Directs the Securities and Exchange Commission to study and report to Congress on personal retirement account reinsurance.
Amends SSA title II with regard to primary insurance amounts.
Amends IRC to provide for: (1) annual $300 contributions (tax credits) by the Secretary of the Treasury on behalf of each eligible individual to a personal retirement account; and (2) an excise tax on excess contributions to such accounts.
Amends SSA title XI with regard to information requirements for Social Security account statements.
Amends SSA title II make appropriations annually to the Federal Disability Insurance Trust Fund to maintain a balance ratio of at least 20 percent.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4839 Introduced in House (IH)]
106th CONGRESS
2d Session
H. R. 4839
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 accounts to allow for more control
by individuals over their Social Security retirement income.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 12, 2000
Mr. Sanford (for himself, Mr. Barr of Georgia, Mr. Barton of Texas, Mr.
Burton of Indiana, Mr. Bryant, Mr. Campbell, Mrs. Chenoweth-Hage, Mr.
Coburn, Mr. Cox, Mr. DeMint, Mr. Doolittle, Mr. Duncan, Mr. Ganske, Mr.
Graham, Mr. Herger, Mr. Hoekstra, Mr. Hunter, Mr. Hyde, Mr. Jones of
North Carolina, Mr. Kingston, Mr. Largent, Mr. McInnis, Mr. McIntosh,
Mr. Metcalf, Mrs. Myrick, Mr. Paul, Mr. Pickering, Mr. Pitts, Mr.
Riley, Mr. Salmon, Mr. Sessions, Mr. Scarborough, Mr. Schaffer, Mr.
Shadegg, Mr. Shays, Mr. Smith of New Jersey, Mr. Spence, Mr. Sununu,
Mr. Terry, and Mr. Toomey) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
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 accounts to allow for more control
by individuals over their Social Security retirement income.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Personal Lockbox Act of 2000''.
SEC. 2. PERSONAL RETIREMENT ACCOUNT PROGRAM.
(a) In General.--Title II of the Social Security Act (42 U.S.C. 401
et seq.) is amended--
(1) by inserting after the heading for title II the
following:
``Part A--Insurance Benefits'';
and
(2) by adding after section 233 (42 U.S.C. 433) the
following new part:
``Part B--Personal Retirement Account Program
``Subpart 1--General Provisions
``definitions
``Sec. 251. For purposes of this part--
``(1) 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 who was born
on or after January 1, 1945, and to whom wages are paid by such
person during such calendar year.
``(2) Covered individual.--The term `covered individual'
means, for any calendar year, any individual--
``(A) who was born on or after January 1, 1945, and
``(B)(i) with respect to whose employment by a
covered employer during such calendar year there is
imposed an excise tax under section 3111 of the
Internal Revenue Code of 1986, or
``(ii) on whose self-employment income, for the
taxable year beginning with or during such calendar
year, there is imposed a tax under section 1401(a) of
the Internal Revenue Code of 1986.
``(3) Employment.--The term `employment' has the meaning
provided in section 210.
``(4) Personal retirement account.--The term `personal
retirement account' means a trust meeting the requirements of
section 531 of the Internal Revenue Code of 1986.
``(5) Personal retirement account holder.--The term
`account holder' means, with respect to any personal retirement
account, the individual for whose benefit such account is
maintained.
``(6) Self-employment income.--The term `self-employment
income' has the meaning provided in section 211(b).
``(7) Wages.--The term `wages' has the meaning provided in
section 209.
``designation of personal retirement accounts
``Sec. 252. (a) Designation of Personal Retirement Accounts.--In
the case of any individual who is a covered individual for a calendar
year after 2000 for whom a personal retirement account is not otherwise
designated under this part, a personal retirement account shall be
designated for such individual in accordance with this section to the
extent necessary to receive deposits made with respect to the
individual under section 253. Under regulations prescribed pursuant to
this section, any such individual may make such designation, in writing
filed with the Commissioner of Social Security, the Securities and
Exchange Commission, and the Secretary of the Treasury, in such form
and manner as may be prescribed in such regulations. The individual may
designate another personal retirement account in lieu of an account
previously designated, in accordance with such regulations.
``(b) Designation by Commissioner in Absence of Timely Designation
by Individual.--The initial designation by an individual of a personal
retirement account must be made within such period as shall be
prescribed in regulations under this section. In any case in which
there is no timely designation of a personal retirement account with
respect to such an individual, the Commissioner of Social Security
shall make the designation of a personal retirement account under
subsection (a) on behalf of such individual, in accordance with
regulations prescribed under to this section. For the purposes of
designating such accounts, the Commissioner shall make arrangements
with certified institutions which shall be selected by the Securities
and Exchange Commission so as to serve as trustees for such accounts in
localities throughout the United States.
``(c) Regulations.--The regulations under this section shall be
prescribed by the Commissioner of Social Security, in consultation with
the Securities and Exchange Commission and the Secretary of the
Treasury.
``federal contributions
``Sec. 253. (a) In General.--Not later than 18 months after the end
of each calendar quarter in any calendar year after 2000 for which an
individual is a covered individual, the Secretary of the Treasury shall
deposit into such individual's personal retirement account, from
amounts in the Federal Old-Age and Survivors Insurance Trust Fund not
otherwise required for immediate withdrawal, an amount equal to the
product derived by multiplying--
``(1) the excess in the receipts of such Trust Fund for
such calendar quarter over the expenditures of such Trust Fund
for such calendar quarter, by
``(2) the allocation percentage for such individual for
such calendar year.
``(b) Allocation Percentage.--For purposes of subsection (a), the
allocation percentage for an individual for a calendar year is the
ratio, expressed as a percentage, of--
``(1) the total amount of the taxes paid under sections
3101(a) and 3111(a) of the Internal Revenue Code of 1986 with
respect to such individual in such calendar year and the taxes
paid under section 1401(a) of such Code with respect to such
individual in such calendar year, to
``(2) the total amount of the taxes paid under such
sections 3101(a), 3111(a), and 1401(a) in such calendar year
with respect to all individuals who are covered individuals for
such calendar year.
``(c) Electronic Payment.--Deposits made pursuant to subsection (a)
shall, to the maximum extent practicable, be made by electronic
payment.
``Subpart 2--Certified Institutions
``certification of institutions by securities and exchange commission
``Sec 261. (a) In General.--For purposes of meeting the
requirements of section 531 of the Internal Revenue Code of 1986
(relating to trusteeship of personal retirement accounts), any
institution that is engaged, in a fiduciary capacity, in the business
of maintaining accounts for individuals for purposes of investment may
apply to the Securities and Exchange Commission (in such form and
manner as shall be provided by the Commission by regulation) for
certification under this subpart.
``(b) Review Requirements.--In reviewing any application for
certification under this subpart and determining whether to approve the
application for certification, the Commission shall consider the
following factors:
``(1) The financial history and condition of the
institution.
``(2) The adequacy of the institution's capital structure.
``(3) The future earnings prospects of the institution.
``(4) The general character and fitness of the management
of the institution.
``(5) The convenience and needs of individuals who are
account holders with respect to personal retirement accounts
for which the institution is to serve as trustee.
