I
104TH CONGRESS
2D SESSION
H. R. 2953
To amend the Internal Revenue Code of 1986 and the Social Security Act
to provide for personal investment plans funded by employee social secu-
rity payroll deductions.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 1, 1996
Mr. PORTER (for himself and Mr. INGLIS of South Carolina) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Economic and Educational Opportu-
nities, for a period to be subsequently determined by the Speaker, in each
case for consideration of such provisions as fall within the jurisdiction of
the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 and the Social
Security Act to provide for personal investment plans
funded by employee 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 ‘‘Personal Investment
Plan Act of 1995’’.
SEC. 2. OPTIONAL REDUCTION OF SOCIAL SECURITY TAXES
ON EMPLOYEES.
(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 period at the end of the
table and inserting a semicolon; 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 4.2 percent with
respect to wages paid on or after January 1 of the cal-
endar year in which an election is in effect under such
section, for pay periods ending after such date.’’.
(b) SELF-EMPLOYMENT TAX.—Subsection (a) of sec-
tion 1401 of such Code (relating to OASDI tax on self-
employment income) is amended—
(1) by striking the period at the end of the
table and inserting a semicolon; and
(2) by adding after and below the table the fol-
lowing:
‘‘except that, in the case of an eligible self-employed indi-
vidual (as defined in section 255(4) of the Social Security
Act), the rate of tax under this subsection shall be 10.4
percent of the amount of the self-employment income in
the case of a taxable year in which an election is in effect
under such section.’’.
(c) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to remuneration paid after
December 31, 1995.
(2) SELF-EMPLOYMENT
TAX.—The amend-
ments made by subsection (b) shall apply to taxable
years beginning after December 31, 1995.
SEC. 3. PERSONAL INVESTMENT 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—PERSONAL INVESTMENT PLANS
‘‘PERSONAL INVESTMENT PAYROLL DEDUCTION PLANS
‘‘SEC. 251. (a) IN GENERAL.—Each person who is
a covered employer for a calendar year shall have in effect
a personal investment payroll deduction plan for such cal-
endar year for such person’s eligible employees.
‘‘(b) REQUIREMENTS.—For purposes of this part, the
term ‘personal investment payroll deduction plan’ means
a written plan of an employer if—
‘‘(1) the plan applies only with respect to wages
of eligible employees,
‘‘(2) under such plan, the personal investment
plan contributions will be deducted from the employ-
ee’s wages and paid to the Social Security Adminis-
tration with respect to a personal investment plan
designated in accordance with section 252(a),
‘‘(3) under such plan, the employer is required
to pay the amount so deducted with respect to the
specified personal investment plan within 10 busi-
ness 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) the employer does not make any endorse-
ment with respect to any plan.
‘‘(c) AMOUNTS DEDUCTED MAY BE ACCUMULATED
BY EMPLOYER IN CERTAIN CASES.—If, under the terms
of a personal investment plan designated under section
252(a), 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
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 speci-
fied amount.
‘‘DESIGNATION OF PERSONAL INVESTMENT PLANS
UNDER PAYROLL DEDUCTION PLAN
‘‘SEC. 252. (a) IN GENERAL.—Except as provided in
subsection (b), the personal investment plan with respect
to which the personal investment plan contributions with
respect to any employee are required to be paid under sec-
tion 251 shall be a personal investment plan designated
by the employee to the employer not later than 10 business
days after the date on which the employee becomes an em-
ployee of such employer. Any such designation shall be
made in such form and manner as may be prescribed in
regulations of the Commissioner of Social Security.
‘‘(b) DESIGNATION IN ABSENCE OF TIMELY DES-
IGNATION BY EMPLOYEE.—In any case in which no timely
designation of the personal investment plan is made, the
employer shall make the designation of the personal in-
vestment plan in accordance with regulations of the Com-
missioner of Social Security.
‘‘PARTICIPATION BY SELF-EMPLOYED INDIVIDUALS
‘‘SEC. 253. (a) IN GENERAL.—Each eligible self-em-
ployed individual who receives self-employment income be-
ginning on or after January 1 of the taxable year in which
an election is in effect under section 255, shall, in such
form and manner as shall be prescribed in regulations of
the Commissioner of Social Security, deposit with the So-
cial Security Administration with respect to a personal in-
vestment plan maintained by such individual the personal
investment plan contribution for such taxable year. Such
deposit shall be made within 10 business days after the
receipt by such individual of such self-employment income.
