Stop the Raid on Social Security Act of 2005 - Amends title II (Old Age, Survivors and Disability Insurance) (OASDI) of the Social Security Act (SSA) to establish a Social Security Personal Retirement Accounts Program, to be administered by a Social Security Personal Savings Board established within the Social Security Administration. Authorizes any individual credited with wages paid after December 31, 2005, or self-employment income derived in any taxable year ending after such date, who is born on or after January 1, 1950, and who has not filed an election to renounce such individual's status as a participating individual, to participate in the Program.
Directs the Board to establish a social security personal retirement account for each participating individual upon initial receipt of a transfer from amounts held in the Federal Old-Age and Survivors Insurance Trust Fund.
Requires the Secretary of the Treasury to make necessary transfers from the general fund of the Treasury to maintain a 100 percent ratio of assets of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund to the annual amount required to pay the full amount of benefits payable for each year up to 2041.
Requires designation of a certified account manager by or on behalf of each participating individual to hold the individual's account assets for investment, including in broad-based index funds similar to the index fund investment options available within the Thrift Savings Fund.
Prescribes requirements for withdrawal from such accounts, annuitization, and related matters.
Amends the Internal Revenue Code to: (1) make all social security personal retirement accounts exempt from income taxation; but (2) subject distributions from closed accounts to taxation as social security benefits.
Exempts assets of Social Security Personal Retirement Accounts from the estate tax.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1302 Introduced in Senate (IS)]
109th CONGRESS
1st Session
S. 1302
To amend the Social Security Act and the Internal Revenue Code of 1986
to stop the Congress from spending Social Security surpluses on other
Government programs by dedicating those surpluses to personal accounts
that can only be used to pay Social Security benefits.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 23, 2005
Mr. DeMint (for himself, Mr. Santorum, Mr. Graham, Mr. Crapo, Mr.
Coburn, Mr. Sununu, Mr. Isakson, Mr. Enzi, Mr. Cornyn, Mr. Lott, Mr.
Brownback, and Mr. Craig) introduced the following bill; which was read
twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Social Security Act and the Internal Revenue Code of 1986
to stop the Congress from spending Social Security surpluses on other
Government programs by dedicating those surpluses to personal accounts
that can only be used to pay Social Security benefits.
Be it enacted by the Senate and House of Representatives 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 ``Stop the Raid on
Social Security Act of 2005''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I--SOCIAL SECURITY PERSONAL RETIREMENT ACCOUNTS PROGRAM
Sec. 101. Establishment of the Social Security Personal Retirement
Accounts Program.
``Part B--Social Security Personal Retirement Accounts Program
``Sec. 251. Definitions.
``Sec. 252. Establishment of Program.
``Sec. 253. Participation in Program.
``Sec. 254. Social security personal retirement accounts .
``Sec. 255. Investment of accounts.
``Sec. 256. Distributions of account balance at retirement.
``Sec. 257. Additional rules relating to disposition of
account assets.
``Sec. 258. Administration of the program.
Sec. 102. Annual account statements.
TITLE II--TAX TREATMENT
Sec. 201. Tax treatment of social security personal retirement
accounts.
Sec. 202. Benefits taxable as Social Security benefits.
``Sec. 2059. Social security personal retirement accounts.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) President Franklin Roosevelt's January 17, 1935,
message on Social Security declared that, ``First, the system
adopted, except for the money necessary to initiate it, should
be self-sustaining in the sense that funds for the payment of
insurance benefits should not come from the proceeds of general
taxation.''.
(2) Social Security's financial integrity is maintained by
requiring that benefit payments do not exceed the program's
dedicated tax revenues and the interest earned on the balances
in the Federal Old-Age and Survivors Insurance Trust Fund and
the Federal Disability Insurance Trust Fund over the long term.
(3) The separation of Social Security from other budget
accounts also serves to protect Social Security benefits from
competing against other Federal programs for its funding
resources.
(4) Comprehensive reforms should be enacted to--
(A) fix Social Security permanently;
(B) ensure that any use of general revenues for the
program is temporary; and
(C) provide for the eventual repayment of any
revenue transfers from the general fund to the Federal
Old-Age and Survivors Insurance Trust Fund and the
Federal Disability Insurance Trust Fund.
TITLE I--SOCIAL SECURITY PERSONAL RETIREMENT ACCOUNTS PROGRAM
SEC. 101. ESTABLISHMENT OF THE SOCIAL SECURITY PERSONAL RETIREMENT
ACCOUNTS PROGRAM.
(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 of such title the following new
part:
``Part B--Social Security Personal Retirement Accounts Program
``definitions
``Sec. 251. For purposes of this part--
``(1) Participating individual.--The term `participating
individual' has the meaning provided in section 253(a).
``(2) Account assets.--The term `account assets' means,
with respect to a social security personal retirement account,
the total amount transferred to such account, increased by
earnings credited under this part and reduced by losses and
administrative expenses under this part.
``(3) Certified account manager.--The term `certified
account manager' means a person who is certified under section
258(b).
``(4) Board.--The term `Board' means the Social Security
Personal Savings Board established under section 258(a).
