‘‘(1) No contribution will be accepted, other
than—
‘‘(A) a contribution under paragraph (1)
or (2) of section 251(b), or subsection (a) of
section 253, of the Social Security Act,
‘‘(B) in any taxable year, an aggregate
amount not exceeding twice the total amount of
contributions described in subparagraph (A)
made in such taxable year,
‘‘(C) a contribution recognition bond, and
the proceeds thereof, issued under section 6 of
the Individual Social Security Retirement Ac-
counts Act of 1997, and
‘‘(D) a supplemental minimum benefit pay-
ment under section 256 of the Social Security
Act.
‘‘(2) Except as provided in paragraph (12), no
amount may be paid or distributed from such
trust—
‘‘(A) before the earlier of the date on
which the account holder attains age 591⁄2 or
the date on which the account holder dies, or
‘‘(B) if the account holder has not attained
age 62 and the balance in the account imme-
diately after the payment or distribution of
such amount would be less than the early dis-
tribution annuity amount (as defined in sub-
section (c)(2)).
‘‘(3) The trustee is a bank (as defined in sec-
tion 408(n)) or such other person who demonstrates
to the satisfaction of the Secretary that the manner
in which such other person will administer the trust
will be consistent with the requirements of this sec-
tion.
‘‘(4) The trustee has registered with the Com-
missioner of Social Security (in such form and man-
ner as the Commissioner may require) as a trustee
of individual social security retirement accounts.
‘‘(5) No part of the trust fund is invested in life
insurance contracts.
‘‘(6) The interest of an individual in the bal-
ance in his account is nonforfeitable.
‘‘(7) The assets of the trust will not be commin-
gled with other property except in a common trust
fund or common investment fund, which fund is
comprised only of assets of individual social security
retirement accounts.
‘‘(8) Under the terms governing the account,
contributions will be accepted irrespective of the
amount of the contribution.
‘‘(9) The same requirements as are applicable
with respect to trusts under paragraph (9) of section
401(a) (relating to required distributions) are met
with respect to the account.
‘‘(10) The same requirements as are applicable
with respect to trusts under paragraph (11) of sec-
tion 401(a) (relating to joint and survivor annuity
and preretirement survivor annuity) are met with re-
spect to the account (disregarding subparagraph (B)
thereof), as if the annuity starting date with respect
to the account holder is the earliest date on which
amounts may be distributed under paragraph (2).
‘‘(11) The account holder certifies that such
trust is the only individual social security retirement
account of the holder.
‘‘(12) Under terms governing the account,
amounts may be distributed from such trust to pur-
chase disability insurance or a policy providing for
preretirement survivor benefits under section 255 of
the Social Security Act.
Paragraphs (1), (2), and (10) shall not apply to a direct
trustee-to-trustee transfer to a successor individual social
security retirement account of the same individual.
‘‘(c) REQUIREMENTS.—
‘‘(1) REQUIREMENTS RELATING TO TRUSTEE.—
‘‘(A) TRUSTEE.—A trustee meets the re-
quirements of subsection (b)(3) if—
‘‘(i) the trustee is in business exclu-
sively as a trustee of individual social secu-
rity retirement accounts, and
‘‘(ii) the trustee is of good character
and is a substantial concern, produces evi-
dence of financial capability, demonstrates
financial soundness, and provides appro-
priate surety.
‘‘(B) REPLACEMENT OF TRUSTEE IN CASE
OF BANKRUPTCY.—In the case of a trustee of
an individual social security retirement account
with respect to which there is filed a bank-
ruptcy petition (or upon the initiation of a simi-
lar judicial proceeding) against the trustee, the
Secretary shall designate a successor trustee.
‘‘(C) STATUS AS FIDUCIARY.—Under the
terms of an individual social security retirement
account, the trustee of the account shall, with
respect to the account, have the status of a fi-
duciary (within the meaning of the first sen-
tence of section 3(21)(A) of the Employee Re-
tirement Income Security Act of 1974). The
trustee shall, with respect to the account, be
treated as a fiduciary for purposes of section
4975(e) (as applicable under subsection (f)(3)).
‘‘(2) 
EARLY
DISTRIBUTION
ANNUITY
AMOUNT.—For purposes of subsection (b)(2)—
‘‘(A) IN GENERAL.—The term ‘early dis-
tribution annuity amount’ means the amount
(determined under regulations of the Secretary)
necessary to purchase a minimum annuity on
the date of the payment or distribution referred
to in subsection (b)(2).
