security account’ means a trust created or organized 
in the United States exclusively for the benefit of an 
individual or his beneficiaries, but only if the written 
governing instrument creating the trust meets the 
following requirements: 
‘‘(A) Except in the case of rollover con-
tributions from another individual security ac-
count of such individual—
‘‘(i) no contribution will be accepted 
unless it is in cash, 
‘‘(ii) contributions will not be accepted 
for the taxable year in excess of the sum 
of—
‘‘(I) the amounts collected with 
respect to such beneficiary under sec-
tions 3101(a)(2) and 1401(a)(2), and 
‘‘(II) the amounts transferred to 
such account under section 6402(l), 
and 
‘‘(iii) any contributions with respect to 
an account holder which are not accepted 
pursuant to this paragraph are promptly 
refunded directly to the account holder.
‘‘(B) The trustee is an institution which is 
certified under subpart 3 of part B of title II 
of the Social Security Act. 
‘‘(C) No part of the trust funds will be in-
vested in life insurance contracts. 
‘‘(D) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(E) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(c) CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for contributions credited to an individual se-
curity account under part B of title II of the Social 
Security Act or amounts transferred to such account 
under section 6402(l). 
‘‘(2) ROLLOVERS.—
‘‘(A) ROLLOVER FROM PRIVATELY-ADMIN-
ISTERED
INDIVIDUAL
SECURITY
ACCOUNT.—
The entire balance of an individual security ac-
count of the account holder may be rolled over 
to another individual security account of the ac-
count holder.
‘‘(B) ROLLOVER
OF
INHERITANCE.—Any 
portion of a distribution to an heir from an in-
dividual security account made by reason of the 
death of the beneficiary of such account may be 
rolled over to the individual security account of 
the heir. 
‘‘(d) TAX TREATMENT OF ACCOUNTS.—
‘‘(1) EXEMPTION FROM TAX.—An individual se-
curity account is exempt from taxation under this 
subtitle unless such account has ceased to be an in-
dividual security account by reason of paragraph 
(2). Notwithstanding the preceding sentence, any 
such account is subject to the taxes imposed by sec-
tion 511 (relating to imposition of tax on unrelated 
business income of charitable, etc. organizations). 
‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 
408(e) shall apply to privately-administered indi-
vidual security accounts, and any amount treated as 
distributed under such rules shall be includible in 
gross income and shall not be treated as a social se-
curity benefit for purposes of section 86. 
‘‘(3) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
‘‘(A) IN GENERAL.—The requirements of 
this subparagraph are met with respect to an 
amount paid or distributed from an individual 
security account to the account holder only if 
the entire amount in such account is received 
by the account holder and is paid into another 
individual security account for the benefit of 
such holder not later than the 60th day after 
the day on which the holder receives the pay-
ment or distribution. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from a pri-
vately-administered individual security account 
if, at any time during the 1-year period ending 
on the day of such receipt, such individual re-
ceived on 3 other occasions any other amount 
described in subparagraph (A) from an indi-
vidual security account which was not includible 
in the individual’s gross income because of the 
application of this paragraph. 
‘‘(e) DISTRIBUTIONS.—