``(6) Whether the institution's corporate powers are
consistent with the purposes of this part.
``(c) Notice of Denial of Application for Certification.--If the
Commission votes to deny any application for certification by any
institution, the Commission shall promptly notify the institution of
the denial of such application, giving specific reasons in writing for
the Commission's determination with reference to the factors described
in subsection (b).
``(d) Nondelegation Requirement.--The authority of the Commission
to make any determination to deny any application under this section
may not be delegated by the Commission.
``access to records
``Sec. 262. (a) In General.--The Securities and Exchange Commission
may from time to time require any certified institution to file such
reports as the Commission may deem advisable for purposes of this
subpart.
``(b) Reports by Certified Institutions.--
``(1) In general.--Each such report shall contain a
declaration by the president, by a vice president, by the
cashier or the treasurer, or by any other officer designated by
the board of directors or trustees of the reporting certified
institution to make such declaration, that the report is true
and correct to the best of his knowledge and belief. The
correctness of such report shall be attested by the signatures
of at least two directors or trustees of the reporting
certified institution other than the officer making such
declaration, with a declaration that the report has been
examined by them and to be the best of their knowledge and
belief is true and correct. At the time of making such reports
each certified institution shall furnish to the Commission a
copy thereof containing such signed declaration and
attestations. Nothing in this paragraph shall be construed to
preclude any Federal or State agency or instrumentality from
requiring a certified institution under its jurisdiction to
make additional reports at any time.
``(2) Information to be provided.--In the reports required
to be made by paragraph (1), each certified institution shall
report the total amount of the liability of the institution for
balances maintained in personal retirement accounts for which
such institution serves as trustee.
``(3) Data collections.--In addition to or in connection
with any other report required under this subsection, the
Commission shall take such action as may be necessary to ensure
that--
``(A) each certified institution maintains; and
``(B) the Commission receives on a regular basis
from such institution,
information on the total amount of all liability of the
institution for balances maintained in personal retirement
accounts for which such institution serves as trustee. In
prescribing reporting and other requirements for the collection
of actual and accurate information pursuant to this paragraph,
the Commission shall minimize the regulatory burden imposed
upon certified institutions while taking into account the
benefit of the information to the Commission in carrying out
its functions under this subpart.
``revocation of certification
``Sec. 263. (a) Voluntary Revocation.--Any institution may revoke
such institution's status as a certified institution if such
institution provides written notice to the Securities and Exchange
Commission of the institution's intent to revoke such status not less
than 90 days before the effective date of such revocation.
``(b) Involuntary Revocation.--
``(1) Notice to primary regulator.--
``(A) In general.--If the Commission determines
that--
``(i) a certified institution or the
directors or trustees of a certified
institution have engaged or are engaging in
unsafe or unsound practices in conducting the
business of the institution,
``(ii) a certified institution is in an
unsafe or unsound condition to continue
operations as a certified institution, or
``(iii) a certified institution or the
directors or trustees of the institution have
violated any applicable law, regulation, order,
condition imposed in writing by the Commission
in connection with the approval of any
application or other request by the
institution, or written agreement entered into
between the institution and the Commission,
and the Commission determines that any unsafe or
unsound practice or condition or any violation
specified in such notice requires the revocation of the
certified status of the certified institution, the
Commission shall take the actions required under
subparagraph (B).
``(B) Required actions.--If the Commission makes
the determination under subparagraph (A) with respect
to a certified institution, the Commission shall--
``(i) serve written notice to the certified
institution of the Commission's intention to
revoke the certified status of the institution;
``(ii) provide the certified institution
with a statement of the charges on the basis of
which the determination to revoke such
institution's certified status was made; and
``(iii) notify the certified institution of
the date (not less than 30 days after notice
under this paragraph) and place for a hearing
before the Commission (or any person designated
by the Commission) with respect to the
revocation of the institution's certified
status.
``(2) Hearing; revocation.--If, on the basis of the
evidence presented at a hearing before the Commission (or any
person designated by the Commission for such purpose), in which
all issues shall be determined on the record pursuant to
section 554 of title 5, United States Code, and the written
findings of the Commission (or such person) with respect to
such evidence (which shall be conclusive), the Commission finds
that any unsafe or unsound practice or condition or any
violation specified in the notice to a certified institution
under paragraph (1) has been established, the Commission may
issue an order revoking the certified status of such
institution effective as of a date subsequent to such finding.
``(3) Appearance; consent to revocation.--Unless the
institution appears at the hearing by a duly authorized
representative, it shall be deemed to have consented to the
revocation of its status as a certified institution and
revocation of such status thereupon may be ordered.
``(4) Publication of notice of revocation.--The Commission
may publish notice of such revocation and the institution shall
give notice of such revocation to the account holder of each
personal retirement account for which the institution serves as
trustee at his last address of record on the books of the
institution, in such manner and at such time as the Commission
may find to be necessary and may order for the protection of
account holders.
``(5) Temporary continuance of certification as of
revocation.--After the Commission has determined under the
provisions of this subsection that the certified status of any
institution is to be revoked, the certification of the
institution shall continue for a period of at least 6 months or
up to 2 years, within the discretion of the Commission. The
institution shall not advertise or hold itself out as being a
certified institution unless in the same connection it shall
also state with equal prominence that such certification is
temporarily in force pending the termination of a limited
continuance certification after revocation thereof under this
subsection. Such institution shall, in all other respects, be
subject to the duties and obligations of a certified
institution for the period referred to in the first sentence of
this paragraph from the date of such revocation, and the
Commission shall have the same powers and rights with respect
to such institution as in the case of a certified institution.
``(6) Temporary suspension of certification.--
``(A) In general.--If the Commission initiates a
revocation proceeding under paragraph (1), and the
Commission, after consultation with any appropriate
regulatory agency with jurisdiction over the
institution, finds that the institution has no tangible
capital under the capital guidelines or regulations of
regulatory agency, the Commission may issue a temporary
order suspending certification of the institution.
``(B) Effective period of temporary order.--Any
order issued under subparagraph (A) shall become
effective not earlier than 10 days from the date of
service upon the institution and, unless set aside,
limited, or suspended by a court in proceedings
authorized under this paragraph, such temporary order
shall remain effective and enforceable until an order
of the Commission under paragraph (2) becomes final or
until the Commission dismisses the proceedings under
paragraph (2).
``(C) Judicial review.--Before the close of the 10-
day period beginning on the date any temporary order
has been served upon the institution under subparagraph
(A), the institution may apply to the United States
District Court for the District of Columbia, or the
United States district court for the judicial district
in which the home office of the institution is located,
for an injunction setting aside, limiting, or
suspending the enforcement, operation, or effectiveness
of such order, and such court shall have jurisdiction
to issue such injunction.
``(D) Publication of order.--The institution shall
give notice of such order to the account holder of each
personal retirement account for which the institution
serves as trustee in such manner and at such times as
the Commission may find to be necessary and may order
for the protection of account holders.
``(E) Notice by commission.--If the Commission
determines that the institution has not substantially
complied with the notice to contributors required by
the Commission, the Commission may provide such notice
in such manner as the Commission may find to be
necessary and appropriate.
