‘‘(d) ADMINISTRATIVE EXPENSES.—Administrative
expenses incurred to carry out this part shall be paid out
of net earnings in the Trust Fund.
‘‘(e) ASSIGNMENT OR ALIENATION AND RELATED
MATTERS.—
‘‘(1) EXCLUSIVE
BENEFIT
OF
THE
ACCOUNT
HOLDER.—Subject to subsection (d) and paragraphs
(2) and (3), sums in the Trust Fund credited to the
account of any account holder may not be used for,
or diverted to, purposes other than for the exclusive
benefit of the account holder or other persons to
whom distributions are made under section 255.
‘‘(2) IMMUNITY
FROM
ASSIGNMENT, ALIEN-
ATION, AND CERTAIN OTHER LEGAL PROCESS.—Ex-
cept as provided in paragraph (3), sums in the
Trust Fund may not be assigned or alienated and
are not subject to execution, levy, attachment, gar-
nishment, or other legal process. For the purposes of
this paragraph, a loan made from the Trust Fund
to an account holder shall not be considered to be
an assignment or alienation.
‘‘(3) EXCEPTIONS.—Moneys due or payable
from the Trust Fund to any person and, in the case
of an account holder, the balance in the individual
account of the account holder, shall be subject to
legal process for the enforcement of the legal obliga-
tions of such person or account holder to provide
child support or make alimony payments as provided
in section 459 or relating to the enforcement of a
judgment for physically, sexually, or emotionally
abusing a child as provided under section 263.
‘‘(f) EXCLUSIVE APPROPRIATION.—The sums in the
Trust Fund shall not be appropriated for any purpose
other than the purposes specified in this section and may
not be used for any other purpose.
‘‘(g) CONTRIBUTIONS
AND
EARNINGS
HELD
IN
TRUST FOR ACCOUNT HOLDERS.—All sums contributed
to the Trust Fund by an account holder and all net earn-
ings in the Trust Fund attributable to investment of such
sums are held in the Trust Fund in trust for such account
holder.
‘‘(h) FIDUCIARY RESPONSIBILITIES; ENFORCEMENT
UNDER THE SECRETARY OF LABOR.—
‘‘(1) IN GENERAL.—Under regulations of the
Secretary of Labor, the provisions of sections 8477
and 8478 of title 5, United States Code, shall apply
in connection with the Trust Fund in the same man-
ner and to the same extent as such provisions apply
in connection with the Thrift Savings Fund.
‘‘(2) INVESTIGATIVE AUTHORITY.—Any author-
ity available to the Secretary of Labor under section
504 of the Employee Retirement Income Security
Act of 1974 is hereby made available to the Sec-
retary of Labor, and any officer designated by the
Secretary of Labor, to determine whether any person
has violated, or is about to violate, any provision ap-
plicable under paragraph (1).
‘‘(3) EXCULPATORY PROVISIONS; INSURANCE.—
‘‘(A) IN GENERAL.—Any provision in an
agreement or instrument which purports to re-
lieve a fiduciary from responsibility or liability
for any responsibility, obligation, or duty under
this part shall be void.
‘‘(B) INSURANCE.—The Trust Fund shall
be available and may be used at the discretion
of the Executive Director to purchase insurance
to cover potential liability of persons who serve
in a fiduciary capacity with respect to the Trust
Fund, without regard to whether a policy of in-
surance permits recourse by the insurer against
the fiduciary in the case of a breach of a fidu-
ciary obligation.
‘‘WAIVER, ALLOTMENT AND ASSIGNMENT OF PAYMENTS
‘‘SEC. 261. (a) WAIVER OF ENTITLEMENT.—An indi-
vidual entitled to an annuity or other payment payable
from the Trust Fund may decline to accept all or any part
of the amount of the payment by a waiver signed and filed
with the Executive Director. The waiver may be revoked
in writing at any time. Payment of the annuity waived
may not be made for the period during which the waiver
is in effect.
‘‘(b) ALLOTMENTS OR ASSIGNMENTS.—An individual
entitled to an annuity or other payment payable from the
Trust Fund may make allotments or assignments of
amounts from the annuity or other payment for such pur-
poses as the Executive Director considers appropriate.
‘‘APPLICATION FOR ANNUITY OR OTHER PAYMENTS
‘‘SEC. 262. (a) APPLICATIONS REQUIRED.—No pay-
ment of an annuity or other payment from the Social Se-
curity Investment Trust Fund under this part may be
made unless an application for payment of the annuity or
other payment is received by the Executive Director before
the one hundred and fifteenth anniversary of the birth of
the account holder.
‘‘(b) APPLICATIONS WITH RESPECT TO DECEASED
ACCOUNT HOLDERS.—Notwithstanding subsection (a),
after the death of an account holder, a payment of the
annuity or other payment shall not be paid unless an ap-
plication therefor is received by the Executive Director
within 30 years after the death or other event which estab-
lishes the entitlement to the annuity or other payment.
