I
106TH CONGRESS
1ST SESSION
H. R. 3206
To amend title II of the Social Security Act and the Internal Revenue
Code of 1986 to provide prospectively for personalized retirement security
through personal retirement savings accounts to allow for more control
by individuals over their Social Security retirement income, to amend
such title and the Balanced Budget and Emergency Deficit Control
Act of 1985 to protect social security surpluses, and to provide other
reforms relating to benefits under such title II.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 3, 1999
Mr. SMITH of Michigan (for himself, Mr. STENHOLM, Mr. PORTER, Mr.
KOLBE, Mr. CAMPBELL, Mr. SANFORD, Mr. SHADEGG, and Mr. TOOMEY)
introduced the following bill; which was referred to the Committee on
Ways and Means, and in addition to the Committee on the Budget, 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 com-
mittee concerned
A BILL
To amend title II of the Social Security Act and the Internal
Revenue Code of 1986 to provide prospectively for per-
sonalized retirement security through personal retirement
savings accounts to allow for more control by individuals
over their Social Security retirement income, to amend
such title and the Balanced Budget and Emergency Def-
icit Control Act of 1985 to protect social security sur-
pluses, and to provide other reforms relating to benefits
under such title II.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Social Security Solvency Act of 1999’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
TITLE I—INDIVIDUAL RETIREMENT SECURITY PROGRAM
Sec. 101. Establishment of individual retirement security program.
Sec. 102. Adjustments in amounts appropriated to the Federal Old-Age and
Survivors Insurance Trust Fund based on reallocation percent-
age.
Sec. 103. Adjustments to primary insurance amounts under part A of title II
of the Social Security Act.
Sec. 104. Personal retirement savings accounts.
TITLE II—SOCIAL SECURITY SURPLUS PROTECTION
Sec. 201. Transfers of budget surpluses to Federal Old-Age and Survivors In-
surance Trust Fund.
Sec. 202. Sequestration of Federal spending to reduce debt held by the public.
TITLE III—SOCIAL SECURITY BENEFIT REFORMS
Sec. 301. Gradual increase in retirement age and early retirement age.
Sec. 302. Adjustments to bend points in determining primary insurance
amounts.
Sec. 303. Information relating to benefit limitations provided in social security
account statements.
Sec. 304. Coverage of newly hired State and local employees.
Sec. 305. Increase in widow’s and widower’s insurance benefits.
Sec. 306. Elimination of earnings test.
Sec. 307. Acceleration of increase in delayed retirement credit.
Sec. 308. Authorization for reimbursement of Federal Disability Insurance
Trust Fund for certain costs of disability insurance benefits.
Sec. 309. Study to develop recommendations for providing for elections under
which individuals may opt for exclusion from social security
coverage.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—On July 15, 1999, the House Budget
Committee Social Security Task Force adopted the fol-
lowing Findings by unanimous vote on July 15, 1999:
(1) Time is the enemy of Social Security reform
and we should move without delay. Prompt action
will give us time to institute gradual reforms that
allow workers to plan for their retirement and mini-
mizes the impact for current or near-term retirees.
(2) The Social Security Trust Fund is a secure,
legal entity comprised of U.S. Treasury Bonds
backed by the full faith and credit of the U.S. Gov-
ernment. While the U.S. has never defaulted on any
of its obligations, these represent a legal claim on
future Federal revenue. Such securities will have to
be redeemed from funds outside the Trust Fund
itself.
(3) Any reform must consider the effects on all
generations, genders, and those currently receiving
Social Security benefits. Since current demographic
projections may very well underestimate future life
expectancy, reform proposals should insure that the
intergenerational balance that has characterized this
program remains intact.
(4) No payroll tax increase.
(5) A universal Social Security survivor and dis-
ability benefit program needs to be maintained. To
shield the disabled and those who have been in the
system a short time, general fund monies should be
used to supplement program benefits.
(6) Social Security surpluses should only be
spent for Social Security and should support a re-
form program that encourages savings and overall
economic growth.
(7) Investment in the capital markets presents
an opportunity to restore Social Security’s solvency.
The investment income generated by savings-based
reform should not be used for any purpose other
than retirement.
(8) Investments in personal accounts can be
managed to minimize administrative costs, avoiding
substantial reductions rates of return on investment.
Individual investors can use guaranteed return secu-
rities and annuities to create a personal investment
safety net that assures a stable retirement income
for each worker.
(b) ADDITIONAL FINDINGS.—The Congress adds the
following to the above Findings:
(1) One of America’s most popular Government
programs, Social Security, is in jeopardy. The 1998
Board of Trustee’s report states that the current
system faces an actuarial deficit of 2.09 percent of
taxable payroll. According to the 1998 Board of
Trustee’s report, the Social Security trust fund will
begin to run a deficit by 2014 and will be exhausted
by 2032.
