined 
without regard to the amendments made by section 
302 of the Social Security Solvency Act of 2003) by 
the individual’s disability period ratio, plus 
‘‘(II) the product derived by multiplying the in-
dividual’s primary insurance amount (as determined 
under this section as amended by section 302 of the 
Social Security Solvency Act of 2003) by the excess 
of 1 over the individual’s disability period ratio.
For purposes of this clause, the term ‘disability period 
ratio’ means, in connection with an individual, the ratio 
of the total number of years excluded under section 
215(b)(2)(B)(iii), by reason of 1 or more periods of dis-
ability, in determining thereunder the individual’s number 
of elapsed years, to the sum of such number of excluded 
years plus such number of elapsed years.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply with respect to bene-
fits for months after November 2003. 
SEC. 303. INFORMATION RELATING TO BENEFIT LIMITA-
TIONS PROVIDED IN SOCIAL SECURITY AC-
COUNT STATEMENTS. 
(a) IN GENERAL.—Section 1143 of the Social Secu-
rity Act (42 U.S.C. 1320b–13) is amended—
(1) in the heading for subsection (a), by strik-
ing ‘‘Upon Request’’ and inserting ‘‘of Annual 
Statements’’; 
(2) in subsection (a)(1), by striking ‘‘Begin-
ning’’ and all that follows and inserting the fol-
lowing: ‘‘The Commissioner of Social Security shall 
provide an annual social security account statement 
(hereinafter in this section referred to as the ‘state-
ment’) to each eligible individual for whom a mailing
address can be determined through such methods as 
the Commissioner determines to be appropriate.’’; 
(3) in subsection (a)(2)(A), by striking ‘‘at the 
date of the request’’; 
(4) in subsection (a)(2)(B), by striking ‘‘on the 
date of the request’’; 
(5) in subsection (a)(2)(C), by striking ‘‘on the 
date of the request’’ and by striking ‘‘and’’ at the 
end; 
(6) in subsection (a)(2)(D), by inserting ‘‘in the 
case of individuals not receiving benefits,’’ after 
‘‘(D)’’, and by striking ‘‘title XVIII.’’ and inserting 
‘‘title XVIII; and’’; 
(7) by adding after subparagraph (D) the fol-
lowing: 
‘‘(E) a table setting forth an estimate, in rela-
tion to 1980 and every 10th year thereafter through 
2030, of the following information: 
‘‘(i) the total amount of the current ad-
justed values of all employee, employer, and 
self-employment contributions made with re-
spect to the wages and self-employment income 
of the average earner retiring at retirement age 
in each such year;
‘‘(ii) the total amount of the current ad-
justed values of the social security old-age or 
survivors 
benefits 
(as 
defined 
in 
section 
202(y)(3)(D)) paid for all prior months on the 
basis of the wages and self-employment income 
of the average earner retiring at retirement age 
in each such year; and 
‘‘(iii) the total amount of the current ad-
justed values of the monthly benefits which will 
have been paid under such subsections, as of 
the time of the death of the average earner re-
tiring at retirement age in each such year, on 
the basis of his or her wages and self-employ-
ment income, as projected under the inter-
mediate actuarial assumptions utilized by the 
Board of Trustees of the Federal Old-Age and 
Survivors Insurance Trust Fund for its most 
recent annual report issued under section 
201(c). 
For purposes of subparagraph (E), the term ‘current ad-
justed value’ has the meaning provided in section 
202(y)(3)(C).’’; 
(8) by striking subsection (b); 
(9) in subsection (c)—
(A) by striking the heading and inserting 
the following: 
‘‘Required Estimates of Benefits’’; 
(B) by striking ‘‘(c)(1) By not later’’ and 
all that follows through ‘‘With respect to’’ in 
paragraph (2) and inserting ‘‘(b) With respect 
to’’; and 
(C) by adding at the end the following new 
sentence: ‘‘The Commissioner shall provide such 
estimates of retirement benefit amounts to eligi-
ble individuals who have not attained age 50 
upon request.’’; and 
(10) by adding at the end the following new 
subsection: 
‘‘Inclusion of Statements to Retirees With Other Mailings 
‘‘(c) The Commissioner of Social Security shall en-
sure that statements provided to eligible individuals who 
are receiving benefits under title II are included to the 
maximum extent practicable with mailings otherwise made 
to such individuals. The Commissioner shall consult with 
the Secretary of the Treasury in carrying out the require-
ment of this subsection and such Secretary shall provide 
such appropriate assistance to the Commissioner as is nec-
essary to carry out such requirements.’’.
