I
105TH CONGRESS
1ST SESSION
H. R. 1611
To provide for the establishment and maintenance of personal social security
investment accounts under the Social Security system.
IN THE HOUSE OF REPRESENTATIVES
MAY 14, 1997
Mr. PETRI introduced the following bill; which was referred to the Committee
on Ways and Means, and in addition to the Committee on Rules, for a
period to be subsequently detemined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the commit-
tee concerned
A BILL
To provide for the establishment and maintenance of per-
sonal social security investment accounts under the So-
cial Security system.
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 ‘‘Retirement Security
Act of 1997’’.
SEC. 2. INDIVIDUAL RETIREMENT INVESTMENT PROGRAM
AND PERSONAL SOCIAL SECURITY INVEST-
MENT ACCOUNTS.
(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 INVESTMENT
PROGRAM
‘‘DEFINITIONS
‘‘SEC. 251. For purposes of this part—
‘‘(1) ACCOUNT
HOLDER.—The term ‘account
holder’ means an individual for whom a personal so-
cial security investment account is established under
section 252(b).
‘‘(2) INVESTMENT
ACCOUNT.—The term ‘in-
vestment account’ means a personal social security
investment account established under section 252(b).
‘‘(3) TRUST
FUND.—The term ‘Trust Fund’
means the Social Security Investment Trust Fund
established under section 260.
‘‘(4) EXECUTIVE DIRECTOR.—The term ‘Execu-
tive Director’ means the Executive Director under
this part authorized to so serve under section
266(b).
‘‘(5) BOARD.—The term ‘Board’ means the
Board of Trustees of the Trust Fund authorized to
so serve under section 266(a).
‘‘PERSONAL SOCIAL SECURITY INVESTMENT ACCOUNTS
‘‘SEC. 252. (a) CERTIFICATION OF NEW ACCOUNT
HOLDERS.—Upon the issuance of a Social Security ac-
count number under section 205(c)(2) to an individual
born on or after July 1, 1998, the Commissioner of Social
Security shall certify to the Executive Director and the
Secretary of the Treasury the identity and Social Security
account number of such individual.
‘‘(b) ESTABLISHMENT OF PERSONAL SOCIAL SECU-
RITY INVESTMENT ACCOUNTS.—Upon receipt of any cer-
tification under subsection (a) with respect to an individ-
ual, the Executive Director shall establish a personal So-
cial Security investment account for such individual.
Amounts in the Social Security Investment Trust Fund
shall be credited by the Executive Director to the invest-
ment account in accordance with this part. The investment
account shall be identified to the account holder by means
of the account holder’s Social Security account number.
The Executive Director shall establish an investment ac-
count for each account holder not later than the later of
January 1, 1999, or 30 days after receipt of the certifi-
cation with respect to the account holder.
‘‘(c) INITIAL CONTRIBUTION.—Upon the establish-
ment of each account holder’s investment account, the
Secretary of the Treasury shall transfer, from amounts
not otherwise appropriated in the general fund of the
Treasury to the Trust Fund, for crediting by the Execu-
tive Director to such investment account under subsection
(b), an amount equal to $1000.00.
‘‘(d) INVESTMENT ACCOUNT BALANCE.—The bal-
ance in an account holder’s investment account at any
time is the excess of—
‘‘(1) the sum of—
‘‘(A) the contribution made to the Trust
Fund and credited to the investment account
pursuant to subsection (c);
‘‘(B) all contributions made to the Trust
Fund and credited to the investment account
under section 253, and
‘‘(C) the total amount of the allocations
made to and reductions made in the investment
account pursuant to subsection (e),
over
‘‘(2) the amounts paid out of the Trust Fund
with respect to such individual under this part.
‘‘(e) ALLOCATION OF EARNINGS AND LOSSES.—Pur-
suant to regulations prescribed by the Executive Director,
the Executive Director shall allocate to each investment
account an amount equal to the net earnings and net
losses from each investment of sums in the Trust Fund
which are attributable, on a pro rata basis, to sums cred-
ited to such investment account, reduced by an appro-
priate share of the administrative expenses paid out of the
net earnings under section 256(d), as determined by the
Executive Director.
‘‘(f) ENGAGEMENT OF QUALIFIED PUBLIC ACCOUNT-
ANT.—
‘‘(1) IN
GENERAL.—The Executive Director
shall annually engage, on behalf of all account hold-
ers, an independent qualified public accountant, who
shall conduct an examination of all accounts and
other books and records maintained in the adminis-
tration of this part as the public accountant consid-
ers necessary to enable the public accountant to
make the determination required by paragraph (2).