‘‘(B) MINIMUM
ANNUITY.—For purposes
of subparagraph (A), the term ‘minimum annu-
ity’ means an immediate annuity making pay-
ments over the life expectancy of the account
holder which (on a monthly basis) are equal to
the lesser of—
‘‘(i) an amount equal to 95 percent of
the account holder’s initial primary insur-
ance amount, determined under section
215 of the Social Security Act—
‘‘(I) as if section 202(y) of such
Act did not apply, and
‘‘(II) as if the account holder ap-
plied for old-age insurance benefits on
the date of the payment or distribu-
tion referred to in subsection (b)(2),
or
‘‘(ii) 40 percent of the account hold-
er’s average indexed monthly earnings (as
so determined),
‘‘(C) IMMEDIATE ANNUITY.—For purposes
of subparagraph (B), the term ‘immediate an-
nuity’ means an annuity—
‘‘(i) which is purchased with a single
premium, and
‘‘(ii) the annuity starting date (as de-
fined in paragraph (4) of section 72(c) of
the Internal Revenue Code of 1986) of
which commences on the 1st day of the
month beginning after the date of the pur-
chase of the annuity.
‘‘(3) INVESTMENT IN COLLECTIBLES TREATED
AS A DISTRIBUTION.—For purposes of this section,
subsection (m) of section 408 shall apply.
‘‘(d) ACCOUNT EXEMPT FROM TAX.—
‘‘(1) GENERAL RULE.—Except as provided in
paragraph (2), any individual social security retire-
ment 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 individual social security retirement ac-
counts.
‘‘(e) TAXATION OF DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—
‘‘(A) INCOME EXCLUSION.—In the case of
any amount paid or distributed from an individ-
ual social security retirement account—
‘‘(i) the social security benefit amount
shall be includible in gross income only if
so includible under section 86, determined
by treating the social security benefit
amount as social security benefits (as de-
fined in such section), and
‘‘(ii) 
the 
supplemental 
retirement
amount shall be includible in gross income
to the extent that such amount is so in-
cludible under section 72, determined by
treating the individual social security re-
tirement account as an individual retire-
ment plan in accordance with section
408(d)(2).
‘‘(B) 
SOCIAL
SECURITY
BENEFIT
AMOUNT.—For purposes of subparagraph (A),
the term ‘social security benefit amount’ means
the amount which bears the same ratio to the
amount of the payment or distribution as the
sum of the amounts contributed to the individ-
ual social security retirement account under
subparagraphs (A), (C), and (D) of subsection
(b)(1) bears to the total amount contributed to
such account under subsection (b)(1).
‘‘(C) 
SUPPLEMENTAL
RETIREMENT
AMOUNT.—For purposes of subparagraph (A),
the term ‘supplemental retirement amount’
means the amount which bears the same ratio
to the amount of the payment or distribution as
the sum of the amounts contributed to the indi-
vidual social security retirement account under
subparagraph (B) of subsection (b)(1) bears to
the total amount contributed to such account
under subsection (b)(1).
‘‘(2) TREATMENT OF ROLLOVERS.—No amount
shall be includible in gross income by reason of a di-
rect trustee-to-trustee transfer from an individual
social security retirement account of an individual to
a successor individual social security retirement ac-
count of the same individual if such transfer is made
in accordance with section 408(d)(3)(A)(i).
‘‘(3) TREATMENT
OF
DISABILITY
INSURANCE
AND
PRERETIREMENT
BENEFIT
POLICY
PRE-
MIUMS.—No amount shall be includible in gross in-
come to the extent that such amount is a premium
for the purchase of disability insurance or a policy
providing for preretirement survivor benefits pursu-
ant to section 255 of the Social Security Act.
‘‘(4) 
TREATMENT
OF
COLLECTIBLES.—
Amounts treated as a distribution under subsection
(c)(3) shall be includible in gross income and para-
graph (1) of section 72(t) shall apply to such
amounts.
‘‘(f) CERTAIN OTHER RULES TO APPLY.—The fol-
lowing rules shall apply to individual social security retire-
ment accounts in the same manner that such rules apply
to individual retirement accounts:
‘‘(1) Section 408(h) (relating to custodial ac-
counts).
‘‘(2) Sections 408(i) and 6693 (relating to re-
ports).
‘‘(3) Section 4975 (relating to prohibited trans-
actions).’’.