``(5) Commissioner.--The term `Commissioner' means the
Commissioner of Social Security.
``(6) Program.--The term `Program' means the Social
Security Personal Retirement Accounts Program established under
this part.
``establishment of program
``Sec. 252. There is hereby established a Social Security Personal
Retirement Accounts Program. The Program shall be governed by
regulations which shall be prescribed by the Social Security Personal
Savings Board. The Board, the Executive Director appointed by the
Board, the Commissioner, and the Secretary of the Treasury shall
consult with each other in issuing regulations relating to their
respective duties under this part. Such regulations shall provide for
appropriate exchange of information to assist them in performing their
duties under this part.
``participation in program
``Sec. 253. (a) Participating Individual.--For purposes of this
part, the term `participating individual' means any individual--
``(1) who is credited under part A with wages paid after
December 31, 2005, or self-employment income derived in any
taxable year ending after such date,
``(2) who is born on or after January 1, 1950, and
``(3) who has not filed an election to renounce such
individual's status as a participating individual under
subsection (b).
``(b) Renunciation of Participation.--
``(1) In general.--An individual--
``(A) who has not attained retirement age (as
defined in section 216(l)(1)), and
``(B) with respect to whom no distribution has been
made from amounts credited to the individual's social
security personal retirement account,
may elect, in such form and manner as shall be prescribed in
regulations of the Board, to renounce such individual's status
as a `participating individual' for purposes of this part. Upon
completion of the procedures provided for under paragraph (2),
any such individual who has made such an election shall not be
treated as a participating individual under this part,
effective as if such individual had never been a participating
individual. The Board shall provide for immediate notification
of such election to the Commissioner of Social Security, the
Secretary of the Treasury, and the Executive Director.
``(2) Procedure.--The Board shall prescribe by regulation
procedures governing the termination of an individual's status
as `participating individual' pursuant to an election under
this subsection. Such procedures shall include--
``(A) prompt closing of the individual's social
security personal retirement account established under
section 254, and
``(B) prompt transfer to the Federal Old-Age and
Survivors Insurance Trust Fund as general receipts of
any amount held for investment in such individual's
social security personal retirement account.
``(3) Irrevocability.--An election under this subsection
shall be irrevocable.
``social security personal retirement accounts
``Sec. 254. (a) Establishment of Accounts.--Under regulations which
shall be prescribed by the Board in consultation with the Secretary of
the Treasury--
``(1) the Board shall establish a social security personal
retirement account for each participating individual (for whom
a social security personal retirement account has not otherwise
been established under this part) upon initial receipt of a
transfer under subsection (b) with respect to such
participating individual, and
``(2) in any case described in paragraph (2) of section
257(b), the Board shall establish a social security personal
retirement account for the divorced spouse referred to in such
paragraph (2).
``(b) Transfers to Social Security Personal Retirement Accounts.--
``(1) In general.--Under regulations which shall be
prescribed by the Secretary of the Treasury in consultation
with the Board, as soon as practicable during the 1-year period
after each calendar year, the Secretary of the Treasury shall
transfer to each participating individual's social security
personal retirement account, from amounts held in the Federal
Old-Age and Survivors Insurance Trust Fund, amounts equivalent
to the personal retirement account deposit with respect to such
participating individual for such calendar year.
``(2) Personal retirement account deposit.--
``(A) In general.--For purposes of paragraph (1),
the personal retirement account deposit for a calendar
year with respect to a participating individual is the
product derived by multiplying--
``(i) the sum of--
``(I) the total amount of wages
paid to the participating individual
during such calendar year on which
there was imposed a tax under section
3101(a) of the Internal Revenue Code of
1986, and
``(II) the total amount of self-
employment income derived by the
participating individual during the
taxable year ending during such
calendar year on which there was
imposed a tax under section 1401(a) of
the Internal Revenue Code of 1986, by
``(ii) the surplus percentage for such
calendar year determined under subparagraph
(B),
increased by deemed interest on each amount transferred
for such calendar year for the period commencing with
July 1 of such calendar year and the ending on the date
on which such amount is transferred, computed at an
annual rate equal to the average annual rate of return
on investments of amounts in the Government Securities
Investment Fund for such calendar year and the
preceding 2 calendar years (except that, for purposes
of the first 3 calendar years for which deemed interest
is computed, this sentence shall be applied by
substituting `Federal Old-Age and Survivors Insurance
Trust Fund' for `Government Securities Investment
Fund') and decreased by the administrative offset
amount determined under subparagraph (D).
``(B) Surplus percentage.--For purposes of
subparagraph (A)(ii), the surplus percentage for a
calendar year is the ratio (expressed as a percentage)
of--
``(i) the net surplus in the Federal Old-
Age and Survivors Insurance Trust Fund for such
year, to
``(ii) the sum of--
``(I) the total amount of wages
paid to participating individuals
during such calendar year under section
3101(a) of the Internal Revenue Code of
1986, and
``(II) the total amount of self-
employment income derived during
taxable years ending during such
calendar year by participating
individuals under section 1401(a) of
such Code.
