I 
110TH CONGRESS 
1ST SESSION H. R. 2002 
To amend title II of the Social Security Act and the Internal Revenue 
Code of 1986 to provide for enhanced retirement security in the form 
of an Individual Social Security Investment Program. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 23, 2007 
Mr. SAM JOHNSON of Texas introduced the following bill; which was referred 
to the Committee on Ways and Means 
A BILL 
To amend title II of the Social Security Act and the Internal 
Revenue Code of 1986 to provide for enhanced retire-
ment security in the form of an Individual Social Secu-
rity Investment Program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Individual Social Security Investment Program Act of 
2007’’. 
(b) TABLE OF CONTENTS.—The table of contents is 
as follows: 
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Sec. 1. Short title and table of contents. 
Sec. 2. Establishment of Individual Social Security Investment Program. 
‘‘PART A—INSURANCE BENEFITS 
‘‘PART B—INDIVIDUAL SOCIAL SECURITY INVESTMENT PROGRAM 
‘‘Sec. 251. Definitions. 
‘‘Sec. 252. Individual investment of social security contributions; part B 
totalization accounts. 
‘‘Sec. 253. Tier I Investment Fund. 
‘‘Sec. 254. Tier II Investment Fund. 
‘‘Sec. 255. Tier III investment accounts. 
‘‘Sec. 256. Retirement distributions. 
‘‘Sec. 257. Recognition bonds. 
‘‘Sec. 258. Supplemental minimum benefit payments. 
‘‘Sec. 259. Election for participation. 
‘‘Sec. 260. Early distribution and termination of participation in program. 
‘‘Sec. 261. Individual Investment Board. 
‘‘Sec. 262. Executive Director of the Individual Investment Board. 
Sec. 3. Tax treatment of Individual Social Security Investment Program. 
Sec. 4. CPI-indexed benefits for Part A beneficiaries other than disability bene-
ficiaries. 
Sec. 5. Maintenance of adequate balances in the Social Security Trust Funds. 
SEC. 2. ESTABLISHMENT OF INDIVIDUAL SOCIAL SECURITY 
INVESTMENT PROGRAM. 
(a) IN GENERAL.—Title II of the Social Security Act 
is amended— 
(1) by inserting before section 201 the fol-
lowing: 
‘‘PART A—INSURANCE BENEFITS’’; and 
(2) by adding at the end the following new part: 
‘‘PART B—INDIVIDUAL SOCIAL SECURITY 
INVESTMENT PROGRAM 
‘‘SEC. 251. DEFINITIONS. 
‘‘For purposes of this part— 
‘‘(1) PARTICIPANT.—The term ‘participant’ 
means— 
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‘‘(A) any individual who is born on or after 
January 1, 1986, and— 
‘‘(i) receives wages in any calendar 
year after December 31, 2007, on which 
there is imposed a tax under section 
3101(a) of the Internal Revenue Code of 
1986, or 
‘‘(ii) derives self-employment income 
for a taxable year beginning after Decem-
ber 31, 2007, on which there is imposed a 
tax under section 1401(a) of the Internal 
Revenue Code of 1986, and 
‘‘(B) any individual who is born on or after 
January 1, 1953, and before January 1, 1986, 
and who, pursuant to an election filed in ac-
cordance with section 259, is treated under 
such section as a participant under this part. 
‘‘(2) BOARD.—The term ‘Board’ means the In-
dividual Investment Board established under section 
261. 
‘‘(3) EXECUTIVE DIRECTOR.—The term ‘Execu-
tive Director’ means the Executive Director ap-
pointed under section 262. 
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‘‘(4) PART
B
TOTALIZATION
ACCOUNT.—The 
term ‘part B totalization account’ means an account 
established for a participant under section 252(d). 
‘‘(5) TIER
I
INVESTMENT
FUND.—The term 
‘Tier I Investment Fund’ means the trust fund cre-
ated under section 253. 
‘‘(6) TIER II INVESTMENT FUND.—The term 
‘Tier II Investment Fund’ means the trust fund cre-
ated under section 254. 
‘‘(7) TIER
III
INVESTMENT
ACCOUNT.—The 
term ‘Tier III investment account’ means a trust es-
tablished pursuant to section 255. 
‘‘SEC. 252. INDIVIDUAL INVESTMENT OF SOCIAL SECURITY 
CONTRIBUTIONS; PART B TOTALIZATION AC-
COUNTS. 
‘‘(a) PAYMENTS INTO TIER I INVESTMENT FUND.— 
‘‘(1) IN GENERAL.—During each calendar year, 
the Secretary of the Treasury shall deposit into the 
Tier I Investment Fund (established under section 
253), from amounts held in the Federal Old-Age and 
Survivors Insurance Trust Fund, a total amount 
equal, in the aggregate, to 100 percent of the redi-
rected social security contribution for such calendar 
year of each individual who is a participant for such 
calendar year. 
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‘‘(2) REDIRECTED SOCIAL SECURITY CONTRIBU-
TIONS.—For purposes of paragraph (1) the term ‘re-
directed social security contributions’ of a partici-
pant for a calendar year means the product derived 
by multiplying— 
‘‘(A) the sum of the total wages paid to, 
and self-employment income derived by, the 
participant during such calendar year (taking 
into account limits imposed by the contribution 
and benefit base under section 230), by 
‘‘(B) 6.2 percent. 
‘‘(3) TRANSFERS BASED ON ESTIMATES.—The 
amounts deposited pursuant to paragraph (1) shall 
be transferred in at least monthly payments from 
the Federal Old-Age and Survivors Insurance Trust 
Fund to the Tier I Investment Fund, such amounts 
to be determined on the basis of estimates, by the 
Commissioner of Social Security and certified to the 
Secretary of the Treasury under part A, of the 
wages paid to, and self-employment income derived 
by, participants, and proper adjustments shall be 
made in amounts subsequently transferred to the ex-
tent prior estimates were in excess of or were less 
than actual amounts. 
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‘‘(4) 
SEPARATE
ACCOUNTING
AND
CRED-
ITING.— 
‘‘(A) IN GENERAL.—Subject to this para-
graph, the Board shall provide, after the close 
of each calendar year, for prompt accounting of 
the amounts deposited in the Tier I Investment 
Fund with respect to each participant during 
such calendar year to such individual’s part B 
totalization account (established under sub-
section (d)), together with properly allocated in-
creases and decreases in such amounts reflect-
ing the net returns from investment of the bal-
ance of the Fund during such year under sec-
tion 253. For purposes of determining such in-
creases and decreases in such amounts for each 
calendar year, the amounts deposited into the 
Fund in connection with any participant during 
such calendar year shall be deemed to have 
been deposited on June 30 of such year. 
‘‘(B) CREDITING.—Under such accounting, 
amounts deposited into the Fund during each 
calendar year with respect to the redirected so-
cial security taxes of each participant (including 
net returns and losses from the investment 
Fund attributed to such amounts under this 
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paragraph) shall be credited to such partici-
pant’s part B totalization account not later 
than the end of the succeeding calendar year. 
‘‘(5) TREATMENT OF MARRIED INDIVIDUALS.— 
‘‘(A) IN GENERAL.—If, as of the end of a 
calendar year in which the amounts to be cred-
ited were deposited into the Fund, the partici-
pant is married and his or her spouse is a par-
ticipant— 
‘‘(i) the amounts credited to the part 
B totalization account of the participant 
shall be limited to 50 percent of the 
amount of the redirected social security 
contributions of the participant for such 
year, and 
‘‘(ii) the part B totalization account of 
such spouse shall be credited with 50 per-
cent of the amount of such redirected so-
cial security contributions. 
‘‘(B) REPORTING
REQUIREMENTS.—The 
Board may prescribe such reporting require-
ments applicable to participants regarding mar-
ital status as the Board considers necessary to 
carry out the provisions of subparagraph (A). 
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‘‘(b) TRANSFERS
INTO
TIER
II INVESTMENT 
FUND.— 
‘‘(1) IN
GENERAL.—Upon the crediting to a 
participant’s part B totalization account of any 
amount held in the Tier I Investment Fund for any 
calendar year, the Board shall (except as provided in 
section 260(a)(2)) transfer the amount so credited 
to such account from the Tier I Investment Fund 
into the Tier II Investment Fund (established under 
section 254). 
‘‘(2) 
SEPARATE
ACCOUNTING
AND
CRED-
ITING.—Subject to this paragraph, the Board shall 
provide for ongoing separate accounting in the par-
ticipant’s part B totalization account of the amounts 
deposited in the Tier II Investment Fund with re-
spect to such participant during each calendar year, 
together with any increases or decreases therein for 
such year so as to reflect the net returns and losses 
from investment thereof under section 254 while 
held in the Tier II Investment Fund during such 
year. 
‘‘(c) DEPOSITS
TO
TIER
III INVESTMENT
AC-
COUNTS.— 
‘‘(1) IN GENERAL.—In any case in which, as of 
the end of any calendar year, the total balance in 
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the Tier II Investment Fund credited to the partici-
pant’s part B totalization account exceeds for the 
first time the minimum deposit balance, the Board 
shall, by regulation, provide for an opportunity for 
the participant to make, at any time thereafter, the 
participant’s first election of a Tier III investment 
account for investment of an amount credited to the 
participant’s part B totalization account. Such elec-
tion may be in lieu of or in addition to investment 
in any option available with respect to the Tier II 
Investment Fund. 
‘‘(2) MINIMUM DEPOSIT BALANCE.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘minimum deposit balance’ 
means an amount equal to $10,000. 