``(7) Final decisions to revoke certification.--Any
decision by the Commission to--
``(A) issue a temporary order revoking
certification; or
``(B) issue a final order revoking certification;
shall be made by the Commission and may not be delegated.
``(8) Judicial review.--Any party to any proceeding under
this subsection to which an institution is a party may obtain a
review of any order served pursuant to this subsection by the
filing in the court of appeals of the United States for the
circuit in which the home office of the institution is located,
or in the United States Court of Appeals for the District of
Columbia Circuit, within 30 days after the date of service of
such order, a written petition praying that the order of the
Commission be modified, terminated, or set aside. A copy of
such petition shall be forthwith transmitted by the clerk of
the court to the Commission, and thereupon the Commission shall
file in the court the record in the proceeding, as provided in
section 2112 of title 28, United States Code. Upon the filing
of such petition, such court shall have jurisdiction, which
upon the filing of the record shall be exclusive, to affirm,
modify, terminate, or set aside, in whole or in part, the order
of the Commission. Review of such proceedings shall be had as
provided in chapter 7 of title 5, United States Code. The
judgment and decree of the court shall be final, except that
the judgment and decree shall be subject to review by the
Supreme Court upon certiorari, as provided in section 1254 of
title 28, United States Code. The commencement of proceedings
for judicial review under this paragraph shall not, unless
specifically ordered by the court, operate as a stay of any
order issued by the Commission.
``institution of closing proceedings by the commission
``Sec. 264. (a) In General.--The Securities and Exchange Commission
shall as soon as practicable institute proceedings under this section
to close a personal retirement account whenever the Commission
determines that--
``(1) the certified status of the institution serving as
trustee of the account ceases to be in effect, or
``(2) the trustee of the account is unable to make full
distributions of the balance in the account when due.
The Commission may prescribe a simplified procedure to follow in
closing personal retirement accounts as long as that procedure includes
substantial safeguards for the rights of the account holder.
Notwithstanding any other provision of this part, the Commission is
authorized to pool assets of closed personal retirement accounts for
purposes of administration, investment, payment of liabilities of all
such accounts, and such other purposes as it determines to be
appropriate in the administration of this part.
``(b) Initial Appointment of Alternative Trustee.--
``(1) In general.--Whenever the Commission makes a
determination under subsection (a) with respect to a personal
retirement account, it may, upon notice to the institution
serving as trustee of the account, apply to the appropriate
United States district court for the appointment of an
alternative trustee to administer the account pending the
issuance of a decree under subsection (c) ordering the closing
of the account. If within 3 business days after the filing of
an application under this subsection, or such other period as
the court may order, the institution consents to the
appointment of an alternative trustee, or fails to show why an
alternative trustee should not be appointed, the court may
grant the application and appoint an alternative trustee to
administer the account in accordance with the terms governing
the account until the Commission determines that the account
should be closed or that closing is unnecessary. The Commission
may request that it be appointed as alternative trustee of the
account in any case.
``(2) Standard for court appointment.--Notwithstanding any
other provision of this part, upon the petition of a certified
institution or the Commission, the appropriate United States
district court may appoint an alternative trustee in accordance
with the provisions of this section if the interests of the
account holder with respect to the personal retirement account
is maintained would be better served by the appointment of the
alternative trustee.
``(3) Appointment by agreement between parties.--The
Commission and the institution serving as trustee of the
account may agree to the appointment of an alternative trustee
without proceeding in accordance with the requirements of
paragraphs (1) and (2).
``(c) Termination Proceedings.--
``(1) In general.--If the Commission is required under
subsection (a) to commence proceedings under this section with
respect to a personal retirement account or, after issuing a
notice under this section to the certified institution serving
as trustee of the account, has determined that the account
should be closed, the Commission may, upon notice to the
institution, apply to the appropriate United States district
court for a decree adjudicating that the account must be closed
in order to protect the interests of the account holder with
respect to the account or to avoid any unreasonable
deterioration of the financial condition of the account. If the
alternative trustee appointed under subsection (b) disagrees
with the determination of the Commission under the preceding
sentence, he may intervene in the proceeding relating to the
application for the decree, or make application for such decree
himself. Upon granting a decree for which the Commission or
alternative trustee has applied under this subsection, the
court shall authorize the alternative trustee (or appoint an
alternative trustee if one has not been appointed under such
subsection and authorize him) to assume trusteeship of the
personal retirement account, and provide for its liquidation,
in accordance with the provisions of this section, and a
transfer of its assets to a successor personal retirement
account, in accordance with paragraph (2).
``(2) Transfer to successor account.--In any case in which
a personal retirement account is closed under this section, the
Commission shall provide by regulation for procedures under
which selection for the account holder of an appropriate
successor personal retirement account is facilitated and a
trustee-to-trustee transfer of the balance in the closed
account to the successor account is made. Whenever an
alternative trustee appointed under this section is exercising
trusteeship authority over a personal retirement account with
discretion as to the date upon which transfer of the assets
from the account to a successor account is to be performed, the
alternative trustee shall notify the Commission at least 10
days before the date on which he proposes to perform such
transfer. The original trustee of the closed account shall be
liable to the trustee of the successor account for the costs of
the transfer.
``(d) Trusteeship Without Closing.--If the Commission and the
institution agree that trusteeship over the personal retirement account
should be assumed by an alternative trustee appointed under this
section and agree to the appointment of an alternative trustee without
proceeding in accordance with the requirements of subsection (c), the
alternative trustee shall have the power described in subsection (e)(1)
of this section and, in addition to any other duties imposed on the
alternative trustee under law or by agreement between the Commission
and the institution, the alternative trustee is subject to the duties
described in subsection (e)(3).
``(e) Powers and Duties of Alternative Trustee.--
``(1) In general.--An alternative trustee appointed under
subsection (b) shall have the power--
``(A) to do any act authorized by documents
governing the personal retirement account or this part
to be done by the institution as trustee of the
account;
``(B) to require the transfer of all (or any part)
of the assets and records of the account to himself as
trustee;
``(C) to invest any assets of the account which he
holds in accordance with the documents governing the
account, regulations of the Securities and Exchange
Commission, and applicable rules of law;
``(D) to limit payment of assets in the account as
appropriate or to continue payment of some or all of
the assets in the account which were being paid prior
to his appointment;
``(E) to do such other acts as he deems necessary
to continue operation of the account without increasing
risk of loss to the account holder, if such acts may be
done under the documents governing the account; and
``(F) to require the institution to furnish any
information with respect to the account which the
alternative trustee may reasonably need in order to
administer the account.
``(2) Time limitation on alternative trusteeship where
closing does not ensue.--If the court to which application is
made under subsection (c) dismisses the application with
prejudice, or if the Commission fails to apply for a decree
under subsection (c) within 30 days after the date on which the
alternative trustee is appointed under subsection (b), the
alternative trustee shall transfer all assets and records of
the account held by him to the institution which had been
serving as trustee of the account within 3 business days after
such dismissal or the expiration of such 30-day period, and
shall not be liable to the institution or any other person for
his acts as alternative trustee except for willful misconduct,
or for conduct in violation of any other provision of this
part. The 30-day period referred to in this paragraph may be
extended as provided by agreement between the institution and
the Commission or by court order obtained by the Commission.