‘‘COURT ORDERS
‘‘SEC. 263. (a) ALTERNATIVE
PAYEES
UNDER
COURT ORDERS.—Payments under this part which would
otherwise be made to an account holder or an annuitant
shall be paid (in whole or in part) by the Executive Direc-
tor to another person if and to the extent expressly pro-
vided for in the terms of—
‘‘(1) any court decree of divorce, annulment, or
legal separation, or the terms of any court order or
court-approved property settlement agreement inci-
dent to any court decree of divorce, annulment, or
legal separation; or
‘‘(2) any court order or other similar process in
the nature of garnishment for the enforcement of a
judgment rendered against such account holder or
annuitant, for physically, sexually, or emotionally
abusing a child.
In the event that the Executive Director, as the case may
be, is served with more than 1 decree, order, or other legal
process with respect to the same moneys due or payable
to any individual, such moneys shall be available to satisfy
such processes on a first-come, first-served basis, with any
such process being satisfied out of such moneys as remain
after the satisfaction of all such processes which have been
previously served.
‘‘(b) 
WRITTEN
NOTICE
REQUIREMENTS.—Sub-
section (a) shall apply only to payments made by the Exec-
utive Director under this part after the date on which the
Executive Director receives written notice of such decree,
order, other legal process, or agreement, and such addi-
tional information and documentation as the Executive
Director may require.
‘‘(c) DEFINITIONS.—For the purpose of this
section—
‘‘(1) the term ‘judgment rendered for phys-
ically, sexually, or emotionally abusing a child’
means any legal claim perfected through a final en-
forceable judgment, which claim is based in whole or
in part upon the physical, sexual, or emotional abuse
of a child, whether or not that abuse is accompanied
by other actionable wrongdoing, such as sexual ex-
ploitation or gross negligence; and
‘‘(2) the term ‘child’ means an individual under
18 years of age.
‘‘WITHHOLDING OF STATE INCOME TAXES
‘‘SEC. 264. (a) WITHHOLDING AGREEMENTS.—The
Executive Director shall, in accordance with this section,
enter into an agreement with any State within 120 days
of a request for agreement from the proper State official.
The agreement shall provide that the Executive Director
shall withhold State income tax in the case of the monthly
annuity of any annuitant who voluntarily requests, in writ-
ing, such withholding. The amounts withheld during any
calendar quarter shall be held in the Trust Fund and dis-
bursed to the States during the month following that cal-
endar quarter.
‘‘(b) NO MULTIPLE REQUESTS.—An annuitant may
have in effect at any time only one request for withholding
under this section, and an annuitant may not have more
than two such requests in effect during any one calendar
year.
‘‘(c) CHANGES AND REVOCATIONS.—Subject to sub-
section (b), an annuitant may change the State designated
by that annuitant for purposes of having withholdings
made, and may request that the withholdings be remitted
in accordance with such change. An annuitant also may
revoke any request of that annuitant for withholding. Any
change in the State designated or revocation is effective
on the first day of the month after the month in which
the request or the revocation is processed by the Executive
Director, but in no event later than on the first day of
the second month beginning after the day on which such
request or revocation is received by the Executive Direc-
tor.
‘‘(d) RESERVATIONS TO THE UNITED STATES; RE-
PAYMENTS OF ERRONEOUS WITHHOLDINGS.—This sec-
tion does not give the consent of the United States to the
application of a statute which imposes more burdensome
requirements on the United States than on employers gen-
erally, or which subjects the United States or any annu-
itant to a penalty or liability because of this section. The
Executive Director may not accept pay from a State for
services performed in withholding State income taxes from
annuities. Any amount erroneously withheld from an an-
nuity and paid to a State by the Executive Director shall
be repaid by the State in accordance with regulations
issued by the Executive Director.
‘‘(e) DEFINITION.—For the purpose of this section,
the term ‘annuitant’ includes a survivor who is receiving
an annuity from the Trust Fund.
‘‘TAX TREATMENT OF THE SOCIAL SECURITY
INVESTMENT TRUST FUND
‘‘SEC. 265. The Trust Fund shall be exempt from
taxation under subtitle A of the Internal Revenue Code
of 1986.
‘‘ADMINISTRATION
‘‘SEC. 266. (a) BOARD OF TRUSTEES.—
‘‘(1) IN
GENERAL.—The Federal Retirement
Thrift Investment Board established by section
8472(a) of title 5, United States Code, shall also
serve as the Board of Trustees of the Social Security
Investment Trust Fund.