(b) EXCESS CONTRIBUTIONS.—
(1) IN
GENERAL.—Subsection (a) of section
4973 of the Internal Revenue Code of 1986 is
amended by striking ‘‘or’’ at the end of paragraph
(3), by inserting ‘‘or’’ at the end of paragraph (4),
and by inserting after paragraph (4) the following
new paragraph:
‘‘(5) an individual social security retirement ac-
count (as defined in section 408B),’’.
(2) EXCESS
CONTRIBUTIONS
DEFINED.—Sec-
tion 4973 of such Code is amended by adding at the
end the following new subsection:
‘‘(g) EXCESS CONTRIBUTIONS TO INDIVIDUAL SO-
CIAL SECURITY RETIREMENT ACCOUNTS.—For purposes
of this section, in the case of contributions to an individual
social security retirement account (within the meaning of
section 408B(b)), the term ‘excess contributions’ means
with respect to a taxable year the sum of—
‘‘(1) the excess (if any) of—
‘‘(A) the amount contributed for the tax-
able year to such account (other than a quali-
fied rollover contribution described in section
408B(e)(2)), over
‘‘(B) the amount allowable as a contribu-
tion for that taxable year under section
408B(b)(1), and
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by
the sum of—
‘‘(A) the distributions out of the account
for such taxable year, and
‘‘(B) the excess (if any) of the maximum
amount allowable as a contribution under sec-
tion 408B(b)(1) for such taxable year over the
amount contributed to the account for the tax-
able year.
For purposes of this subsection, any contribution which
is distributed from an individual social security retirement
account in a distribution described in section 408(d)(4)
shall be treated as an amount not contributed.’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart A of part I of subchapter D of chapter 1 of
such Code is amended by inserting after the item relating
to section 408A the following new item:
‘‘Sec. 408B. Individual social security retirement accounts.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
poses of sections 226 and 226A) no other individual shall
be deemed entitled to benefits under section 202 for any
month ending after the date of the election based on the
wages or self-employment income of an individual who has
made such an election.’’.
SEC. 6. CONTRIBUTION RECOGNITION BONDS.
(a) CERTIFICATION OF CREDITED WAGES AND SELF-
EMPLOYMENT INCOME.—Not later than July 1 of the first
calendar year for which an individual is an eligible individ-
ual (as defined in section 257(3) of the Social Security
Act), the Commissioner of Social Security shall certify to
the Secretary of the Treasury whether such individual
was, as of immediately before such first calendar year,
credited with wages and self-employment income under
part A of title II of the Social Security Act.
(b) ISSUANCE OF BOND.—Immediately upon receipt
of certification under subsection (a) that such individual
is so credited, the Secretary of the Treasury shall issue
a contribution recognition bond to the trustee of the indi-
vidual social security retirement account held by such indi-
vidual. Such bond shall consist of an obligation of the
United States to pay each month into the individual social
security retirement account held by such individual, com-
mencing with the applicable initial month, an amount
equal to such individual’s primary insurance amount, de-
termined under section 215 of the Social Security Act as
if section 202(y) of such Act did not apply and such indi-
vidual had applied for old-age insurance benefits under
section 202(a) of such Act for such month, and by taking
into account average indexed monthly earnings based sole-
ly on those wages and self-employment income that were
credited as described in subsection (a).
(c) APPLICABLE INITIAL MONTH.—For purposes of
subsection (b), the applicable initial month in connection
with any individual is the later of—
(1) the month in which such individual attains
age 62, or
(2) the month in which such individual first
commences distributions from such individual’s indi-
vidual social security retirement account.
(d) ADDITIONAL PROVISIONS.—The purposes for
which obligations of the United States may be issued
under chapter 31 of title 31, United States Code, are here-
by extended to authorize the issuance of public debt obli-
gations consisting of contribution recognition bonds issued
under this section. Each such obligation shall be evidenced
by a paper instrument in the form of a bond issued by
the Secretary setting forth the terms specified in this sub-
section, and stating on its face that the obligation shall
be incontestable in the hands of the trustee of such ac-
count, that the obligation is supported by the full faith
and credit of the United States, and that the United
States is pledged to the payment of the obligation, to the
credit of such account, in accordance with the provisions
of this section.
SEC. 7. PHASED IN INCREASE IN SOCIAL SECURITY RETIRE-
MENT AGE.
Section 216(l) of the Social Security Act (42 U.S.C.