``(3) Additional powers upon closing.--If the court to
which an application is made under subsection (c) issues the
decree requested in such application, in addition to the powers
described in paragraph (1), the alternative trustee shall have
the power--
``(A) to collect for the account any amounts due
the account;
``(B) to commence, prosecute, or defend on behalf
of the institution or the account any suit or
proceeding involving the account;
``(C) to issue, publish, or file such notices,
statements, and reports as may be required by the
Commission or any order of the court;
``(D) to liquidate the assets of the account and
perform the transfer of such assets to a successor
personal retirement account as provided in subsection
(c)(2);
``(E) to recover payments inappropriately made from
the account; and
``(F) to do such other acts as may be necessary to
comply with this part or any order of the court and to
protect the interests of the account holder of the
closed account.
``(4) Notice of proceedings.--As soon as practicable after
his appointment, the alternative trustee shall give notice to
interested parties of the institution of proceedings under this
section to determine whether the account should be closed or to
close the account, whichever is applicable. For purposes of
this paragraph, the term `interested party' means--
``(A) the institution,
``(B) the account holder with respect to the
account was maintained, including the beneficiary of
the account holder who is deceased,
``(C) each person who may be liable for payments to
the account.
``(5) Additional duties.--Except to the extent inconsistent
with the provisions of this part, or as may be otherwise
ordered by the court, an alternative trustee appointed under
this section shall be subject to the same duties as those of a
trustee under section 704 of title 11, United States Code, and
shall be, with respect to the account, a fiduciary within the
meaning of paragraph (21) of section 3 of the Employee
Retirement Income Security Act of 1974 and under section
4975(e) of the Internal Revenue Code of 1986 (except to the
extent that the provisions of this part are inconsistent with
the requirements applicable under part 4 of subtitle B of title
I of such Act and of such section 4975).
``(f) Coordination With Bankruptcy or Other Insolvency
Proceedings.--An application by the Commission under this section may
be filed notwithstanding the pendency in the same or any other court of
any bankruptcy, mortgage foreclosure, or equity receivership
proceeding, or any proceeding to reorganize, conserve, or liquidate the
personal retirement account or the institution, or its assets, or any
proceeding to enforce a lien against assets of the account or the
institution.
``(g) Court Jurisdiction.--Upon the filing of an application for
the appointment of an alternative trustee or the issuance of a decree
under this section, the court to which an application is made shall
have exclusive jurisdiction of the account involved and its assets
wherever located with the powers, to the extent consistent with the
purposes of this section, of a court of the United States having
jurisdiction over cases under chapter 11 of title 11 of the United
States Code. Pending an adjudication under subsection (c), such court
shall stay, and upon appointment by it of an alternative trustee, as
provided in this section, such court shall continue the stay of, any
pending mortgage foreclosure, equity receivership, or other proceeding
to reorganize, conserve, or liquidate the account or its assets and any
other suit against any receiver, conservator, or trustee of the account
or the institution, or its assets. Pending such adjudication and upon
the appointment by it of such alternative trustee, the court may stay
any proceeding to enforce a lien against property of the account or the
institution or any other suit against the account or the institution.
``(h) Venue and Process.--An action under this section may be
brought in the judicial district where the institution serving as
trustee of the personal retirement account is located or does business
or where any asset of the account or the institution is situated. A
district court in which such action is brought may issue process with
respect to such action in any other judicial district.
``(i) Compensation and Personnel for Alternative Trustees.--
``(1) Compensation.--The amount of compensation paid to
each alternative trustee appointed under the provisions of this
section shall require the prior approval of the Commission,
and, in the case of an alternative trustee appointed by a
court, the consent of that court.
``(2) Appointment and retention of personnel.--Alternative
trustees appointed under this section shall appoint, retain,
and compensate accountants, actuaries, and other professional
service personnel in accordance with regulations prescribed by
the Commission.
``Subpart 3--Investment Standards, Reporting and Disclosure
Requirements, and Fiduciary Duties
``investment standards
``Sec. 271. (a) Required Forms of Investment.--Under the terms
governing a personal retirement account, amounts held in the account
shall be invested, at the option of the account holder, in any of not
fewer than 3 forms of investment, consisting of--
``(1) a broad-based portfolio of common stock,
``(2) a portfolio consisting of United States Treasury
bills issued under chapter 31 of title 31, United States Code,
savings bonds or similar obligations issued under such chapter
which are indexed to inflation, or any combination of the
foregoing, and
``(3) a broad-based portfolio of private sector
obligations.
``(b) Required Choice of Portfolios.--Under the terms governing a
personal retirement account, the account holder shall be provided with
not fewer than 5 and not more than 15 portfolio options, assembled so
as to provide the account holder, in combination, at least the options
required under subsection (a). Each such portfolio shall be approved by
the Securities and Exchange Commission under this section.
``(c) Default Portfolio Selections.--Among the approved portfolio
options required under subsection (b), one option shall be the default
option, as so designated by the certified institution serving as
trustee of the account. The certified institution may designate 2 or
more different default options for 2 or more groups of account holders,
respectively, categorized by age. Any such default option shall apply
unless an alternative selection is made by the account holder under
subsection (b). Application of any such default option in the case of
any account holder in the absence of an alternative selection by the
account holder shall be deemed to comply with applicable fiduciary
standards.
``(d) Approval of Portfolios.--A portfolio offered for a personal
retirement account may be approved by the Commission only if--
``(1) to the extent that the portfolio provides an
investment form described in paragraph (1) or (3) of subsection
(a), the portfolio replicates the assets of a broad-based index
of equities or obligations meeting requirements which shall be
prescribed in regulations of the Commission,
``(2) the portfolio is managed exclusively by the
investment manager so as to minimize risk on the part of the
individual investor,
``(3) the portfolio is constructed so as not to present an
unreasonable risk of loss inconsistent with saving for
retirement, and
``(4) any charge for administrative expenses in connection
with the account (including any fee charged in connection with
management of the portfolio) is expressed in terms of a flat
fee for a fixed period of time, except that additional charges
may be required, in accordance with regulations of the
Commission, on a reasonable basis and at reasonable margins, as
may be necessary to allow for--
``(A) reasonable payment of appropriate management
fees to investment managers, and
``(B) costs relating to accounting for voluntary
contributions to the account,
if such additional charges are set forth separately and clearly
identified as such.
``(e) Special Rules.--
``(1) Limits on asset reallocations.--The Commission shall
establish by regulation reasonable limits on the frequency of
changes in allocations of assets in personal retirement
accounts to investments permitted under this section.
``(2) Investment of accounts with de minimis balances.--In
the case of a personal retirement account with a balance of
less than $500, the certified institution serving as trustee of
such account may provide for investment of such balance solely
in accordance with policies established by such institution.
The Commission shall prescribe regulations which shall set
forth standards which such policies must meet and shall provide
for adequate disclosure of such policies to the account holder.