(2) Helping assure Americans retirement secu-
rity is a major national goal.
(3) The Congress should strengthen Social Se-
curity to ensure Americans retirement security. The
changes made to strengthen Social Security should
create a solvent Social Security system, and avoid
payroll tax increases.
(4) The root causes of the weaknesses in the
current Social Security system are its inadequate
funding mechanism and changing demographics. So-
cial Security was designed in 1935 as a pay-as-you-
go system, in which current workers supported cur-
rent retirees. This design worked when America had
42 workers per beneficiary in 1945, but that ratio
has fallen over time. In 1999 there are only 3.2
workers per beneficiary, and by 2060 the ratio is
projected to fall to 1.8 workers per beneficary. To
pay benefits to the rising number of retirees, the
Government has levied increasing payroll taxes on
workers. To maintain the program in its current
form, the Government will have to continue to raise
payroll taxes or substantially reduce benefits.
(5) The key to a more secure Social Security
system is increased savings and private investment.
We should move from a financing system based on
the Federal Government’s power to tax workers to
one based on savings and investment accounts
owned and controlled by workers.
(6) Allowing workers to take advantage of high-
er investment returns will increase their income in
retirement. Over the last 100 years, the stock mar-
ket has earned roughly 7 percent after inflation
compared to a yield of 1.5 to 2 percent after infla-
tion projects by the Social Security Administration
for workers’ payroll taxes. The difference is enor-
mous. For example, $1,000 invested for 50 years at
2 percent becomes nearly $2,700. The same amount
invested for 50 years at 7 percent becomes nearly
$30,000.
(c) PURPOSES.—The purposes of this Act are as fol-
lows:
(1) To give workers and retirees more owner-
ship and control over their retirement savings.
(2) To improve the living standards of Amer-
ican seniors by allowing them to take advantage of
low-risk investment opportunities that earn higher
returns than those they can expect to realize under
the current Social Security system.
(3) To stimulate the American economy by in-
creasing savings and investment leading to higher
productivity, more jobs, and better wages.
(4) To ensure the solvency of the Social Secu-
rity system while maintaining an adequate reserve in
the Social Security trust fund.
TITLE 
I—INDIVIDUAL 
RETIRE-
MENT SECURITY PROGRAM
SEC. 101. ESTABLISHMENT OF INDIVIDUAL RETIREMENT
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 RETIREMENT SECURITY
PROGRAM
‘‘DEPOSITS TO PERSONAL RETIREMENT SAVINGS
ACCOUNTS
‘‘SEC. 251. (a) DESIGNATION OF PERSONAL RETIRE-
MENT
SAVINGS
ACCOUNTS.—Under regulations pre-
scribed by the Board of Trustees, a covered individual,
and the spouse of such an individual, upon the attainment
of a minimum deposit balance in the Interim Investment
Fund as described in subsection (b), may designate, in
writing filed with the Commissioner of Social Security in
such form and manner as may be prescribed in such regu-
lations, one or more personal retirement savings accounts
to which deposits with respect to the individual or spouse
are to be made under subsection (b). The individual or
spouse may designate other personal retirement savings
accounts in lieu of or in addition to accounts previously
designated, in accordance with regulations of the Board
of Trustees.
‘‘(b) DEPOSITS TO PERSONAL RETIREMENT SAVINGS
ACCOUNTS.—
‘‘(1) IN GENERAL.—In any case in which the
total amount in the Interim Investment Fund cred-
ited to an individual as of the end of any annual re-
porting month, adjusted so as to reflect net earnings
and net losses attributable to such amount from in-
vestment of the balance in the Fund under section
252(c), equals or exceeds the minimum deposit
amount, the Secretary of the Treasury shall, within
30 days after the end of such month, notify the indi-
vidual of the amount credited to such individual in
the Fund. If such total amount credited to such in-
dividual as of the end of such individual’s annual re-
porting month is at least equal to the minimum de-
posit amount, pursuant to the written election of
such individual which is filed in accordance with reg-
ulations of the Board of Trustees and received by
the Secretary of the Treasury during the 90-day pe-
riod following the individual’s annual reporting
month, the Secretary of the Treasury shall transfer
such total amount from such Fund to such personal
retirement savings accounts as are designated under
subsection (a) with respect to such individual.
‘‘(2) DEFINITIONS.—For purposes of this
subsection—
‘‘(A) ANNUAL
REPORTING
MONTH.—The
term ‘annual reporting month’ means, in con-
nection with a covered individual, a calendar
month of the calendar year assigned to such in-
dividual as his or her annual reporting month
according to a schedule that shall be prescribed
in regulations of the Board of Trustees.
‘‘(B) MINIMUM DEPOSIT BALANCE.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the term ‘minimum deposit balance’
means an amount equal to $2,500.
