I
106TH CONGRESS
1ST SESSION
H. R. 251
To amend the Internal Revenue Code of 1986 and the Social Security Act
to provide for personal investment plans funded by employee Social
Security payroll deductions, to extend the solvency of the old-age, sur-
vivors, and disability insurance program, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
Mr. SANFORD introduced the following bill; which was referred to the Commit-
tee on Ways and Means, and in addition to the Committee on Education
and the Workforce, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 and the Social
Security Act to provide for personal investment plans
funded by employee Social Security payroll deductions,
to extend the solvency of the old-age, survivors, and
disability insurance program, and for other purposes.
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 ‘‘Strengthening Social
Security Act of 1999’’.
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SEC. 2. PORTION OF SOCIAL SECURITY TAXES ON EMPLOY-
EES DEPOSITED INTO PERSONAL INVEST-
MENT PLANS.
(a) DEDICATION OF EMPLOYEE TAXES AND SELF-
EMPLOYMENT TAXES.—
(1) TAX ON EMPLOYEES.—Section 3101(a) of
the Internal Revenue Code of 1986 (relating to
OASDI tax on employees) is amended—
(A) by striking the period at the end of the
table and inserting a semicolon; and
(B) by adding after and below the table
the following: ‘‘except that, in the case of an eli-
gible employee (as defined in section 255(3) of
the Social Security Act), the rate of tax under
this subsection shall be 5.2 percent with respect
to wages paid on or after December 31, 1999,
for pay periods ending after such date.’’.
(2) SELF-EMPLOYMENT TAX.—Section 1401(a)
of such Code (relating to OASDI tax on self-employ-
ment income) is amended—
(A) by striking the period at the end of the
table and inserting a semicolon; and
(B) by adding after and below the table
the following: ‘‘except that, in the case of an eli-
gible self-employed individual (as defined in sec-
tion 255(4) of the Social Security Act), the rate
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a personal investment payroll deduction plan for such cal-
endar year for such person’s eligible employees.
‘‘(b) PERSONAL INVESTMENT PAYROLL DEDUCTION
PLANS.—For purposes of this part, the term ‘personal in-
vestment payroll deduction plan’ means a written plan of
an employer—
‘‘(1) which applies only with respect to wages of
eligible employees,
‘‘(2) under which the personal investment plan
contributions will be deducted from the employee’s
wages and paid to the Social Security Administra-
tion with respect to a personal investment plan des-
ignated in accordance with section 252(a),
‘‘(3) under which the employer is required to
pay the amount so deducted with respect to the
specified personal investment plan within 10 busi-
ness days after the payment of the wages from
which the amount was deducted,
‘‘(4) under which the employer receives no com-
pensation for the cost of administering such plan,
and
‘‘(5) under which the employer does not make
any endorsement with respect to any personal invest-
ment plan.
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‘‘(c) AMOUNTS DEDUCTED MAY BE ACCUMULATED
BY EMPLOYER IN CERTAIN CASES.—If, under the terms
of a personal investment plan designated under section
252(a), contributions below a specified amount will not be
accepted, the requirements of subsection (b)(2) shall be
treated as met if amounts deducted from the wages of
such employee are accumulated by the employer and paid
to such plan not later than 10 business days after the first
day on which the accumulated amount exceeds such speci-
fied amount.
‘‘DESIGNATION OF PERSONAL INVESTMENT PLANS
UNDER PAYROLL DEDUCTION PLAN
‘‘SEC. 252. (a) IN GENERAL.—Except as provided in
subsection (b), the personal investment plan to which the
personal investment plan contributions with respect to any
employee are required to be paid under section 251 shall
be a personal investment plan designated by the employee
to the employer not later than 10 business days after the
date on which the employee becomes an employee of such
employer. Any such designation shall be made in such
form and manner as may be prescribed in regulations of
the Commissioner of Social Security.
‘‘(b) DESIGNATION IN ABSENCE OF TIMELY DES-
IGNATION BY EMPLOYEE.—In any case in which no timely
designation of the personal investment plan is made, the
employer shall make the designation of the personal in-
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vestment plan in accordance with regulations of the Com-
missioner of Social Security.
