SEC. 3. INDIVIDUAL SOCIAL SECURITY RETIREMENT AC-
COUNTS FUNDED BY SOCIAL SECURITY PAY-
ROLL DEDUCTION PLANS.
(a) IN GENERAL.—Title II of the Social Security Act
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 any calendar year shall have in
effect throughout such calendar year a social security pay-
roll deduction plan 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 a covered employer if—
‘‘(1) under such plan, the prescribed social se-
curity employee contribution is deducted from each
eligible employee’s wages and paid to an individual
social security retirement account of such employee
designated in accordance with section 252,
‘‘(2) under such plan, the covered employer
pays the amount so deducted to the designated indi-
vidual social security retirement account within 10
business days after the payment of the wages from
which the amount was deducted,
‘‘(3) under such plan, the covered employer
pays to the individual social security retirement ac-
count, together with the contribution paid pursuant
to paragraph (2), the prescribed social security em-
ployer contribution with respect to the eligible em-
ployee, and
‘‘(4) the employer receives no compensation for
the cost of administering such plan.
‘‘(c) AMOUNT DEDUCTED MAY BE ACCUMULATED
BY EMPLOYER IN CERTAIN CASES.—If, under the terms
of an individual social security retirement account selected
under section 252, contributions below a specified amount
will not be accepted, the requirements of subsection (b)(2)
shall be treated as met if amounts deducted from the
wages of an eligible employee are accumulated by the cov-
ered 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 INDIVIDUAL SOCIAL SECURITY
RETIREMENT ACCOUNTS
‘‘SEC. 252. (a) IN GENERAL.—Except as provided in
subsection (b), the individual social security retirement ac-
count to which contributions with respect to any eligible
employee are required to be paid under section 251 shall
be such an account designated by such employee to such
employer not later than 10 business days after the date
on which such employee becomes an eligible employee of
such employer. Any such designation shall be made in
such form and manner as may be prescribed in regula-
tions of the Secretary.
‘‘(b) DESIGNATION IN ABSENCE OF TIMELY DES-
IGNATION BY EMPLOYEE.—In any case in which no timely
designation of the individual social security retirement ac-
count is made, the covered employer shall designate such
account in accordance with regulations of the Secretary.
‘‘(c) SUBSEQUENT DESIGNATION
OF OTHER AC-
COUNTS.—The Secretary shall provide by regulation for
subsequent designation of other individual social security
retirement accounts of an eligible employee in lieu of or
in addition to accounts previously designated under this
section.
‘‘SELF-EMPLOYED INDIVIDUALS
‘‘SEC. 253. (a) IN GENERAL.—Not later than 30
days after the close of any taxable year for which there
is imposed a tax under section 1401(a) of the Internal
Revenue Code of 1986 on the self-employment income of
an individual, such individual shall pay to an individual
social security retirement account designated by such indi-
vidual the prescribed social security self-employment con-
tribution with respect to such individual for such taxable
year.
‘‘(b) DESIGNATION OF ACCOUNT.—The designation
of an individual social security retirement account for pay-
ment of prescribed social security self-employment con-
tributions shall be made in such form and manner as may
be prescribed in regulations of the Secretary.
‘‘DEFINITIONS
‘‘SEC. 254. For purposes of this part—
‘‘(1) INDIVIDUAL
SOCIAL
SECURITY
RETIRE-
MENT ACCOUNT.—The term ‘individual social secu-
rity 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) and which meets the require-
ments of section 408A of such Code.
‘‘(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 were paid by such person during such cal-
endar year.
‘‘(3) ELIGIBLE EMPLOYEE.—The term ‘eligible
employee’ means, in connection with any person who
is a covered employer for any calendar year, any in-
dividual 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.
‘‘(4) PRESCRIBED SOCIAL SECURITY EMPLOYEE
CONTRIBUTION.—The term ‘prescribed social secu-
rity employee contribution’ means, with respect to
any eligible employee of a covered employer, an
amount equal to 1 percent of the wages received by
such employee with respect to employment by such
employer.
‘‘(5) PRESCRIBED SOCIAL SECURITY EMPLOYER
CONTRIBUTION.—The term ‘prescribed social secu-
rity employer contribution’ means, with respect to a
covered employer of any eligible employee, 1 percent
of the wages paid by such employer to such em-
ployee with respect to employment of such employee.
‘‘(6) PRESCRIBED
SOCIAL
SECURITY
SELF-
EMPLOYMENT
CONTRIBUTION.—The 
term 
‘pre-
scribed social security self-employment contribution’
means, with respect to the self-employment income
of an individual for any taxable year, 2 percent of
the amount of such self-employment income for such
taxable year.
‘‘(7) BUSINESS DAY.—The term ‘business day’
means any day other than a Saturday, Sunday, or
legal holiday in the area involved.
‘‘PENALTIES
‘‘SEC. 255. (a) FAILURE TO ESTABLISH SOCIAL SE-
CURITY PAYROLL DEDUCTION PLAN.—Any covered em-
ployer who fails to meet the requirements of section 251
for any calendar year shall be subject to a civil penalty
of not to exceed the greater of—
‘‘(1) $50,000, or
‘‘(2) $1,000 for each eligible employee of such
employer as of the beginning of such calendar year.
‘‘(b) FAILURE TO MAKE DEDUCTIONS REQUIRED
UNDER PLAN.—Any covered employer who fails to timely
deduct in full the amount from the wages of an eligible
employee required under an applicable social security pay-
roll deduction plan shall be subject to a civil penalty of
not to exceed $50 for each such failure.