‘‘(ii) ADJUSTMENTS.—The Secretary
of the Treasury shall adjust annually (ef-
fective for annual reporting months occur-
ring after December 2001) the dollar
amount set forth in clause (i) under proce-
dures 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
of $1.00 shall be rounded to the nearest
multiple of $1.00.
‘‘(c) LUMP SUM PAYMENT TO ESTATE UPON DEATH
OF ACCOUNT HOLDER.—Upon the death of the account
holder, the amount of any assets in the personal retire-
ment savings account shall be transferred in a lump sum,
under rules established by the Board of Trustees, to the
account holder’s estate.
‘‘(d) PUBLIC EDUCATION EFFORT.—Under regula-
tions prescribed by the Board of Trustees, the Commis-
sioner of Social Security shall conduct a public education
effort. Such effort shall include dissemination to covered
individuals of information that will assist them in making
educated investment decisions under the program estab-
lished under this part.
‘‘INTERIM INVESTMENT FUND
‘‘SEC. 252. (a) ESTABLISHMENT OF INTERIM IN-
VESTMENT FUND.—There is established in the Treasury
of the United States an Interim Investment Fund. The
Board of Trustees shall serve as trustees of such Fund.
The Fund consists of all amounts derived from payments
into the Fund under subsection (b) and remaining after
investment of such amounts under subsection (c), includ-
ing additional amounts derived as income from such in-
vestments. The amounts held in the Fund are appro-
priated and shall remain available without fiscal year limi-
tation to be held for investment under subsection (c), to
pay the administrative expenses related to the Fund and
to investment under subsection (c), and to make transfers
to personal retirement savings accounts under section
251(b)(1).
‘‘(b) 
PAYMENTS
INTO
INTERIM
INVESTMENT
FUND.—
‘‘(1) IN GENERAL.—During each calendar year,
the Secretary of the Treasury shall deposit into the
Interim Investment Fund, from amounts otherwise
available in the general fund of the Treasury, a total
amount equal, in the aggregate, to 100 percent of
the redirected social security taxes for such calendar
year of each individual who is a covered individual
for such calendar year.
‘‘(2) TRANSFERS BASED ON ESTIMATES.—The
amounts deposited pursuant to paragraph (1) shall
be transferred in at least monthly payments from
the general fund in the Treasury to the Interim In-
vestment Fund, such amounts to be determined on
the basis of estimates by the Secretary of the Treas-
ury of the taxes, specified in section 251(b)(1), paid
to or deposited into the Treasury; and proper adjust-
ments shall be made in amounts subsequently trans-
ferred to the extent prior estimates were in excess
of or were less than actual amounts.
‘‘(3) 
SEPARATE
ACCOUNTING
AND
CRED-
ITING.—Subject to this paragraph, the Secretary of
the Treasury shall provide for prompt, separate ac-
counting of the amounts deposited in the Interim In-
vestment Fund with respect to each individual dur-
ing 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
while held in the Fund during such year. Such ac-
counting shall also take into account any adjust-
ments made pursuant to paragraph (2). Under such
accounting, amounts initially deposited into the
Fund during each fiscal year with respect to the re-
directed social security taxes of each covered indi-
vidual (including net returns and losses from the in-
vestment thereof) shall be credited, not later than
the end of the succeeding fiscal year, as follows:
‘‘(A) If the covered individual is not mar-
ried as of the end of the fiscal year in which the
amounts to be credited were deposited, such
amount shall be credited to such covered indi-
vidual.
‘‘(B) If the covered individual is married
as of the end of such fiscal year—
‘‘(i) 50 percent of such amounts shall
be credited to such covered individual, and
‘‘(ii) 50 percent of such amounts shall
be credited to the individual who is the
spouse of such individual as of the end of
such fiscal year.
‘‘(4) REDIRECTED SOCIAL SECURITY TAXES.—
For purposes of paragraph (1), the term ‘redirected
social security taxes’ of an individual for a calendar
year means the product derived by multiplying—
‘‘(A) the sum of the total taxes paid under
sections 3101(a) and 3111(a) of the Internal
Revenue Code of 1986 with respect to such in-
dividual during such calendar year, and the
total taxes paid under section 1401(a) of such
Code with respect to such individual during
such calendar year, by
‘‘(B) the reallocation percentage declared
for such calendar year under section 201(n)(2)
of this Act.
‘‘(c) INVESTMENT
IN COMMON STOCK
AND COR-
PORATE BONDS IN 3 ALTERNATIVE INVESTMENT AC-
COUNTS.—
‘‘(1) IN GENERAL.—For purposes of investment
of the Interim Investment Fund, the Board of
Trustees shall divide the Fund into 3 investment ac-
counts. Such accounts shall consist of the 60/40 in-
vestment account, the 40/60 investment account,
and the 80/20 investment account. The Board of
Trustees shall contract with appropriate investment
managers selected for investment of amounts held in
each investment account.