``reporting and disclosure requirements
``Sec. 272. (a) In General.--In the case of a personal retirement
account which does not form part of an individual account plan covered
under part 1 of subtitle B of title I of the Employee Retirement Income
Security Act of 1974, rules similar to the rules of such part 1
applicable to individual account plans covered under such part 1 shall
apply with respect to such account and the terms of any arrangement
under which such account is maintained, to the extent that the
application of such rules to personal retirement accounts is determined
by the Securities and Exchange Commission by regulation to be
appropriate. Compliance with the requirements of this subsection may be
by electronic means in the case of personal retirement account holders
having reasonable access thereto, if such electronic means meets
requirements which shall be prescribed in regulations of the Commission
and receipt of information by the account holder by electronic means is
elected by the account holder in accordance with such regulations.
``(b) General Requirements.--In applying under subsection (a) the
rules of part 1 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 in the case of a personal retirement
account described in subsection (a), references in such part to the
Secretary of Labor shall be deemed to be references to the Securities
and Exchange Commission, references in such part to a participant or
beneficiary in connection with an individual account plan covered under
such part shall be deemed to be references to the account holder with
respect to the personal retirement account, and references in such part
to the plan administrator or plan sponsor in connection with an
individual account plan covered under such part shall be deemed to be
references to the trustee of the personal retirement account.
``(c) Coordination of Reporting Requirements.--The Securities and
Exchange Commission and the Secretary of Labor shall jointly issue
regulations so as to ensure that requirements of part 1 of subtitle B
of title I of the Employee Retirement Income Security Act of 1974
applicable to any trustee that is a certified institution and the
requirements of this section are mutually consistent and to minimize
administrative expense. Separate inclusion of information relating to a
personal retirement account maintained by a certified institution in an
annual report filed by such institution pursuant to section 103 of the
Employee Retirement Income Security Act of 1974 shall be treated as
meeting the annual reporting requirement under this subsection relating
to such personal retirement account. The Secretary of Labor and the
Securities and Exchange Commission shall provide for prompt
transmission to the Commission of a copy of any such annual report
filed by a certified institution with such Secretary relating to the
personal retirement account.
``(d) Specific Trustee Requirements.--The requirements of this
section relating to the trustee of a personal retirement account under
this section shall not be treated as met unless the trustee--
``(1) submits to the Securities and Exchange Commission
periodic evaluations of the investment options available to
personal retirement account holders in accordance with
regulations which shall be prescribed by the Commission and
makes such evaluations reasonably available to the personal
retirement account holders in accordance with such regulations,
and
``(2) the trustee provides to the personal retirement
account holder--
``(A) in connection with the designation of the
account under section 252 and at least semi-annually
thereafter, in language understandable by the typical
account holder, information describing the investment
options available to the account holder which shall be
specified in regulations of the Securities and Exchange
Commission and which shall be sufficient to enable a
reasonably educated selection of portfolio options
offered by the trustee,
``(B) on an annual basis, a disclosure of all fees
and other charges imposed by the trustee with respect
to the personal retirement account,
``(C) on a quarterly basis, an accounting of all
activity of the personal retirement account during the
preceding quarter, and
``(D) on an annual basis, an accounting of all
activity of the personal retirement account during the
preceding year.
``fiduciary duties
``Sec. 273. (a) In General.--In the case of a personal retirement
account which does not form part of an individual account plan covered
under part 4 of subtitle B of title I of the Employee Retirement Income
Security Act of 1974, rules similar to the rules of such part 4
applicable to individual account plans covered under such part 4 shall
apply with respect to a personal retirement account and the terms of
any arrangement under which such account is maintained.
``(b) General Requirements.--In applying under subsection (a) the
rules of part 4 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 in the case of a personal retirement
account, references in such part to the Secretary of Labor shall be
deemed to be references to the Securities and Exchange Commission,
references in such part to a participants or beneficiary in connection
with an individual account plan covered under such part shall be deemed
to be references to the account holder with respect to the personal
retirement account, and references in such part to the plan
administrator or plan sponsor in connection with an individual account
plan covered under such part shall be deemed to be references to the
trustee of the personal retirement account.
``(c) Limitation on Liability.--Any account holder who issues an
instruction to the trustee of the account directing an investment of
funds held in the account shall sign an acknowledgement prescribed by
the Securities and Exchange Commission which states that the account
holder understands that an investment of any amount in the account is
made at the account holder's risk, that the account holder is not
protected by the Government or by the trustee against any loss on such
investment, and that a return on such investment is not guaranteed by
the Government or by the trustee. Notwithstanding the preceding
provisions of this section and any other provision of Federal or State
law, the trustee of a personal retirement account shall not be liable
for losses suffered in connection with any investment of assets held in
the account unless it is shown by clear and convincing evidence that
the trustee did not act in the manner in which a reasonable trustee
would act under the circumstances then prevailing in evaluating the
risk and reward properties of the investment option involved.
``Subpart 4--Enforcement
``cause of action
``Sec. 281. The account holder with respect to a personal
retirement account who is adversely affected by an act or practice of
any party (other than the Securities and Exchange Commission, the
Social Security Administration, the Department of the Treasury, or any
officer or employee of any of the foregoing) in violation of any
provision of this part, may bring an action--
``(1) to enjoin such act or practice, or
``(2) to obtain other appropriate equitable relief (A) to
redress such violation or (B) to enforce such provision.
``jurisdiction and venue
``Sec. 282. Civil actions under this subpart may be brought in the
district courts of the United States in the district where the personal
retirement account is administered, where the violation took place, or
where a defendant resides or may be found, and process may be served in
any district where a defendant resides or may be found. The district
courts of the United State shall have jurisdiction, without regard to
the amount in controversy or the citizenship of the parties, to grant
the relief provided for in section 281 in any action.
``right of securities and exchange commission to intervene
``Sec. 283. A copy of the complaint or notice of appeal in any
action under this subpart shall be served upon the Securities and
Exchange Commission by certified mail. The Commission shall each have
the right to intervene in any action.
``awards of costs and expenses
``Sec. 284. In any action brought under this subpart, the court in
its discretion may award all or a portion of the costs and expenses
incurred in connection with such action, including reasonable
attorney's fees, to any party who prevails or substantially prevails in
such action.
``limitation on actions
``Sec. 285. (a) In General.--Except as provided in subsection (c),
an action under this subpart may not be brought after the later of--
``(1) 6 years after the date on which the cause of action
arose, or
``(2) 3 years after the applicable date specified in
subsection (b).
``(b) Applicable Date.--The applicable date specified in this
subsection is the earliest date on which the plaintiff acquired or
should have acquired actual knowledge of the existence of such cause of
action.
``(c) Cases of Fraud or Concealment.--In the case of fraud or
concealment, the period described in subsection (a)(2) shall be
extended to 6 years after the applicable date specified in subsection
(b).
``penalty for failure to timely provide required information
``Sec. 286. The Securities and Exchange Commission may assess a
penalty, payable to it, against any person who fails to provide any
notice or other material information required under this part or any
regulations prescribed under this part within the applicable time limit
specified therein. Such penalty shall not exceed $1,000 for each day
for which such failure continues.