416(l) is amended—
(1) by striking subparagraphs (B), (C), (D),
and (E) of paragraph (1) and inserting the following
new subparagraphs:
‘‘(B) with respect to an individual who attains
early retirement age (as determined under para-
graph (2)) after December 31, 1999, and before
January 1, 2029, 65 years of age plus 2⁄12 of the
number of months in the period beginning with Jan-
uary 2000 and ending with December of the year in
which the individual attains early retirement age (as
so determined); and
‘‘(C) with respect to an individual who attains
early retirement age after December 31, 2028, 70
years of age.’’; and
(2) by striking paragraph (3).
SEC. 8. ADJUSTED PERCENTAGES APPLIED TO AVERAGE
INDEXED MONTHLY EARNINGS IN DETERMIN-
ING PRIMARY INSURANCE AMOUNTS.
(a) IN GENERAL.—Section 215(a)(1)(B) of the So-
cial Security Act (42 U.S.C. 415(a)(1)(B)) is amended by
adding at the end the following new clause:
‘‘(iii) For purposes of determinations made under
this subsection taking effect in each calendar year after
1999, each percentage specified in clauses (i), (ii), and (iii)
of subparagraph (A) shall be replaced with a percentage
equal to the product derived by multiplying—
‘‘(I) the percentage in effect for purposes of de-
terminations made under this subsection in the prior
calendar year, by
‘‘(II) the applicable index ratio,
rounded to the nearest one-tenth of 1 percent.
‘‘(iv) For purposes of clause (iii), the applicable index
ratio in connection with determinations made under this
subsection in any calendar year, means a ratio—
‘‘(I) the numerator of which is 100 percent plus
the percentage (rounded to the nearest one-tenth of
1 percent) by which the Consumer Price Index for
December of the preceding calendar year exceeds the
Consumer Price Index for December of the next
prior calendar year, and
‘‘(II) the denominator of which is 100 percent
plus the percentage (rounded to the nearest one-
tenth of 1 percent) by which the national average
wage index (as defined in section 209(k)(1)) for the
preceding calendar year exceeds such index for the
next prior calendar year.’’.
(b) CONFORMING AMENDMENT.—Section 209(k)(1)
of such Act (42 U.S.C. 409(k)(1)) is amended by inserting
‘‘215(a)(1)(B)(iii),’’ after ‘‘215(a)(1)(B)(ii),’’.
SEC. 9. OFF-BUDGET TREATMENT FOR SOCIAL SECURITY
REFORMS.
(a) IN GENERAL.—In determining any new budget
authority, outlays, receipts, deficit, or surplus for purposes
of—
(1) the budget of the United States Govern-
ment as submitted by the President,
(2) the congressional budget, or
(3) the Balanced Budget and Emergency Defi-
cit Control Act of 1985,
any receipts or disbursements of the general fund of the
Treasury and any indebtedness incurred by the Federal
Government pursuant to the operation of the provisions
of this Act or the amendments made thereby (other than
administrative expenses of the Social Security Administra-
tion or the Department of the Treasury) shall not be taken
into account.
(b) RULES OF CONSTRUCTION.—Nothing in this Act
(or the amendments made thereby) shall—
(1) affect the status as private property of
amounts contributed to individual social security re-
tirement accounts pursuant to section 251 or 253 of
the Social Security Act (added by this Act) and any
income attributable to such contributions, or
(2) supersede or otherwise affect the provisions
of section 710 of the Social Security Act (relating to
budgetary treatment of the social security trust
funds) or section 13301 of the Budget Enforcement
Act of 1990 (relating to off-budget status of OASDI
trust funds).
(c) EXCLUSION OF PROGRAM FOR SOCIAL SECURITY
REFORMS
FROM
CONGRESSIONAL
BUDGET.—Section
301(a) of the Congressional Budget Act of 1974 is amend-
ed in the last sentence by inserting ‘‘or of the operation
of the provisions of the Individual Social Security Retire-
ment Accounts Act of 1997 (and the amendments made
thereby)’’ after ‘‘1986’’.
SEC. 10. STUDY RELATING TO FEDERAL CIVILIAN AND
MILITARY PERSONNEL.
(a) IN GENERAL.—Not later than December 31,
1998, the Office of Personnel Management, after appro-
priate study, shall submit to the President and each House
of the Congress a written report containing recommenda-
tions for the most appropriate and feasible means of pro-
viding for the application of this Act with respect to Fed-
eral civilian and military personnel.
(b) REQUIREMENTS.—The report—
(1) shall be prepared in consultation with the
Social Security Administration and other appro-
priate agencies, and
(2) shall be accompanied by draft legislation
which, if enacted, would carry out the recommenda-
tions contained in such report.
Æ