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply with respect to statements pro-
vided on or after October 1, 2004. 
SEC. 304. COVERAGE OF NEWLY HIRED STATE AND LOCAL 
EMPLOYEES. 
(a) AMENDMENTS TO THE SOCIAL SECURITY ACT.—
(1) IN
GENERAL.—Paragraph (7) of section 
210(a) of the Social Security Act (42 U.S.C. 
410(a)(7)) is amended to read as follows: 
‘‘(7) Excluded State or local government em-
ployment (as defined in subsection (s));’’. 
(2) EXCLUDED STATE OR LOCAL GOVERNMENT 
EMPLOYMENT.—
(A) IN
GENERAL.—Section 210 of such 
Act (42 U.S.C. 410) is amended by adding at 
the end the following new subsection: 
‘‘Excluded State or Local Government Employment 
‘‘(s)(1) IN GENERAL.—The term ‘excluded State or 
local government employment’ means any service per-
formed in the employ of a State, of any political subdivi-
sion thereof, or of any instrumentality of any one or more 
of the foregoing which is wholly owned thereby, if—
‘‘(A)(i) such service would be excluded from the 
term ‘employment’ for purposes of this title if the
preceding provisions of this section as in effect in 
December 2004 had remained in effect, and 
‘‘(ii) the requirements of paragraph (2) are met 
with respect to such service, or 
‘‘(B) the requirements of paragraph (3) are met 
with respect to such service. 
‘‘(2) EXCEPTION
FOR
CURRENT
EMPLOYMENT 
WHICH CONTINUES.—
‘‘(A) IN GENERAL.—The requirements of this 
paragraph are met with respect to service for any 
employer if—
‘‘(i) such service is performed by an indi-
vidual—
‘‘(I) who was performing substantial 
and regular service for remuneration for 
that employer before January 1, 2004,
‘‘(II) who was a bona fide employee of 
that employer on December 31, 2003, and 
‘‘(III) whose employment relationship 
with that employer was not entered into 
for purposes of meeting the requirements 
of this subparagraph, and 
‘‘(ii) the employment relationship with that 
employer has not been terminated after Decem-
ber 31, 2003.
‘‘(B) TREATMENT OF MULTIPLE AGENCIES AND 
INSTRUMENTALITIES.—For purposes of subpara-
graph (A), under regulations (consistent with regula-
tions established under section 3121(t)(2)(B) of the 
Internal Revenue Code of 1986)—
‘‘(i) all agencies and instrumentalities of a 
State (as defined in section 218(b)) or of the 
District of Columbia shall be treated as a single 
employer, and 
‘‘(ii) all agencies and instrumentalities of a 
political subdivision of a State (as so defined) 
shall be treated as a single employer and shall 
not be treated as described in clause (i). 
‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—
‘‘(A) IN GENERAL.—The requirements of this 
paragraph are met with respect to service if such 
service is performed—
‘‘(i) by an individual who is employed by a 
State or political subdivision thereof to relieve 
such individual from unemployment, 
‘‘(ii) in a hospital, home, or other institu-
tion by a patient or inmate thereof as an em-
ployee of a State or political subdivision thereof 
or of the District of Columbia,
‘‘(iii) by an individual, as an employee of 
a State or political subdivision thereof or of the 
District of Columbia, serving on a temporary 
basis in case of fire, storm, snow, earthquake, 
flood, or other similar emergency, 
‘‘(iv) by any individual as an employee in-
cluded under section 5351(2) of title 5, United 
States Code (relating to certain interns, student 
nurses, and other student employees of hos-
pitals of the District of Columbia Government), 
other than as a medical or dental intern or a 
medical or dental resident in training, 
‘‘(v) by an election official or election 
worker if the remuneration paid in a calendar 
year for such service is less than $1,000 with 
respect to service performed during 2004, and 
the adjusted amount determined under sub-
paragraph (C) for any subsequent year with re-
spect to service performed during such subse-
quent year, except to the extent that service by 
such election official or election worker is in-
cluded in employment under an agreement 
under section 218, or 
‘‘(vi) by an employee in a position com-
pensated solely on a fee basis which is treated
pursuant to section 211(c)(2)(E) as a trade or 
business for purposes of inclusion of such fees 
in net earnings from self-employment. 