‘‘(2) DUTIES.—It shall be the duty of the
Board to—
‘‘(A) hold the Trust Fund;
‘‘(B) report to the Congress not later than
the first day of April of each year on the oper-
ation and status of the Trust Fund during the
preceding fiscal year and on its expected oper-
ation and status during the next ensuing 5 fis-
cal years;
‘‘(C) develop investment policies which pro-
vide for—
‘‘(i) prudent investments suitable for
accumulating funds for payment of retire-
ment income, and
‘‘(ii) low administrative costs;
‘‘(D) recommend improvements in adminis-
trative procedures and policies designed to ef-
fectuate the proper coordination of the program
established under this part with the old-age,
survivors, and disability insurance program es-
tablished under part A; and
‘‘(E) review the general policies followed in
managing the Trust Fund and recommend
changes in such policies, including necessary
changes in the provisions of the law which gov-
ern the way in which the Trust Funds are to
be managed and invested.
‘‘(b) EXECUTIVE DIRECTOR.—
‘‘(1) IN GENERAL.—The Executive Director ap-
pointed under section 8474(a) of title 5, United
States Code, shall also serve as Executive Director
under this part.
‘‘(2) DUTIES.—The Executive Director shall—
‘‘(A) carry out the policies established by
the Board under this part;
‘‘(B) invest and manage the Trust Fund in
accordance with the investment policies and
other policies established by the Board under
this part;
‘‘(C) purchase annuity contracts and pro-
vide for the payment of other benefits under
this part;
‘‘(D) administer the provisions of this part;
and
‘‘(E) prescribe such regulations (other
than regulations relating to fiduciary respon-
sibilities) as may be necessary for the adminis-
tration of this part.
‘‘(3) AUTHORIZED FUNCTIONS.—The Executive
Director may—
‘‘(A) prescribe such regulations as may be
necessary to carry out the responsibilities of the
Executive Director under this part, other than
regulations relating to fiduciary responsibilities;
‘‘(B) appoint such personnel as may be
necessary to carry out the provisions of this
part;
‘‘(C) subject to approval by the Board,
procure the services of experts and consultants
under section 3109 of title 5, United States
Code;
‘‘(D) secure directly from other agencies
and instrumentalities of the Federal Govern-
ment any information necessary to carry out
the provisions of this part and policies of the
Board under this part;
‘‘(E) make such payments out of sums in
the Trust Fund as the Executive Director de-
termines are necessary to carry out the provi-
sions of this part and the policies of the Board
under this part;
‘‘(F) pay the compensation, per diem, and
travel expenses of individuals appointed under
subparagraphs (B), (C), and (G) from the
Trust Fund;
‘‘(G) accept and use the services of individ-
uals employed intermittently in the Government
service and reimburse such individuals for trav-
el expenses, as authorized by section 5703 of
title 5, United States Code, including per diem
as authorized by section 5702 of such title;
‘‘(H) except as otherwise expressly prohib-
ited by law or the policies of the Board, dele-
gate any of the Executive Director’s functions
to such employees under the Board as the Ex-
ecutive Director may designate and authorize
such successive redelegations of such functions
to such employees under the Board as the Ex-
ecutive Director may consider to be necessary
or appropriate; and
‘‘(I) take such other actions as are appro-
priate to carry out the functions of the Execu-
tive Director.
‘‘(c) SOURCE OF COMPENSATION.—Notwithstanding
paragraph (3) of section 8476(d) of title 5, United States
Code, basic pay paid for any fiscal year as compensation
to each member of the Board (and each officer and em-
ployee of the Board) shall be paid from the Trust Fund
(in lieu of the Thrift Savings Fund) in an amount which
bears the same ratio to the total amount of basic pay paid
to such member (or officer or employee) for such fiscal
year as the balance in the Trust Fund as of the beginning
of such fiscal year bears to the total amount of such bal-
ance and the balance in the Thrift Savings Fund as of
the beginning of such fiscal year.’’.
(b) CONFORMING AMENDMENTS.—Section 201(h) of
such Act (42 U.S.C. 401(h)) is amended—
(1) by striking ‘‘All other’’ in the second sen-
tence and inserting ‘‘Except as provided in section
255, all other’’; and
(2) by adding at the end the following new sen-
tence: ‘‘Any reference in this part to benefits under
this title shall be deemed a reference to benefits en-
titlement to which arises under this part.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to payments of old-
age insurance benefits for months after December 2000.
SEC. 3. FINANCING OF INITIAL GOVERNMENT CONTRIBU-
TIONS BY MEANS OF REDUCTION IN APPRO-
PRIATIONS TO TRUST FUNDS OF TAXES ON
RETIREMENT BENEFITS.