‘‘(b) AMOUNTS PAYABLE MAY BE ACCUMULATED IN
CERTAIN CASES.—If, under the terms of a personal in-
vestment plan maintained under subsection (a), contribu-
tions below a specified amount will not be accepted, the
requirements of subsection (a) shall be treated as met if
amounts otherwise payable under subsection (a) are accu-
mulated by the individual 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 PLANS 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 personal investment plan was estab-
lished and maintained pursuant to section 252 or 253, the
trustee of such plan shall transfer the balance in such plan
to a personal investment plan maintained by an eligible
survivor if such plan is designated by the eligible survivor
to the trustee not later than 20 business days after the
date of such individual’s death. Any such designation shall
be made in such form and manner as may be prescribed
in regulations of the Commissioner of Social Security.
‘‘(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 personal in-
vestment plan is made by the eligible survivor under sub-
section (a), the trustee shall make the designation of the
personal investment plan under subsection (a) on behalf
of such eligible survivor, in accordance with regulations
of the Commissioner of Social Security.
‘‘(c) DISPOSITION OF PLAN BALANCE WHERE NO
ELIGIBLE SURVIVOR EXISTS.—In any case in which, upon
the expiration of such 20-day period no timely designation
under subsection (b) has been made and there is no eligi-
ble survivor, the trustee of the deceased individual’s plan
shall transfer the balance in such plan to the Federal Old-
Age and Survivors Insurance Trust Fund within the pe-
riod of 20 business days following the expiration of such
20-day period.
‘‘DEFINITIONS
‘‘SEC. 255. For purposes of this part—
‘‘(1) PERSONAL INVESTMENT PLAN.—The term
‘personal investment plan’ means—
‘‘(A) any personal investment retirement
plan in the Personal Investment Fund (estab-
lished under section 257) which is administered
by the Personal Investment Board, or
‘‘(B) any individual retirement plan (as de-
fined in section 7701(a)(37) of the Internal
Revenue Code of 1986) which is administered
or issued by a bank (as defined in section
408(n) of such Code),
under terms which restrict deposits to personal in-
vestment plan contributions made to the plan pursu-
ant to section 251 or 253 and transfers made to the
plan pursuant to section 254, and under which dis-
tributions may only be made on or after the date on
which the individual attains age 591⁄2, made to a
beneficiary (or to the estate of the individual) on or
after the death of the individual, or attributable to
the individual’s becoming disabled within the mean-
ing of section 223(d).
‘‘(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.—The term ‘eligible em-
ployee’ means, in connection with any person
who is a covered employer for any calendar year
beginning after December 31, 1995, any indi-
vidual—
‘‘(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 files with the employer and
the Commissioner of Social Security, in
such form and manner as shall be pre-
scribed in regulations of the Commissioner,
a written and signed declaration of such
individual’s intention to be treated as an
eligible employee for purposes of this title
and such election meets the requirements
of subparagraph (B).
‘‘(B) REQUIREMENTS.—Any election under
subparagraph (A)(ii) must be so filed not later
than December 15 preceding the calendar year
in which such election is to take effect, and
must designate the personal investment plan to
which the personal investment plan contribu-
tions with respect to such individual are to be
paid.
‘‘(C) 
IRREVOCABILITY.—Any 
election
under subparagraph (A)(ii) shall be irrevocable
and shall be effective with respect to wages paid
on or after January 1 of the calendar year in
which such election is to take effect, for pay pe-
riods ending on or after such date.
‘‘(4) ELIGIBLE SELF-EMPLOYED INDIVIDUAL.—
‘‘(A) IN GENERAL.—The term ‘eligible self-
employed individual’ means any individual—
‘‘(i) on whose self-employment income
for a taxable year beginning after Decem-
ber 31, 1995, there is imposed a tax under
section 1401(a) of the Internal Revenue
Code of 1986, and
‘‘(ii) who files with the Commissioner
of Social Security, in such form and man-
ner as shall be prescribed in regulations of
the Commissioner, a written and signed
declaration of such individual’s intention to
be treated as an eligible self-employed indi-
vidual for purposes of this title and such
election meets the requirements of sub-
paragraph (B).
‘‘(B) REQUIREMENTS.—Any election under
subparagraph (A)(ii) must be so filed not later
than December 15 preceding the taxable year in
which such election is to take effect, and must
designate the personal investment plan to which
the personal investment plan contributions with
respect to such individual are to be paid.
‘‘(C) 
IRREVOCABILITY.—Any 
election
under subparagraph (A)(ii) shall be irrevocable
and shall be effective with respect to self-em-
ployment income beginning on or after the first
day of the taxable year in which such election
is to take effect, for pay periods ending on or
after such date.
‘‘(5) PERSONAL INVESTMENT PLAN CONTRIBU-
TION.—The term ‘personal investment plan con-
tribution’ means—
‘‘(A) with respect to any eligible employee
of a covered employer, an amount equal to 2
percent of the wages received by such employee
with respect to employment by such employer,
and
‘‘(B) with respect to the self-employment
income of an individual for any taxable year, an
amount equal to 2 percent of such income for
such taxable year.