‘‘PARTICIPATION BY SELF-EMPLOYED INDIVIDUALS
‘‘SEC. 253. (a) IN GENERAL.—Each eligible self-em-
ployed individual who receives self-employment income in
any taxable year, shall, in such form and manner as shall
be prescribed in regulations of the Commissioner of Social
Security, deposit with the Social Security Administration
with respect to a personal investment plan maintained by
such individual the personal investment plan contribution
for such taxable year. Such deposit shall be made within
10 business days after the receipt by such individual of
such self-employment income.
‘‘(b) AMOUNTS PAYABLE MAY BE ACCUMULATED IN
CERTAIN CASES.—If, under the terms of a personal in-
vestment plan maintained under subsection (a), contribu-
tions below a specified amount will not be accepted, the
requirements of subsection (a) shall be treated as met if
amounts otherwise payable under subsection (a) are accu-
mulated by the individual and paid to such plan not later
than 10 business days after the first day on which the
accumulated amount exceeds such specified amount.
‘‘DESIGNATION OF PLANS OF SURVIVING SPOUSES AND
SURVIVING DIVORCED SPOUSES
‘‘SEC. 254. (a) IN GENERAL.—Except as otherwise
provided in this section, in the case of a deceased individ-
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ual with respect to whom a personal investment plan was
established and maintained pursuant to section 252 or
253, the trustee of such plan shall transfer the balance
in such plan to a personal investment plan maintained by
an eligible survivor if such plan is designated by the eligi-
ble survivor to the trustee not later than 20 business days
after the date of such individual’s death. Any such des-
ignation shall be made in such form and manner as may
be prescribed in regulations of the Commissioner of Social
Security.
‘‘(b) EXCEPTION IN CASE OF WRITTEN CONSENT TO
TRANSFER TO ANOTHER BENEFICIARY.—In any case in
which the eligible survivor of a deceased individual has
consented in writing to a transfer by such individual of
the balance in such individual’s personal investment plan
to another beneficiary, the trustee of such plan shall trans-
fer the balance in such plan to such beneficiary within the
period of 20 business days following the date of such indi-
vidual’s death.
‘‘(c) DESIGNATION IN ABSENCE OF TIMELY DES-
IGNATION OR CONSENT BY ELIGIBLE SURVIVOR.—In any
case in which, upon the expiration of the 20-day period
described in subsection (a), there is an eligible survivor
but no timely designation is made by the eligible survivor
under subsection (a) and no consent has been made pursu-
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ant to subsection (b), the trustee shall make the designa-
tion of the personal investment plan under subsection (a)
on behalf of such eligible survivor, in accordance with reg-
ulations of the Commissioner of Social Security.
‘‘(d) DISPOSITION OF PLAN BALANCE IF NO ELIGI-
BLE SURVIVOR EXISTS.—In any case in which, upon the
expiration of the 20-day period described in subsection (a),
no timely designation under subsection (c) has been made
and there is no eligible survivor, the trustee of the de-
ceased individual’s plan shall transfer the balance in such
plan to the estate of the decreased individual.
‘‘(e) PERIOD FOR TRANSFER BY TRUSTEE.—In the
case of a transfer by a trustee under subsection (a), (c),
or (d), the trustee shall transfer the balance in the per-
sonal investment plan of the deceased individual within the
period of 20 business days following the expiration of the
20-day period described in such subsection.
‘‘DEFINITIONS
‘‘SEC. 255. For purposes of this part—
‘‘(1) PERSONAL INVESTMENT PLAN.—The term
‘personal investment plan’ means—
‘‘(A) any personal investment retirement
plan in the Personal Investment Fund (estab-
lished under section 257) which is administered
by the Personal Investment Board, or
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‘‘(B) any individual retirement plan (as de-
fined in section 7701(a)(37) of the Internal
Revenue Code of 1986) which is administered
or issued by a bank or other person referred to
in section 408(a)(2) of such Code, under terms
which restrict deposits to personal investment
plan contributions made to the plan pursuant to
section 251 or 253 and transfers made to the
plan pursuant to section 254, and under which
distributions may only be made on or after the
date on which the individual attains age 591⁄2,
made to a beneficiary (or to the estate of the
individual) on or after the death of the individ-
ual, or attributable to the individual’s becoming
disabled within the meaning of section 223(d).