‘‘(2) RULES RELATING TO THE 60/40 INVEST-
MENT ACCOUNT.—
‘‘(A) DEFAULT INVESTMENT ACCOUNT.—
Except as provided in an election in effect
under paragraph (3), amounts held in the In-
terim Investment Fund shall be credited to the
60/40 investment account and invested as pro-
vided in subparagraph (B).
‘‘(B) 
INVESTMENT.—Each 
investment
manager selected under paragraph (1) for in-
vestment of amounts held in the 60/40 invest-
ment account shall invest such amounts under
regulations which shall be prescribed by the
Board of Trustees so as to ensure, to the max-
imum extent practicable, that, of the total bal-
ance in the Fund credited to such account and
available for investment (after allowing for ad-
ministrative expenses)—
‘‘(i) 60 percent is invested in common
stock in accordance with paragraph (4),
and
‘‘(ii) 40 percent is invested in cor-
porate bonds in accordance with paragraph
(5).
‘‘(3) ELECTION OF TRANSFERS TO THE 40/60
INVESTMENT ACCOUNT AND THE 80/20 INVESTMENT
ACCOUNT.—
‘‘(A) IN GENERAL.—Pursuant to any indi-
vidual’s written election filed in accordance with
regulations of the Board of Trustees and re-
ceived by the Secretary of the Treasury during
the period beginning January 1 of each year
and ending March 31 of such year, the Sec-
retary of the Treasury shall transfer to any of
the investment accounts in the Interim Invest-
ment Fund (whichever is designated in such
election), from either of the other investment
accounts in the Interim Investment Fund, the
amount credited to such other investment ac-
count as of the end of the fiscal year ending
on September 30 of the prior calendar year.
‘‘(B) INVESTMENT OF 40/60 INVESTMENT
ACCOUNT.—Each investment manager selected
under paragraph (1) for investment of amounts
held in the 40/60 investment account shall in-
vest such amounts under regulations which
shall be prescribed by the Board of Trustees so
as to ensure, to the maximum extent prac-
ticable, that, of the total balance in the Fund
credited to such account and available for in-
vestment (after allowing for administrative ex-
penses)—
‘‘(i) 40 percent is invested in common
stock in accordance with paragraph (4),
and
‘‘(ii) 60 percent is invested in cor-
porate bonds in accordance with paragraph
(5).
‘‘(C) INVESTMENT OF 80/20 INVESTMENT
ACCOUNT.—Each investment manager selected
under paragraph (1) for investment of amounts
held in the 80/20 investment account shall in-
vest such amounts under regulations which
shall be prescribed by the Board of Trustees so
as to ensure, to the maximum extent prac-
ticable, that, of the total balance in the Fund
credited to such account and available for in-
vestment (after allowing for administrative ex-
penses)—
‘‘(i) 80 percent is invested in common
stock in accordance with paragraph (4),
and
‘‘(ii) 20 percent is invested in cor-
porate bonds in accordance with paragraph
(5).
‘‘(4) INVESTMENT IN COMMON STOCK.—In ac-
cordance with regulations which shall be prescribed
by the Board of Trustees, the Board of Trustees
shall establish standards which must be met by com-
mon stock selected for investment of the balance of
the Interim Investment Fund pursuant to paragraph
(2)(B)(i), (3)(B)(i), or (3)(C)(i). In conformity with
such standards, the Board of Trustees shall select,
for purposes of such investment, indices which are
comprised of common stock the aggregate market
value of which is, in each case, a reasonably broad
representation of publicly held companies whose
shares are traded on the equity markets. Amounts
invested in common stock by each investment man-
ager shall beheld in a portfolio designed to replicate
the performance of one or more of such indices.
‘‘(5) INVESTMENT IN CORPORATE BONDS.—In
accordance with regulations which shall be pre-
scribed by the Board of Trustees, the Board of
Trustees shall establish standards which must be
met by corporate bonds selected for investment of
the balance of the Interim Investment Fund pursu-
ant to paragraph (2)(B)(ii), (3)(B)(ii), or (3)(C)(ii).
Such standards shall take into account the com-
peting considerations of risk and return. Amounts
invested in corporate bonds by each investment man-
ager shall be held in a portfolio which shall consist
of a diverse range of corporate bonds, taking into
full account the opposing considerations of risk and
maximization of return.
‘‘PERIODIC REPORTS BY ACCOUNT TRUSTEE
‘‘SEC. 253. (a) IN GENERAL.—The trustee of a per-
sonal retirement savings account shall make periodic re-
ports concerning the status of the account which shall
meet the requirements of section 408B(g)(2) of the Inter-
nal Revenue Code of 1986 and of this section. Each peri-
odic report shall be furnished to the account holder on
at least a semiannual basis on or before the 60th day fol-
lowing the period for which the report is required.