‘‘(6) ELIGIBLE SURVIVOR.—The term ‘eligible
survivor’ of a deceased individual means such indi-
vidual’s widow or, if there is no such widow, such in-
dividual’s last surviving divorced wife or surviving
divorced husband. Such term shall not include any
such surviving divorced wife or surviving divorced
husband who is married on the date of the deceased
individual’s death.
‘‘(7) BUSINESS DAY.—The term ‘business day’
means any day other than a Saturday, Sunday, or
legal holiday in the area involved.
‘‘PENALTIES
‘‘SEC. 256. (a) FAILURE TO ESTABLISH PERSONAL
INVESTMENT PAYROLL DEDUCTION PLAN.—Any covered
employer 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) $5,000, or
‘‘(2) $100 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 deduct
an amount from the wages of an eligible employee in ac-
cordance with a personal investment payroll deduction
plan shall be subject to a civil penalty of not to exceed
$500 for each such failure.
‘‘(c) FAILURE BY EMPLOYER TO MAKE TIMELY PAY-
MENTS
WITH
RESPECT
TO
PERSONAL
INVESTMENT
PLAN.—If an amount deducted from the wages of an eligi-
ble employee under a social security payroll deduction plan
is not paid to the Social Security Administration with re-
spect to the specified personal investment plan within the
time prescribed by section 251—
‘‘(1) the employer shall be subject to a civil
penalty of not to exceed 50 percent of the amount
so deducted, and
‘‘(2) shall be liable to the employee for interest
on the amount so deducted at the underpayment
rate determined under section 6621 of the Internal
Revenue Code of 1986 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 specified per-
sonal investment plan.
‘‘(d) FAILURE BY ELIGIBLE SELF-EMPLOYED INDI-
VIDUAL TO MAKE TIMELY PAYMENTS TO PERSONAL IN-
VESTMENT PLAN.—If a personal investment plan con-
tribution is not paid by an eligible self-employed individual
to the Social Security Administration with respect to a
personal investment plan maintained by the individual
within the time prescribed by section 253, such individual
shall be subject to a civil penalty of not to exceed 50 per-
cent of the amount of such contribution.
‘‘(e) FAILURE
BY TRUSTEE TO MAKE TIMELY
TRANSFERS.—If the balance in the personal investment
plan of a deceased individual is not transferred by the
trustee within the time prescribed by section 254—
‘‘(1) the trustee shall be subject to a civil pen-
alty of not to exceed 50 percent of the amount of
the balance, and
‘‘(2) shall be liable—
‘‘(A) in the case of a transfer required to
be made to another personal investment plan,
to the widow or the surviving divorced wife or
surviving divorced husband (as the case may
be), or
‘‘(B) in the case of a transfer required to
be made to the Federal Old-Age and Survivors
Insurance Trust Fund, to such Trust Fund,
for interest on the balance at the underpayment rate
determined under section 6621 of the Internal Reve-
nue Code of 1986 from the last day by which such
balance was required to be so transferred to the date
on which such balance is transferred to the des-
ignated personal investment plan.
‘‘(f) RULES FOR APPLICATION OF SECTION.—
‘‘(1) 
PENALTIES
ASSESSED
BY
COMMIS-
SIONER.—Any civil penalty assessed by this section
shall be imposed by the Commissioner of Social Se-
curity and collected in a civil action.
‘‘(2) COMPROMISES.—The Commissioner may
compromise the amount of any civil penalty imposed
by this section.
‘‘(3) AUTHORITY TO WAIVE PENALTY IN CER-
TAIN CASES.—The Commissioner may waive the ap-
plication of this section with respect to any failure
if the Commissioner determines that such failure is
due to reasonable cause and not to intentional dis-
regard of rules and regulations.
‘‘PERSONAL INVESTMENT FUND
‘‘SEC. 257. (a) ESTABLISHMENT.—There is hereby
established and maintained in the Treasury of the United
States a Personal Investment Fund in the same manner
as the Thrift Savings Fund under sections 8437, 8438,
and 8439 of title 5, United States Code.
‘‘(b) PERSONAL INVESTMENT FUND BOARD.—
‘‘(1) IN GENERAL.—There is established and
operated in the Social Security Administration a
Personal Investment Fund Board in the same man-
ner as the Federal Retirement Thrift Investment
Board under subchapter VII of chapter 84 of title
5, United States Code.
‘‘(2) SPECIFIC INVESTMENT DUTIES.—The Per-
sonal Investment Fund shall be managed by the
Personal Investment Fund Board in the same man-
ner as the Thrift Savings Fund is managed under
subchapter VIII of chapter 84 of title 5, United
States Code.’’.
