Individual Social Security Retirement Account Act of 1993

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Individual Social Security 
Retirement Account Act of 1993''.

SEC. 2. REDUCTION OF SOCIAL SECURITY TAXES.

    (a) Tax on Employees.--Subsection (a) of section 3101 of the 
Internal Revenue Code of 1986 (relating to OASDI tax on employees) is 
amended by striking the table and inserting the following:

``In cases of wages
                                                               The rate
  received during:
                                                              shall be:
                1993 or 1994.........................       6.2 percent
                1995 or thereafter...................    5.2 percent.''
    (b) Tax on Employers.--Subsection (a) of section 3111 of such Code 
(relating to OASDI tax on employers) is amended by striking the table 
and inserting the following:

``In cases of wages
                                                               The rate
  paid during:
                                                              shall be:
                1993 or 1994.........................       6.2 percent
                1995 or thereafter...................    5.2 percent.''
    (c) Tax on Self-Employed.--Subsection (a) of section 1401 of such 
Code of (relating to OASDI tax on self-employment income) is amended by 
striking the table and inserting the following:

      

                                                                        
              ``In the case of a taxable year:                          
                                                                        
          Beginning after:           And before:            Percent:    
                                                                        
      December 31, 1992......  January 1, 1995........  12.4          
      December 31, 1994......  .......................  10.4.''         
                                                                        

    (d) Effective Date.--The amendments made by this section shall 
apply with respect to remuneration paid after December 31, 1994, and 
with respect to earnings from self-employment attributable to taxable 
years beginning after such date.

SEC. 3. INDIVIDUAL SOCIAL SECURITY RETIREMENT ACCOUNTS FUNDED BY SOCIAL 
              SECURITY PAYROLL DEDUCTION PLANS.

    (a) In General.--Title II of the Social Security Act is amended--
            (1) by inserting before section 201 the following:

                    ``Part A--Insurance Benefits'';

        and
            (2) by adding at the end the following new part:

                ``Part B--Individual Retirement Program

               ``social security payroll deduction plans

    ``Sec. 251. (a) In General.--Each person who is a covered employer 
for any calendar year shall have in effect throughout such calendar 
year a social security payroll deduction plan for such person's 
eligible employees.
    ``(b) Requirements.--For purposes of this part, the term `social 
security payroll deduction plan' means a written plan of a covered 
employer if--
            ``(1) under such plan, the prescribed social security 
        employee contribution is deducted from each eligible employee's 
        wages and paid to an individual social security retirement 
        account of such employee designated in accordance with section 
        252,
            ``(2) under such plan, the covered employer pays the amount 
        so deducted to the designated individual social security 
        retirement account within 10 business days after the payment of 
        the wages from which the amount was deducted,
            ``(3) under such plan, the covered employer pays to the 
        individual social security retirement account, together with 
        the contribution paid pursuant to paragraph (2), the prescribed 
        social security employer contribution with respect to the 
        eligible employee, and
            ``(4) the employer receives no compensation for the cost of 
        administering such plan.
    ``(c) Amount Deducted May Be Accumulated by Employer in Certain 
Cases.--If, under the terms of an individual social security retirement 
account selected under section 252, 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 an 
eligible employee are accumulated by the covered employer 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 individual social security retirement accounts

    ``Sec. 252. (a) In General.--Except as provided in subsection (b), 
the individual social security retirement account to which 
contributions with respect to any eligible employee are required to be 
paid under section 251 shall be such an account designated by such 
employee to such employer not later than 10 business days after the 
date on which such employee becomes an eligible employee of such 
employer. Any such designation shall be made in such form and manner as 
may be prescribed in regulations of the Secretary.
    ``(b) Designation in Absence of Timely Designation by Employee.--In 
any case in which no timely designation of the individual social 
security retirement account is made, the covered employer shall 
designate such account in accordance with regulations of the Secretary.
    ``(c) Subsequent Designation of Other Accounts.--The Secretary 
shall provide by regulation for subsequent designation of other 
individual social security retirement accounts of an eligible employee 
in lieu of or in addition to accounts previously designated under this 
section.

