I
103D CONGRESS
2D SESSION
H. R. 3803
To amend the Internal Revenue Code of 1986 and the Social Security Act
to reduce social security taxes and to provide for social security individual
retirement accounts funded by social security payroll deductions.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 3, 1994
Mr. THOMAS of California introduced the following bill; which was referred
jointly to the Committees on Ways and Means and Education and Labor
A BILL
To amend the Internal Revenue Code of 1986 and the Social
Security Act to reduce social security taxes and to pro-
vide for social security individual retirement accounts
funded by social security payroll deductions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Social Security Individ-
ual Retirement Act of 1994’’.
SEC. 2. REDUCTION OF SOCIAL SECURITY TAXES.
(a) TAX ON EMPLOYEES.—Subsection (a) of section
3101 of the Internal Revenue Code of 1986 (relating to
OASDI tax on employees) is amended—
(1) by striking the last item in the table and in-
serting the following:
‘‘1990, 1991, 1992, 1993, or 1994 ..........................................
6.20 percent
‘‘1995 or thereafter ..................................................................
6.06 percent;’’;
and
(2) by adding after and below the table the fol-
lowing:
‘‘except that, in the case of an eligible employee (as de-
fined in section 255(3) of the Social Security Act), the
rate of tax under this subsection shall be 0.0 percent with
respect to wages paid after December 31, 1994, for pay
periods ending after such date.’’
(b) TAX ON EMPLOYERS.—Subsection (a) of section
3111 of such Code (relating to OASDI tax on employers)
is amended by striking the last item in the table and in-
serting the following:
‘‘1990, 1991, 1992, 1993, or 1994 ..........................................
6.20 percent
‘‘1995 or thereafter ..................................................................
6.06 percent.’’
(c) SELF-EMPLOYMENT TAX.—Subsection (a) of sec-
tion 1401 of such Code (relating to OASDI tax on self-
employment income) is amended—
(1) by inserting before section 201 the follow-
ing:
‘‘PART A—INSURANCE BENEFITS’’;
and
(2) by adding at the end the following new part:
‘‘PART B—INDIVIDUAL RETIREMENT PROGRAM
‘‘SOCIAL SECURITY PAYROLL DEDUCTION PLANS
‘‘SEC. 251. (a) IN GENERAL.—Each person who is
a covered employer for a calendar year shall have in effect
a social security payroll deduction plan for such calendar
year for such person’s eligible employees.
‘‘(b) REQUIREMENTS.—For purposes of this part, the
term ‘social security payroll deduction plan’ means a writ-
ten plan of an employer if—
‘‘(1) the plan applies only with respect to wages
of eligible employees,
‘‘(2) under such plan, the prescribed social se-
curity contributions will be deducted from the em-
ployee’s wages and paid to a social security individ-
ual retirement account designated in accordance
with section 252(a),
‘‘(3) under such plan, the employer is required
to pay the amount so deducted to the specified social
security individual retirement account within 10
business days after the payment of the wages from
which the amount was deducted,
‘‘(4) the employer receives no compensation for
the cost of administering such plan, and
‘‘(5) in the case of a plan under which there is
more than 1 social security individual retirement ac-
count, the employer does not make any endorsement
with respect to any such accounts.
‘‘(c) AMOUNTS DEDUCTED MAY BE ACCUMULATED
BY EMPLOYER IN CERTAIN CASES.—If, under the terms
of a social security individual retirement account des-
ignated under section 252(a), contributions below a speci-
fied amount will not be accepted, the requirements of sub-
section (b)(2) shall be treated as met if amounts deducted
from the wages of such employee are accumulated by the
employer and paid to such plan not later than 10 business
days after the first day on which the accumulated amount
exceeds such specified amount.
‘‘DESIGNATION OF ACCOUNTS UNDER PAYROLL
DEDUCTION PLAN
‘‘SEC. 252. (a) IN GENERAL.—Except as provided in
subsection (b), the social security individual retirement ac-
count to which the prescribed social security contributions
with respect to any employee are required to be paid under
section 251 shall be a social security individual retirement
account designated by the employee to the employer not
later than the later of—
‘‘(1) 10 business days after the date on which
the employee becomes an employee of such employer,
or
‘‘(2) December 31, 1994.