``(C) Net trust fund surplus.--For purposes of
subparagraph (B), the term `net surplus' in connection
with the Federal Old-Age and Survivors Insurance Trust
Fund for a calendar year means the excess, if any, of--
``(i) the sum of--
``(I) the total amounts which are
appropriated to such Trust Fund under
clauses (3) and (4) of section 201(a)
and attributable to such calendar year,
and
``(II) the total amounts which are
appropriated to such Trust Fund under
section 121 of the Social Security
Amendments of 1983 and attributable to
such calendar year, over
``(ii) the amount estimated by the
Commissioner of Social Security to be the total
amount to be paid from such Trust Fund during
such calendar year for all purposes authorized
by section 201 (other than payments of interest
on, and repayments of, loans from the Federal
Hospital Insurance Trust Fund under section
201(l)(1), but reducing the amount of any
transfer to the Railroad Retirement Account by
the amount of any transfers into such Trust
Fund from such Account).
``(D) Administrative offset amount.--For purposes
of subparagraph (A), the administrative offset amount
determined with respect to a personal retirement
account deposit for a calendar year is the amount equal
to the product of--
``(i) the amount of such deposit determined
for that year without regard to a reduction
under this subparagraph; and
``(ii) the administrative cost percentage
attributable to the Program determined by the
Board for that year (including reasonable
administration fees charged by certified
account managers under the Program), but in no
event to exceed 30 basis points per year of the
assets under management).
``(3) Transition rule.--Notwithstanding paragraph (1),
amounts payable to social security personal retirement accounts
under paragraph (1) with respect to the first calendar year
described in paragraph (1) ending after the date of the
enactment of the Stop the Raid on Social Security Act of 2005
shall be paid by the Secretary of the Treasury as soon as
practicable after such Secretary determines that the
administrative mechanisms necessary to provide for accurate and
efficient payment of such amounts have been established.
``(4) Transfer of general revenues to ensure continued
solvency of federal old-age and survivors insurance trust
fund.--Whenever the Secretary of the Treasury makes a transfer
under paragraph (1), the Secretary of the Treasury also shall
transfer, to the extent necessary, from amounts otherwise
available in the general fund of the Treasury, such amounts as
are necessary to maintain a 100 percent ratio of assets of the
Federal Old-Age and Survivors Insurance Trust Fund and the
Federal Disability Insurance Trust Fund to the annual amount
required to pay the full amount of benefits payable under part
A for each year occurring during the period that begins with
the year in which such transfer is made and ends with 2041.
``(c) Requirements for Accounts.--The following requirements shall
be met with respect to each social security personal retirement
account:
``(1) Amounts transferred to the account consist solely of
amounts transferred pursuant to this part.
``(2) In accordance with section 255, the account assets
are held for purposes of investment under the Program by a
certified account manager designated by (or on behalf of) the
participating individual for whom such account is established
under the Program.
``(3) Disposition of the account assets is made solely in
accordance with sections 256 and 257.
``(d) Accounting of Receipts and Disbursements Under the Program.--
The Board shall provide by regulation for an accounting system for
purposes of this part--
``(1) which shall be maintained by or under the Executive
Director,
``(2) which shall provide for crediting of earnings from,
and debiting of losses and administrative expenses from,
amounts held in social security personal retirement accounts,
and
``(3) under which receipts and disbursements under the
Program which are attributable to each account are separately
accounted for with respect to such account.
``(e) Correction of Erroneous Transfers.--The Board, in
consultation with the Commissioner, shall provide by regulation rules
similar to paragraphs (4) through (7) and (9) of section 205(c) and
section 205(g) with respect to the correction of erroneous or omitted
transfers of amounts to social security personal retirement accounts.
``investment of accounts
``Sec. 255. (a) Designation of Certified Account Managers.--Under
the Program, a certified account manager shall be designated by or on
behalf of each participating individual to hold for investment under
this section such individual's social security personal retirement
account assets.
``(b) Procedure for Designation.--Any designation made under
subsection (a) shall be made in such form and manner as shall be
prescribed in regulations prescribed by the Board. Such regulations
shall provide for annual selection periods during which participating
individuals may make designations pursuant to subsection (a).
Designations made pursuant to subsection (a) during any such period
shall be irrevocable for the one-year period following such period,
except that such regulations shall provide for such interim
designations as may be necessitated by the decertification of a
certified account manager. Such regulations shall provide for such
designations made by the Board on behalf of a participating individual
in any case in which a timely designation is not made by the
participating individual.
``(c) Investment.--Any balance held in a participating individual's
social security personal retirement account under this part which is
not necessary for immediate withdrawal shall be invested on behalf of
such participating individual by the certified account manager as
follows:
``(1) Investment in marketable government securities.--In a
representative mix of fixed marketable interest-bearing
obligations of the United States then forming a part of the
public debt which are not due or callable earlier than 4 years
after the date of investment.
``(2) Additional and alternative investments.--Beginning
with 2008, in such additional and alternative investment
options in broad-based index funds that are similar to the
index fund investment options available within the Thrift
Savings Fund established under section 8437 of title 5, United
States Code, as the Board determines would be prudent sources
of retirement income that could yield greater amounts of income
than the investment described in paragraph (1) and a
participating individual may elect.