‘‘(b) INFORMATION REQUIRED TO BE INCLUDED.—
The periodic report shall contain the following information
for transactions occurring during the period for which the
report is provided:
‘‘(1) The balance in the account.
‘‘(2) The rate of return for the period covered.
‘‘(3) The amount of authorized personal retire-
ment savings account contributions.
‘‘(4) The amount of distributions.
‘‘(5) The name and address of the trustee.
‘‘(6) Commission fees and fees for administra-
tive expenses charged in connection with the ac-
count.
‘‘(7) Other information which may be required
from time to time by the Board of Trustees.
The language of the report shall be written in a form so
as to be understood by the average covered individual.
‘‘(c) REPORTS
TO
BOARD
OF
TRUSTEES.—The
Board of Trustees may require the periodic report to be
filed with the Board at such time as the Board may speci-
fy in regulations under this section.
‘‘(d) FAILURE BY TRUSTEE TO MAKE TIMELY PERI-
ODIC REPORTS.—
‘‘(1) IN GENERAL.—The trustee of a personal
retirement savings 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 furnish the
periodic report required to be furnished by the trust-
ee under this section until the date on which such
report is furnished.
‘‘(2) PENALTIES
ASSESSED
BY
BOARD
OF
TRUSTEES.—Any civil penalty assessed by this sub-
section shall be imposed by the Board of Trustees
and collected in a civil action. The Board of Trust-
ees may compromise the amount of any civil penalty
imposed by this subsection. The Board of Trustees
may waive the application of this subsection with re-
spect to any failure if the Board of Trustees deter-
mines that such failure is due to reasonable cause
and not to intentional disregard of rules and regula-
tions.
‘‘DEFINITIONS
‘‘SEC. 254. For purposes of this title—
‘‘(1) PERSONAL
RETIREMENT
SAVINGS
AC-
COUNT.—The term ‘personal retirement savings ac-
count’ has the meaning provided in section 408B of
the Internal Revenue Code of 1986.
‘‘(2) COVERED EMPLOYER.—The term ‘covered
employer’ means, for any calendar year, any person
on whom an excise tax is imposed under section
3111 of the Internal Revenue Code of 1986 with re-
spect to having an individual in his employ to whom
wages are paid by such person during such calendar
year.
‘‘(3) COVERED
INDIVIDUAL.—The term ‘cov-
ered individual’ means any individual—
‘‘(A) with respect to whose employment by
a person who is covered employer for any cal-
endar year beginning after December 31, 2000,
there is imposed an excise tax under section
3111 of the Internal Revenue Code of 1986, or
‘‘(B) on whose self-employment income for
a taxable year beginning after December 31,
2000, there is imposed a tax under section
1401(a) of the Internal Revenue Code of 1986.
‘‘(4) BUSINESS DAY.—The term ‘business day’
means any day other than a Saturday, Sunday, or
legal holiday in the area involved.
‘‘(5) BOARD OF TRUSTEES.—
‘‘(A) IN GENERAL.—The term ‘Board of
Trustees’ means the Board of Trustees of the
Federal Old-Age and Survivors Insurance Trust
Fund and the Federal Disability Insurance
Trust Fund.
‘‘(B) ROLE OF SECRETARY OF THE TREAS-
URY.—
‘‘(i) IN GENERAL.—In connection with
the duties of the Board of Trustees under
this part, the Secretary of the Treasury
shall serve as Executive Director of the
Board of Trustees.
‘‘(ii) STAFF.—Upon request of the
Board of Trustees, the Secretary may de-
tail, on a reimbursable basis, any of the
personnel of the Department of the Treas-
ury to the Board of Trustees to assist it in
carrying out its duties under this part.
‘‘(iii) ADMINISTRATIVE
SUPPORT.—
Upon the request of the Board, the Sec-
retary shall provide to the Board of Trust-
ees from the Department of the Treasury,
on a reimbursable basis, the administrative
support services necessary for the Board to
carry out its responsibilities under this
part.’’.
(b) EFFECTIVE
DATE
AND
NOTICE
REQUIRE-
MENTS.—
(1) EFFECTIVE DATE.—The amendments made
by subsection (a) shall apply with respect to wages
paid after December 31, 2000, for pay periods end-
ing after such date and self-employment income for
taxable years beginning after such date.
(2) NOTICE REQUIREMENTS.—
(A) IN GENERAL.—Not later than October
1, 2000, the Commissioner of Social Security,
pursuant to direction by the Board of Trustees
of the Federal Old-Age and Survivors Insurance
Trust Fund and the Federal Disability Insur-
ance Trust Fund, shall—
(i) send to the last known address of
each eligible individual a description of the
program established by the amendments
made by this Act, which shall be written in
the form of a pamphlet in language which
may be readily understood by the average
worker,
(ii) provide for toll-free access by tele-
phone from all localities in the United
States to the Social Security Administra-
tion and for a site on the Internet through
which individuals may obtain information
and answers to questions regarding such
program, and
(iii) provide information to the media
in all localities of the United States about
such program, such toll-free access by tele-
phone, and such site on the Internet.