‘‘(B) DEFINITIONS.—As used in this para-
graph, the terms ‘State’ and ‘political subdivision’ 
have the meanings given those terms in section 
218(b). 
‘‘(C) ADJUSTMENTS TO DOLLAR AMOUNT FOR 
ELECTION OFFICIALS AND ELECTION WORKERS.—
For each year after 2004, the Commissioner of So-
cial Security shall adjust the amount referred to in 
subparagraph (A)(v) at the same time and in the 
same 
manner 
as 
is 
provided 
under 
section 
215(a)(1)(B)(ii) with respect to the amounts re-
ferred to in section 215(a)(1)(B)(i), except that—
‘‘(i) for purposes of this subparagraph, 
1999 shall be substituted for the calendar year 
referred to in section 215(a)(1)(B)(ii)(II), and 
‘‘(ii) such amount as so adjusted, if not a 
multiple of $100, shall be rounded to the next 
higher multiple of $100 where such amount is 
a multiple of $50 and to the nearest multiple 
of $100 in any other case. 
The Commissioner of Social Security shall determine 
and publish in the Federal Register each adjusted
amount determined under this subparagraph not 
later than November 1 preceding the year for which 
the adjustment is made.’’. 
(B) CONFORMING AMENDMENTS.—
(i) Subsection (k) of section 210 of 
such Act (42 U.S.C. 410(k)) (relating to 
covered transportation service) is repealed.
(ii) Section 210(p) of such Act (42 
U.S.C. 410(p)) is amended—
(I) in paragraph (2), by striking 
‘‘service is performed’’ and all that 
follows and inserting ‘‘service is serv-
ice described in subsection (s)(3)(A).’’; 
and 
(II) in paragraph (3)(A), by in-
serting ‘‘under subsection (a)(7) as in 
effect in December 2003’’ after ‘‘sec-
tion’’. 
(iii) Section 218(c)(6) of such Act (42 
U.S.C. 418(c)(6)) is amended—
(I) by striking subparagraph (C); 
(II) by redesignating subpara-
graphs (D) and (E) as subparagraphs 
(C) and (D), respectively; and
(III) by striking subparagraph 
(F) and inserting the following: 
‘‘(E) service which is included as employment 
under section 210(a).’’
(b) AMENDMENTS
TO
THE INTERNAL REVENUE 
CODE OF 1986.—
(1) IN
GENERAL.—Paragraph (7) of section 
3121(b) of the Internal Revenue Code of 1986 (re-
lating to employment) is amended to read as follows: 
‘‘(7) excluded State or local government em-
ployment (as defined in subsection (t));’’. 
(2) EXCLUDED STATE OR LOCAL GOVERNMENT 
EMPLOYMENT.—Section 3121 of such Code is 
amended by inserting after subsection (s) the fol-
lowing new subsection:
‘‘(t) EXCLUDED STATE OR LOCAL GOVERNMENT EM-
PLOYMENT.—
‘‘(1) IN GENERAL.—For purposes of this chap-
ter, the term ‘excluded State or local government 
employment’ means any service performed in the 
employ of a State, of any political subdivision there-
of, or of any instrumentality of any one or more of 
the foregoing which is wholly owned thereby, if—
‘‘(A)(i) such service would be excluded 
from the term ‘employment’ for purposes of this
chapter if the provisions of subsection (b)(7) as 
in effect in December 2003 had remained in ef-
fect, and (ii) the requirements of paragraph (2) 
are met with respect to such service, or 
‘‘(B) the requirements of paragraph (3) 
are met with respect to such service. 
‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT 
WHICH CONTINUES.—
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met with respect to service 
for any employer if—
‘‘(i) such service is performed by an 
individual—
‘‘(I) who was performing sub-
stantial and regular service for remu-
neration for that employer before Jan-
uary 1, 2004, 
‘‘(II) who was a bona fide em-
ployee of that employer on December 
31, 2003, and 
‘‘(III) whose employment rela-
tionship with that employer was not 
entered into for purposes of meeting 
the requirements of this subpara-
graph, and
‘‘(ii) the employment relationship with 
that employer has not been terminated 
after December 31, 2003. 
‘‘(B) TREATMENT OF MULTIPLE AGENCIES 
AND
INSTRUMENTALITIES.—For purposes of 
subparagraph (A), under regulations—
‘‘(i) all agencies and instrumentalities 
of a State (as defined in section 218(b) of 
the Social Security Act) or of the District 
of Columbia shall be treated as a single 
employer, and 
‘‘(ii) all agencies and instrumentalities 
of a political subdivision of a State (as so 
defined) shall be treated as a single em-
ployer and shall not be treated as de-
scribed in clause (i). 
‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met with respect to service 
if such service is performed—
‘‘(i) by an individual who is employed 
by a State or political subdivision thereof 
to relieve such individual from unemploy-
ment,
‘‘(ii) in a hospital, home, or other in-
stitution by a patient or inmate thereof as 
an employee of a State or political subdivi-
sion thereof or of the District of Columbia, 
‘‘(iii) by an individual, as an employee 
of a State or political subdivision thereof 
or of the District of Columbia, serving on 
a temporary basis in case of fire, storm, 
snow, earthquake, flood, or other similar 
emergency, 
‘‘(iv) by any individual as an employee 
included under section 5351(2) of title 5, 
United States Code (relating to certain in-
terns, student nurses, and other student 
employees of hospitals of the District of 
Columbia Government), other than as a 
medical or dental intern or a medical or 
dental resident in training, 
‘‘(v) by an election official or election 
worker if the remuneration paid in a cal-
endar year for such service is less than 
$1,000 with respect to service performed 
during 2004, and the adjusted amount de-
termined under section 210(s)(3)(C) of the 
Social Security Act for any subsequent
year with respect to service performed dur-
ing such subsequent year, except to the ex-
tent that service by such election official 
or election worker is included in employ-
ment under an agreement under section 
218 of the Social Security Act, or 
‘‘(vi) by an employee in a position 
compensated solely on a fee basis which is 
treated pursuant to section 1402(c)(2)(E) 
as a trade or business for purposes of in-
clusion of such fees in net earnings from 
self-employment. 
‘‘(B) DEFINITIONS.—As used in this para-
graph, the terms ‘State’ and ‘political subdivi-
sion’ have the meanings given those terms in 
section 218(b) of the Social Security Act.’’.
(3) CONFORMING AMENDMENTS.—
(A) Subsection (j) of such section 3121 
(relating to covered transportation service) is 
repealed. 
(B) Paragraph (2) of section 3121(u) of 
such Code (relating to application of hospital 
insurance tax to Federal, State, and local em-
ployment) is amended—
(i) in subparagraph (B), by striking 
‘‘service is performed’’ in clause (ii) and all 
that follows through the end of such sub-
paragraph and inserting ‘‘service is service 
described in subsection (t)(3)(A).’’; and
(ii) in subparagraph (C)(i), by insert-
ing ‘‘under subsection (b)(7) as in effect in 
December 2004’’ after ‘‘chapter’’. 
(c) EFFECTIVE DATE.—Except as otherwise provided 
in this section, the amendments made by this section shall 
apply with respect to service performed after December 
31, 2004.
SEC. 305. INCREASE IN MONTHLY INSURANCE BENEFITS 
FOR WIDOWS AND WIDOWERS. 
(a) 
OLD-AGE
INSURANCE
BENEFITS.—Section 
202(a) of the Social Security Act (42 U.S.C. 402(a)) is 
amended by adding at the end the following new sentence: 
‘‘For any month ending after the month in which the indi-
vidual is a widow, widower, surviving divorced wife, or sur-
viving divorced husband in connection with any deceased 
spouse and has not remarried since the death of such de-
ceased spouse, the individual’s old-age insurance benefit 
shall be increased to 110 percent of the individual’s pri-
mary insurance amount for such month.’’.
his spouse, and dependents under a qualified long-term 
care insurance contract (as defined in section 7702B(b)). 
‘‘(b) DOLLAR LIMITATION.—The amount of the cred-
it allowed to a taxpayer under subsection (a) shall not ex-
ceed $1,000 ($2,000 in the case of a joint return). 
‘‘(c) COORDINATION WITH OTHER DEDUCTIONS.—
Any amount paid by a taxpayer for any qualified long-
term care insurance contract to which subsection (a) ap-
plies shall not be taken into account in computing the 
amount allowable to the taxpayer as a deduction under 
section 162(l) or 213(a).’’. 
(b) TECHNICAL AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘or 
from section 36 of such Code’’ before the period at 
the end. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by striking the item 
relating to section 35 and inserting the following 
new items:
‘‘Sec. 36. Premiums on qualified long-term care insurance con-
tracts. 
‘‘Sec. 37. Overpayment of taxes.’’.