year in which the account holder becomes 701⁄2 
years of age; or 
‘‘(4) to transfer the amount of the balance in 
the account holder’s investment account in the Trust 
Fund to an eligible retirement plan as provided in 
subsection (c). 
‘‘(c) 
TRANSFERS
TO
ELIGIBLE
RETIREMENT 
PLANS.—
‘‘(1) IN
GENERAL.—The Executive Director 
shall make each transfer elected under subsection 
(b)(4) directly to an eligible retirement plan or plans 
(as defined in section 402(c)(8)(B) of the Internal 
Revenue Code of 1986) identified by the account 
holder for whom the transfer is made. 
‘‘(2) TRANSFER
CONTINGENT
UPON
RECEIPT 
OF NECESSARY INFORMATION.—A transfer may not 
be made for an account holder under paragraph (1) 
until the Executive Director receives from such ac-
count holder the information required by the Execu-
tive Director specifically to identify the eligible re-
tirement plan or plans to which the transfer is to be 
made. 
‘‘(d) MODIFICATION OF ELECTIONS.—
‘‘(1) IN
GENERAL.—Subject to paragraph 
(3)(A) and subsections (a) and (d) of section 258,
an account holder may change an election previously 
made under this section. 
‘‘(2) MODIFICATION
OF
DATE
FOR
DELAYED 
DISTRIBUTIONS.—Subject to paragraph (3)(B) and 
section 258(d), an account holder who has made an 
election pursuant to subsection (b)(2) may modify 
the date specified in such election or in a previous 
modification under this paragraph. 
‘‘(3) LIMITATIONS.—
‘‘(A) MODIFICATIONS DISALLOWED UPON 
COMMENCEMENT
OF
DISTRIBUTION.—An ac-
count holder may not change an election under 
this section on or after the date on which a 
payment is made in accordance with such elec-
tion or, in the case of an election to receive an 
annuity, the date on which an annuity contract 
is purchased to provide for the annuity elected 
by the account holder. 
‘‘(B) OTHER
LIMITATIONS.—A modifica-
tion of a date may not be made under para-
graph (2) on or after the date on which an an-
nuity contract is purchased to provide for the 
annuity involved, and may not specify a date 
for the commencement of an annuity earlier 
than 90 days after the date on which the modi-
fication is submitted to the Executive Director 
(or such period shorter than 90 days as the Ex-
ecutive Director may by regulation prescribe). 
‘‘(e) DEFAULT MEANS OF DISTRIBUTION.—
‘‘(1) LUMP SUM DISTRIBUTIONS OF MINIMAL 
AMOUNTS.—Notwithstanding subsection (b), if an 
account holder becomes entitled to old-age insurance 
benefits under section 202(a) and the balance in 
such account holder’s investment account is $3,500 
or less, the Executive Director shall pay the balance 
to the account holder in a single payment unless the 
account holder elects, at such time and otherwise in 
such manner as the Executive Director prescribes, 
one of the options available under subsection (b). 
‘‘(2) 
DEFAULT
ANNUITY
COMMENCEMENT 
DATE.—Unless otherwise elected under this section, 
and subject to paragraph (1), the balance in an ac-
count holder’s investment account shall be paid as 
an annuity commencing for the account holder on 
February 1 of the year following the year in which 
the account holder becomes entitled to old-age insur-
ance benefits under section 202(a). 
‘‘SEC. 257. PAYMENT OF ANNUITIES. 
‘‘(a) METHODS OF PAYMENT.—The Board shall pre-
scribe methods of payment of annuities under this part.
The methods of payment prescribed under this subsection 
shall include, but not be limited to—
‘‘(1) a method which provides for the payment 
of a monthly annuity only to an annuitant during 
the life of the annuitant; 
‘‘(2) a method which provides for the payment 
of a monthly annuity to an annuitant for the joint 
lives of the annuitant and the spouse of the annu-
itant and an appropriate monthly annuity to the one 
of them who survives the other of them for the life 
of the survivor; 
‘‘(3) a method described in paragraph (1) which 
provides for automatic adjustments in the amount of 
the annuity payable so long as the amount of the an-
nuity payable in any one year shall not be less than 
the amount payable in the previous year; 
‘‘(4) a method described in paragraph (2) which 
provides for automatic adjustments in the amount of 
the annuity payable so long as the amount of the an-
nuity payable in any one year shall not be less than 
the amount payable in the previous year; and 
‘‘(5) a method which provides for the payment 
of a monthly annuity—
‘‘(A) to the annuitant for the joint lives of 
the annuitant and an individual who is des-
ignated by the annuitant under regulations pre-
scribed by the Executive Director and (i) is a 
former spouse of the annuitant, or (ii) has an 
insurable interest in the annuitant; and 
‘‘(B) to the one of them who survives the 
other of them for the life of the survivor. 
‘‘(b) REQUIREMENT OF ELECTION.—Subject to sec-
tion 258(c), under such regulations as the Executive Di-
rector shall prescribe, an account holder who elects under 
section 256 to receive an annuity under this part shall 
elect, on or before the date on which an annuity contract 
is purchased to provide for that annuity, one of the meth-
ods of payment prescribed under subsection (a). 
‘‘(c) CONTINUED PERIOD OF 5 YEARS AVAILABILITY 
FOR ELIMINATED METHODS.—Notwithstanding an elimi-
nation of a method of payment by the Board, an account 
holder may elect the eliminated method if the elimination 
of such method became effective less than 5 years before 
the date on which the annuity commences. 