‘‘(2) COVERED EMPLOYER.—The term ‘covered
employer’ means, for any calendar year, any person
on whom an excise tax is imposed under section
3111 of the Internal Revenue Code of 1986 with re-
spect to having an individual in the person’s employ
to whom wages are paid by such person during such
calendar year.
‘‘(3) ELIGIBLE EMPLOYEE.—The term ‘eligible
employee’ means in connection with any person who
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is a covered employer for any calendar year begin-
ning after December 31, 1999, any individual—
‘‘(A) with respect to whose employment by
such employer during such calendar year there
is imposed an excise tax under section 3111 of
the Internal Revenue Code of 1986, and
‘‘(B) who does not attain age 55 during
such calendar year.
‘‘(4) ELIGIBLE SELF-EMPLOYED INDIVIDUAL.—
The term ‘eligible self-employed individual’ means
any individual—
‘‘(A) on whose self-employment income for
a taxable year beginning after December 31,
1999, there is imposed a tax under section
1401(a) of the Internal Revenue Code of 1986,
and
‘‘(B) who does not attain age 55 during
such taxable year.
‘‘(5) PERSONAL INVESTMENT PLAN CONTRIBU-
TION.—The term ‘personal investment plan con-
tribution’ means—
‘‘(A) with respect to any eligible employee
of a covered employer, an amount equal to 1
percent of the wages received by such employee
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with respect to employment by such employer,
and
‘‘(B) with respect to the self-employment
income of an individual for any taxable year, an
amount equal to 1 percent of such income for
such taxable year.
‘‘(6) ELIGIBLE SURVIVOR.—The term ‘eligible
survivor’ of a deceased individual means such indi-
vidual’s spouse or, if there is no such spouse, such
individual’s last surviving divorced spouse. Such
term shall not include any such surviving divorced
spouse who is married on the date of the deceased
individual’s death.
‘‘(7) BUSINESS DAY.—The term ‘business day’
means any day other than a Saturday, Sunday, or
legal holiday in the area involved.
‘‘PENALTIES
‘‘SEC. 256. (a) FAILURE TO ESTABLISH PERSONAL
INVESTMENT PAYROLL DEDUCTION PLAN.—Any covered
employer who fails to meet the requirements of section
251 for any calendar year shall be subject to a civil penalty
of not to exceed the greater of—
‘‘(1) $5,000 or
‘‘(2) $100 for each eligible employee of such
employer as of the beginning of such calendar year.
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‘‘(b) FAILURE TO MAKE DEDUCTIONS REQUIRED
UNDER PLAN.—Any covered employer who fails to deduct
an amount from the wages of an eligible employee in ac-
cordance with a personal investment payroll deduction
plan shall be subject to a civil penalty of not to exceed
$500 for each such failure.
‘‘(c) FAILURE BY EMPLOYER TO MAKE TIMELY PAY-
MENTS TO PERSONAL INVESTMENT PLAN.—If an amount
deducted from the wages of an eligible employee under a
personal investment payroll deduction plan is not paid to
the Social Security Administration with respect to the
specified personal investment plan within the time pre-
scribed by section 251—
‘‘(1) the employer shall be subject to a civil
penalty of not to exceed 50 percent of the amount
so deducted, and
‘‘(2) shall be liable to the employee for interest
on the amount so deducted at the underpayment
rate determined under section 6621 of the Internal
Revenue Code of 1986 from the last day by which
such amount was required to be so paid to the date
on which such amount is paid into the specified per-
sonal investment plan.
‘‘(d) FAILURE BY ELIGIBLE SELF-EMPLOYED INDI-
VIDUAL TO MAKE TIMELY PAYMENTS TO PERSONAL IN-
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VESTMENT PLAN.—If a personal investment plan con-
tribution is not paid by an eligible self-employed individual
to the Social Security Administration with respect to a
personal investment plan maintained by the individual
within the time prescribed by section 253, such individual
shall be subject to a civil penalty of not to exceed 50 per-
cent of the amount of such contribution.
