‘‘(A) carry out the policies established by 
the Board under this part; 
‘‘(B) invest and manage the Trust Fund in 
accordance with the investment policies and 
other policies established by the Board under 
this part; 
‘‘(C) purchase annuity contracts and pro-
vide for the payment of other benefits under 
this part; 
‘‘(D) administer the provisions of this part; 
and 
‘‘(E) prescribe such regulations (other 
than regulations relating to fiduciary respon-
sibilities) as may be necessary for the adminis-
tration of this part. 
‘‘(3) AUTHORIZED FUNCTIONS.—The Executive 
Director may—
‘‘(A) prescribe such regulations as may be 
necessary to carry out the responsibilities of the 
Executive Director under this part, other than 
regulations relating to fiduciary responsibilities; 
‘‘(B) appoint such personnel as may be 
necessary to carry out the provisions of this 
part;
‘‘(C) subject to approval by the Board, 
procure the services of experts and consultants 
under section 3109 of title 5, United States 
Code; 
‘‘(D) secure directly from other agencies 
and instrumentalities of the Federal Govern-
ment any information necessary to carry out 
the provisions of this part and policies of the 
Board under this part; 
‘‘(E) make such payments out of sums in 
the Trust Fund as the Executive Director de-
termines are necessary to carry out the provi-
sions of this part and the policies of the Board 
under this part; 
‘‘(F) pay the compensation, per diem, and 
travel expenses of individuals appointed under 
subparagraphs (B), (C), and (G) from the 
Trust Fund; 
‘‘(G) accept and use the services of individ-
uals employed intermittently in the Government 
service and reimburse such individuals for trav-
el expenses, as authorized by section 5703 of 
title 5, United States Code, including per diem 
as authorized by section 5702 of such title;
‘‘(H) except as otherwise expressly prohib-
ited by law or the policies of the Board, dele-
gate any of the Executive Director’s functions 
to such employees under the Board as the Ex-
ecutive Director may designate and authorize 
such successive redelegations of such functions 
to such employees under the Board as the Ex-
ecutive Director may consider to be necessary 
or appropriate; and 
‘‘(I) take such other actions as are appro-
priate to carry out the functions of the Execu-
tive Director. 
‘‘(c) SOURCE OF COMPENSATION.—Notwithstanding 
paragraph (3) of section 8476(d) of title 5, United States 
Code, basic pay paid for any fiscal year as compensation 
to each member of the Board (and each officer and em-
ployee of the Board) shall be paid from the Trust Fund 
(in lieu of the Thrift Savings Fund) in an amount which 
bears the same ratio to the total amount of basic pay paid 
to such member (or officer or employee) for such fiscal 
year as the balance in the Trust Fund as of the beginning 
of such fiscal year bears to the total amount of such bal-
ance and the balance in the Thrift Savings Fund as of 
the beginning of such fiscal year.’’.
(b) CONFORMING AMENDMENTS.—Section 201(h) of 
such Act (42 U.S.C. 401(h)) is amended—
(1) by striking ‘‘All other’’ in the second sen-
tence and inserting ‘‘Except as provided in section 
255, all other’’; and 
(2) by adding at the end the following new sen-
tence: ‘‘Any reference in this part to benefits under 
this title shall be deemed a reference to benefits en-
titlement to which arises under this part.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to payments of old-
age insurance benefits for months after December 2006. 
SEC. 3. FINANCING OF GOVERNMENT CONTRIBUTIONS TO 
ACCOUNTS. 
(a) PRIMARY FINANCING FROM SOCIAL SECURITY 
CONTRIBUTIONS OF INDIVIDUALS WORKING ILLEGALLY 
IN THE UNITED STATES.—Section 201(a) of the Social 
Security Act (42 U.S.C. 401(a)) is amended, in the matter 
following clause (4)—
(1) by striking ‘‘The amounts appropriated by 
clauses (3) and (4)’’ and inserting the following: ‘‘So 
much of the amounts described in clauses (3) and 
(4) for any fiscal year as are attributable to wages 
paid to, and self-employment income derived by, in-
dividuals with respect to whom the criterion speci-
fied in section 214(c) is not satisfied in determining 
such individuals’ quarters of coverage, as determined 
by the Secretary of the Treasury in consultation 
with the Commissioner of Social Security, shall be 
reduced by the amounts equivalent to the aggregate 
of initial contributions to investment accounts made 
during such fiscal year pursuant to section 252(c). 