(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
(9);
(2) by striking the period at the end of para-
graph (10) and inserting ‘‘, and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(11) the total amount deducted from the em-
ployee’s wages under a personal investment payroll
deduction 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 personal investment payroll
deduction plan established under part B of title II
of the Social Security Act and does not provide for
employer contributions.’’.
(d) EFFECTIVE
DATE
AND
NOTICE
REQUIRE-
MENTS.—
(1) EFFECTIVE DATE.—The amendments made
by subsection (a) (and any personal investment pay-
roll deduction plan required thereunder) shall apply
with respect to wages paid after December 31, 1995,
for pay periods ending after such date and self-em-
ployment income for taxable years beginning after
such date.
(2) NOTICE REQUIREMENTS.—
(A) IN GENERAL.—Not later than October
1, 1995, the Commissioner of Social Security
shall—
(i) send to the last known address of
each eligible individual a description of the
program established by the amendments
made by this section, which shall be writ-
ten in the form of a pamphlet in language
which may be readily understood by the
average worker,
(ii) provide for toll-free access by tele-
phone from all localities in the United
States to the Social Security Administra-
tion through which individuals may obtain
information and answers to questions re-
garding such program, and
(iii) provide information to the media
in all localities of the United States about
such program and such toll-free access by
telephone.
(B) ELIGIBLE INDIVIDUAL.—For purposes
of this paragraph, the term ‘‘eligible individual’’
means an individual who, as of the date of the
pamphlet sent pursuant to subparagraph (A), is
indicated within the records of the Social Secu-
rity Administration as being credited with one
or more quarters of coverage under section 213
of the Social Security Act.
(C) MATTERS
TO
BE
INCLUDED.—The
Commissioner shall include with the pamphlet
sent to each eligible individual pursuant to sub-
paragraph (A)—
(i) a statement of the number of quar-
ters of coverage indicated in the records of
the Social Security Administration as of
the date of the description as credited to
such individual under section 213 of the
Social Security Act and the date as of
which such records may be considered ac-
curate, and
(ii) the number for toll-free access by
telephone established by the Commissioner
pursuant to subparagraph (A).
SEC. 4. ADJUSTMENTS TO PRIMARY INSURANCE AMOUNTS
UNDER PART A OF TITLE II OF THE SOCIAL
SECURITY ACT.
(a) IN GENERAL.—Section 215 of the Social Security
Act (42 U.S.C. 415) is amended by adding at the end the
following new subsection:
‘‘Adjustment of Primary Insurance Amount of Eligible
Employees and Eligible Self-Employed Individuals
Under Part B
‘‘(j)(1) Except as provided in paragraph (2), in the
case of an individual who is—
‘‘(A) an eligible employee, as defined under
paragraph (3) of section 255, or
‘‘(B) an eligible self-employed individual, as de-
fined under paragraph (4) of section 255,
such individual’s primary insurance amount shall be deter-
mined under subsection (a)(1)(A) (before subsequent ad-
justments made under subsection (i)), by substituting the
first, second, and third primary insurance amount factors
determined in the following table for the primary insur-
ance amount factors ‘90’, ‘32’, and ‘15’ in clauses (i), (ii),
and (iii), respectively:
‘‘If individual’s age in 1996 is:
The PIA factors for such individual are:
First:
Second:
Third:
25 and under ..................................
26 to 35 ..........................................
35 to 45 ..........................................
45 and over .....................................
14.’’
‘‘(2)(A) In the case of an individual who is an eligible
employee as defined in paragraph (3) of section 255 or
an eligible self-employed individual as defined in para-
graph (4) of section 255 becomes entitled to disability in-
surance benefits under section 223, such individual’s pri-
mary insurance amount shall be determined without re-
gard to paragraph (1).
‘‘(B) Effective upon the attainment by an individual
described in subparagraph (A) of retirement age (as de-
fined in section 216(l)(1)), such individual’s primary in-
surance amount as determined in accordance with this sec-
tion (before subsequent adjustments made under sub-
section (i)) shall be determined under paragraph (1).’’.
(b) CONFORMING AMENDMENT TO RAILROAD RE-
TIREMENT ACT OF 1974.—Section 1 of the Railroad Re-
tirement Act of 1974 (45 U.S.C. 231) is amended by add-
ing at the end the following:
‘‘(s) In applying applicable provisions of the Social
Security Act for purposes of determining the amount of
the annuity to which an individual is entitled under this
Act, such individual shall not be treated as an ‘eligible
individual’ as defined in section 253(4) of the Social Secu-
rity Act.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to months after De-
cember 1995.
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