‘‘(e) FAILURE
BY TRUSTEE TO MAKE TIMELY
TRANSFERS.—If the balance in the personal investment
plan of a deceased individual is not transferred by the
trustee within the time prescribed by section 254—
‘‘(1) the trustee shall be subject to a civil pen-
alty of not to exceed 50 percent of the amount of
the balance, and
‘‘(2) shall be liable for interest on the balance
at the underpayment rate determined under section
6621 of the Internal Revenue Code of 1986 from the
last day by which such balance was required to be
so transferred to the date on which such balance is
transferred.
‘‘(f) RULES FOR APPLICATION OF SECTION.—
‘‘(1) 
PENALTIES
ASSESSED
BY
COMMIS-
SIONER.—Any civil penalty assessed by this section
shall be imposed by the Commissioner of Social Se-
curity and collected in a civil action.
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‘‘(2) COMPROMISES.—The Commissioner may
compromise the amount of any civil penalty imposed
by this section.
‘‘(3) AUTHORITY TO WAIVE PENALTY IN CER-
TAIN CASES.—The Commissioner may waive the ap-
plication of this section with respect to any failure
if the Commissioner determines that such failure is
due to reasonable cause and not to intentional dis-
regard of rules and regulations.
‘‘PERSONAL INVESTMENT FUND
‘‘SEC. 257. (a) ESTABLISHMENT.—There is estab-
lished and maintained in the Treasury of the United
States a Personal Investment Fund in the same manner
as the Thrift Savings Fund under sections 8437, 8438,
and 8439 of title 5, United States Code.
‘‘(b) PERSONAL INVESTMENT FUND BOARD.—
‘‘(1) IN GENERAL.—There is established and
operated in the Social Security Administration a
Personal Investment Fund Board in the same man-
ner as the Federal Retirement Thrift Investment
Board under subchapter VII of chapter 84 of title
5, United States Code.
‘‘(2) SPECIFIC INVESTMENT DUTIES.—The Per-
sonal Investment Fund shall be managed by the
Personal Investment Fund Board in the same man-
ner as the Thrift Savings Fund is managed under
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subchapter VIII of chapter 84 of title 5, United
States Code.’’.
(2) AMOUNTS DEDUCTED TO BE SHOWN ON W–
STATEMENTS.—Section 6051(a) of the Internal
Revenue Code of 1986 (relating to receipts for em-
ployees), as amended by section 301(c)(3) of the
Health Insurance Portability and Accountability Act
of 1996, is amended—
(A) in paragraph (10), by striking ‘and’;
(B) in paragraph (11), by striking the pe-
riod and inserting ‘‘, and’’; and
(C) by inserting after paragraph (11) the
following:
‘‘(12) the total amount deducted from the em-
ployee’s wages under a personal investment payroll
deduction plan established under part B of title II
of the Social Security Act.’’.
(3) 
EXEMPTION
FROM
ERISA
REQUIRE-
MENTS.—Section 4(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1003(b)) is
amended—
(A) in paragraph (4), by striking ‘‘or’’;
(B) in paragraph (5), by striking the pe-
riod and inserting ‘‘; or’’; and
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may be readily understood by the av-
erage worker,
(II) provide for toll-free access by
telephone from all localities in the
United States to the Social Security
Administration through which individ-
uals may obtain information and an-
swers to questions regarding such pro-
gram, and
(III) provide information to the
media in all localities of the United
States about such program and such
toll-free access by telephone.
(ii) ELIGIBLE INDIVIDUAL.—For pur-
poses of this subparagraph, the term ‘‘eli-
gible individual’’ means an individual who,
as of the date of the pamphlet sent pursu-
ant to clause (i), is indicated within the
records of the Social Security Administra-
tion as—
(I) not having attained age 55,
and
(II) being credited with 1 or
more quarters of coverage under sec-