The amounts appropriated by clauses (3) and (4)’’; 
(2) by inserting ‘‘and initial contributions to in-
vestment accounts to be made pursuant to section 
252(c)’’ after ‘‘paid to or deposited into the Treas-
ury’’; and 
(3) by striking ‘‘the taxes specified in such 
clauses (3) and (4) of this subsection’’ and inserting 
‘‘the amounts required to be transferred’’. 
(b) SECONDARY FINANCING FROM TAXES ON SOCIAL 
SECURITY BENEFITS.—Section 121(e) of the Social Secu-
rity Amendments of 1983 (42 U.S.C. 401 note) is amend-
ed—
(1) by striking ‘‘less (ii) the amounts’’ in para-
graph (1) and inserting ‘‘less (ii) the sum of (I) the 
amounts’’; 
(2) by inserting before the period at the end of 
paragraph (1) the following: ‘‘, and (II) the amounts 
equivalent to the excess (if any) of the aggregate of
initial contributions to investment accounts to be 
made pursuant to section 252(c) of the Social Secu-
rity Act for any fiscal year over the amount of the 
reduction for such fiscal year described in the first 
sentence following clause (4) of section 201(a) of the 
Social Security Act’’; and 
(3) by inserting before the period at the end of 
the second sentence of paragraph (2) the following: 
‘‘and initial contributions to investment accounts 
pursuant to section 252(c) of the Social Security Act 
estimated to be made during such quarter’’. 
SEC. 4. TAX TREATMENT OF INDIVIDUAL RETIREMENT IN-
VESTMENT PROGRAM AND PERSONAL SO-
CIAL SECURITY INVESTMENT ACCOUNTS. 
(a) SOCIAL SECURITY INVESTMENT TRUST FUND.—
Section 7701 of the Internal Revenue Code of 1986 (relat-
ing to definitions) is amended by redesignating subsection 
(o) as subsection (p) and by inserting after subsection (n) 
the following new subsection: 
‘‘(o) TAX TREATMENT OF THE SOCIAL SECURITY IN-
VESTMENT TRUST FUND.—The Social Security Invest-
ment Trust Fund established under section 260 of the So-
cial Security Act shall be exempt from taxation under sub-
title A of the Internal Revenue Code of 1986.’’.
(b) PERSONAL SOCIAL SECURITY INVESTMENT AC-
COUNTS.—Part VII of subchapter B of chapter 1 of such 
Code (relating to additional itemized deductions for indi-
viduals) is amended by redesignating section 224 as sec-
tion 225 and by inserting after section 223 the following 
new section: 
‘‘SEC. 224. PERSONAL SOCIAL SECURITY INVESTMENT AC-
COUNTS. 
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 
individual, there shall be allowed as a deduction for the 
taxable year an amount equal to the amount contributed 
in cash for such taxable year to the personal social security 
investment account of any eligible individual. 
‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—
‘‘(1) IN GENERAL.—The amount allowable as a 
deduction under subsection (a) for any taxable year 
for contributions to the personal social security in-
vestment account of an eligible individual shall not 
exceed $5,000. 
‘‘(2) SPECIAL RULE.—If the account holder of 
any personal social security investment account 
makes a contribution to such account for any tax-
able year, no other taxpayer shall be allowed a de-
duction for any amount contributed to such account 
for such taxable year.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) PERSONAL SOCIAL SECURITY INVESTMENT 
ACCOUNT.—The term ‘personal social security in-
vestment account’ means an account established 
under section 252 of the Social Security Act. 
‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible 
individual’ means, with respect to the taxpayer—
‘‘(A) the taxpayer, 
‘‘(B) the taxpayer’s spouse, and 
‘‘(C) any individual with respect to whom 
a deduction under section 151(c) (determined 
without regard to subsections (b)(1), (b)(2), 
and (d)(1)(B) thereof) is allowed to the tax-
payer. 
Subparagraph (B) shall not apply unless the tax-
payer files a joint return for the taxable year. 
‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, any amount paid or distrib-
uted out of a personal social security investment ac-
count shall be included in gross income by the payee 
or distributee, as the case may be, in the manner 
provided under section 72.