(B) ELIGIBLE INDIVIDUAL.—For purposes
of this paragraph, the term ‘‘eligible individual’’
means an individual who, as of the date of the
pamphlet sent pursuant to subparagraph (A), is
indicated within the records of the Social Secu-
rity Administration as—
(i) not having attained age 65, and
(ii) being credited with one or more
quarters of coverage under section 213 of
the Social Security Act.
(C) MATTERS
TO
BE
INCLUDED.—The
Commissioner of Social Security shall include
with the pamphlet sent to each eligible indi-
vidual pursuant to subparagraph (A)—
(i) a statement of the number of quar-
ters of coverage indicated in the records of
the Social Security Administration as of
the date of the description as credited to
such individual under section 213 of the
Social Security Act and the date as of
which such records may be considered ac-
curate, and
(ii) the number for toll-free access by
telephone established by the Commissioner
pursuant to subparagraph (A).
SEC. 102. ADJUSTMENTS IN AMOUNTS APPROPRIATED TO
THE FEDERAL OLD-AGE AND SURVIVORS IN-
SURANCE 
TRUST 
FUND 
BASED 
ON 
RE-
ALLOCATION PERCENTAGE.
(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:
‘‘Reduction in Appropriations to Federal Old-Age and
Survivors Insurance Trust Fund Based on Realloca-
tion Percentage
‘‘(n)(1) Under regulations prescribed by the Board
of Trustees of the Trust Funds (in consultation with the
Secretary of the Treasury) to carry out this subsection,
the amounts appropriated for any fiscal year under para-
graphs (3) and (4) of subsection (a) shall be reduced by
an amount equal to the product derived by multiplying—
‘‘(A) the total amount which would (but for this
subsection) be appropriated under paragraphs (3)
and (4) of subsection (a) for such fiscal year, by
‘‘(B) the reallocation percentage for such fiscal
year.
‘‘(2)(A) The Board of Trustees shall declare and pub-
lish in the Federal Register on or before April 1 of each
calendar year the reallocation percentage for amounts oth-
erwise appropriated to the Federal Old-Age and Survivors
Insurance Trust Fund under paragraphs (3) and (4) of
subsection (a) for the fiscal year beginning on October 1
of such calendar year.
‘‘(B) For purposes of this subsection—
‘‘(i) The term ‘reallocation percentage’ for
amounts appropriated for any fiscal year means—
‘‘(I) in the case of fiscal years preceding
fiscal year 2026, 20.16 percent,
‘‘(II) in the case of fiscal years following
2025 and preceding 2039, 22.18 percent, and
‘‘(III) in the case of fiscal years following
fiscal year 2038, the best estimate of the Board
of Trustees of the maximum percentage by
which the amounts described in subparagraph
(A) for the fiscal year may be reduced so as to
maintain a reserve in the Federal Old-Age and
Survivors Insurance Trust Fund as of the end
of such fiscal year equal to 15 percent of the
amount of benefits projected to be paid from
the Trust Fund during the next fiscal year, but
not in excess of 64.52 percent.
In making the estimate under subclause (II), the
Board of Trustees shall utilize the intermediate ac-
tuarial assumptions utilized by the Board of Trust-
ees for its most recent annual report issued under
subsection (c).’’.
(b) RECOMMENDATIONS REGARDING REDUCTIONS IN
SOCIAL SECURITY TAXES.—In any case in which the
Board of Trustees of the Federal Old-Age and Survivors
Insurance Trust Fund and the Federal Disability Insur-
ance Trust Fund estimates that the reallocation percent-
age (as defined in section 201(n)(2)(B)(i) of the Social
Security Act for any of the next 5 fiscal years will equal
64.52 percent, the Board of Trustees shall include within
its next annual report to the Congress and the President
its recommendations for reductions in taxes under chap-
ters 2 and 21 of the Internal Revenue Code of 1986 so
as to avoid unnecessary surpluses in such Trust Funds.
SEC. 
103. 
ADJUSTMENTS 
TO 
PRIMARY 
INSURANCE
AMOUNTS UNDER PART A OF TITLE II OF THE
SOCIAL SECURITY ACT.
(a) IN GENERAL.—Section 215 of the Social Security
Act (42 U.S.C. 415) is amended by adding at the end the
following new subsection:
‘‘Adjustment of Primary Insurance Amount in Relation
to Deposits Made to Personal Retirement Savings
Accounts
‘‘(j)(1) Except as provided in paragraph (2), an indi-
vidual’s primary insurance amount as determined in ac-
cordance with this section (before adjustments made
under subsection (i)) shall be equal to the excess (if any)
of—
‘‘(A) the amount which would be so determined
without the application of this subsection, over
‘‘(B) the monthly amount of an immediate life
annuity, determined on the basis of the total of all
amounts which have been deposited pursuant to sec-
tion 251(c) (indexed in the same manner as is appli-
cable with respect to average indexed monthly earn-
ings under subsection (b)) into all personal retire-
ment savings accounts held by such individual, plus
accrued interest compounded annually, assuming an
interest rate of 3.7 percent and using the mortality
table used under 412(l)(7)(C)(ii) of the Internal
Revenue Code of 1986.