‘‘(B) ADJUSTMENTS.—The Board shall ad-
just annually (effective for years after Decem-
ber 2008) the dollar amount set forth in sub-
paragraph (A) under procedures providing for 
adjustments in the same manner and to the 
same extent as adjustments are provided for 
under the procedures used to adjust benefit 
amounts under section 215(i)(2)(A), except that 
any amount so adjusted that is not a multiple 
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of $1.00 shall be rounded to the nearest mul-
tiple of $1.00. 
‘‘(3) SUBSEQUENT INVESTMENT.—At any time 
after a participant’s first election of a Tier III in-
vestment account pursuant to paragraph (1), the 
participant may invest any portion of the balance 
credited to the participant’s part B totalization ac-
count in a Tier III investment account, the Tier II 
Investment Fund, or any combination thereof, as 
elected by the participant from time to time in ac-
cordance with regulations of the Board under this 
part. 
‘‘(d) ACCOUNTING FOR TOTAL INVESTED AMOUNTS 
BY MEANS OF PART B TOTALIZATION ACCOUNTS.— 
‘‘(1) ESTABLISHMENT OF ACCOUNTS.—As soon 
as practicable after the later of January 1, 2008, or 
the date on which an individual becomes a partici-
pant under this part, the Executive Director shall 
establish and maintain a part B totalization account 
for the participant. Such account shall be the means 
by which amounts held in the Tier I Investment 
Fund, the Tier II Investment Fund, and any Tier 
III investment account of such participant are cred-
ited to such participant under this part, under pro-
cedures which shall be established by the Board by 
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regulation. The part B totalization account of a par-
ticipant shall be identified to such participant by 
means of the participant’s social security account 
number. 
‘‘(2) ACCOUNT
BALANCE.—The balance in a 
participant’s part B totalization account at any time 
is the sum of— 
‘‘(A) any balance in the Tier I Investment 
Fund credited to such participant’s part B to-
talization account prior to transfer to the Tier 
II Investment Fund under section 252(b)(1); 
plus 
‘‘(B) the excess of— 
‘‘(i) all deposits in the Tier II Invest-
ment Fund credited to such participant’s 
part B totalization account under sub-
section (a) (including the proceeds of any 
sale by such participant, as provided in 
section 257(e), of any recognition bond 
issued in the name of the participant 
under section 257(b)), subject to such in-
creases and reductions as may result from 
allocations made to and reductions made in 
the account pursuant to paragraph (3)(A) 
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with respect to amounts in the Tier II In-
vestment Fund; over 
‘‘(ii) amounts credited to such partici-
pant’s part B totalization account under 
subsection (a) paid out of the Tier II In-
vestment Fund under this part; plus 
‘‘(C) the excess of— 
‘‘(i) the deposits to any Tier III in-
vestment account of such participant, sub-
ject to such increases and reductions as 
may result from allocations made to and 
reductions made in the Tier III investment 
account pursuant to paragraph (3)(B); 
over 
‘‘(ii) amounts paid out of such partici-
pant’s Tier III investment account under 
this part. 
‘‘(3) ALLOCATION OF EARNINGS AND LOSSES.— 
Pursuant to regulations which shall be prescribed by 
the Board, the Executive Director shall allocate to 
the part B totalization account of each participant— 
‘‘(A) the net earnings and net losses from 
each investment of sums in the Tier II Invest-
ment Fund which are attributable to sums cred-
ited to such participant’s part B totalization ac-
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count, and reductions equal to an appropriate 
share of the administrative expenses of the Tier 
II Investment Fund, as determined by the Ex-
ecutive Director; and 
‘‘(B) the net earnings and net losses from 
each investment of sums in any Tier III invest-
ment account of such participant, and reduc-
tions equal to the administrative expenses in 
connection with the Tier III investment ac-
count. 
‘‘(e) TREATMENT OF TRANSFERS.—Transfers from 
the Federal Old-Age and Survivors Insurance Trust Fund 
to the Tier I Investment Fund and transfers among the 
Tier I Investment Fund, Tier II Investment Fund, and 
Tier III investment accounts under this part shall not be 
included in the totals of the budget of the United States 
Government as submitted by the President or of the con-
gressional budget and shall be exempt from any general 
budget limitation imposed by statute on budget outlays of 
the United States Government. 
‘‘SEC. 253. TIER I INVESTMENT FUND. 
‘‘(a) ESTABLISHMENT
OF
TIER
I INVESTMENT 
FUND.—There is established in the Treasury of the 
United States a trust fund to be known as the ‘Tier I 
Investment Fund’. The Board shall serve as trustees of 
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such Fund. The Fund consists of all amounts derived from 
payments into the Fund under section 252(a) and remain-
ing after investment of such amounts under subsection (b) 
of this section, including additional amounts derived as in-
come from such investments. The amounts held in the 
Fund are appropriated and shall remain available without 
fiscal year limitation— 
‘‘(1) to be held for investment on behalf of par-
ticipants under subsection (b), 
‘‘(2) to pay the administrative expenses related 
to the Fund and to investment under subsection (b), 
‘‘(3) to make transfers to the Tier II Invest-
ment Fund under section 252(b) or to Tier III in-
vestment accounts under section 252(c), 
‘‘(4) 
to 
make 
payments 
under 
section 
260(a)(2), and 
‘‘(5) to make lump sum distributions under 
subsections (d) and (e). 
‘‘(b) INVESTMENT OF FUND BALANCE.—For pur-
poses of investment of the Tier I Investment Fund, the 
Board shall contract with appropriate professional asset 
managers selected for investment of amounts held in the 
Fund, so as to provide for investment of the balance of 
the Fund, in a manner providing broad diversification in 
accordance with regulations of the Board, in certificates 
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of deposit or other instruments or obligations selected by 
such 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. 
‘‘(c) TREATMENT OF AMOUNTS HELD IN TIER I IN-
VESTMENT FUND.— 
‘‘(1) IN GENERAL.—Subject to this part— 
‘‘(A) until amounts deposited into the Tier 
I Investment Fund during any calendar year 
are credited to part B totalization accounts, 
such 
amounts 
shall 
be 
treated 
as 
the 
unallocated property of all participants with re-
spect to whom amounts were deposited in the 
Fund during such year, jointly held in trust for 
such participants in the Fund, and 
‘‘(B) amounts deposited into the Fund 
which are credited to a participant’s part B to-
talization account shall be treated as property 
of such participant, held in trust for such par-
ticipant in the Fund. 
‘‘(2) LIMITATIONS ON USE OF FUNDS.— 
‘‘(A) IN GENERAL.—Sums in the Tier I In-
vestment Fund credited to a participant’s part 
B totalization account may not be used for, or 
diverted to, purposes other than for the exclu-
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sive benefit of the participant or the partici-
pant’s beneficiaries under this part. 
‘‘(B) ASSIGNMENTS
AND
ALIENATION.— 
Sums in the Fund may not be assigned or 
alienated and are not subject to execution, levy, 
attachment, garnishment, or other legal proc-
ess. 
‘‘(d) RETIREMENT DISTRIBUTION.—As soon as prac-
ticable after the commencement of the distribution under 
section 256 of assets credited to a participant’s part B 
totalization account, the amount of any assets in the Tier 
I Investment Fund credited to such account shall be dis-
tributed to such participant in a lump sum, under rules 
established by the Board. 
‘‘(e) LUMP SUM PAYMENT TO ESTATE UPON DEATH 
OF PARTICIPANT.—Upon the death of a participant, the 
amount of any assets in the Tier I Investment Fund cred-
ited to such participant’s part B totalization account shall 
be transferred in a lump sum, under rules established by 
the Board— 
‘‘(1) in any case in which one or more bene-
ficiaries have been designated in advance, in accord-
ance with regulations which shall be prescribed by 
the Board, to such beneficiaries in accordance with 
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such designation as provided in such regulations, 
and 
‘‘(2) in the case of any amount not distributed 
as described in paragraph (1), to such participant’s 
estate. 
‘‘SEC. 254. TIER II INVESTMENT FUND. 
‘‘(a) ESTABLISHMENT
OF TIER II INVESTMENT 
FUND.—There is established in the Treasury of the 
United States a trust fund to be known as the ‘Tier II 
Investment Fund’. The Board shall serve as trustees of 
such Fund. The Fund consists of all amounts derived from 
payments into the Fund under section 252(b)(1) and re-
maining after investment of such amounts under sub-
section (b) of this section, including additional amounts 
derived as income from such investments. The amounts 
held in the Fund are appropriated and shall remain avail-
able without fiscal year limitation— 
‘‘(1) to be held for investment under subsection 
(b), 
‘‘(2) to pay the administrative expenses related 
to the Fund and to investment under subsection (b), 
‘‘(3) to make transfers to Tier III investment 
accounts under section 252(c)(1), 
‘‘(4) to make retirement distributions in accord-
ance with section 256, and 
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‘‘(5) to make lump sum distributions under sec-
tion 256 and subsection (e) of this section. 
‘‘(b) INVESTMENT IN EQUITIES AND FIXED INCOME 
INSTRUMENTS IN MANAGEMENT ACCOUNTS.— 
‘‘(1) IN GENERAL.—For purposes of investment 
of the Tier II Investment Fund, the Board shall di-
vide the Fund into multiple management accounts. 
Such accounts shall consist of the 60/40 manage-
ment account and 2 or more additional management 
accounts providing for investment in each account in 
a combination of equities and fixed income instru-
ments in accordance with prescribed percentages, as 
provided in paragraph (2). The Board shall contract 
with appropriate investment managers selected for 
investment of amounts held in each management ac-
count. 