Section 121(e) of the Social Security Amendments of
1983 (42 U.S.C. 401 note) is amended—
(1) by striking ‘‘less (ii) the amounts’’ in para-
graph (1) and inserting ‘‘less (ii) the sum of (I) the
amounts’’;
(2) by inserting before the period at the end of
paragraph (1) the following: ‘‘, and (II) the amounts
equivalent to the aggregate of initial contributions to
investment accounts to be made pursuant to section
252(c) of the Social Security Act’’; and
(3) by inserting before the period at the end of
the second sentence of paragraph (2) the following:
‘‘and initial contributions to investment accounts
pursuant to section 252(c) of the Social Security Act
estimated to be made during such quarter’’.
SEC. 4. TAX TREATMENT OF AMOUNTS CONTRIBUTED TO,
AND DISTRIBUTIONS FROM, PERSONAL SO-
CIAL SECURITY INVESTMENT ACCOUNTS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions for individuals) is amended
by redesignating section 222 as section 223 and by insert-
ing after section 221 the following new section:
‘‘SEC. 222. PERSONAL SOCIAL SECURITY INVESTMENT AC-
COUNTS.
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an
individual, there shall be allowed as a deduction for the
taxable year an amount equal to the amount contributed
in cash for such taxable year to the personal social security
investment account of any eligible individual.
‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—
‘‘(1) IN GENERAL.—The amount allowable as a
deduction under subsection (a) for any taxable year
for contributions to the personal social security in-
vestment account of an eligible individual shall not
exceed $2,000.
‘‘(2) SPECIAL RULE.—If the account holder of
any personal social security investment account
makes a contribution to such account for any tax-
able year, no other taxpayer shall be allowed a de-
duction for any amount contributed to such account
for such taxable year.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) PERSONAL SOCIAL SECURITY INVESTMENT
ACCOUNT.—The term ‘personal social security in-
vestment account’ means an account established
under section 252 of the Social Security Act.
‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible
individual’ means, with respect to the taxpayer—
‘‘(A) the taxpayer,
‘‘(B) the taxpayer’s spouse, and
‘‘(C) any individual with respect to whom
a deduction under section 151(c) is allowed to
the taxpayer.
Subparagraph (B) shall not apply unless the tax-
payer files a joint return for the taxable year.
‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, any amount paid or distrib-
uted out of a personal social security investment ac-
count shall be included in gross income by the payee
or distributee, as the case may be, in the manner
provided under section 72.
‘‘(2) SPECIAL RULES FOR APPLYING SECTION
72.—For purposes of applying section 72 to any
amount described in paragraph (1)—
‘‘(A) all personal social security investment
accounts of the same individual shall be treated
as 1 contract,
‘‘(B) all distributions during any taxable
year shall be treated as 1 distribution, and
‘‘(C) the value of the contract, income on
the contract, and investment in the contract
shall be computed as of the close of the cal-
endar year in which the taxable year begins.
For purposes of subparagraph (C), the value of the
contract shall be increased by the amount of any dis-
tributions during the calendar year.
‘‘(3) TREATMENT
OF
DISTRIBUTIONS
OF
SO-
CIAL SECURITY BENEFITS.—
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), the amount of any benefit distribu-
tion described in section 255(b) of the Social
Security Act shall be included in gross income
(to the extent provided in section 86) as if such
distribution were a social security benefit (as
defined in section 86).
‘‘(B) ALLOCATION OF INVESTMENT IN THE
CONTRACT.—For purposes of section 72, the
portion of the account which the Executive Di-
rector (as defined in section 251 of the Social
Security Act) determines is necessary to fund
the benefit distributions referred to in subpara-
graph (A) for the taxable year and all suc-
ceeding taxable years shall be treated as a sepa-
rate contract with respect to which no premium
or other consideration was paid.
‘‘(4) CROSS REFERENCE.—
‘‘For excise tax on certain distributions, see sec-
tion 72(t).
‘‘(e) SPECIAL RULES.—
‘‘(1) TIME
WHEN
CONTRIBUTIONS
DEEMED
MADE.—For purposes of this section, a taxpayer
shall be deemed to have made a contribution to a
personal social security investment account on the
last day of the preceding taxable year if the con-
tribution is made on account of such taxable year
and is made not later than the time prescribed by
law for filing the return for such taxable year (not
including extensions thereof).
‘‘(2) BENEFICIARY
MUST
BE
UNDER
AGE
701⁄2.—No deduction shall be allowed under this sec-
tion with respect to any contribution to personal so-
cial security investment account if the account hold-
er has attained age 701⁄2 before the close of such
holder’s taxable year for which the contribution was
made.’’
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)
of section 62 of such Code is amended by inserting after
paragraph (17) the following new paragraph:
‘‘(18) PERSONAL
SOCIAL
SECURITY
INVEST-
MENT
ACCOUNT
CONTRIBUTIONS.—The deduction
allowed by section 222.’’.
(c) CONFORMING AMENDMENTS.—
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
Æ