                      ``self-employed individuals

    ``Sec. 253. (a) In General.--Not later than 30 days after the close 
of any taxable year for which there is imposed a tax under section 
1401(a) of the Internal Revenue Code of 1986 on the self-employment 
income of an individual, such individual shall pay to an individual 
social security retirement account designated by such individual the 
prescribed social security self-employment contribution with respect to 
such individual for such taxable year.
    ``(b) Designation of Account.--The designation of an individual 
social security retirement account for payment of prescribed social 
security self-employment contributions shall be made in such form and 
manner as may be prescribed in regulations of the Secretary.

                             ``definitions

    ``Sec. 254. For purposes of this part--
            ``(1) Individual social security retirement account.--The 
        term `individual social security retirement account' means any 
        individual retirement account (as defined in section 408(a) of 
        the Internal Revenue Code of 1986) which is administered or 
        issued by a bank (as defined in section 408(n) of such Code) 
        and which meets the requirements of section 408A of such Code.
            ``(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 respect to having an individual in his employ to whom 
        wages were paid by such person during such calendar year.
            ``(3) Eligible employee.--The term `eligible employee' 
        means, in connection with any person who is a covered employer 
        for any calendar year, any individual 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.
            ``(4) Prescribed social security employee contribution.--
        The term `prescribed social security employee contribution' 
        means, with respect to any eligible employee of a covered 
        employer, an amount equal to 1 percent of the wages received by 
        such employee with respect to employment by such employer.
            ``(5) Prescribed social security employer contribution.--
        The term `prescribed social security employer contribution' 
        means, with respect to a covered employer of any eligible 
        employee, 1 percent of the wages paid by such employer to such 
        employee with respect to employment of such employee.
            ``(6) Prescribed social security self- employment 
        contribution.--The term `prescribed social security self-
        employment contribution' means, with respect to the self-
        employment income of an individual for any taxable year, 2 
        percent of the amount of such self-employment income for such 
        taxable year.
            ``(7) Business day.--The term `business day' means any day 
        other than a Saturday, Sunday, or legal holiday in the area 
        involved.

                              ``penalties

    ``Sec. 255. (a) Failure To Establish Social Security 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) $50,000, or
            ``(2) $1,000 for each eligible employee of such employer as 
        of the beginning of such calendar year.
    ``(b) Failure To Make Deductions Required Under Plan.--Any covered 
employer who fails to timely deduct in full the amount from the wages 
of an eligible employee required under an applicable social security 
payroll deduction plan shall be subject to a civil penalty of not to 
exceed $50 for each such failure.
    ``(c) Failure To Pay Deducted Wages to Individual Social Security 
Retirement Account.--If an amount deducted from the wages of an 
eligible employee under a social security payroll deduction plan is not 
timely paid in full to the designated individual social security 
retirement account in accordance with section 251--
            ``(1) the covered employer failing to make such payment 
        shall be subject to a civil penalty of not to exceed 20 percent 
        of the unpaid amount, and
            ``(2) shall be liable to the eligible employee for interest 
        on the unpaid amount at a rate equal to 133 percent of the 
        Federal short-term rate under section 1274(d)(1) of the 
        Internal Revenue Code of 1986, calculated 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 designated individual social 
        security retirement account.
    ``(d) Failure To Pay Prescribed Social Security Self-Employment 
Contributions to Individual Social Security Retirement Account.--Any 
individual failing to timely pay in full a prescribed social security 
self-employment contribution to a designated individual social security 
retirement account as required under section 253 shall be subject to a 
civil penalty of not to exceed 20 percent of the unpaid amount, plus 
interest on the unpaid amount at a rate equal to 133 percent of the 
Federal short-term rate under section 1274(d)(1) of the Internal 
Revenue Code of 1986, calculated 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 designated individual social security retirement account.
    ``(e) Rules for Application of Section.--
            ``(1) Penalties assessed by secretary.--Any civil penalty 
        assessed by this section shall be imposed by the Secretary and 
        collected in a civil action.
            ``(2) Compromises.--The Secretary may compromise the amount 
        of any civil penalty imposed by this section.
            ``(3) Authority to waive penalty in certain cases.--The 
        Secretary may waive the application of this section with 
        respect to any failure if the Secretary determines that such 
        failure is due to reasonable cause and not to intentional 
        disregard of rules and regulations.''.
    (b) Amounts Deducted To Be Shown on W-2 Statements.--Subsection (a) 
of section 6051 of the Internal Revenue Code of 1986 (relating to 
receipts for employees) is amended--
            (1) by striking ``and'' at the end of paragraph (8),
            (2) by striking the period at the end of paragraph (9) and 
        inserting ``, and'', and
            (3) by inserting after paragraph (9) the following new 
        paragraph:
            ``(10) the total amount deducted from the employee's wages 
        under a social security payroll deduction plan established 
        under part B of title II of the Social Security Act.''
    (c) Exemption From ERISA Requirements.--Subsection (b) of section 4 
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1003(b)) is amended--
            (1) by striking ``or'' at the end of paragraph (4);
            (2) by striking the period at the end of paragraph (5) and 
        inserting ``; or''; and
            (3) by adding at the end the following new paragraph:
            ``(6) such plan is a social security payroll deduction plan 
        established under part B of title II of the Social Security 
        Act.''.
    (d) Effective Date.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply with respect to wages paid in calendar years 
        beginning on or after January 1, 1995.
            (2) Transitional rule.--Notwithstanding section 252(a) of 
        the Social Security Act (as added by this Act), the initial 
        designations of individual social security retirement accounts 
        with respect to eligible employees employed by covered 
        employers as of January 1, 1995, pursuant to such section may 
        be made at any time not later than January 15, 1995.