‘‘(2) RULES RELATING TO MANAGEMENT AC-
COUNTS.— 
‘‘(A) IN GENERAL.—The investment man-
ager selected for investment of amounts held in 
each management account referred to in para-
graph (1) shall invest such amounts under reg-
ulations which shall be prescribed by the Board 
so as to ensure, to the maximum extent prac-
ticable, that, of the total balance in the Fund 
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credited to such account and available for in-
vestment (after allowing for administrative ex-
penses)— 
‘‘(i) the prescribed equities percentage 
is invested in equities in accordance with 
paragraph (4), and 
‘‘(ii) the prescribed fixed income in-
strument percentage is invested in fixed in-
come instruments in accordance with para-
graph (5). 
‘‘(B) PRESCRIBED
PERCENTAGES.—For 
purposes of subparagraph (A)— 
‘‘(i) THE
60/40
MANAGEMENT
AC-
COUNT.—In the case of the 60/40 manage-
ment account— 
‘‘(I) the prescribed equities per-
centage is 60 percent, and 
‘‘(II) the prescribed fixed income 
instrument percentage is 40 percent. 
‘‘(ii) 
OTHER
MANAGEMENT
AC-
COUNTS.—In the case of any other man-
agement account— 
‘‘(I) the prescribed equities per-
centage is a prescribed percentage not 
in excess of 80 percent, and 
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‘‘(II) the prescribed fixed income 
instrument percentage is the remain-
ing percentage of the amount invested 
in the management account. 
‘‘(3) ELECTION OF MANAGEMENT ACCOUNTS.— 
‘‘(A) DEFAULT MANAGEMENT ACCOUNT.— 
Except as provided in an election in effect 
under subparagraph (B), amounts held in the 
Tier II Investment Fund shall be credited to 
the 60/40 management account. 
‘‘(B) ELECTION OF TRANSFERS BETWEEN 
MANAGEMENT
ACCOUNTS.—Pursuant to the 
written election, filed in accordance with regula-
tions of the Board and received by the Sec-
retary of the Treasury during an applicable 
election month by a participant who has an 
amount credited to such participant’s part B 
totalization account invested in any of the man-
agement accounts in the Tier II Investment 
Fund, the Secretary of the Treasury shall 
transfer such amount from such account to any 
of the other management accounts in the Tier 
II Investment Fund (whichever is designated in 
such election). 
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‘‘(C) APPLICABLE ELECTION MONTH.—For 
purposes of subparagraph (B), the term ‘appli-
cable election month’, in connection with a par-
ticipant, means— 
‘‘(i) the calendar month in which oc-
curs the anniversary of such participant’s 
birth, and 
‘‘(ii) the 6th calendar month following 
such month. 
‘‘(4) INVESTMENT IN EQUITIES.—In accordance 
with regulations which shall be prescribed by the 
Board, the Board shall establish standards which 
must be met by equities selected for investment of 
amounts in any management account in the Tier II 
Investment Fund pursuant to paragraph (2)(A)(i). 
In conformity with such standards, the Board shall 
select, for purposes of such investment, indices 
which are comprised of equities the aggregate mar-
ket value of which is, in each case, a reasonably 
broad representation of companies whose shares are 
traded on the equity markets. Amounts invested in 
equities by each investment manager shall be held in 
a portfolio designed to replicate the performance of 
one or more of such indices. 
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‘‘(5) INVESTMENT IN FIXED INCOME INSTRU-
MENTS.—In accordance with regulations which shall 
be prescribed by the Board, the Board shall estab-
lish standards which must be met by fixed income 
instruments selected for investment of amounts in 
any management account in the Tier II Investment 
Fund pursuant to paragraph (2)(A)(ii). Such stand-
ards shall take into account the competing consider-
ations of risk and return. Amounts invested in fixed 
income instruments by each investment manager 
shall be held in a portfolio which shall consist of a 
diverse range of fixed income instruments, taking 
into full account the opposing considerations of risk 
and maximization of return. 
‘‘(c) PERIODIC REPORTS BY BOARD.— 
‘‘(1) IN GENERAL.—The Board shall make peri-
odic reports concerning the status of the investment 
in the Tier II Investment Fund of amounts credited 
to each participant’s part B totalization account. 
Each periodic report shall be furnished to the partic-
ipant on at least a semiannual basis on or before the 
60th day following the period for which the report 
is required. 
‘‘(2) INFORMATION
REQUIRED
TO
BE
IN-
CLUDED.—The periodic report shall contain the fol-
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lowing information for transactions occurring during 
the period for which the report is provided: 
‘‘(A) The balance in the Tier II Investment 
Fund credited to the participant’s part B total-
ization account. 
‘‘(B) The rate of return on such balance 
for the period covered, set forth separately for 
each management account in the case of an in-
vestment in 2 or more management accounts 
during the period. 
‘‘(C) The amount of authorized contribu-
tions made to the Tier II management account 
and credited to the participant’s part B total-
ization account. 
‘‘(D) The name and address of the Board. 
‘‘(E) Commission fees and fees for admin-
istrative expenses charged in connection with 
the investment in the Tier II Investment Fund 
during the period. 
‘‘(F) Other information which may be re-
quired from time to time by the Board. 
The language of the report shall be written in a 
form so as to be understood by the average partici-
pant. 
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‘‘(d) TREATMENT OF AMOUNTS HELD IN TIER II IN-
VESTMENT FUND.— 
‘‘(1) IN
GENERAL.—Subject to this part, 
amounts deposited into the Tier II Investment Fund 
which are credited to a participant’s part B total-
ization account shall be treated as property of such 
participant, held in trust for such participant in the 
Fund. 
‘‘(2) LIMITATIONS ON USE OF FUNDS.— 
‘‘(A) IN GENERAL.—Sums in the Tier II 
Investment Fund credited to a participants part 
B totalization account may not be used for, or 
diverted to, purposes other than for the exclu-
sive benefit of the participant or the partici-
pant’s beneficiaries under this part. 
‘‘(B) ASSIGNMENTS
AND
ALIENATION.— 
Sums in the Fund may not be assigned or 
alienated and are not subject to execution, levy, 
attachment, garnishment, or other legal proc-
ess. 
‘‘(e) LUMP SUM PAYMENT TO ESTATE UPON DEATH 
OF PARTICIPANT.—Upon the death of a participant, the 
amount of any assets in the Tier II Investment Fund cred-
ited to such participant’s part B totalization account shall 
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be transferred in a lump sum, under rules established by 
the Board— 
‘‘(1) in any case in which one or more bene-
ficiaries have been designated in advance, in accord-
ance with regulations which shall be prescribed by 
the Board, to such beneficiaries in accordance with 
such designation as provided in such regulations, 
and 
‘‘(2) in the case of any amount not distributed 
as described in paragraph (1), to such individual’s 
estate. 
‘‘SEC. 255. TIER III INVESTMENT ACCOUNTS. 
‘‘(a) DESIGNATION OF TIER II INVESTMENT AC-
COUNTS.—Under regulations prescribed by the Board, a 
participant, upon the initial attainment of a minimum de-
posit balance in amounts in the Tier II Investment Fund 
credited to the participant’s part B totalization account, 
as described in section 252(c), may designate to the 
Board, in such form and manner as shall be prescribed 
in such regulations, a Tier III investment account to 
which deposits with respect to the individual are to be 
made under section 252(c). The individual may designate 
another Tier III investment account in lieu of any account 
previously designated, in accordance with regulations of 
the Board. 
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‘‘(b) DEFINITION.—For purposes of this part, the 
term ‘Tier III investment account’ means a trust created 
or organized in the United States for the exclusive benefit 
of a participant or his beneficiaries, but only if the written 
governing instrument creating the trust meets the fol-
lowing requirements: 
‘‘(1) RESTRICTED
CONTRIBUTIONS.—No con-
tribution will be accepted unless it is in the form of 
a deposit to the account pursuant to section 
252(c)(1). 
‘‘(2) TRUSTEE
REQUIREMENTS.—The trustee 
is— 
‘‘(A) a bank (as defined in section 581 of 
the Internal Revenue Code of 1986), 
‘‘(B) an insured credit union (as defined in 
section 101(6) of the Federal Credit Union 
Act), 
‘‘(C) a corporation which, under the laws 
of the State of its incorporation, is subject to 
supervision and examination by the Commis-
sioner of Banking or other officer of such State 
in charge of the administration of the banking 
laws of such State, 
‘‘(D) a regulated investment company (as 
defined in section 851 of the Internal Revenue 
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Code of 1986) for which an election is in effect 
under section 851(b)(1) of such Code, or 
‘‘(E) any other person designated by the 
Board under regulations prescribed under this 
paragraph, 
but only if the trustee demonstrates to the satisfac-
tion of the Board that its portfolio assets either rep-
licate the assets of a broad-based index of equities 
or fixed income instruments which is approved by 
the Board or are of a type that the Board has deter-
mined not to involve high risks for the investor, and 
that the manner in which it will administer the trust 
will be consistent with the requirements of this sec-
tion. 
‘‘(3) NONFORFEITABILITY.—The interest of an 
individual in the balance of his account is nonforfeit-
able. 
‘‘(4) DIVERSIFICATION.—The investment op-
tions made available to participants by the trustee 
include reasonably diversified options of equities, 
fixed income instruments, or a combination of both. 
‘‘(5) SEPARATION OF ASSETS.—The assets of 
the trust will not be commingled with other property 
except in a common trust fund or common invest-
ment fund. 
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‘‘(c) INVESTMENT STANDARDS.—The trustee of a 
Tier III investment account shall invest amounts credited 
to the part B totalization account of a participant which 
are held in such account in accordance with standards 
which shall be prescribed by the Board by regulation. Such 
standards shall ensure that investments made available to 
participants by the trustee are reasonably diversified, that 
assets held in a Tier III investment account are nonforfeit-
able, and that the trustee complies with applicable fidu-
ciary requirements. 