‘‘(2) In the case of an individual described in para-
graph (1) who becomes entitled to disability insurance
benefits under section 223, such individual’s primary in-
surance amount shall be determined without regard to
paragraph (1).
‘‘(3) For purposes of this subsection, the term ‘imme-
diate 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 fol-
lowing the date of the determination, and
‘‘(B) which provides for a series of substantially
equal monthly payments over the life expectancy of
the individual described in paragraph (1).’’.
(b) CONFORMING AMENDMENT TO RAILROAD RE-
TIREMENT ACT OF 1974.—Section 1 of the Railroad Re-
tirement Act of 1974 (45 U.S.C. 231) is amended by add-
ing at the end the following:
‘‘(s) In applying applicable provisions of the Social
Security Act for purposes of determining the amount of
the annuity to which an individual is entitled under this
Act, section 215(j) of the Social Security Act and part
B of title II of such Act shall be disregarded.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to computations and
recomputations of primary insurance amounts occurring
after December 31, 2000.
SEC. 104. PERSONAL RETIREMENT SAVINGS ACCOUNTS.
(a) DEDUCTION
FOR
CONTRIBUTIONS
BY
TAX-
PAYER.—Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional
itemized deductions) is amended by redesignating section
222 as section 223 and by inserting after section 221 the
following new section:
‘‘SEC. 222. CONTRIBUTIONS TO PERSONAL RETIREMENT
SAVINGS ACCOUNTS.
‘‘(a) IN GENERAL.—In the case of an individual who
is an electing personal retirement savings account partici-
pant for the taxable year, there shall be allowed as a de-
duction an amount equal to 50 percent of the amount con-
tributed during such taxable year by such individual to
a personal retirement savings account maintained for the
benefit of such individual.
‘‘(b) LIMITATION.—The amount of contributions
which may be taken into account under subsection (a)
shall not exceed $2,000.
‘‘(c) ELECTING PERSONAL RETIREMENT SAVINGS
ACCOUNT PARTICIPANT.—An individual is an electing
personal retirement savings account participant for any
taxable year if any amount is deposited under section
251(c) of the Social Security Act for such taxable year
to a personal retirement savings account maintained for
the benefit of such individual.
‘‘(d) SPECIAL RULES.—
‘‘(1) NO DEDUCTION FOR TRUSTEE-TO-TRUST-
EE TRANSFERS.—No deduction shall be allowed for
amounts transferred to an account in a rollover con-
tribution described in section 408B(b)(2).
‘‘(2) TIME
WHEN
CONTRIBUTIONS
DEEMED
MADE.—For purposes of this section, a taxpayer
shall be deemed to have made a contribution to a
personal retirement savings account on the last day
of the preceding taxable year if the contribution 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 ex-
tensions thereof).’’
(b) PERSONAL RETIREMENT SAVINGS ACCOUNTS.—
Subpart A of part I of subchapter D of chapter 1 of such
Code (relating to pension, profit-sharing, stock bonus
plans, etc.) is amended by inserting after section 408A
the following new section:
‘‘SEC. 408B. PERSONAL RETIREMENT SAVINGS ACCOUNTS.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any amount deposited in a personal retirement sav-
ings account under section 251(c) of the Social Security
Act.
‘‘(b) PERSONAL RETIREMENT SAVINGS ACCOUNT.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘personal retirement savings account’
means a trust created or organized in the United
States for the exclusive benefit of an individual or
his beneficiaries, but only if the written governing
instrument creating the trust meets the following re-
quirements:
‘‘(A) No contribution will be accepted
other than—
‘‘(i) deposits under section 251(c) of
the Social Security Act,
‘‘(ii) contributions made in cash, ex-
cept that contributions under this subpara-
graph may not be accepted for any taxable
year in excess of $2,000, and
‘‘(iii) a contribution which is a roll-
over contribution described in paragraph
(2).
‘‘(B) Except as provided in subsection
(f)(2), no amount may be paid or distributed
from such trust—
‘‘(i) before the date on which the ac-
count holder attains age 591⁄2 or dies, or
‘‘(ii) in a manner not meeting the re-
quirements of subsection (d).
‘‘(C) The trustee of which is a regulated
investment company (as defined in section 851)
which is approved by the Secretary for purposes
of this section.
‘‘(D) The interest of an individual in the
balance in his account is nonforfeitable.