The examination shall be conducted in accordance
with generally accepted auditing standards and shall
involve such tests of the accounts, books, and
records as the public accountant considers necessary.
‘‘(2) EXAMINATION AND REPORT.—The public
accountant conducting an examination under para-
graph (1) shall determine whether the accounts,
books, and records referred to in such paragraph
have been maintained in conformity with generally
accepted accounting principles applied on a basis
consistent with the manner in which such principles
were applied during the examination conducted
under such paragraph during the preceding year.
The public accountant shall transmit to the Board
and the Comptroller General of the United States a
report on his examination, including his determina-
tion under this paragraph.
‘‘(3) 
RELIANCE
ON
ACTUARY’S
CERTIFI-
CATIONS.—In making a determination under para-
graph (2), a public accountant may rely on the cor-
rectness of any actuarial matter certified by an en-
rolled actuary if the public accountant states his re-
liance in the report transmitted to the Board under
such paragraph.
‘‘(4) DEFINITION.—For the purposes of this
subsection, the term ‘‘qualified public accountant’’
shall have the same meaning as is provided in sec-
tion 103(a)(3)(D) of the Employee Retirement In-
come 
Security 
Act 
of 
1974 
(29 
U.S.C.
1023(a)(3)(D)).
‘‘(g) INFORMATION REQUIRED TO BE PROVIDED TO
ACCOUNT HOLDERS.—
‘‘(1) IN GENERAL.—The Board shall prescribe
regulations under which each account holder shall be
furnished with—
‘‘(A) a periodic statement relating to the
account holder’s investment account; and
‘‘(B) a summary description of the invest-
ment options under section 254 covering, and
an evaluation of, each such option for at least
the 5-year period preceding the date as of
which such evaluation is made.
‘‘(2) TIMELY PROVISION OF INFORMATION.—In-
formation under this subsection shall be provided at
least 30 calendar days before the date provided for
each election under section 254(c), and in a manner
designed to facilitate informed decisionmaking with
respect to each such election.
‘‘(h) ASSUMPTION OF RISK.—Each account holder
who elects to invest in the Fixed Income Investment Fund
or the Common Stock Index Investment Fund described
in paragraphs (2) and (3), respectively, of section 254(a)
shall sign an acknowledgement prescribed by the Execu-
tive Director which states that the account holder under-
stands that an investment in either such Fund is made
at the account holder’s risk, that the account holder is
not protected by the Government against any loss on such
investment, and that a return on such investment is not
guaranteed by the Government.
‘‘(i) TREATMENT OF MINORS AND INCOMPETENT IN-
DIVIDUALS.—An election under this part to be made by
a minor, or an individual mentally incompetent or under
other legal disability, may be made by the person who is
constituted guardian or other fiduciary by the law of the
State of residence of the individual or is otherwise legally
vested with the care of the individual or his estate. Pay-
ment under this part due a minor, or an individual men-
tally incompetent or under other legal disability, may be
made to the person who is constituted guardian or other
fiduciary by the law of the State of residence of the claim-
ant or is otherwise legally vested with the care of the
claimant or his estate. In any case in which a guardian
or other fiduciary of the individual under legal disability
has not been appointed under the law of the State of resi-
dence of the individual, if any other person, in the judg-
ment of the Executive Director, is responsible for the care
of such individual, any election under this part which may
otherwise be made by such individual may be made by
such person, any payment under this part which is other-
wise payable to such individual may be made to such per-
son, and the payment of an annuity payment under this
part to such person bars recovery by any other person.
‘‘CONTRIBUTIONS TO THE SOCIAL SECURITY INVESTMENT
TRUST FUND
‘‘SEC. 253. (a) IN GENERAL.—The Executive Direc-
tor shall prescribe regulations under which each individual
who is eligible to claim a deduction under section 221 of
the Internal Revenue Code of 1986 for contributions to
a personal Social Security investment account shall be af-
forded a reasonable opportunity to make contributions to
the Trust Fund, for crediting to such account, either from
time to time or under arrangements providing for regular,
periodic contributions. Such arrangements may include ar-
rangements for contributions of wages by employers on be-
half of employees. Any such arrangement shall also pro-
vide individuals a reasonable opportunity to modify the
amount to be contributed under this part, or to terminate
such contributions.
‘‘(b) LIMITATION
ON
CONTRIBUTIONS.—Notwith-
standing any other provision of this section, no contribu-
tion may be made under this section to any account for
any year to the extent that such contribution, when added
to prior contributions to such account for such year, ex-
ceeds $7,000.