‘‘(d) TREATMENT OF AMOUNTS HELD IN TIER III 
INVESTMENT ACCOUNTS.— 
‘‘(1) IN
GENERAL.—Subject to this part, 
amounts deposited into a participant’s Tier III in-
vestment account are the property of such partici-
pant, held in trust for such participant by the trust-
ee of such account. 
‘‘(2) ASSIGNMENTS
AND
ALIENATION.—Sums 
in, and payments from, the account may not be as-
signed or alienated and are not subject to execution, 
levy, attachment, garnishment, or other legal proc-
ess. 
‘‘(e) PERIODIC REPORTS BY ACCOUNT TRUSTEE.— 
‘‘(1) IN GENERAL.—The trustee of a partici-
pant’s Tier III investment account shall, in accord-
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ance with regulations of the Board, make periodic 
reports concerning the status of the account which 
shall meet the requirements of this section. Each 
periodic report shall be furnished to the participant 
on at least a semiannual basis on or before the 60th 
day following the period for which the report is re-
quired. 
‘‘(2) INFORMATION
REQUIRED
TO
BE
IN-
CLUDED.—The periodic report shall contain the fol-
lowing information for transactions occurring during 
the period for which the report is provided: 
‘‘(A) The balance in the Tier III invest-
ment account. 
‘‘(B) The rate of return for the period cov-
ered. 
‘‘(C) The amount of authorized account 
contributions. 
‘‘(D) The name and address of the trustee. 
‘‘(E) Commission fees and fees for admin-
istrative expenses charged in connection with 
the account. 
‘‘(F) Other information which may be re-
quired from time to time by the Board. 
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The language of the report shall be written in a 
form so as to be understood by the average partici-
pant. 
‘‘(3) REPORTS TO BOARD.—The Board may re-
quire the periodic report to be filed with the Board 
at such time as the Board may specify in regulations 
under this section, except that at least 1 periodic re-
port filed annually with Board shall provide informa-
tion with respect to the account as of December 31 
preceding the date of the issuance of the report. 
‘‘(4) FAILURE BY TRUSTEE TO MAKE TIMELY 
PERIODIC REPORTS.— 
‘‘(A) IN GENERAL.—The trustee of a Tier 
III investment account shall be subject to a civil 
penalty of not to exceed $100 a day from the 
date of such trustee’s failure or refusal to fur-
nish the periodic report required to be furnished 
by the trustee under this subsection until the 
date on which such report is furnished. 
‘‘(B) PENALTIES ASSESSED BY BOARD.— 
Any civil penalty assessed by this paragraph 
shall be imposed by the Board and collected in 
a civil action. The Board may compromise the 
amount of any civil penalty imposed by this 
paragraph. The Board may waive the applica-
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tion of this paragraph with respect to any fail-
ure if the Board determines that such failure is 
due to reasonable cause and not to intentional 
disregard of rules and regulations. 
‘‘(f) LUMP SUM PAYMENT TO ESTATE UPON DEATH 
OF ACCOUNT HOLDER.—Upon the death of a participant 
who has an amount credited to such participant’s part B 
totalization account invested in a Tier III investment ac-
count, such amount shall be distributed in a lump sum 
distribution, under rules established by the Board— 
‘‘(1) in any case in which one or more bene-
ficiaries have been designated in advance, in accord-
ance with regulations which shall be prescribed by 
the Board, to such beneficiaries in accordance with 
such designation as provided in such regulations, 
and 
‘‘(2) in the case of any amount not distributed 
as described in paragraph (1), to the participant’s 
estate. 
‘‘SEC. 256. RETIREMENT DISTRIBUTIONS. 
‘‘(a) IN GENERAL.—Except as provided in this sec-
tion, amounts credited to a participant’s part B total-
ization account may be distributed to the participant only 
on and after the participant’s retirement date. Such dis-
tribution shall be in the form of— 
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‘‘(1) an individual social security annuity meet-
ing the requirements of subsection (c), 
‘‘(2) a programmed withdrawal meeting the re-
quirements of subsection (d), or 
‘‘(3) a combination, meeting the requirements 
of subsection (e), of an individual social security an-
nuity (meeting the requirements of subsection (b)) 
and a lump sum distribution. 
Not later than the date on which the participant attains 
age 62, and at any other time upon the request of the 
participant, the Board shall notify the participant of the 
most recent listing of forms of distribution approved under 
this section and the entitlement (if any) of the participant 
to such a distribution. 
‘‘(b) RETIREMENT DATE.—For purposes of this sec-
tion, the term ‘retirement date’, in connection with a par-
ticipant, means the earlier of— 
‘‘(1) any date as of which the participant has 
attained retirement age (as defined in section 
216(l)(1)), or 
‘‘(2) the date designated for distribution of the 
balance in the participant’s part B totalization ac-
count pursuant to section 260. 
‘‘(c) PURCHASE OF ANNUITIES.— 
‘‘(1) IN GENERAL.— 
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‘‘(A) SELECTION
OF
ANNUITY.—On the 
participant’s retirement date, the participant 
may purchase an individual social security an-
nuity selected from among the annuities ap-
proved by the Board under paragraph (2). 
‘‘(B) TRANSFER
OF
ASSETS.—Upon the 
selection by a participant under subparagraph 
(A), the Board shall provide for the transfer of 
all assets credited to the participant’s part B 
totalization account and determined under reg-
ulations of the Board to be available for dis-
tribution to purchase the annuity selected by 
the individual. 
‘‘(2) APPROVAL OF INDIVIDUAL SOCIAL SECU-
RITY ANNUITIES.— 
‘‘(A) CERTIFICATION OF ISSUERS.— 
‘‘(i) IN GENERAL.—The Board shall 
certify issuers eligible to enter into annuity 
contracts with participants under this sub-
section. 
‘‘(ii) APPLICATION.—Any issuer that 
desires to be certified by the Board to 
issue an individual social security annuity 
shall submit an application to the Board at 
such time, in such manner, and containing 
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such information as the Board may re-
quire. 
‘‘(iii) SEPARATION FROM OTHER OP-
ERATIONS.—As a condition of certification 
under this subparagraph, each issuer shall 
maintain each individual social security an-
nuity issued by such issuer separate from 
all other operations of the issuer. 
‘‘(iv) EXEMPTION FROM THIRD PARTY 
CLAIMS.—Each individual social security 
annuity shall be exempt from any and all 
third party claims against the issuer. 
‘‘(B) APPROVAL
OF
INDIVIDUAL
SOCIAL 
SECURITY ANNUITIES.— 
‘‘(i) IN GENERAL.—No funds may be 
transferred into an individual social secu-
rity annuity unless the Board has approved 
an application submitted under clause (ii) 
with respect to the annuity. 
‘‘(ii) APPLICATION.—With respect to 
each individual social security annuity that 
an issuer certified under subparagraph 
(A)(i) seeks to issue, such issuer shall sub-
mit an application to the Board at such 
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time, in such manner, and containing such 
information as the Board may require. 
‘‘(iii) 
QUALIFICATIONS
FOR
AP-
PROVAL.— 
‘‘(I) IN
GENERAL.—The Board 
may not approve an application under 
clause (i) unless the individual social 
security annuity that is the subject of 
the application meets qualifications 
which shall be specified in regulations 
of the Board. Such qualifications shall 
include the safety and soundness of 
the annuity, the experience and record 
of performance of the issuer issuing 
the annuity, and such other factors as 
the Board may determine appropriate. 
‘‘(II) COST-OF-LIVING
ADJUST-
MENTS.—The Board may not approve 
an application under clause (i) unless 
the terms of the annuity include pro-
cedures providing for adjustments in 
the amount of the monthly payments 
in the same manner and to the same 
extent as adjustments are provided for 
under the procedures used to adjust 
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benefit 
amounts 
under 
section 
215(i)(2)(A). Nothing in this sub-
clause shall be construed to preclude 
the terms governing such an annuity 
from providing for adjustments in the 
amount of monthly payments result-
ing in a payment for any month 
greater than the payment for that 
month that would result from adjust-
ments required under the preceding 
sentence. 
‘‘(d) PROGRAMMED WITHDRAWAL.— 
‘‘(1) IN GENERAL.—On the participant’s retire-
ment date, the participant may elect distribution 
under this section of the balance credited to the par-
ticipant’s part B totalization account as provided in 
this subsection. Such distribution shall be in the 
form of a combination of— 
‘‘(A) equal annual or more frequent peri-
odic installments of the principal portion of the 
balance over twice his or her life expectancy 
(subject to adjustments under paragraph (2)), 
and 
‘‘(B) any distribution of any remaining 
balance in accordance with this section. 
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‘‘(2) COST-OF-LIVING ADJUSTMENTS.—Any dis-
tribution under paragraph (1)(A) shall, in accord-
ance with regulations which shall be prescribed by 
the Board, provide for adjustments in the periodic 
payments in the same manner and to the same ex-
tent as adjustments are provided for under the pro-
cedures used to adjust benefit amounts under sec-
tion 215(i)(2)(A). Nothing in this paragraph shall be 
construed to preclude the terms governing such dis-
tribution from providing for adjustments in the 
amount of monthly payments resulting in a payment 
for any month greater than the payment for that 
month that would result from adjustments required 
under the preceding sentence. 
‘‘(3) LIMITATION.—Any distribution described 
in paragraph (1)(B) shall be limited to the extent 
necessary to ensure that remaining funds credited to 
the account are sufficient to provide periodic install-
ments under paragraph (1) at least, on an annual 
basis, equal to (determined under reasonable actu-
arial assumptions) 100 percent of the poverty line 
for an individual (determined under the poverty 
guidelines of the Department of Health and Human 
Services issued under sections 652 and 673(2) of the 
Omnibus Budget Reconciliation Act of 1981). 