``actions by securities and exchange commission
``Sec. 287. If any person is assessed under this subpart and fails
to pay the assessment when due, or any person otherwise fails to meet
any requirement of this part, the Securities and Exchange Commission
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 for the recovery of the amount of
the assessment or for appropriate equitable relief to redress the
violation or enforce the provisions of this part, and process may be
served in any other district. The district courts of the United States
shall have jurisdiction over actions brought under this section by the
Commission without regard to the amount in controversy.
``criminal penalty for fraud or intentional misrepresentation in
connection with investment options
``Sec. 288. Any person who makes, or causes to be made, a statement
or representation of a material fact for use in selecting an investment
option under section 271 that the person knows or should know is false
or misleading or knows or should know omits a material fact or makes
such a statement with knowing disregard for the truth shall upon
conviction be fined not more than $500,000 or imprisoned for not more
than 5 years, or both.''.
(b) Implementation.--The Securities and Exchange Commission, in
consultation with the Commissioner of Social Security and the Secretary
of the Treasury, shall establish an expedited procedure to ensure
timely implementation of the amendments made by this section. The
Commission shall submit to each House of the Congress report on the
status of such implementation not later than March 1, 2001. All
measures necessary to prepare for full implementation of such
amendments shall be completed by the Commission, the Commissioner, and
the Secretary not later than July 1, 2001.
SEC. 3. PERSONAL RETIREMENT ACCOUNTS.
(a) In General.--Subchapter F of chapter 1 of the Internal Revenue
Code of 1986 (relating to exempt organizations) is amended by adding at
the end the following new part:
``PART IX--PERSONAL RETIREMENT ACCOUNTS
``Sec. 531. Personal Retirement Accounts.
``SEC. 531. PERSONAL RETIREMENT ACCOUNTS.
``(a) General Rule.--A personal retirement account shall be exempt
from taxation under this subtitle. Notwithstanding the preceding
sentence, the personal retirement account shall be subject to the taxes
imposed by section 511 (relating to imposition of tax on unrelated
business income of charitable organizations).
``(b) Personal Retirement Account Defined.--For purposes of this
section--
``(1) In general.--The term `personal retirement account'
means a trust which is designated under section 252 of the
Social Security Act as a personal retirement account and which
is created or organized in the United States for the exclusive
benefit of an individual, or the beneficiaries of such
individual, but only if the written governing instrument
creating the trust meets the following requirements:
``(A) The contribution requirements of subsection
(c) are met.
``(B) The distribution requirements of subsection
(d) are met.
``(C) The trustee requirements of subsection (f)
are met.
``(D) The investment requirements of subpart 3 of
part B of title II of the Social Security Act are met.
``(E) The interest of an individual in the balance
in his account is nonforfeitable.
``(2) Aggregation of accounts.--For purposes of determining
whether the requirements of paragraph (1) are met in a taxable
year, a predecessor personal retirement account and a successor
personal retirement account of an account holder shall be
treated as 1 account.
``(c) Contribution Requirements.--
``(1) In general.--The requirements of this subsection are
met if, except in the case of a rollover contribution described
in paragraph (2) or subsection (e)(4), no contribution will be
accepted unless it is in cash, and contributions will not be
accepted for the taxable year on behalf of any individual in
excess of the sum of--
``(A) the Federal contribution under section 253 of
the Social Security Act,
``(B) the entitlement payment for early
contributions under section 54, and
``(C) $10,000.
``(2) Rollover contributions from eligible retirement
plans.--
``(A) In general.--A rollover contribution is
described in this paragraph if such contribution is--
``(i) an eligible rollover distribution out
of a qualified trust and excluded from gross
income under section 402(c), 403(a)(4), or
403(b)(8), determined, for purposes of this
paragraph, by treating the personal retirement
account as a qualified trust, employee annuity,
or annuity contract, as the case may be, or
``(ii) an eligible rollover within the
meaning of section 408(d)(3)) out of an
individual retirement account or individual
retirement annuity, determined, for purposes of
this paragraph, by treating the contribution to
the personal retirement account as a payment
into an individual retirement account or
individual retirement annuity.
``(B) Inclusion in gross income for rollover
contributions, spread over 4-year taxable period.--For
purposes of any rollover contribution described in
subparagraph (A), rules similar to the rules of section
408A(d)(3) shall apply, except that the date in
subparagraph (A)(iii) thereof shall be disregarded. The
preceding sentence shall not apply to a rollover
contribution from a Roth IRA.
``(C) No rollover from current defined contribution
plan.--For purposes of subparagraph (A)(i), amounts may
not be rolled over to a personal retirement account
from any defined contribution plan which is maintained
by the employer of the employee who is the account
holder of the personal retirement account on the date
such rollover is made.
``(d) Distribution Requirements.--
``(1) In general.--The distribution requirements of this
paragraph are met if--
``(A)(i) no payment or distribution from the
personal retirement account from amounts attributable
to Federal contributions may be made from the personal
retirement account before the date the account holder
attains age 62, and
``(ii) on and after the date the account holder
attains age 62, no payment or distribution from the
personal retirement account from amounts attributable
to Federal contributions may be made in a taxable year
if, immediately after the distribution, the amount
remaining in the account that is attributable to
Federal contributions is less than the minimum annuity
amount, and
``(B) no payment or distribution from the personal
retirement account from amounts attributable to
voluntary contributions may be made from the personal
retirement account before the date the account holder
attains age 59\1/2\.
``(2) Exceptions.--The requirements of paragraph (1) shall
not be treated as not met solely by reason of--
``(A) any trustee-to-trustee transfer from a
personal retirement account to a successor personal
retirement account,
``(B) any payment or distribution used to purchase
a minimum annuity or a survivor annuity that meets the
requirements of paragraph (3)(B)(ii),
``(C) any payment or distribution from amounts
attributable to voluntary contributions by reason of
the individual's being disabled (within the meaning of
section 72(m)(7)),
``(D) any payment or distribution made to a
beneficiary (or to the estate of the employee) on or
after the death of the account holder,
``(E) any payment or distribution which is a return
of contributions described in subsection (e)(5),
``(F) any payment or distribution incident to
divorce (within the meaning of subsection (e)(6)),
``(G) any payment or distribution to which
subsection (e)(7) applies,
``(H) any payment or distribution to which
subsection (e)(8) applies,
``(I) any payment or distribution for
administrative expenses charged by the trustee of the
personal retirement account meeting the applicable
requirements of section 271(d)(4) of the Social
Security Act, and
``(J) any payment or distribution which fails to
meet the requirements of paragraph (1) with respect to
which the Secretary makes the good faith determination
described in subsection (e)(10).
``(3) Minimum annuity amount; minimum annuity.--For
purposes of this subsection--
``(A) Minimum annuity amount.--
``(i) In general.--The term `minimum
annuity amount' means, as of any date, the
amount determined by the trustee (under
regulations issued by the Secretary) to be
necessary to purchase on such date an immediate
annuity which is a minimum annuity.
``(ii) Reduction to account for old-age
insurance benefits.--In the case of a personal
retirement account holder who is entitled to
old-age insurance benefits under section 202 of
the Social Security Act, the minimum annuity
amount determined under clause (i) shall be
reduced by the actuarial present value, as of
the date referred to in clause (iii), of future
old-age insurance benefits payable to such
individual under such section (determined by
using reasonable assumptions which shall be
prescribed by the Commission).