‘‘(c) CREDITING PROCEDURES.—Amounts contrib-
uted by (or on behalf of) an account holder under this
section shall be deposited in the Trust Fund to the credit
of that account holder’s investment account in accordance
with such procedures as the Comptroller General of the
United States may, in consultation with the Executive Di-
rector, prescribe in regulations.
‘‘(d) NONFORFEITABILITY OF CONTRIBUTIONS.—All
contributions made under this section shall be fully non-
forfeitable when made.
‘‘INVESTMENT OF SOCIAL SECURITY INVESTMENT TRUST
FUND
‘‘SEC. 254. (a) INVESTMENT FUNDS.—The Board
shall establish—
‘‘(1) a Government Securities Investment Fund
under which sums in the Trust Fund are invested in
securities of the United States Government issued as
provided in subsection (e);
‘‘(2) a Fixed Income Investment Fund under
which sums in the Trust Fund are invested in—
‘‘(A) insurance contracts,
‘‘(B) certificates of deposit, or
‘‘(C) other instruments or obligations se-
lected by qualified professional asset managers,
which return the amount invested and pay interest,
at a specified rate or rates, on that amount during
a specified period of time;
‘‘(3) a Common Stock Index Investment Fund
as provided in subsection (b); and
‘‘(4) such other investment fund or funds as the
Board may provide by regulation.
‘‘(b) INDEX GOVERNING COMMON STOCK INDEX IN-
VESTMENT FUNDS.—
‘‘(1) SELECTION OF INDEX.—The Board shall
select an index which is a commonly recognized
index comprised of common stock the aggregate
market value of which is a reasonably complete rep-
resentation of the United States equity markets.
‘‘(2) PORTFOLIO DESIGN.—The Common Stock
Index Investment Fund shall be invested in a port-
folio designed to replicate the performance of the
index selected under paragraph (1). The portfolio
shall be designed such that, to the extent prac-
ticable, the percentage of the Common Stock Index
Investment Fund that is invested in each stock is
the same as the percentage determined by dividing
the aggregate market value of all shares of that
stock by the aggregate market value of all shares of
all stocks included in such index.
‘‘(c) INVESTMENT ACCORDING TO ELECTIONS.—
‘‘(1) IN
GENERAL.—The Executive Director
shall invest the sums available in the Trust Fund for
investment as provided in elections made under sub-
section (d).
‘‘(2) DEFAULT
INVESTMENT
IN
ABSENCE
OF
ELECTION.—If an election has not been made with
respect to any sums in the Trust Fund available for
investment, the Executive Director shall invest such
sums in the Government Securities Investment
Fund.
‘‘(d) SEMIANNUAL ELECTIONS.—
‘‘(1) IN GENERAL.—At least twice each year, an
account holder may elect the investment funds re-
ferred to in subsection (a) into which the sums in
the Trust Fund credited to such account holder’s in-
vestment account are to be invested or reinvested.
‘‘(2) INVESTMENT
ACCORDING
TO
REGULA-
TIONS.—An election may be made under paragraph
(1) only in accordance with regulations prescribed by
the Executive Director and within such period as the
Executive Director shall provide in such regulations.
‘‘(e) ISSUANCE OF SPECIAL OBLIGATIONS.—
‘‘(1) AUTHORIZATION.—The Secretary of the
Treasury is authorized to issue special interest-bear-
ing obligations of the United States for purchase by
the Trust Fund for the Government Securities In-
vestment Fund.
‘‘(2) REQUIREMENTS.—
‘‘(A) IN GENERAL.—Obligations issued for
the purpose of this subsection shall have matu-
rities fixed with due regard to the needs of the
Trust Fund as determined by the Executive Di-
rector, and shall bear interest at a rate equal
to the average market yield (computed by the
Secretary of the Treasury on the basis of mar-
ket quotations as of the end of the calendar
month next preceding the date of issue of such
obligations) on all marketable interest-bearing
obligations of the United States then forming a
part of the public debt which are not due or
callable earlier than 4 years after the end of
such calendar month.
‘‘(B) ROUNDING.—Any average market
yield computed under subparagraph (A) which
is not a multiple of one-eighth of 1 percent,
shall be rounded to the nearest multiple of one-
eighth of 1 percent.
‘‘(f) NO
VOTING
RIGHTS
IN
SECURITIES.—The
Board, the Executive Director, and an account holder may
not exercise voting rights associated with the ownership
of securities by the Social Security Investment Trust
Fund.