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‘‘(e) COMBINATION OF LUMP SUM PAYMENT AND 
ANNUITY.—On the participant’s retirement date, the par-
ticipant may elect distribution under this section of the 
balance credited to the participant’s part B totalization 
account as provided in this subsection. Such distribution 
shall be in the form of a combination of a lump sum pay-
ment and an annuity approved under subsection (c). Any 
such lump sum payment shall be limited to the extent nec-
essary to ensure that remaining funds credited to the ac-
count are sufficient to provide, through the purchase of 
such an annuity, a monthly payment over the life expect-
ancy of the participant (determined under reasonable ac-
tuarial assumptions) which is at least, on an annual basis, 
equal to 100 percent of the poverty line for an individual 
(determined under the poverty guidelines of the Depart-
ment of Health and Human Services issued under sections 
652 and 673(2) of the Omnibus Budget Reconciliation Act 
of 1981). 
‘‘(f) LUMP SUM DISTRIBUTIONS
OF DE MINIMIS 
AMOUNTS.—In any case in which, as of the date on which 
the participant attains retirement age (as defined in sec-
tion 216(l)(1)), a distribution under this section has not 
commenced, and the total amount of the assets credited 
to the participant’s part B totalization account is less than 
the minimum deposit balance (as defined in section 
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252(c)(2)), the preceding provisions of this section shall 
not apply, and such assets shall be distributed to the par-
ticipant in a lump sum upon the request of the participant, 
under rules established by the Board. 
‘‘(g) PROTECTION FROM ASSIGNMENT OR ALIEN-
ATION.—Distributions under this section may not be as-
signed or alienated and are not subject to execution, levy, 
attachment, garnishment, or other legal process. 
‘‘SEC. 257. RECOGNITION BONDS. 
‘‘(a) CERTIFICATION
OF CREDITED WAGES
AND 
SELF-EMPLOYMENT INCOME.—Not later than July 1 fol-
lowing the effective date of an election to become a partici-
pant filed by an individual under section 259, the Commis-
sioner of Social Security shall certify to the Secretary of 
the Treasury whether such individual was, as of imme-
diately before such effective date, credited with wages and 
self-employment income under part A. 
‘‘(b) ISSUANCE OF BOND.—Immediately upon receipt 
of certification under subsection (a) that an individual is 
credited with wages and self-employment income under 
part A, the Secretary of the Treasury shall issue a recogni-
tion bond in the name of such individual as an obligation 
of the United States, which shall be deposited in the Tier 
II Investment Fund and held in such Fund for such indi-
vidual together with such individual’s part B totalization 
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account. The purposes for which obligations of the United 
States may be issued under chapter 31 of title 31, United 
States Code, are hereby extended to authorize the issuance 
of public debt obligations consisting of recognition bonds 
issued under this paragraph. Each such obligation shall 
be evidenced by a paper instrument issued by the Sec-
retary of the Treasury setting forth the terms specified 
in this section, and stating on its face that the obligation 
shall be incontestable in the hands of the bearer, 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, in accordance with the pro-
visions of this section. 
‘‘(c) CALCULATION OF FACE VALUE.— 
‘‘(1) IN GENERAL.—The face value of a rec-
ognition bond issued in the name of an individual 
under this section shall be the actuarial present 
value of the future monthly insurance benefits under 
part A to which such individual would have been en-
titled, and to which other individuals would have 
been entitled under part A based on such individ-
ual’s wages and self-employment income, determined 
under then current law but as if section 215(j) did 
not apply and subject to paragraph (2) of this sub-
section. 
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‘‘(2) ASSUMPTIONS.—The actuarial present 
value determined under paragraph (1) shall be de-
termined— 
‘‘(A) taking into account solely wages and 
self-employment income credited to such indi-
vidual as of the effective date of the election re-
ferred to in subsection (a), 
‘‘(B) assuming that such individual would 
become entitled to disability insurance benefits 
under section 223 (in lieu of old-age insurance 
benefits under section 202(a)) on the day such 
individual would attain retirement age (as de-
fined in section 216(l)), except that, in com-
puting average indexed monthly earnings under 
section 215(b), the number of such individual’s 
benefit computation years shall be determined 
without regard to any reduction in the number 
of elapsed years under section 215(b)(2)(A), 
and 
‘‘(C) using reasonable actuarial assump-
tions, including reasonable current age-specific 
and gender-specific expected mortality rates. 
‘‘(d) REDEMPTION.—A bond issued in the name of 
any participant under this section shall be redeemable (by 
the participant or other person bearing the bond after sale 
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or resale pursuant to subsection (e)) on or after the date 
on which such participant would attain retirement age (as 
defined in section 216(l)(1)), for the amount of the face 
value. 
‘‘(e) NEGOTIABILITY AND CREDITING OF PROCEEDS 
TO PART B TOTALIZATION ACCOUNT.—A recognition 
bond issued in the name of a participant under this section 
shall not be taken into account in determining the amount 
credited to the participant’s part B totalization account. 
Such bond shall be fully tradable on the secondary mar-
kets under such procedures as may be provided in regula-
tions of the Board, and any amount derived by the partici-
pant from the sale of such bond shall be deposited in the 
Tier II Investment Fund and shall be included in the total 
amount credited to such participant’s part B totalization 
account. 
‘‘SEC. 258. SUPPLEMENTAL MINIMUM BENEFIT PAYMENTS. 
‘‘(a) IN GENERAL.—In any case in which— 
‘‘(1) a participant attains retirement age (as 
defined in section 216(l)(1)), 
‘‘(2) as of the date such participant attains 
such age, no distribution from amounts credited to 
the participant’s part B totalization account has 
been made to the participant under section 260, and 
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‘‘(3) as of such date, the balance in the partici-
pant’s part B totalization account (subject to sub-
section (e)) is less than the minimum annuity 
amount, 
the Board shall promptly notify the participant of the par-
ticipant’s eligibility for a supplemental minimum benefit 
payment under this section. The participant, upon applica-
tion to the Board filed by the participant on or after such 
date and in such form and manner as shall be prescribed 
by the Board, shall be entitled to a supplemental minimum 
benefit payment either to the Tier II Investment Fund (to 
the credit of the participant’s part B totalization account) 
or to the participant’s Tier III investment account, as may 
be specified by the participant in such application. Upon 
receipt of such application, the Board shall certify to the 
Secretary of the Treasury the amount of such payment, 
and such Secretary shall pay the amount of such payment 
to such Fund or such Tier III investment account in ac-
cordance with such certification from funds otherwise 
available in the general fund of the Treasury. 
‘‘(b) AMOUNT OF SUPPLEMENTAL MINIMUM BEN-
EFIT PAYMENT.—The amount of a supplemental min-
imum benefit payment payable with respect to a partici-
pant under subsection (a) is, subject to subsection (d), the 
excess (if any) of— 
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‘‘(1) the minimum annuity amount as of the 
date described in subsection (a), over 
‘‘(2) the amount credited to the participant’s 
part B totalization account, (subject to subsection 
(e)). 
‘‘(c) MINIMUM ANNUITY AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘minimum annuity amount’ means an 
amount, determined as of the date described in sub-
section (a), necessary to purchase an immediate life 
annuity which provides for monthly payments which 
are, on an annual basis, at least equal to the appli-
cable percentage of the poverty line as of such date 
for an individual (determined under the poverty 
guidelines of the Department of Health and Human 
Services issued under sections 652 and 673(2) of the 
Omnibus Budget Reconciliation Act of 1981). 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage, in con-
nection a participant, shall be the excess of— 
‘‘(A) 100 percent, over 
‘‘(B) the product derived by multiplying— 
‘‘(i) 1.0 percentage point, by 
‘‘(ii) the excess (not less than zero) 
of— 
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‘‘(I) 140, over 
‘‘(II) the number of such partici-
pant’s quarters of coverage under part 
A of this title. 
‘‘(3) IMMEDIATE LIFE ANNUITY.—For purposes 
of paragraph (1), the term ‘immediate life annuity’ 
means an annuity— 
‘‘(A) the annuity starting date (as defined 
in section 72(c)(4) of the Internal Revenue 
Code of 1986) of which commences with the 
first month following the date described in sub-
section (a), and 
‘‘(B) which provides for a series of sub-
stantial equal annual payments over the life ex-
pectancy of the participant. 
‘‘(4) ASSUMPTIONS.—Determinations of the 
minimum annuity amount under this subsection 
shall be based on reasonable actuarial assumptions 
which shall be prescribed by the Board (including 
among such assumptions reasonable charges for ad-
ministrative costs). 
‘‘(d) NEED-BASED CASH BENEFITS TAKEN INTO 
ACCOUNT.— 
‘‘(1) IN
GENERAL.—Under regulations which 
shall be prescribed by the Board, in any case in 
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which a participant is entitled to, or eligible for, 
need-based cash benefits for any month, the supple-
mental minimum benefit payments otherwise payable 
to such participant for such month, as determined 
under subsection (a), shall be reduced by the total 
amount of such recognized governmental cash bene-
fits for such month. 
‘‘(2) NEED-BASED CASH BENEFITS.—For pur-
poses of paragraph (1), the term ‘need-based cash 
benefit’ for any month means— 
‘‘(A) a supplemental security income ben-
efit under title XVI for such month, and 
‘‘(B) a monthly cash benefit payable to 
such participant for such month under any 
other need-based assistance program of the 
United States or of any State (or political sub-
division 
thereof, 
as 
defined 
in 
section 
218(b)(2)). 