‘‘(2) ROLLOVER
CONTRIBUTIONS.—For pur-
poses of paragraph (1)(A), a rollover contribution is
described in this paragraph if such contribution is—
‘‘(A) a direct trustee-to-trustee transfer de-
scribed in subsection (f)(2), or
‘‘(B) a transfer from an eligible retirement
plan (as defined in section 402(c)(8)) to the
personal retirement savings account if no
amount is includible in gross income by reason
of such transfer, determined by treating such
account as the same type of plan as the plan
from which such transfer were made.
‘‘(c) INVESTMENT REQUIREMENTS.—
‘‘(1) IN GENERAL.—Amounts in a personal re-
tirement savings account may be invested only in
regulated investment companies (as defined in sec-
tion 851) which are approved by the Secretary for
purposes of this section.
‘‘(2) CRITERIA FOR SECRETARIAL APPROVAL.—
The Secretary may approve a regulated investment
company for purposes of this section only if—
‘‘(A) an election is in effect under section
851(b)(1) for such company, and
‘‘(B) 
the 
portfolio 
assets 
of 
such
company—
‘‘(i) replicate the assets of a broad-
based index of stocks which is approved by
the Secretary, or
‘‘(ii) are of a type determined by the
Secretary not to involve high risks for the
investor.
‘‘(3) DIVERSIFICATION REQUIRED.—To the ex-
tent possible, the Secretary shall approve under sub-
paragraph (B)(i) funds in each of the following 4
categories: domestic stocks, domestic bonds, stocks
of companies having small capitalization, and foreign
stocks. Nothing in this subsection shall be construed
to preclude the use of managed funds devised so as
to minimize risk.
‘‘(4) 
CONSIDERATION
OF
MANAGEMENT
COSTS.—The Secretary shall take into account man-
agement costs in determining whether to approve a
company for purposes of this section.
‘‘(d) DISTRIBUTION REQUIREMENTS.—
‘‘(1) IN GENERAL.—The requirements of this
subsection are met with respect to distributions from
a personal retirement savings account (other than
reasonable administrative fees meeting such require-
ments as may be prescribed in regulations of the
Secretary) only if such distributions are in accord-
ance with a payment option under paragraph (2).
The preceding sentence shall not apply to direct
trustee-to-trustee transfers described in subsection
(f)(2) or distributions to a deceased account holder’s
estate under section 251(c) of the Social Security
Act.
‘‘(2) PAYMENT OPTIONS.—The payment options
under this paragraph are the following:
‘‘(C) section 408B(g)(2) (relating to per-
sonal retirement savings accounts),’’.
(f) CLERICAL AMENDMENTS.—
(1) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by
striking the last item and inserting the following
new items:
‘‘Sec. 222. Contributions to personal retirement savings accounts.
‘‘Sec. 223. Cross reference.’’
(2) The table of sections for subpart A of part
I of subchapter D of chapter 1 of such Code is
amended by inserting after the item relating to sec-
tion 408A the following new item:
‘‘Sec. 408B. Personal retirement savings accounts.’’
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
TITLE II—SOCIAL SECURITY
SURPLUS PROTECTION
SEC. 201. TRANSFERS OF BUDGET SURPLUSES TO FEDERAL
OLD-AGE AND SURVIVORS INSURANCE TRUST
FUND.
Section 201 of the Social Security Act (as amended
by the preceding provisions of this Act) is amended further
by adding at the end the following new subsection:
‘‘Transfers of Budget Surpluses to Federal Old-Age and
Survivors Insurance Trust Fund
‘‘(o)(1) In addition to the amounts otherwise appro-
priated to the Federal Old-Age and Survivors Insurance
Trust Fund for each fiscal year after fiscal year 2000 and
before fiscal year 2010, there is hereby appropriated to
such Trust Fund for each such fiscal year the applicable
amount for such fiscal year. All amounts transferred to
such Trust Fund under this subsection shall be invested
by the Managing Trustee in the same manner and to the
same extent as the other assets of such Trust Fund.
‘‘(2) For purposes of paragraph (1), the applicable
amount for any fiscal year is the amount set forth in the
following table:
In the case of
The
fiscal year—
amount is—
2001 ............................................................................................. $11 billion
2002 ............................................................................................. $59 billion
2003 ............................................................................................. $51 billion
2004 ............................................................................................. $68 billion
2005 ............................................................................................. $79 billion
2006 .............................................................................................$116 billion
2007 .............................................................................................$134 billion
2008 .............................................................................................$146 billion
2009 .............................................................................................$165 billion.
‘‘(3)(A) Subject to subparagraph (B), in any case in
which the reallocation percentage (as defined in subsection
(n)(2)(B)(i)) for any fiscal year after 2014 of the best esti-
mate of the Board of Trustees of the amounts otherwise
appropriated for the calendar year ending during such fis-
cal year to the Federal Old-Age and Survivors Insurance