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SEC. 204. INSURANCE REQUIREMENTS.
(a) IN GENERAL.—The insurance requirements of
this section are met with respect to a trust only if the
trustee maintains for each calendar year insurance on the
life of each account holder who—
(1) is married, or
(2) has at least one dependent child with re-
spect to whom the same requirements are met as are
applicable under section 202(d)(1)(B) of the Social
Security Act with respect to an application filed
under section 202(d) of such Act.
(b) REQUIRED COVERAGE.—Insurance meets the re-
quirements of subsection (a) only if such insurance pro-
vides for a benefit payable upon the account holder’s death
to the account holder’s spouse (if any) and to each depend-
ent child (if any) described in subsection (a). Each such
benefit shall be equal to at least the product derived by
multiplying the average indexed monthly earnings (as de-
fined in section 215(b) of the Social Security Act) of the
account holder by 36.
SEC. 205. PERSONAL RETIREMENT ACCOUNT EXEMPT
FROM INCOME TAX.
Any personal retirement account is exempt from tax-
ation under subtitle A of the Internal Revenue Code of
1986. Notwithstanding the preceding sentence, any such
account is subject to the taxes imposed by section 511 of
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such Code (relating to imposition of tax on unrelated busi-
ness income of charitable, etc. organizations).
SEC. 206. TAX TREATMENT OF DISTRIBUTIONS.
(a) IN GENERAL.—Except as otherwise provided in
this section, any amount paid or distributed out of a per-
sonal retirement account shall be included in gross income
of the account holder for the taxable year in which the
payment or distribution is received. Notwithstanding any
other provision of law, the basis of the account holder in
such account shall be zero.
(b) EXCEPTION FOR AMOUNTS USED TO ACQUIRE
MINIMUM OR MORE GENEROUS IMMEDIATE ANNUITY.—
No portion of a payment or distribution out of a personal
retirement account shall be included in gross income so
long as a sufficient portion of such payment or distribu-
tion is used within a reasonable period to acquire an im-
mediate annuity which provides payments which, on an
annual basis, are not less than the payments under a mini-
mum annuity purchased in the date of such acquisition.
(c) EXCEPTION FOR TRANSFERS INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in a per-
sonal retirement account to his spouse or former spouse
under a divorce or separation instrument described in sub-
paragraph (A) of section 71(b)(2) of the Internal Revenue
Code of 1986 is not to be considered a taxable transfer
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for purposes of subtitle A of the Internal Revenue Code
of 1986, and such interest at the time of the transfer is
to be treated as a personal retirement account of such
spouse, and not of such individual. Thereafter such spouse
shall, for purposes of this title, be treated as the account
holder of such account.
SEC. 207. PENALTY ON TRUSTEE FOR FAILURE OF PER-
SONAL RETIREMENT ACCOUNT TO MEET RE-
QUIREMENT.
For purposes of section 4975 of the Internal Revenue
Code of 1986 (relating to tax on prohibited trans-
actions)—
(1) a personal retirement account shall be treat-
ed as a plan to which such section applies, and
(2) the term ‘‘prohibited transaction’’ includes
any failure of a personal retirement account to meet
any requirement of section 202 or 203.
SEC. 208. NOTIFICATION REGARDING INSURED DEPOSI-
TORY INSTITUTIONS.
(a) NOTIFICATION OF INSURED STATUS.—The rel-
evant Federal agency shall notify the Securities and Ex-
change Commission of the identity of each financial insti-
tution which is an insured depository institution or an in-
sured credit union not later than—
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(1) in the case of financial institutions which
are insured depository institutions or insured credit
unions on the date of the enactment of this Act, 60
days after such date, or
(2) in any other case, 60 days after the date on
which the institution becomes an insured depository
institution or an insured credit union.
(b) NOTIFICATION OF TERMINATION OF INSURED
STATUS.—The relevant Federal agency shall notify the
Commission of the termination of a financial institution’s
status as an insured depository institution or an insured
credit union not later than the effective date of the termi-
nation of such status.
(c) RELEVANT FEDERAL AGENCY.—For purposes of
this section, the term ‘‘relevant Federal agency’’ means—
(1) in the case of an insured credit union (as
defined in section 101(7) of the Federal Credit
Union Act), the National Credit Union Administra-
tion Board, and
(2) in any other case, the appropriate Federal
banking agency (as defined in section 3(q) of the
Federal Deposit Insurance Act).
SEC. 208. REPORTS.
(a) IN GENERAL.—The trustee of a personal retire-
ment account shall make such reports regarding such ac-
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count to the Securities and Exchange Commission and to
the account holder with respect to contributions (and the
years to which they relate), distributions, and such other
matters as the Commission may require under regulations.
(b) FILING AND FURNISHING OF REPORTS.—The re-
ports required by this section—
(1) shall be filed at such time and in such man-
ner as the Commission prescribes in the regulations
prescribed pursuant to subsection (a), and
(2) shall be furnished to individuals—
(A) not later than January 31 of the cal-
endar year following the calendar year to which
such reports relate, and
(B) in such manner as the Commission
prescribes in such regulations.
SEC. 210. STUDY ON IMPLEMENTATION OF EARLY RETIRE-
MENT OPTIONS.
(a) IN GENERAL.—As soon as practicable after the
date of the enactment of this Act, the Securities and Ex-
change Commission, in consultation with the Commis-
sioner of Social Security, shall conduct a study of the best
means of providing for options under which distributions
from a personal retirement account established under this
Act may commence in advance of the date on which the
account holder attains retirement age.
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(b) MATTERS TO BE STUDIED.—The study con-
ducted pursuant to subsection (a) shall consider
specifically—
(1) the extent to which minimum levels of as-
sets held in the account may need to be required as
a prerequisite for distribution of assets from the ac-
count at an age earlier than retirement age, and
(2) possible forms of distribution to which such
early distributions might be restricted,
in order to minimize any adverse affects that such early
distributions might have on retirement income security
and to forestall any likelihood of reliance by the account
holder in the future on other Federal or Sate benefit pro-
grams for financial support.
(c) REPORTS.—Not later than December 31 of each
calendar year beginning after the date of the enactment
of this Act and ending with 2003, the Commission shall
transmit to the President and to each House of the Con-
gress interim reports on the progress of the study being
conducted under subsection (a). Not later than December
31, 2004, the Commission shall submit to the President
and to each House of the Congress a final report on the
study conducted under subsection (a) setting forth the
Commission’s conclusions and recommendations. The re-
port shall include any recommendations for legislation