‘‘(3) CONVERSION TO MONTHLY BENEFITS.— 
For purposes of this subsection, any periodic benefit 
which otherwise is described in paragraph (2)(B), 
but which is paid on other than a monthly basis, 
shall be allocated on a basis equivalent to a monthly 
benefit (as determined by the Board), and such 
equivalent monthly benefit shall constitute a monthly 
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cash benefit for purposes of paragraph (2)(B). For 
purposes of this paragraph, the term ‘periodic ben-
efit’ includes a benefit payable in a lump sum if it 
is a commutation of, or a substitute for, periodic 
payments. 
‘‘(4) AFFECT ON OTHER LAWS.—To the extent 
that any provision of law of the United States or of 
any State (or political subdivision thereof, as defined 
in section 218(b)(2)) providing for need-based cash 
benefits takes into account supplemental minimum 
benefit payments under this section in determining 
eligibility for such need-based benefits or the amount 
thereof, this section supersedes such provision and 
such provision shall be null and void as against pub-
lic policy. 
‘‘(e) TREATMENT OF PERIODIC PAYMENTS BASED 
ON NONCOVERED GOVERNMENTAL SERVICE.— 
‘‘(1) IN GENERAL.—In any case in which a par-
ticipant is eligible for a periodic payment which is 
based in whole or in part on the participant’s earn-
ings for noncovered governmental service, for pur-
poses of subsection (b)(2), the amount credited to 
such participant’s part B totalization account shall 
be deemed to be equal to the amount derived by 
multiplying— 
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‘‘(A) the amount credited to such partici-
pant’s part B totalization account (as deter-
mined without regard to this subsection), by 
‘‘(B) a fraction— 
‘‘(i) the numerator of which is an 
amount equal to the individual’s adjusted 
average indexed monthly earnings (as de-
termined under paragraph (3)), and 
‘‘(ii) the denominator of which is the 
individual’s average indexed monthly earn-
ings (determined on 215(b) without regard 
to paragraph (3)), 
rounded, if not a multiple of $0.10, to the next lower 
multiple of $0.10. 
‘‘(2) NONCOVERED GOVERNMENTAL SERVICE.— 
For purposes of this subsection, the term ‘non-
covered governmental service’ means service for the 
Federal Government or for a State (or political sub-
division thereof, as defined in section 218(b)(2)) 
which does not constitute ‘employment’ as defined in 
section 210, except that such term does not include 
service as a member of a uniformed service (as de-
fined in section 210(m)). 
‘‘(3) ADJUSTED AVERAGE INDEXED MONTHLY 
EARNINGS.— 
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‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(B)(i), the adjusted average indexed 
monthly earnings of a participant is the amount 
of the participant’s average indexed monthly 
earnings (determined under section 215(b)), ad-
justed by treating all noncovered governmental 
service performed after 1952 on which a peri-
odic benefit referred to in paragraph (1) is 
based as ‘employment’ as defined in section 210 
for purposes of this title (together with all other 
service performed by such individual consisting 
of ‘employment’ as so defined). 
‘‘(B) METHODOLOGY.—For purposes of 
determining average indexed monthly earnings 
as described in subparagraph (A), the Commis-
sioner of Social Security shall provide by regu-
lation for a method for determining the amount 
of wages derived from service performed after 
1952 and which is to be treated as ‘employ-
ment’ solely for purposes of subparagraph (A). 
Such method shall provide for reliance on em-
ployment records which are provided to the 
Commissioner and which constitute a reason-
able basis for treatment of service as ‘employ-
ment’ for such purposes, together with such 
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other information received by the Commissioner 
as the Commissioner may consider appropriate 
as a reasonable basis for treatment of service as 
‘employment’ for such purposes. 
‘‘(4) COOPERATION
BY
COMMISSIONER.—The 
Commissioner of Social Security shall provide to the 
Board such assistance and information as the Board 
may require for purposes of this subsection. 
‘‘(f) MARRIED COUPLES.—In the case of any 2 par-
ticipants who are married, subsection (a) shall apply with 
respect to each such participant, upon the joint written 
request of such participants, by totalling the balances in 
the accounts referred to in subsection (a) of both such in-
dividuals. 
‘‘(g) PROTECTION FROM ASSIGNMENT OR ALIEN-
ATION.—Any supplemental minimum benefit payment 
under this section may not be assigned or alienated. 
‘‘SEC. 259. ELECTION FOR PARTICIPATION. 
‘‘(a) IN GENERAL.—Any individual who— 
‘‘(1) is born on or after January 1, 1953, and 
before January 1, 1986, 
‘‘(2) has not attained retirement age (as de-
fined in section 216(l)(1)), and 
‘‘(3) has not become entitled to old-age insur-
ance benefits under section 202(a), 
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may file with the Board under this section, in such form 
and manner as shall be prescribed in regulations of the 
Board, a written form electing the status of ‘participant’ 
for purposes of this part. On and after the effective date 
of the election, such individual shall be treated as a partic-
ipant under this part with respect to wages received in 
any calendar year beginning on or after such date and 
self-employment income for any taxable year beginning on 
or after such effective date. 
‘‘(b) EFFECTIVE DATE OF ELECTION.—An election 
under this section shall take effect on January 1 of the 
first calendar year beginning after 60 days after the date 
of the filing of the election in accordance with subsection 
(a). 
‘‘(c) IRREVOCABILITY.—Any election under this sec-
tion shall be irrevocable. 
‘‘SEC. 260. EARLY DISTRIBUTION AND TERMINATION OF 
PARTICIPATION IN PROGRAM. 
‘‘(a) IN GENERAL.—In any case in which the amount 
credited to a participant’s part B totalization account as 
of any date prior to the date on which the participant at-
tains retirement age (as defined in section 216(l)(1)) ac-
crues to a level equal to at least the amount necessary 
to purchase under section 256(c) (as if such date were 
the participant’s retirement date) an immediate life annu-
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ity which provides for payments which are, on an annual 
basis, at least equal to 100 percent of the poverty line 
as of such date for an individual (determined under the 
poverty guidelines of the Department of Health and 
Human Services issued under sections 652 and 673(2) of 
the Omnibus Budget Reconciliation Act of 1981), the 
Board shall promptly so inform the participant, and, upon 
application of the participant filed with the Board under 
this section in accordance with regulations of the Board— 
‘‘(1) the Board shall, at the election of the par-
ticipant, either— 
‘‘(A) commence distribution of the total 
amount credited to such participant’s part B 
totalization account in the form of an annuity 
purchased under section 256(c), or 
‘‘(B) provide for consolidation of the total 
amount credited to such account in the Tier II 
Investment Fund and investment of such 
amount in fixed-income instruments meeting 
the requirements of section 254(c), until dis-
tribution of such amount is made under sub-
paragraph (A) or section 256, and 
‘‘(2) in lieu of the transfer, from the Tier I In-
vestment Fund to the Tier II Investment Fund or 
a Tier III investment account, of any remaining 
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amount credited to such participant’s part B total-
ization account after the date of the distribution or 
consolidation under paragraph (1), the Board shall 
provide for the direct payment of such remaining 
credited amount to the participant. 
‘‘(b) IMMEDIATE LIFE ANNUITY.—For purposes of 
subsection (a), the term ‘immediate life annuity’ means 
an annuity— 
‘‘(1) the annuity starting date (as defined in 
section 72(c)(4) of the Internal Revenue Code of 
1986) of which commences with the first month fol-
lowing the date referred to in subsection (a), and 
‘‘(2) which provides for a series of substantially 
equal annual payments over the life expectancy of 
the participant. 
‘‘(c) MARRIED COUPLES.—In the case of any 2 par-
ticipants who are married, subsection (a) shall apply with 
respect to each such participant, upon the joint written 
request of such participants, by totalling the balances in 
the accounts referred to in subsection (a) of both such in-
dividuals. 
‘‘(d) TREATMENT OF PERIODIC PAYMENTS BASED 
ON
GOVERNMENTAL
SERVICE.—Section 258(e) shall 
apply for purposes of this section in determining the 
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amount credited to a participant’s part B totalization ac-
count. 
‘‘SEC. 261. INDIVIDUAL INVESTMENT BOARD. 
‘‘(a) ESTABLISHMENT.—There is established in the 
executive branch of the Government an Individual Invest-
ment Board. 
‘‘(b) COMPOSITION.—The Board shall be composed 
of— 
‘‘(1) 3 members appointed by the President, of 
whom 1 shall be designated by the President as 
Chairman; and 
‘‘(2) 2 members appointed by the President, of 
whom— 
‘‘(A) 1 shall be appointed by the President 
after taking into consideration the recommenda-
tion made by the Speaker of the House of Rep-
resentatives in consultation with the Minority 
Leader of the House of Representatives; and 
‘‘(B) 1 shall be appointed by the President 
after taking into consideration the recommenda-
tion made by the Majority Leader of the Senate 
in consultation with the Minority Leader of the 
Senate. 
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‘‘(c) ADVICE AND CONSENT.—Appointments under 
subsection (b) shall be made by and with the advice and 
consent of the Senate. 
‘‘(d) MEMBERSHIP REQUIREMENTS.—Members of 
the Board shall have substantial experience, training, and 
expertise in the management of financial investments and 
pension benefit plans. 
‘‘(e) LENGTH OF APPOINTMENTS.— 
‘‘(1) TERMS.—A member of the Board shall be 
appointed for a term of 4 years, except that of the 
members first appointed under subsection (b)— 
‘‘(A) the Chairman shall be appointed for 
a term of 4 years; 
‘‘(B) the members appointed under sub-
section (b)(2) shall be appointed for terms of 3 
years; and 
‘‘(C) the remaining members shall be ap-
pointed for terms of 2 years. 