SEC. 4. TAX TREATMENT OF INDIVIDUAL SOCIAL SECURITY RETIREMENT 
              ACCOUNTS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 (relating to pension, profit-
sharing, stock bonus plans, etc.) is amended by inserting after section 
408 the following new section:

``SEC. 408A. INDIVIDUAL SOCIAL SECURITY RETIREMENT ACCOUNTS.

    ``(a) General Rule.--Except as provided in this section, an 
individual social security retirement account shall be treated for 
purposes of this title in the same manner as an individual retirement 
plan.
    ``(b) Individual Social Security Retirement Account.--For purposes 
of this section, the term `individual social security retirement 
account' means an account established and administered in accordance 
with part B of title II of the Social Security Act (relating to 
individual retirement program).
    ``(c) Contribution Rules.--
            ``(1) No deduction allowed.--No deduction shall be allowed 
        under section 219 for a contribution to an individual social 
        security retirement account.
            ``(2) Contribution limit.--No amount, other than a 
        prescribed contribution under part B of title II of the Social 
        Security Act, may be accepted as a contribution to an 
        individual social security retirement account.
    ``(d) Treatment of Rollovers.--Section 408(d)(3)(A)(i) shall apply 
to any amount distributed from an individual social security retirement 
account only to the extent such amount is paid into another such 
account for the benefit of the individual for whom the account from 
which such amount is transferred was maintained.''
    (b) Clerical Amendment.--The table of sections for such subpart A 
is amended by inserting after the item relating to section 408 the 
following new item:

                              ``Sec. 408A. Individual social security 
                                        retirement accounts.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

Summary: Individual Social Security Retirement Account Act of 1993 - Amends the Internal Revenue Code to reduce the social security taxes on employees, employers, and the self-employed for 1995 and thereafter. 
Amends title II (Old-Age, Survivors and Disability Insurance) of the Social Security Act to require employers to have in effect a social security payroll deduction plan for employees.  Requires such plan to provide for employers to deduct the prescribed social security employee contribution for transfer, together with the prescribed social security employer contribution, to an individual social security retirement account of the employee. 
Provides for self-employed individuals to pay into such accounts the prescribed social security self-employment contribution. 
Sets forth penalties for failure to establish and maintain such accounts. 
Requires amounts deducted from employee wages to be shown on wage receipts for employees. 
Amends the Employee Retirement Income Security Act of 1974 to exempt social security payroll deduction plans from provisions governing employee benefit plans. 
Provides for the tax treatment of individual social security retirement accounts in a manner similar to individual retirement accounts.