``distributions of account balance at retirement
``Sec. 256. (a) Part A and Social Security Personal Retirement
Account Benefits Combined.--Upon the date on which a participating
individual becomes entitled to old-age insurance benefits under section
202(a), the Executive Director shall determine the total amount which
would (but for this section) be payable as benefits under subsection
(a), (b), (c), or (h) of section 202, subsection (e) or (f) of section
202 other than on the basis of disability, or any combination thereof,
to any individual who is a participant on the basis of the wages and
self-employment income of such individual or any other individual under
part A for any month and provide for the following distributions from
the individual's social security personal retirement account (in
accordance with regulations which shall be prescribed by the Board):
``(1) Part a benefit provides at least a poverty-level
annual benefit.--If such total amount would be sufficient to
purchase a minimum annuity, the participating individual shall
elect to have the Executive Director provide for the
distribution of the balance in the participating individual's
social security personal retirement account in the form of--
``(A) a lump-sum payment; or
``(B) an annuity which meets the requirements of
subsection (b) (other than the requirement that the
annuity provides for payments which, on an annual
basis, are equal to at least the minimum annuity
amount), the terms of which provide for a monthly
payment equal to the maximum amount that such account
can fund.
``(2) Part a benefit combined with account balance provides
at least a poverty-level benefit.--
``(A) In general.--If such total amount when
combined with all or a portion of the balance in the
participating individual's social security personal
retirement account would be sufficient to purchase a
minimum annuity, the Executive Director shall, subject
to subparagraph (B)--
``(i) use such amount of the balance in a
participating individual's social security
personal retirement account as is necessary to
purchase an annuity which meets the
requirements of subsection (b) (other than the
requirement that the annuity provides for
payments which, on an annual basis, are equal
to at least the minimum annuity amount), the
terms of which provide for an annual payment
that, when combined with the total amount of
annual old-age insurance benefits payable to
the participating individual, is equal to the
annual amount that a minimum annuity would pay
to the individual; and
``(ii) provide for the distribution of any
remaining balance in the participating
individual's social security personal
retirement account in the form of a lump-sum
payment.
``(B) Option for increased annuity.--A
participating individual may elect to have the
Executive Director use the balance of the individual's
social security personal retirement account to purchase
an annuity which meets the requirements of subsection
(b), the terms of which provide for the maximum monthly
payment that such account can fund, in lieu of using
only a portion of such balance to purchase an annuity
which provides a monthly payment equal to the amount
described in subparagraph (A)(i).
``(3) Distribution in event of failure to obtain at least a
poverty-level benefit.--If such total amount when combined with
all of the balance in the participating individual's social
security personal retirement account would not be sufficient to
purchase a minimum annuity, the participating individual may
elect to have the Executive Director--
``(A) distribute the balance in the participating
individual's social security personal retirement
account in the form of a lump-sum payment; or
``(B) if such balance is sufficient to purchase an
annuity which meets the requirements of subsection (b)
(other than the requirement that the annuity provides
for payments which, on an annual basis, are equal to at
least the minimum annuity amount), purchase such an
annuity on behalf of the individual.
``(b) Minimum Annuity Defined.--For purposes of this subsection,
the term `minimum annuity' means an annuity that meets the following
requirements:
``(1) The annuity starting date (as defined in section
72(c)(4) of the Internal Revenue Code of 1986) commences on the
first day of the month beginning after the date of the purchase
of the annuity.
``(2) The terms of the annuity provide for a series of
substantially equal annual payments, subject to adjustment as
provided in subsection (d), payable monthly to the
participating individual during the life of the participating
individual which are, on an annual basis, equal to at least the
minimum annuity amount.
``(c) Minimum Annuity Amount.--For purposes of this subsection, the
term `minimum annuity amount' means an amount equal to 100 percent of
the poverty line for an individual (determined under the poverty
guidelines of the Department of Health and Human Services issued under
sections 652 and 673(2) of the Omnibus Budget Reconciliation Act of
1981).
``(d) Cost of Living Adjustment.--The terms of any annuity
described in subsection (b) shall include provision for increases in
the monthly annuity amounts thereunder determined in the same manner
and at the same rate as primary insurance amounts are increased under
section 215(i).
``(e) Assumptions.--The assumptions under subsection (b) include
the probability of survival for persons born in the same year as the
participating individual (and the spouse, in the case of a joint
annuity), future projection of investment earnings based on investment
of the account assets, and expected price inflation. Determinations
under this subsection shall be made in accordance with regulations
which shall be prescribed by the Board, otherwise using generally
accepted actuarial assumptions, except that no differentiation shall be
made in such assumptions on the basis of sex, race, health status, or
other characteristics other than age. Such assumptions may include, for
determinations made prior to 2009, an assumed interest rate reflecting
investment earnings of the Federal Old-Age and Survivors Insurance
Trust Fund.