``(iii) Immediate annuity.--For purposes of
clause (i), the term `immediate annuity' means
an annuity--
``(I) which is purchased with a
single premium or annuity
consideration,
``(II) the annuity starting date
(as defined in section 72(c)(4)) of
which commences no later than 1 year
from the date of the purchase of the
annuity, and
``(III) which provides for a series
of substantially equal periodic
payments (to be made not less
frequently than annually) during the
annuity period, subject to adjustment
under subparagraph (D).
``(B) Minimum annuity.--
``(i) In general.--The term `minimum
annuity' means an amount determined under
regulations issued by the Commissioner of
Social Security. Such amount shall be stated on
a monthly basis and shall assume an annuity
making payments over the life (or life
expectancy) of the account holder.
``(ii) Joint and survivor annuity and
preretirement survivor annuity requirements.--
An annuity shall not be treated as a minimum
annuity within the meaning of clause (i) unless
the requirements of section 401(a)(11)
applicable to plans are met with respect to
such annuity, except that, for purposes of this
clause, the minimum required survivor annuity
shall be an amount such that the monthly
equivalent thereof is equal to the excess of--
``(I) the widow's or widower's
insurance benefit under section 202 of
the Social Security Act to which the
surviving spouse would have been
eligible upon the personal retirement
account holder's death without the
application of section 215(a)(8) of
such Act, over
``(II) the amount of such widow's
or widower's insurance benefit.
``(C) Life expectancy tables.--In determining life
expectancy for purposes of subparagraphs (A) and (B),
the trustee of a personal retirement account shall not
be treated as failing to meet the requirements of this
paragraph if the trustee follows life expectancy tables
prescribed by the Commissioner of Social Security for
purposes of this paragraph.
``(e) Tax Treatment of Distributions.--
``(1) In General.--Except as otherwise provided in this
subsection--
``(A) Amount attributable to federal
contributions.--In the case of the portion of any
payment or distribution out of a personal retirement
account that is the amount attributable to Federal
contributions--
``(i) \1/2\ of such portion shall be
treated as a social security benefit under
section 86, and
``(ii) \1/2\ of such portion shall not be
includible in gross income.
``(B) Amount attributable to voluntary
contributions.--The portion of any payment or
distribution out of a personal retirement account that
is the amount attributable to voluntary contributions
shall not be includible in gross income.
``(2) Early withdrawal of contributions.--
``(A) In general.--In the case of an amount paid or
distributed out of a personal retirement account to a
personal retirement account holder who--
``(i) in the case of amounts attributable
to Federal contributions, has not attained age
62, and
``(ii) in the case of amounts attributable
to voluntary contributions, has not attained
age 59\1/2\,
the tax of such personal retirement account holder
under this chapter for the taxable year in which such
amount is received shall be increased by an amount
equal to the applicable percentage of the portion of
such amount which is includible in gross income.
``(B) Applicable percentage.--For purposes of
subparagraph (A), the term `applicable percentage'
means--
``(i) 100 percent in the case of amounts
attributable to Federal contributions, and
``(ii) 10 percent in the case of amounts
attributable to voluntary contributions.
``(C) Special rule.--For purposes of this
paragraph, the amount includible in gross income shall
be determined under section 72.
``(3) Excess distributions.--
``(A) In general.--In the case of excess
distributions from a personal retirement account to a
personal retirement account holder, the tax of such
personal retirement account holder under this chapter
for the taxable year in which such amount is received
shall be increased by an amount equal to 10 percent of
the portion of such amount which is includible in gross
income.
``(B) Excess distributions defined.--For purposes
of subparagraph (A), the term `excess distribution'
means a distribution from a personal retirement account
that is prohibited by subsection (d)(1)(A)(ii).
``(C) Applicable rules.--Rules similar to the rules
of paragraphs (2) and (3) of section 4980A(c) (as in
effect before the date of the enactment of the Taxpayer
Relief Act of 1997) shall apply for purposes of
subparagraph (A).
``(4) Rollover contribution to successor personal
retirement account.--
``(A) In general.--Paragraph (1) does not apply to
any amount paid or distributed out of a personal
retirement account of an account holder to another
personal retirement account of such account holder if
such transfer meets the requirements of subparagraph
(B).
``(B) Requirements.--A transfer meets the
requirements of this subparagraph if--
``(i) such transfer is a direct trustee-to-
trustee transfer,
``(ii) the entire amount in the account
from which the distribution is made is so
transferred,
``(iii) during the 12-month period ending
with the month preceding the month in which
such transfer occurred, not more than 2 such
transfers were made, and
``(iv) during the 3-year period ending with
the month preceding the month in which such
transfer occurred, not more than 4 such
transfers were made.
``(C) Involuntary transfer.--A transfer of assets
as a result of the replacement of a trustee or closing
an account under subpart II of part B of title II of
the Social Security Act shall not be taken into account
for purposes of clauses (iii) and (iv) of subparagraph
(B).
``(5) Contributions returned before due date of return.--
Paragraph (1) does not apply to the distribution of any
contribution paid during a taxable year to a personal
retirement account if--
``(A) such distribution is received on or before
the day prescribed by law (including extensions of
time) for filing such individual's return for such
taxable year, and
``(B) such distribution is accompanied by the
amount of net income attributable to such contribution.
In the case of such a distribution, for purposes of section 61,
any net income described in subparagraph (B) shall be deemed to
have been earned and receivable in the taxable year in which
such contribution is made.
``(6) Transfer of account incident to divorce.--For
purposes of this section, rules similar to the rules of section
408(d)(6) (relating to transfer of account incident to divorce)
shall apply.
``(7) Qualified first-time homebuyer distribution.--The
additional tax imposed by paragraph (3) shall not apply to a
distribution from amounts attributable to voluntary
contributions which is a qualified first-time homebuyer
distribution (as defined in section 72(t)(8)).
``(8) Treatment after death of account holder.--
``(A) In general.--Paragraph (1) shall not apply to
distributions made on account of the death of the
account holder. For purposes of this paragraph, rules
similar to the rules of section 401(a)(9) shall apply
to the personal retirement account upon the death of
the account holder.
``(B) Account holder who dies before attaining age
62.--
``(i) Use of amounts to pay benefits.--In
the case of the death of an account holder who
has not attained age 62, if any beneficiary of
the account holder is either--
``(I) a spouse or former spouse of
the account holder who has not attained
age 62 as of the date of such death, or
``(II) a child of the account
holder who meets the requirements of
section 202(d) of the Social Security
Act, but for the filing of an
application for child's insurance
benefits,
the amounts in the account attributable to
Federal contributions shall be apportioned in
accordance with clause (ii) and transferred to
the personal retirement account of each such
beneficiary and shall be payable as a monthly
annuity in accordance with the entitlement of
such beneficiary to benefits under section 202
of the Social Security Act.