‘‘(2) VACANCIES.— 
‘‘(A) IN
GENERAL.—A vacancy on the 
Board shall be filled in the manner in which the 
original appointment was made and shall be 
subject to any conditions that applied with re-
spect to the original appointment. 
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‘‘(B) COMPLETION
OF
TERM.—An indi-
vidual chosen to fill a vacancy shall be ap-
pointed for the unexpired term of the member 
replaced. 
‘‘(3) EXPIRATION.—The term of any member 
shall not expire before the date on which the mem-
ber’s successor takes office. 
‘‘(f) DUTIES.—The Board shall— 
‘‘(1) administer the program established under 
this part; 
‘‘(2) establish policies for the investment and 
management of the Tier I Investment Fund, the 
Tier II Investment Fund, and Tier III investment 
accounts, including policies applicable to the asset 
managers with responsibility for managing the in-
vestment of individual investment account balances, 
and for the management and operation of individual 
social security annuities purchased with Tier II In-
vestment Fund assets, which shall provide for— 
‘‘(A) prudent investments suitable for ac-
cumulating funds for payment of retirement in-
come; 
‘‘(B) sound management practices; and 
‘‘(C) low administrative costs; 
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‘‘(3) review the performance of investments 
made for the Tier I Investment Fund and the Tier 
II Investment Fund; 
‘‘(4) review the management and operation of 
individual social security annuities purchased with 
Tier II Investment Fund assets; 
‘‘(5) review the performance of investments 
made under Tier III investment accounts; 
‘‘(6) review and approve the budget of the 
Board; and 
‘‘(7) comply with the fiduciary requirements of 
part 4 of subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 (relating to fi-
duciary responsibility) in connection with any exer-
cise of discretion in connection with the assets of the 
Tier I Investment Fund or the Tier II Investment 
Fund. 
‘‘(g) ADMINISTRATIVE PROVISIONS.— 
‘‘(1) IN GENERAL.—The Board may— 
‘‘(A) adopt, alter, and use a seal; 
‘‘(B) except as provided in paragraph (4), 
direct the Executive Director to take such ac-
tion as the Board considers appropriate to 
carry out the provisions of this part and the 
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policies of the Board in accordance with delega-
tions under this part; 
‘‘(C) upon the concurring votes of 4 mem-
bers, remove the Executive Director from office 
for good cause shown; 
‘‘(D) provide to the Executive Director 
such resources as are necessary to carry out the 
duties of the Executive Director; and 
‘‘(E) take such other actions as may be 
necessary to carry out the functions of the 
Board. 
‘‘(2) MEETINGS.—The Board shall meet— 
‘‘(A) not less than once during each 
month; and 
‘‘(B) at additional times at the call of the 
Chairman. 
‘‘(3) EXERCISE OF POWERS.— 
‘‘(A) IN GENERAL.—Except as provided in 
paragraph (1)(C), the Board shall perform the 
functions and exercise the powers of the Board 
on a majority vote of a quorum of the Board. 
Three members of the Board shall constitute a 
quorum for the transaction of business. 
‘‘(B) VACANCIES.—A vacancy on the 
Board shall not impair the authority of a 
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quorum of the Board to perform the functions 
and exercise the powers of the Board. 
‘‘(4) LIMITATIONS
ON
INVESTMENTS.—The 
Board may not direct any person to invest or to 
cause to be invested any sums in the Tier II Invest-
ment Fund or any Tier III investment account in a 
specific asset or to dispose of or cause to be disposed 
of any specific asset of such Fund or any such ac-
count. 
‘‘(h) COMPENSATION.— 
‘‘(1) IN GENERAL.—Each member of the Board 
who is not an officer or employee of the Federal 
Government shall be compensated at the daily rate 
of basic pay for level IV of the Executive Schedule 
for each day during which such member is engaged 
in performing a function of the Board. 
‘‘(2) EXPENSES.—A member of the Board shall 
be paid travel, per diem, and other necessary ex-
penses under subchapter I of chapter 57 of title 5, 
United States Code, while traveling away from such 
member’s home or regular place of business in the 
performance of the duties of the Board. 
‘‘(3) SOURCE OF FUNDS.—Payments authorized 
under this subsection shall be paid from the Tier I 
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Investment Fund or the Tier II Investment Fund, 
as determined appropriate by the Board. 
‘‘(i) DISCHARGE OF RESPONSIBILITIES.—The mem-
bers of the Board shall discharge their responsibilities 
solely in the interest of the participants and their bene-
ficiaries under this part. 
‘‘(j) ANNUAL INDEPENDENT AUDIT.—The Board 
shall annually engage an independent qualified public ac-
countant to audit the activities of the Board. 
‘‘(k) SUBMISSION OF BUDGET TO CONGRESS.—The 
Board shall prepare and submit to the President, and, at 
the same time, to the appropriate committees of Congress, 
an annual budget of the expenses and other items relating 
to the Board which shall be included as a separate item 
in the budget required to be transmitted to Congress 
under section 1105 of title 31, United States Code. 
‘‘(l) SUBMISSION
OF LEGISLATIVE RECOMMENDA-
TIONS.—The Board may submit to the President, and, at 
the same time, shall submit to each House of Congress, 
any legislative recommendations of the Board relating to 
any of its functions under this part or any other provision 
of law. 
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‘‘SEC. 262. EXECUTIVE DIRECTOR OF THE INDIVIDUAL IN-
VESTMENT BOARD. 
‘‘(a) APPOINTMENT OF EXECUTIVE DIRECTOR.—The 
Board shall appoint, without regard to the provisions of 
law governing appointments in the competitive service, an 
Executive Director by action agreed to by a majority of 
the members of the Board. 
‘‘(b) DUTIES.—The Executive Director shall, as de-
termined appropriate by the Board— 
‘‘(1) carry out the policies established by the 
Board; 
‘‘(2) invest and manage the Tier I Investment 
Fund and the Tier II Investment Fund in accord-
ance with the investment policies and other policies 
established by the Board; 
‘‘(3) administer the provisions of this part re-
lating to the Tier I Investment Fund and the Tier 
II Investment Fund; and 
‘‘(4) prescribe such regulations (other than reg-
ulations relating to fiduciary responsibilities) as may 
be necessary for the administration of this part re-
lating to the Tier I Investment Fund and the Tier 
II Investment Fund. 
‘‘(c) ADMINISTRATIVE AUTHORITY.—The Executive 
Director may, within the scope of the duties of the Execu-
tive Director as determined by the Board— 
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‘‘(1) appoint such personnel as may be nec-
essary to carry out the provisions of this part relat-
ing to the Tier I Investment Fund and the Tier II 
Investment Fund; 
‘‘(2) subject to approval by the Board, procure 
the services of experts and consultants under section 
3109 of title 5, United States Code; 
‘‘(3) secure directly from an Executive agency, 
the United States Postal Service, or the Postal Rate 
Commission any information necessary to carry out 
the provisions of this part and the policies of the 
Board relating to the Tier I Investment Fund and 
the Tier II Investment Fund; 
‘‘(4) make such payments out of sums in the 
Tier I Investment Fund and the Tier II Investment 
Fund as the Executive Director determines, in ac-
cordance with regulations of the Board, are nec-
essary to carry out the provisions of this part and 
the policies of the Board; 
‘‘(5) pay the compensation, per diem, and travel 
expenses of individuals appointed under paragraphs 
(1), (2), and (6) from the Tier I Investment Fund 
or the Tier II Investment Fund, in accordance with 
regulations of the Board; 
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‘‘(6) accept and use the services of individuals 
employed intermittently in the Government service 
and reimburse such individuals for travel expenses, 
authorized by section 5703 of title 5, United States 
Code, including per diem as authorized by section 
5702 of such title; 
‘‘(7) except as otherwise expressly prohibited by 
law or the policies of the Board, delegate any of the 
Executive Director’s functions to such employees 
under the Board as the Executive Director may des-
ignate and authorize such successive redelegations of 
such functions to such employees under the Board 
as the Executive Director may consider to be nec-
essary or appropriate; and 
‘‘(8) take such other actions as are appropriate 
to carry out the functions of the Executive Direc-
tor.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to wages paid after 
December 31, 2007, for pay periods ending after such 
date and self-employment income for taxable years begin-
ning after such date. 
(c) STUDY REGARDING TREATMENT
OF SPOUSES 
WHERE ONE SPOUSE IS NOT A PARTICIPANT.—As soon 
as practicable after the date of the enactment of this Act, 
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the Individual Investment Board shall undertake a study 
of the appropriate treatment of spouses in cases in which 
both spouses are not participants in the Individual Social 
Security Investment Program. The Board shall transmit 
the results of its study to the Committee on Ways and 
Means of the House of Representatives and the Committee 
on Finance of the Senate not later than 6 months after 
the first meeting of the Board. Such results shall include 
such recommendations for legislative changes as the 
Board determines appropriate. 
(d) TREATMENT OF NONCITIZENS.—Nothing in the 
amendments made by this section shall be construed to 
result in the crediting, for any purpose under part B of 
title II of the Social Security Act, of any amount based 
on the wages and self-employment income of any indi-
vidual who is not a citizen or national of the United States 
in any case in which such wages and self-employment in-
come would not be credited under part A of such title if 
section 215(j) of such Act did not apply in the case of 
such individual. 
SEC. 3. TAX TREATMENT OF INDIVIDUAL SOCIAL SECURITY 
INVESTMENT PROGRAM. 
(a) TAXATION WITH RESPECT TO ELEMENTS OF 
THE PROGRAM.— 
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(1) IN GENERAL.—Subchapter F of chapter 1 
of the Internal Revenue Code of 1986 (relating to 
exempt organizations) is amended by adding at the 
end the following new part: 
‘‘PART IX—INDIVIDUAL SOCIAL SECURITY 
INVESTMENT PROGRAM 
‘‘Sec. 530A. Individual Social Security Investment Program. 