``(f) Offset of Part A Benefits.--Notwithstanding any other
provision of this title, in the case of a participating individual to
which subsection (a)(1) applies, the total amount of monthly old-age
insurance benefits payable as benefits under subsection (a), (b), (c),
or (h) of section 202, subsection (e) or (f) of section 202 other than
on the basis of disability, or any combination thereof, to such
individual determined under subsection (a) shall be reduced so that the
amount of such monthly old-age insurance benefits payable to the
individual does not exceed the amount equal to the difference between--
``(i) such monthly old-age insurance
benefits (determined without regard to a
reduction under this subsection); and
``(ii) the ratio of--
``(I) what would have been the
monthly annuity payment payable to the
individual from an annuity if the
individual's personal retirement
account balance had earned the rate of
return specified in section
254(b)(2)(A); to
``(II) the expected present value
of all future potential benefits
payable under section 202 on the basis
of the wages or self-employment income
of the participating individual
(determined as of the date the
participating individual becomes
entitled to old-age benefits under
section 202(a)).
``additional rules relating disposition of account assets
``Sec. 257. (a) Splitting of Account Assets Upon Divorce After 1
Year of Marriage.--
``(1) In general.--Upon the divorce of a participating
individual for whom a social security personal retirement
account has been established under this part, from a spouse to
whom the participating individual had been married for at least
1 year, the Board shall direct the appropriate certified
account manager to transfer--
``(A) from the social security personal retirement
account of the participating individual,
``(B) to the social security personal retirement
account of the divorced spouse,
an amount equal to one-half of the amount of net accruals
(including earnings) during the time of the marriage in the
social security personal retirement account of the
participating individual.
``(2) Treatment of divorced spouse who is not a
participating individual.--In the case of a divorced spouse
referred to in paragraph (1) who, as of the time of the
divorce, is not a participating individual and for whom a
social security personal retirement account has not been
established--
``(A) the divorced spouse shall be deemed a
participating individual for purposes of this part, and
``(B) the Board shall establish a social security
personal retirement account for the divorced spouse and
shall direct the appropriate certified account manager
to perform the such transfer.
``(3) Preemption.--The provisions of this subsection shall
supersede any provision of law of any State or political
subdivision thereof which is inconsistent with the requirements
of this subsection.
``(b) Closing of Account Upon the Death of the Participating
Individual.--
``(1) In general.--Upon the death of a participating
individual, the Executive Director shall close out any
remaining balance in the participating individual's social
security personal retirement account. In closing out the
account, the Executive Director shall certify to the certified
account manager the amount of the account assets, and, upon
receipt of such certification, the certified account manager
shall transfer from such account an amount equal to such
certified amount to the Secretary of the Treasury for
subsequent transfer to--
``(A) the social security personal retirement
account of the surviving spouse of such participating
individual,
``(B) if there is no such surviving spouse, to such
other person as may be designated by the participating
individual in accordance with regulations which shall
be prescribed by the Board, or
``(C) if there is no such designated person, to the
estate of such participating individual.
``(2) Treatment of surviving spouse who is not a
participating individual.--In the case of a surviving spouse
referred to in paragraph (1) who, as of the time of the death
of the participating individual, is not a participating
individual and for whom a social security personal retirement
account has not been established--
``(A) the surviving spouse shall be deemed a
participating individual for purposes of this part, and
``(B) the Board shall establish a social security
personal retirement account for the surviving spouse
and shall direct the appropriate certified account
manager to perform the such transfer.
``(c) Closing of Account of Participating Individuals Who Are
Ineligible for Benefits Upon Attaining Retirement Age.--In any case in
which, as of the date on which a participating individual attains
retirement age (as defined in section 216(l)), such individual is not
eligible for an old-age insurance benefit under section 202(a), the
Commissioner shall so certify to the Executive Director and, upon
receipt of such certification, the Executive Director shall close out
the participating individual's social security personal retirement
account. In closing out the account, the Executive Director shall
certify to the certified account manager the amount of the account
assets, and upon receipt of such certification from the Executive
Director, the account manager shall transfer from such account an
amount equal to such certified amount to the Secretary of the Treasury
for subsequent transfer to the participating individual.
``(d) Administrative Expenses.--
``(1) In general.--Under regulations which shall be
prescribed by the Board, account assets are available in
accordance with section 254(b)(2)(D)(ii) for payment of the
reasonable administrative costs of the Program (including
reasonable administration fees charged by certified account
managers under the Program), but in no event to exceed 30 basis
points per year of the assets under management.
``(2) Temporary authorization of appropriations for startup
administrative costs.--For any such administrative costs that
remain after applying paragraph (1) for each of the first five
fiscal years that end after the date of the enactment of this
part, there are authorized to be appropriated such sums as may
be necessary for each of such fiscal years.
``administration of the program
``Sec. 258. (a) General Provisions.--
``(1) Establishment and duties of the social security
personal savings board.--
``(A) Establishment.--There is established within
the Social Security Administration a Social Security
Personal Savings Board.