Any such designation shall be made in such form and
manner as may be prescribed in regulations of the Sec-
retary.
‘‘(b) DESIGNATION IN ABSENCE OF TIMELY DES-
IGNATION BY EMPLOYEE.—In any case in which no timely
designation of the social security individual retirement ac-
count is made, the employer shall make the designation
of the social security individual retirement account in ac-
cordance with regulations of the Secretary.
‘‘PARTICIPATION BY SELF-EMPLOYED INDIVIDUALS
‘‘SEC. 253. (a) IN GENERAL.—Each eligible self-em-
ployed individual who receives self-employment income for
any taxable year beginning after December 31, 1994,
shall, in such form and manner as shall be prescribed in
regulations of the Secretary, deposit in a social security
individual retirement account maintained by such individ-
ual the prescribed social security contribution for such tax-
able year. Such deposit shall be made within 10 business
days after the receipt by such individual of such self-em-
ployment income.
‘‘(b) AMOUNTS PAYABLE MAY BE ACCUMULATED IN
CERTAIN CASES.—If, under the terms of a social security
individual retirement account maintained under subsection
(a), contributions below a specified amount will not be ac-
cepted, the requirements of subsection (a) shall be treated
as met if amounts otherwise payable under subsection (a)
are accumulated by the individual and paid to such ac-
count not later than 10 business days after the first day
on which the accumulated amount exceeds such specified
amount.
‘‘DESIGNATION OF ACCOUNTS OF SURVIVING SPOUSES
AND SURVIVING DIVORCED SPOUSES
‘‘SEC. 254. (a) IN GENERAL.—Except as provided in
subsection (b), in the case of a deceased individual with
respect to whom a social security individual retirement ac-
count was established and maintained pursuant to section
252 or 253, the trustee of such account shall transfer the
balance in such account to a social security individual re-
tirement account maintained by an eligible survivor if such
account is designated by the eligible survivor to the trustee
not later than 20 business days after the date of such indi-
vidual’s death. Any such designation shall be made in such
form and manner as may be prescribed in regulations of
the Secretary.
‘‘(b) DESIGNATION IN ABSENCE OF TIMELY DES-
IGNATION BY ELIGIBLE SURVIVOR.—In any case in which,
upon the expiration of such 20-day period, there is an eli-
gible survivor but no timely designation of a social security
individual retirement account is made by the eligible survi-
vor under subsection (a), the trustee shall make the des-
ignation of the social security individual retirement ac-
count under subsection (a) on behalf of such eligible survi-
vor, in accordance with regulations of the Secretary.
‘‘(c) DISPOSITION OF ACCOUNT BALANCE WHERE
NO ELIGIBLE SURVIVOR EXISTS.—In any case in which,
upon the expiration of such 20-day period no timely des-
ignation under subsection (b) has been made and there
is no eligible survivor, the trustee of the deceased individ-
ual’s account shall transfer the balance in such account
to the Federal Old-Age and Survivors Insurance Trust
Fund within the period of 20 business days following the
expiration of such 20-day period.
‘‘DEFINITIONS
‘‘SEC. 255. For purposes of this part—
‘‘(1) SOCIAL
SECURITY
INDIVIDUAL
RETIRE-
MENT ACCOUNT.—The term ‘social security individ-
ual retirement account’ means any individual retire-
ment account (as defined in section 408(a) of the
Internal Revenue Code of 1986) which is adminis-
tered or issued by a bank (as defined in section
408(n) of such Code) under terms which restrict de-
posits to prescribed social security contributions
made to the account pursuant to section 251 or 253
and transfers made to the account pursuant to sec-
tion 254.
‘‘(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) ELIGIBLE EMPLOYEE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘eligible employee’ means,
in connection with any person who is a covered
employer for any calendar year, any individ-
ual—
‘‘(i) with respect to whose employment
by such employer during such calendar
year there is imposed an excise tax under
section 3111 of the Internal Revenue Code
of 1986, and
‘‘(ii) who, as of January 1, 1995, has
not been credited under part A with any
quarters of coverage (within the meaning
of section 213(a)(2)).