‘‘(c) FAILURE TO PAY DEDUCTED WAGES TO INDI-
VIDUAL SOCIAL SECURITY RETIREMENT ACCOUNT.—If
an amount deducted from the wages of an eligible em-
ployee under a social security payroll deduction plan is not
timely paid in full to the designated individual social secu-
rity retirement account in accordance with section 251—
‘‘(1) the covered employer failing to make such
payment shall be subject to a civil penalty of not to
exceed 20 percent of the unpaid amount, and
‘‘(2) shall be liable to the eligible employee for
interest on the unpaid amount at a rate equal to
133 percent of the Federal short-term rate under
section 1274(d)(1) of the Internal Revenue Code of
1986, calculated from the last day by which such
amount was required to be so paid to the date on
which such amount is paid into the designated indi-
vidual social security retirement account.
‘‘(d) FAILURE TO PAY PRESCRIBED SOCIAL SECU-
RITY SELF-EMPLOYMENT CONTRIBUTIONS TO INDIVID-
UAL SOCIAL SECURITY RETIREMENT ACCOUNT.—Any in-
dividual failing to timely pay in full a prescribed social
security self-employment contribution to a designated indi-
vidual social security retirement account as required under
section 253 shall be subject to a civil penalty of not to
exceed 20 percent of the unpaid amount, plus interest on
the unpaid amount at a rate equal to 133 percent of the
Federal short-term rate under section 1274(d)(1) of the
Internal Revenue Code of 1986, calculated from the last
day by which such amount was required to be so paid to
the date on which such amount is paid into the designated
individual social security retirement account.
‘‘(e) RULES FOR APPLICATION OF SECTION.—
‘‘(1) PENALTIES ASSESSED BY SECRETARY.—
Any civil penalty assessed by this section shall be
imposed by the Secretary and collected in a civil
action.
‘‘(2) COMPROMISES.—The Secretary may com-
promise the amount of any civil penalty imposed by
this section.
‘‘(3) AUTHORITY TO WAIVE PENALTY IN CER-
TAIN CASES.—The Secretary may waive the applica-
tion of this section with respect to any failure if the
Secretary determines that such failure is due to rea-
sonable cause and not to intentional disregard of
rules and regulations.’’.
(b) AMOUNTS DEDUCTED TO BE SHOWN ON W–2
STATEMENTS.—Subsection (a) of section 6051 of the In-
ternal Revenue Code of 1986 (relating to receipts for em-
ployees) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(8),
(2) by striking the period at the end of para-
graph (9) and inserting ‘‘, and’’, and
(3) by inserting after paragraph (9) the follow-
ing new paragraph:
‘‘(10) the total amount deducted from the em-
ployee’s wages under a social security payroll deduc-
tion plan established under part B of title II of the
Social Security Act.’’
(c) EXEMPTION FROM ERISA REQUIREMENTS.—
Subsection (b) of section 4 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1003(b)) is
amended—
(1) by striking ‘‘or’’ at the end of paragraph
(4);
(2) by striking the period at the end of para-
graph (5) and inserting ‘‘; or’’; and
(3) by adding at the end the following new
paragraph:
‘‘(6) such plan is a social security payroll de-
duction plan established under part B of title II of
the Social Security Act.’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
subsection (a) shall apply with respect to wages paid
in calendar years beginning on or after January 1,
1995.
(2) 
TRANSITIONAL
RULE.—Notwithstanding
section 252(a) of the Social Security Act (as added
by this Act), the initial designations of individual so-
cial security retirement accounts with respect to eli-
gible employees employed by covered employers as of
January 1, 1995, pursuant to such section may be
made at any time not later than January 15, 1995.
SEC. 4. TAX TREATMENT OF INDIVIDUAL SOCIAL SECURITY
RETIREMENT ACCOUNTS.
(a) IN GENERAL.—Subpart A of part I of subchapter
D of chapter 1 of the Internal Revenue Code of 1986 (re-
lating to pension, profit-sharing, stock bonus plans, etc.)
is amended by inserting after section 408 the following
new section:
‘‘SEC. 408A. INDIVIDUAL SOCIAL SECURITY RETIREMENT
ACCOUNTS.
‘‘(a) GENERAL RULE.—Except as provided in this
section, an individual social security retirement account
shall be treated for purposes of this title in the same man-
ner as an individual retirement plan.
‘‘(b) INDIVIDUAL SOCIAL SECURITY RETIREMENT
ACCOUNT.—For purposes of this section, the term ‘indi-
vidual social security retirement account’ means an ac-
count established and administered in accordance with
part B of title II of the Social Security Act (relating to
individual retirement program).
‘‘(c) CONTRIBUTION RULES.—
‘‘(1) NO DEDUCTION ALLOWED.—No deduction
shall be allowed under section 219 for a contribution
to an individual social security retirement account.
‘‘(2) CONTRIBUTION LIMIT.—No amount, other
than a prescribed contribution under part B of title
II of the Social Security Act, may be accepted as a
contribution to an individual social security retire-
ment account.
‘‘(d) 
TREATMENT
OF
ROLLOVERS.—Section
408(d)(3)(A)(i) shall apply to any amount distributed
from an individual social security retirement account only
to the extent such amount is paid into another such ac-
count for the benefit of the individual for whom the ac-
count from which such amount is transferred was main-
tained.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subpart A is amended by inserting after the item
relating to section 408 the following new item:
‘‘Sec. 408A. Individual social security retirement accounts.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1994.
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