``(B) Number and appointment.--The Board shall be
composed of 6 members as follows:
``(i) two members appointed by the
President who may not be of the same political
party;
``(ii) one member appointed by the Speaker
of the House of Representatives, in
consultation with the Chairman of the Committee
on Ways and Means of the House of
Representatives;
``(iii) one member appointed by the
minority leader of the House of
Representatives, in consultation with the
ranking member of the Committee on Ways and
Means of the House of Representatives;
``(iv) one member appointed by the majority
leader of the Senate, in consultation with the
Chairman of the Committee on Finance of the
Senate; and
``(v) one member appointed by the minority
leader of the Senate, in consultation with the
ranking member of the Committee on Finance of
the Senate.
``(C) Advice and consent.--Appointments under this
paragraph shall be made by and with the advice and
consent of the Senate.
``(D) Membership requirements.--Members of the
Board shall have substantial experience, training, and
expertise in the management of financial investments
and pension benefit plans.
``(E) Terms.--
``(i) In general.--Each member shall be
appointed for a term of 4 years, except as
provided in clauses (ii) and (iii). The initial
members shall be appointed not later than 90
days after the date of the enactment of this
section.
``(ii) Terms of initial appointees.--Of the
members first appointed under each clause of
subparagraph (B), one of the members appointed
under subparagraph (B)(i) (as designated by the
President at the time of appointment) and the
members appointed under clauses (iii) and (v)
of subparagraph (B) shall be appointed for a
term of 2 years, and the remaining members
shall be appointed for a term of 4 years.
``(iii) Vacancies.--Any member appointed to
fill a vacancy occurring before the expiration
of the term for which the member's predecessor
was appointed shall be appointed only for the
remainder of that term. A member may serve
after the expiration of that member's term
until a successor has taken office. A vacancy
in the Board shall be filled in the manner in
which the original appointment was made.
``(F) Powers and duties of the board.--
``(i) In general.--The Board shall have
powers and duties solely as provided in this
part. The Board shall prescribe by regulation
the terms of the Social Security Personal
Retirement Accounts Program established under
this part, including policies for investment
under the Program of account assets, and
policies for the certification and
decertification of account managers under the
Program, which shall include consideration of
the appropriateness of the marketing materials
and plans of such person.
``(ii) Budgetary requirements.--The Board
shall prepare and submit to the President and
to the appropriate committees of Congress an
annual budget of the expenses and other items
relating to the Board which shall be included
as a separate item in the budget required to be
transmitted to the Congress under section 1105
of title 31, United States Code. The Board
shall provide for low administrative costs such
that, to the extent practicable, overall
administrative costs of the Program do not
exceed 30 basis points in relation to assets
under management under the Program.
``(iii) Additional authorities of the
board.--The Board may--
``(I) adopt, alter, and use a seal;
``(II) establish policies with
which the Commissioner shall comply
under this part;
``(III) appoint and remove the
Executive Director, as provided in
paragraph (2); and
``(IV) beginning with 2008, provide
for such additional and alternative
investment options for participating
individuals as the Board determines
would be prudent sources of retirement
income that would yield greater amounts
of retirement income than the
investment described in section
255(c)(1).
``(iv) Independence of certified account
managers.--The policies of the Board may not
require a certified account manager to invest
or to cause to be invested any account assets
in a specific asset or to dispose of or cause
to be disposed of any specific asset so held.
``(v) Meetings of the board.--The Board
shall meet at the call of the Chairman or upon
the request of a quorum of the Board. The Board
shall perform the functions and exercise the
powers of the Board on a majority vote of a
quorum of the Board. Four members of the Board
shall constitute a quorum for the transaction
of business.
``(vi) Compensation of board members.--
``(I) In general.--Each member of
the Board who is not an officer or
employee of the Federal Government
shall be compensated at the daily rate
of basic pay for level IV of the
Executive Schedule for each day during
which such member is engaged in
performing a function of the Board. Any
member who is such an officer or
employee shall not suffer any loss of
pay or deduction from annual leave on
the basis of any time used by such
member in performing such a function.
``(II) Travel, per diem, and
expenses.--A member of the Board shall
be paid travel, per diem, and other
necessary expenses under subchapter I
of chapter 57 of title 5, United States
Code, while traveling away from such
member's home or regular place of
business in the performance of the
duties of the Board.
``(vii) Standard for board's discharge of
responsibilities.--The members of the Board
shall discharge their responsibilities solely
in the interest of participating individuals
and the Program.
``(viii) Annual report.--The Board shall
submit an annual report to the President, to
each House of the Congress, and to the Board of
Trustees of the Federal Old-Age and Survivors
Insurance Trust Fund and the Federal Disability
Insurance Trust Fund regarding the financial
and operating condition of the Program.
``(ix) Public accountant.--
``(I) Definition.--For purposes of
this subparagraph, the term `qualified
public accountant' shall have the same
meaning as provided in section
103(a)(3)(D) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C.
1023(a)(3)(D)).
``(II) Engagement.--The Executive
Director, in consultation with the
Board, shall annually engage, on behalf
of all individuals for whom a social
security personal retirement account is
established under this part, an
independent qualified public
accountant, who shall conduct an
examination of all records maintained
in the administration of this part that
the public accountant considers
necessary.