‘‘SEC. 530A. INDIVIDUAL SOCIAL SECURITY INVESTMENT 
PROGRAM. 
‘‘(a) GENERAL RULE.—Any fund created, account 
established, or annuity under part B of title II of the So-
cial Security Act is exempt from taxation under this sub-
title. Notwithstanding the preceding sentence, any such 
fund or account is subject to the taxes imposed by section 
511 (relating to imposition of tax on unrelated business 
income of charitable, etc. organizations). 
‘‘(b) RECOGNITION BONDS.—Gross income shall not 
include— 
‘‘(1) the value of a recognition bond issued to 
a participant under section 257(b) of the Social Se-
curity Act which is deposited in the Tier II Invest-
ment Fund and held for such participant under such 
section, 
‘‘(2) proceeds from the sale of a recognition 
bond of a participant under section 257(e) of the 
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Social Security Act which are deposited in the Tier 
II Investment Fund and held for such participant 
under section 257(b) of such Act, and 
‘‘(3) proceeds from the redemption of a recogni-
tion bond of a participant under section 257(d) of 
the Social Security Act deposited in the Tier II In-
vestment Fund to the credit of such participant’s 
part B totalization account under part B of title II 
of such Act. 
For purposes of this subsection, the term ‘Tier II Invest-
ment Fund’ has the meaning given such term by section 
251(6) of the Social Security Act. 
‘‘(c) DISTRIBUTIONS.—A distribution from any fund 
or account, or any annuity payment, under part B of title 
II of the Social Security Act shall not be included in the 
gross income of the distributee or payee.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
86(d)(1)(A) of such Code is amended by inserting 
‘‘part A of’’ after ‘‘under’’. 
(3) CLERICAL
AMENDMENT.—The table of 
parts for subchapter F of chapter 1 of such Code is 
amended by adding after the item relating to part 
VIII the following new item: 
‘‘PART IX. INDIVIDUAL SOCIAL SECURITY INVESTMENT PROGRAM.’’. 
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(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2007. 
(b) EXCLUSION OF INDIVIDUAL INVESTMENT PRO-
GRAM PARTICIPANTS FROM INSURANCE BENEFITS.—Sec-
tion 215 of the Social Security Act (42 U.S.C. 415) is 
amended by adding at the end the following new sub-
section: 
‘‘Exclusion of Individual Investment Program 
Participants 
‘‘(j)(1) Except as provided in paragraph (3), a partic-
ipant (as defined in section 251(1)) in the Individual So-
cial Security Investment Program under part B shall not 
be credited with wages or self-employment income under 
this part for purposes of determining benefits under the 
old-age, survivors, and disability insurance program under 
this part. 
‘‘(2) In the case of an individual who becomes a par-
ticipant under part B pursuant to an election filed under 
section 259, paragraph (1) shall apply with respect to 
wages paid in calendar years beginning on or after the 
effective date of the election and with respect to self-em-
ployment income derived in taxable years ending after 
such date. 
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‘‘(3)(A) Paragraph (1) shall not apply in connection 
with the determination of any such participant’s entitle-
ment to disability insurance benefits under section 223(a), 
the determination of such participant’s primary insurance 
amount in connection with such entitlement, and the de-
termination during such entitlement of benefits based on 
such participant’s wages and self-employment income. 
‘‘(B) In any case in which the first month of such 
participant’s entitlement to old-age insurance benefits 
under section 202(a) immediately follows the last month 
of such participant’s entitlement to disability insurance 
benefits, during such participant’s entitlement to old-age 
insurance benefits, such participant’s primary insurance 
amount shall not be less than the excess of— 
‘‘(i) 
such 
participant’s 
primary 
insurance 
amount, determined as if paragraph (1) did not 
apply, over 
‘‘(ii) the monthly payment which would be pay-
able to such participant under a life annuity under 
section 256(c) commencing with such first month of 
entitlement and providing for a series of substan-
tially equal annual payments over the life expectancy 
of the participant. 
‘‘(4) Paragraph (1) shall not apply in connection with 
the determination of child’s insurance benefits under sec-
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tion 202(d) or mother’s or father’s insurance benefits 
under section 202(g) based on such participant’s wages 
and self-employment income.’’. 
SEC. 4. CPI-INDEXED BENEFITS FOR PART A BENE-
FICIARIES OTHER THAN DISABILITY BENE-
FICIARIES. 
(a) COMPUTATION
OF
BEND
POINTS.—Section 
215(a)(1)(B) of the Social Security Act (42 U.S.C. 
415(a)(1)(B)) is amended— 
(1) by redesignating clause (iii) as clause (vi); 
(2) in clause (ii), by striking ‘‘For individuals’’ 
and inserting ‘‘Subject to clause (iii), for individ-
uals’’; 
(3) by inserting after clause (ii) the following 
new clauses: 
‘‘(iii) For individuals who initially become eligible for 
old-age insurance benefits, or who die (before becoming 
eligible for such benefits), in any calendar year after 2015, 
each of the amounts so established under the preceding 
provisions of this subparagraph shall be equal to the prod-
uct derived by multiplying such amount (as determined 
before the application of this clause) by the quotient de-
rived by dividing— 
‘‘(I) the applicable change in the CPI for the 
first of the 2 preceding calendar years, by 
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‘‘(II) applicable change in the national average 
wage index for the first of the 2 preceding calendar 
years. 
‘‘(iv) For purposes of clause (iii)(I), the term ‘appli-
cable change in the CPI’ for a calendar year means the 
excess of— 
‘‘(I) the arithmetical mean of the Consumer 
Price Index for Urban Wage Earners and Clerical 
Workers (issued by the Bureau of Labor Statistics) 
for the 12 months in such calendar year, over 
‘‘(II) the arithmetical mean of such Consumer 
Price Index for the 12 months in calendar year 
2014. 
‘‘(v) For purposes of clause (iii)(II), the term ‘appli-
cable change in the national average wage index’ for a cal-
endar year means the excess of— 
‘‘(I) the national average wage index (as de-
fined in section 209(k)(1)) for such calendar year, 
over 
‘‘(II) the national average wage index (as so de-
fined) for calendar year 2014.’’; and 
(4) in clause (vi) (as redesignated), by striking 
‘‘under clause (ii)’’ and inserting ‘‘under the pre-
ceding provisions of this subparagraph’’. 
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(b) SUBSTITUTION OF CPI FOR NATIONAL AVERAGE 
WAGE INDEX IN COMPUTING AVERAGE INDEXED MONTH-
LY EARNINGS.— 
(1) IN GENERAL.—Section 215(b)(3) of such 
Act (42 U.S.C. 415(b)(3)) is amended— 
(A) in subparagraph (A)(ii)(I), by striking 
‘‘national average wage index (as defined in sec-
tion 209(k)(1))’’ and inserting ‘‘national aver-
age 
wage 
index 
(as 
defined 
in 
section 
209(k)(1)) (for determinations of disability in-
surance benefits and other benefits based on 
the wages and self-employment income of an in-
dividual entitled to disability insurance benefits) 
or the consumer price index (for determinations 
of other benefits)’’; 
(B) in subparagraph (A)(ii)(II), by striking 
‘‘national average wage index (as so defined)’’ 
and inserting ‘‘national average wage index (as 
so defined) (for determinations of disability in-
surance benefits and other benefits based on 
the wages and self-employment income of an in-
dividual entitled to disability insurance benefits) 
or the consumer price index (for determinations 
of other benefits)’’; 
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(C) by redesignating subparagraph (B) as 
subparagraph (C); and 
(D) by inserting after subparagraph (A) 
the following new subparagraph: 
‘‘(B) For purposes of this paragraph, the term ‘con-
sumer price index’ for a calendar year means the arithmet-
ical mean of the Consumer Price Index for Urban Wage 
Earners and Clerical Workers (issued by the Bureau of 
Labor Statistics) for the 12 months in such calendar 
year.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to the av-
erage indexed monthly earnings of individuals at-
taining age 62, or dying before attaining such age, 
on or after January 1, 2015. 
SEC. 5. MAINTENANCE OF ADEQUATE BALANCES IN THE 
SOCIAL SECURITY TRUST FUNDS. 
(a) IN GENERAL.—Section 201 of the Social Security 
Act (42 U.S.C. 401) is amended by adding at the end the 
following new subsection: 
‘‘(o) In addition to amounts otherwise appropriated 
under the preceding provisions of this section to the Trust 
Funds established under this section, there is hereby ap-
propriated for each fiscal year to each of such Trust 
Funds, from amounts in the general fund of the Treasury 
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not otherwise appropriated, such sums as may be nec-
essary from time to time to maintain the balance ratio 
(as defined in section 709(b)) of such Trust Fund, for the 
calendar year commencing during such fiscal year, at not 
less than 100 percent. The sums to be appropriated under 
the preceding sentence shall be determined by the Com-
missioner of Social Security and certified by the Commis-
sioner to each House of the Congress not later than Octo-
ber 1 of such fiscal year. In making such determination 
and certification, the Commissioner shall use the inter-
mediate actuarial assumptions used by the Board of 
Trustees of the Trust Funds in its most recent annual 
report to the Congress prepared pursuant to subsection 
(c)(2). The Commissioner shall also transmit a copy of 
any such certification to the Secretary of the Treasury, 
and upon receipt thereof, such Secretary shall promptly 
take appropriate actions in accordance with the certifi-
cation.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply with respect to fiscal years be-
ginning after the date of the enactment of this Act. 
Æ 
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