‘‘DISTRIBUTIONS FROM THE SOCIAL SECURITY
INVESTMENT TRUST FUND
‘‘SEC. 255. (a) IN GENERAL.—No distribution may
be made from the Social Security Investment Trust Fund
of any amount credited to the investment account of any
account holder, unless such distribution is in the form
of—
‘‘(1) a benefit distribution described in sub-
section (b),
‘‘(2) a distribution described in subsection (c),
or
‘‘(3) a death distribution under subsection (d).
‘‘(b) BENEFIT DISTRIBUTION.—
‘‘(1) IN GENERAL.—A distribution from an in-
vestment account is in the form of a benefit distribu-
tion referred to in subsection (a)(1) if such distribu-
tion constitutes payment (in whole or in part) of a
monthly insurance benefit under part A based on the
wages and self-employment income of the account
holder.
‘‘(2) PAYMENT OF MONTHLY INSURANCE BENE-
FITS.—Notwithstanding section 201(h), benefit pay-
ments required to be made under part A, other than
benefit payments required to be made under section
223 or 226 and benefit payments required to be
made under subsection (b), (c), or (d) of section 202
to account holders entitled to benefits on the basis
of the wages and self-employment income of any
such account holder entitled to disability insurance
benefits, shall be made from amounts in the Trust
Fund credited to such account holder’s investment
account, except to the extent that such benefit pay-
ments exceed the balance credited to such account
holder’s investment account. Any amount of such
benefit payments in excess of the balance in such ac-
count holder’s investment account shall be payable
as provided in section 201(h). The Commissioner of
Social Security shall provide for certification to the
Executive Director for payment of such benefits
from the Trust Fund, and the Executive Director
shall make such payments from the Trust Fund in
accordance with such certification.
‘‘(c) ANNUITIES AND LUMP SUM PAYMENTS.—A dis-
tribution referred to in subsection (a)(2) is described in
this subsection if—
‘‘(1) the distribution is at the election of the ac-
count holder made (in such form and manner as
shall be prescribed by the Executive Director) on or
after the date of the commencement of such account
holder’s entitlement to old-age insurance benefits
under section 202(a),
‘‘(2) the amount of each distribution is in an
amount, as determined by the Executive Director,
which is not greater than the excess of—
‘‘(A) the balance credited to such account
holder’s investment account, over
‘‘(B) the amount necessary to provide for
benefit distributions as required under sub-
section (a)(1), and
‘‘(3) the distributions shall be paid in the form
of annuities and other payments under section 256.
‘‘(d) DEATH DISTRIBUTION.—
‘‘(1) IN GENERAL.—A distribution from an in-
vestment account is in the form of a death distribu-
tion if such distribution is in the amount remaining
credited to the account holder as of the date of such
account holder’s death and, except as provided in
paragraph (2), is distributed in the same manner as
is provided for distribution of benefit payments
under section 204(d).
‘‘(2) PORTION OF ACCOUNT BALANCE ATTRIB-
UTABLE TO FEDERAL CONTRIBUTION RETURNED TO
UNITED STATES.—The portion of the amount re-
maining credited to the account holder as of the
date of such account holder’s death which is attrib-
utable to the contribution made under section 252(c)
shall be paid to the Secretary of the Treasury for
deposit into the general fund of the Treasury as mis-
cellaneous receipts. For purposes of the preceding
sentence, distributions from a personal social secu-
rity investment account shall be treated as first
made from amounts attributable to the contribution
made under section 252(c) and then from other
amounts.
‘‘ANNUITIES AND LUMP SUM PAYMENTS PAYABLE FROM
THE SOCIAL SECURITY INVESTMENT TRUST FUND
‘‘SEC. 256. (a) IN GENERAL.—An account holder
who is entitled to old-age insurance benefits under section
202(a) is entitled as provided in this section to the amount
of the balance in the account holder’s investment account
available for distribution under this section in accordance
with section 255.
‘‘(b) ALTERNATIVE FORMS OF DISTRIBUTION.—Sub-
ject to section 258, any account holder who is entitled to
old-age insurance benefits under section 202(a) is entitled
and may elect—
‘‘(1) to receive an immediate annuity from the
Trust Fund;
‘‘(2) to defer the commencement of the pay-
ment of an annuity from the Trust Fund until such
date as the account holder specifies, but not later
than April 1 of the year following the year in which
the account holder becomes 701⁄2 years of age;
‘‘(3) to withdraw the amount of the balance in
the account holder’s investment account in the Trust
Fund in one or more substantially equal payments
to be made not less frequently than annually and to
commence before April 1 of the year following the
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(a)(5)(E) of the Internal
Revenue Code of 1986) identified by the account
holder for whom the transfer is made.