``(III) Duties.--The public
accountant conducting an examination
under clause (ii) shall determine
whether the records referred to in such
clause have been maintained in
conformity with generally accepted
accounting principles. The public
accountant shall transmit to the Board
a report on his examination.
``(IV) Reliance on certified
actuarial matters.--In making a
determination under clause (iii), a
public accountant may rely on the
correctness of any actuarial matter
certified by an enrolled actuary if the
public accountant states his reliance
in the report transmitted to the Board
under such clause.
``(2) Executive director.--
``(A) Appointment and removal.--The Board shall
appoint, without regard to the provisions of law
governing appointments in the competitive service, an
Executive Director by action agreed to by a majority of
the members of the Board. The Executive Director shall
have substantial experience, training, and expertise in
the management of financial investments and pension
benefit plans. The Board may, with the concurrence of 4
members of the Board, remove the Executive Director
from office for good cause shown.
``(B) Powers and duties of executive director.--The
Executive Director shall--
``(i) carry out the policies established by
the Board,
``(ii) administer the provisions of this
part in accordance with the policies of the
Board,
``(iii) in consultation with the Board,
prescribe such regulations (other than
regulations relating to fiduciary
responsibilities) as may be necessary for the
administration of this part, and
``(iv) meet from time to time with the
Board upon request of the Board.
``(C) Administrative authorities of executive
director.--The Executive Director may--
``(i) appoint such personnel as may be
necessary to carry out the provisions of this
part,
``(ii) subject to approval by the Board,
procure the services of experts and consultants
under section 3109 of title 5, United States
Code,
``(iii) secure directly from any agency or
instrumentality of the Federal Government any
information which, in the judgment of the
Executive Director, is necessary to carry out
the provisions of this part and the policies of
the Board, and which shall be provided by such
agency or instrumentality upon the request of
the Executive Director,
``(iv) pay the compensation, per diem, and
travel expenses of individuals appointed under
clauses (i), (ii), and (v) of this
subparagraph, subject to such limits as may be
established by the Board,
``(v) accept and use the services of
individuals employed intermittently in the
Government service and reimburse such
individuals for travel expenses, as authorized
by section 5703 of title 5, United States Code,
including per diem as authorized by section
5702 of such title, and
``(vi) except as otherwise expressly
prohibited by law or the policies of the Board,
delegate any of the Executive Director's
functions to such employees under the Board as
the Executive Director may designate and
authorize such successive redelegations of such
functions to such employees under the Board as
the Executive Director may consider to be
necessary or appropriate.
``(3) Role of the commissioner of social security.--The
Commissioner shall--
``(A) prescribe such regulations (supplementary to
and consistent with the regulations prescribed by the
Board and the Executive Director) as may be necessary
for carrying out the duties of the Commissioner under
this part,
``(B) meet from time to time with, and provide
information to, the Board upon request of the Board
regarding matters relating to the Social Security
Personal Retirement Accounts Program, and
``(C) in consultation with the Board and utilizing
available Federal agencies and resources, develop a
campaign to educate workers about the Program.
``(b) Certification and Oversight of Account Managers.--
``(1) Certification by the board.--
``(A) In general.--Any person that is a qualified
professional asset manager (as defined in section
8438(a)(8) of title 5, United States Code) may apply to
the Board (in such form and manner as shall be provided
by the Board by regulation) for certification under
this subsection as a certified account manager. In
making certification decisions, the Board shall
consider the applicant's general character and fitness,
financial history and future earnings prospects, and
ability to serve participating individuals under the
Program, and such other criteria as the Board deems
necessary to carry out this part. Certification of any
person under this subsection shall be contingent upon
entry into a contractual arrangement between the Board
and such person.
``(B) Nondelegation requirement.--The authority of
the Board to make any determination to deny any
application under this subsection may not be delegated
by the Board.
``(2) Oversight of certified account managers.--
``(A) Role of regulatory agencies.--The Board may
enter into cooperative arrangements with Federal and
State regulatory agencies identified by the Board as
having jurisdiction over persons eligible for
certification under this subsection so as to ensure
that the provisions of this part are enforced with
respect to certified account managers in a manner
consistent with and supportive of the requirements of
other provisions of Federal law applicable to them.
Such Federal regulatory agencies shall cooperate with
the Board to the extent that the Board determines that
such cooperation is necessary and appropriate to ensure
that the provisions of this part are effectively
implemented.
``(B) Access to records.--The Board may from time
to time require any certified account manager to file
such reports as the Board may specify by regulation as
necessary for the administration of this part. In
prescribing such regulations, the Board shall minimize
the regulatory burden imposed upon certified account
managers while taking into account the benefit of the
information to the Board in carrying out its functions
under this part.
``(3) Revocation of certification.--The Board shall
provide, in the contractual arrangements entered into under
this subsection with each certified account manager, for
revocation of such person's status as a certified account
manager upon determination by the Board of such person's
failure to comply with the requirements of such contractual
arrangements. Such arrangements shall include provision for
notice and opportunity for review of any such revocation.