‘‘(d) CONTRACTS FOR PURCHASE OF ANNUITIES.—
‘‘(1) TIME
LIMIT
FOR
ENTERING
INTO
CON-
TRACT.—Not earlier than 90 days (or such shorter 
period as the Executive Director may by regulation 
prescribe) before an annuity is to commence under 
this part, the Executive Director shall expend the
balance in the annuitant’s account to purchase an 
annuity contract from any entity which, in the nor-
mal course of its business, sells and provides annu-
ities. 
‘‘(2) ASSURANCE OF PROVISION OF ANNUITY.—
The Executive Director shall assure, by contract en-
tered into with each entity from which an annuity 
contract is purchased under paragraph (1), that the 
annuity shall be provided in accordance with the 
provisions of this part. 
‘‘(3) TERMS
AND
CONDITIONS.—An annuity 
contract purchased under paragraph (1) shall in-
clude such terms and conditions as the Executive 
Director requires for the protection of the annuitant. 
‘‘(4) BONDING.—The Executive Director shall 
require, from each entity from which an annuity 
contract is purchased under paragraph (1), a bond 
or proof of financial responsibility sufficient to pro-
tect the annuitant. 
‘‘(e) EXEMPTION
FROM
LOCAL
TAXATION
OF 
AMOUNTS PAID TO PURCHASE ANNUITIES.—
‘‘(1) IN GENERAL.—No tax, fee, or other mone-
tary payment may be imposed or collected by any 
State, or by any political subdivision or other gov-
ernmental authority thereof, on, or with respect to,
any amount paid to purchase an annuity contract 
under this section. 
‘‘(2) TAXATION OF ISSUER PERMITTED.—Para-
graph (1) shall not be construed to exempt any com-
pany or other entity issuing an annuity contract 
under this section from the imposition, payment, or 
collection of a tax, fee, or other monetary payment 
on the net income or profit accruing to or realized 
by that entity from the sale of an annuity contract 
under this section if that tax, fee, or payment is ap-
plicable to a broad range of business activity. 
‘‘SEC. 258. PROTECTIONS FOR SPOUSES AND FORMER 
SPOUSES. 
‘‘(a) REQUIREMENT OF SPOUSAL CONSENT.—
‘‘(1) IN GENERAL.—A married account holder 
may make an election under subsection (b)(3) or 
(b)(4) of section 256 or change an election pre-
viously made under subsection (b)(1) or (b)(2) of 
such section only if the account holder and the ac-
count holder’s spouse jointly waive, by written elec-
tion, any right which the spouse may have to a sur-
vivor annuity with respect to such account holder 
under section 257 or subsection (b). 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply to an election or change of election by an ac-
count holder who establishes to the satisfaction of 
the Executive Director (at the time of the election 
or change and in accordance with regulations pre-
scribed by the Executive Director)—
‘‘(A) that the spouse’s whereabouts cannot 
be determined; or 
‘‘(B) 
that, 
due 
to 
exceptional 
cir-
cumstances, requiring the spouse’s waiver would 
otherwise be inappropriate. 
‘‘(b) JOINT AND SURVIVOR ANNUITY FORM APPLIES 
UNLESS OTHERWISE ELECTED.—
‘‘(1) IN GENERAL.—Notwithstanding any elec-
tion under subsection (b) of section 257, the method 
described in subsection (a)(2) of such section (or, if 
more than one form of such method is available, the 
form which the Board determines to be the one 
which provides for a surviving spouse a survivor an-
nuity most closely approximating the annuity of a 
surviving spouse under section 8442 of title 5, 
United States Code) shall be deemed the applicable 
method under such subsection (b) in the case of an 
account holder who is married on the date on which 
an annuity contract is purchased to provide for the 
account holder’s annuity under this part.
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply if—
‘‘(A) a joint waiver of such method is 
made, in writing, by the account holder and the 
spouse; or 
‘‘(B) the account holder waives such meth-
od, in writing, after establishing to the satisfac-
tion of the Executive Director that cir-
cumstances described under subsection (a)(2) 
(A) or (B) make the requirement of a joint 
waiver inappropriate. 
‘‘(c) ELECTIONS AND OTHER CHANGES SUBJECT TO 
COURT ORDERS.—
‘‘(1) IN GENERAL.—An election, change of elec-
tion, or modification of the commencement date of 
a deferred annuity shall not be effective under this 
part to the extent that the election, change, modi-
fication, or transfer conflicts with any court decree, 
order, or agreement described in paragraph (2). 
‘‘(2) REQUIREMENTS.—A court decree, order, 
or agreement referred to in paragraph (1) is, with 
respect to an account holder, a court decree of di-
vorce, annulment, or legal separation issued in the 
case of the account holder and any former spouse of 
the account holder or any court order or court-ap-
proved property settlement agreement incident to 
the decree if—
‘‘(A) the decree, order, or agreement ex-
pressly relates to any portion of the balance in 
the account holder’s investment account; and 
‘‘(B) notice of the decree, order, or agree-
ment was received by the Executive Director be-
fore—
‘‘(i) the date on which payment is 
made, or 
‘‘(ii) in the case of an annuity, the 
date on which an annuity contract is pur-
chased to provide for the annuity, 
in accordance with the election, change, modi-
fication, or contribution referred to in para-
graph (1). 
‘‘(3) TREATMENT OF 2 OR MORE COURT OR-
DERS.—The Executive Director shall prescribe regu-
lations under which this subsection shall be applied 
in any case in which the Executive Director receives 
two or more decrees, orders, or agreements referred 
to in paragraph (1). 
‘‘(d) RIGHTS OF FORMER SPOUSES.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2) 
through (7), a former spouse of a deceased account