``(c) Fiduciary Responsibilities.--
``(1) In general.--Rules similar to the provisions of
section 8477 of title 5, United States Code (relating to
fiduciary responsibilities; liability and penalties) shall
apply in connection with account assets, in accordance with
regulations which shall be issued by the Board. The Board shall
issue regulations with respect to the investigative authority
of appropriate Federal agencies in cases involving account
assets.
``(2) Exculpatory provisions voided.--Any provision in an
agreement or instrument which purports to relieve a fiduciary
from responsibility or liability for any responsibility,
obligation, or duty under this part shall be void.
``(d) Civil Actions by Board.--If any person fails to meet any
requirement of this part or of any contract entered into under this
part, the Board may bring a civil action in any district court of the
United States within the jurisdiction of which such person's assets are
located or in which such person resides or is found, without regard to
the amount in controversy, for appropriate relief to redress the
violation or enforce the provisions of this part, and process in such
an action may be served in any district.
``(e) Preemption of Inconsistent State Law.--A provision of this
part shall not be construed to preempt any provision of the law of any
State or political subdivision thereof, or prevent a State or political
subdivision thereof from enacting any provision of law with respect to
the subject matter of this part, except to the extent that such
provision of State law is inconsistent with this part, and then only to
the extent of the inconsistency.''.
(b) Conforming Amendment to Part A.--Section 202 of such Act (42
U.S.C. 402) is amended by adding at the end the following new
subsection:
``Adjustments Under Part B
``(z) The amount of benefits under subsection (a), (b), (c), or
(h), subsection (e) or (f) other than on the basis of disability, or
any combination thereof which are otherwise payable under this part
shall be subject to adjustment as provided under section 256(f).''.
(c) Additional Conforming Amendments.--(1) Section 701(b) of the
Social Security Act (42 U.S.C. 901(b)) is amended by striking ``title
II'' and inserting ``part A of title II, the Social Security Personal
Retirement Accounts Program under part B of title II,''.
(2) Section 702(a)(4) of the Social Security Act (42 U.S.C.
902(a)(4)) is amended by inserting ``other than those of the Social
Security Personal Savings Board'' after ``Administration'', and by
striking ``thereof'' and inserting ``of the Administration in
connection with the exercise of such powers and the discharge of such
duties''.
SEC. 102. ANNUAL ACCOUNT STATEMENTS.
Section 1143 of the Social Security Act (42 U.S.C. 1320b-13) is
amended by adding at the end the following new subsection:
``Performance of Social Security Personal Retirement Accounts
``(d) Beginning not later than 1 year after the date of the first
deposit is made to an eligible individual's Social Security personal
retirement account, each statement provided to such eligible individual
under this section shall include information determined by the Social
Security Personal Savings Board as sufficient to fully inform such
eligible individual annually of the balance, investment performance,
and administrative expenses of such account.''.
TITLE II--TAX TREATMENT
SEC. 201. TAX TREATMENT OF SOCIAL SECURITY PERSONAL RETIREMENT
ACCOUNTS.
Section 7701 of the Internal Revenue Code of 1986 (relating to
definitions) is amended by redesignating subsection (o) as subsection
(p) and by inserting after subsection (n) the following new subsection:
``(o) Tax Treatment of Social Security Personal Retirement
Accounts.--All social security personal retirement accounts established
under part B of title II of the Social Security Act shall be exempt
from taxation under this title.''.
SEC. 202. BENEFITS TAXABLE AS SOCIAL SECURITY BENEFITS.
(a) Special Rules Relating to Distribution of Closed Account Under
Section 257(d) of Social Security Act.--Section 86(a) of such Code (as
amended by paragraph (2)) is amended by adding at the end the following
new paragraph:
``(4) Extension of paragraph (2)(b) to distributions of
closed account under section 257(d) of social security act.--
Notwithstanding any other provision of this subsection, in the
case of any amount received pursuant to the closing of an
account under section 257(d) of the Social Security Act,
paragraph (2)(B) shall apply to such amounts, and for such
purposes the amount allocated to the investment in the contract
shall be zero.''.
(b) Effective Date.--The amendments made by this subsection shall
apply to taxable years beginning after the end of the calendar year in
which this Act is enacted.
(c) Estate Tax Not To Apply to Assets of Social Security Personal
Retirement Accounts.--
(1) In general.--Part IV of subchapter A of chapter 11 of
such Code (relating to taxable estate) is amended by adding at
the end the following new section:
``SEC. 2059. SOCIAL SECURITY PERSONAL RETIREMENT ACCOUNTS.
``For purposes of the tax imposed by section 2001, the value of the
taxable estate shall be determined by deducting from the value of the
gross estate an amount equal to the value of the assets of a social
security personal retirement account transferred from such account by
the Secretary under section 257 of the Social Security Act.''.
(2) Clerical amendment.--The table of sections for part IV
of subchapter A of chapter 11 of such Code is amended by adding
at the end the following new item:
``Sec. 2059. Social security personal retirement accounts.''.
(3) Effective date.--The amendments made by this subsection
shall apply to decedents dying in or after the calendar year in
which this Act is enacted.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S7303)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR S7303-7308)
Sponsor introductory remarks on measure. (CR S12829-12830)
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