``(ii) Determination of amounts.--
``(I) In general.--The amount
apportioned to a beneficiary under
clause (i) shall be the amount equal to
the present value of the benefits to
which each beneficiary specified in
clause (i) is entitled under section
202 of the Social Security Act, as
determined by the Commissioner of
Social Security.
``(II) Proportional allocation.--If
amounts attributable to Federal
contributions is less than the amount
required to yield each monthly annuity
described in clause (ii), the
Commissioner shall allocate such
amounts among all beneficiaries
described in clause (ii) on a
proportional basis in accordance with
regulations of the Commissioner.
``(iii) Interim personal retirement
accounts for individuals who are not
employees.--For purposes of this subparagraph,
the Commissioner shall provide for the
establishment of interim personal retirement
accounts in accordance with part B of title II
of the Social Security Act for any beneficiary
referred to in this subparagraph who is not a
covered individual (as defined by section 251
of the Social Security Act).
``(C) Excess amounts treated in same manner as
voluntary contributions.--For purposes of this
paragraph, amounts in the personal retirement account
attributable to Federal contributions which are in
excess of the amount required under subparagraph
(B)(ii)(I) (if any) shall be treated in the same manner
as amounts attributable to voluntary contributions.
``(9) Administrative expenses.--Paragraphs (1), (2), and
(3) shall not apply to amounts paid or distributed for
administrative expenses charged by the trustee of the personal
retirement account.
``(10) Good faith exception to additional tax.--The
additional tax imposed by paragraph (3) or (4) shall not apply
if the Secretary determines that--
``(A) the taxpayer in good faith attempted to meet
the requirements to which such paragraph relates, and
``(B) any failure to meet such requirements is due
to inadvertent error after the taxpayer took reasonable
steps to comply with such requirements.
``(f) Trustee Requirements.--The requirements of this subsection
are met if the trustee--
``(1) in the case of a personal retirement account
maintained by an employer which has in effect an individual
account plan under a qualified cash or deferred arrangement (as
defined in section 401(k)), is the trustee of the trust forming
part of such plan, and
``(2) in any case not described in paragraph (1), has in
effect a certification under subpart 2 of part B of title II of
the Social Security Act or is an alternative trustee appointed
under section 264 of such Act.
``(g) Definitions and Special Rules.--For purposes of this
section--
``(1) Amount attributable to federal contributions.--The
term `amount attributable to Federal contributions' means, with
respect to any payment or distribution from a personal
retirement account, the amount determined by multiplying the
total amount of such payment or distribution by the ratio--
``(A) the numerator of which is the aggregate of
the contributions described in subparagraphs (A) and
(B) of subsection (c)(1) and the total amount of
earnings on such contributions, and
``(B) the denominator of which is the sum of the
total amount in the personal retirement account
immediately before such payment or distribution was
made.
``(2) Amount attributable to voluntary contributions.--The
term `amount attributable to voluntary contributions' means,
with respect to any payment or distribution from a personal
retirement account, the amount determined by multiplying the
total amount of such payment or distribution by the ratio--
``(A) the numerator of which is the aggregate of
the contributions described in subsection (c)(1)(C),
the rollover contributions described in subsection
(c)(2), and the total amount of earnings on
contributions described in subsection (c)(1)(C) and
subsection (c)(2), and
``(B) the denominator of which is the sum of the
total amount in the personal retirement account
immediately before such payment or distribution was
made.
``(3) Separate accounting for contributions and earnings
thereon and distributions.--
``(A) In general.--The trustee of any personal
retirement account shall separately account for--
``(i) contributions under subparagraph (A)
of subsection (c)(1) and earnings thereon,
``(ii) contributions under subsection
(c)(1)(B) and earnings thereon,
``(iii) contributions under subsection
(c)(1)(C) and earnings thereon, and
``(iv) distributions from amounts accounted
for under clauses (i) and (ii).
``(B) Successor accounts.--The character of
contributions and earnings separately accounted for
under subparagraph (A) in a predecessor personal
retirement account shall apply to the successor
personal retirement account (within the meaning of
subsection (e)(4)).
``(4) Additional rules on tax treatment of account.--Rules
similar to the rules of paragraphs (2), (3), and (4) of section
408(e) shall apply.
``(5) Estate tax treatment.--No amount shall be includible
in the gross estate of any individual for purposes of chapter
11 by reason of an interest in a personal retirement account.
``(6) Community property laws.--This section shall be
applied without regard to any community property laws.''.
(b) Study Relating to Reinsurance.--The Securities and Exchange
Commission shall conduct a study to determine the need for, and the
feasibility of requiring, reinsurance relating to personal retirement
accounts. In particular, the study shall address the need for a
governmental entity to provide such reinsurance and to which providers
of annuities from personal retirement accounts would make payments for
such reinsurance. The Commission shall make such recommendations to the
Congress relating to such study as the Commission determines
appropriate.
(c) Federal Contributions Treated as Employer Contributions for
Purposes of Pension Nondiscrimination Rules.--
(1) In general.--Subparagraph (D) of section 401(k)(3) of
such Code (relating to application of participation and
discrimination standards) is amended by striking ``and'' at the
end of clause (i), by striking the period at the end of clause
(ii) and inserting ``, and'', and by inserting after clause
(ii) the following new clause:
``(iii) shall include contributions
described in subparagraphs (A) and (B) of
section 531(c)(1).''.
(2) Information provided to employer.--Paragraph (3) of
section 401(k) of such Code (relating to application of
participation and discrimination standards) is amended by
adding at the end the following new subparagraph:
``(H) Certification to employer regarding personal
retirement account.--For purposes of subparagraph
(D)(iii), an employee shall, in such manner and on such
forms as the Secretary shall prescribe, certify to the
employer the existence of the personal retirement
account of the employee, the number of such account,
the trustee for such account, and the contributions to
such account under subparagraphs (A) and (B) of section
531(c)(1). Information furnished under this
subparagraph shall be confidential and may not be
disclosed to any person for any purpose other than the
purposes of subparagraph (D)(iii).''.
(d) Clerical Amendment.--The table of parts for subchapter F of
chapter 1 of the Internal Revenue Code of 1986 is amended by adding
after the item relating to part VIII the following new item:
``Part IX. Personal Retirement
accounts.''.
(e) Effective Date.--The amendments made by this subsection shall
apply to taxable years beginning after December 31, 2000.
SEC. 4. PRIMARY INSURANCE AMOUNTS.
(a) In General.--Section 215(a) of the Social Security Act (42
U.S.C. 415(a)) is amended by adding at the end the following new
paragraph:
``(8)(A) Notwithstanding the preceding provisions of this
subsection, solely for purposes of determining monthly insurance
benefits other than disability insurance benefits, the primary
insurance amount (as determined under the preceding paragraphs of this
subsection) of an individual who is a personal retirement account
holder (as defined in section 251) shall be reduced to the product
derived by multiplying such primary insurance amount by a fraction (not
less than zero) equal to 1 minus a fraction--
``(i) the numerator of which is the total of all deposits
(adjusted as provided under subparagraph (B)) made to the
individual's personal retirement account pursuant to section
253 of this Act or section 531(e)(8) of the Internal Revenue
Code of 1986 prior to the date on which such individual becomes
eligible for such benefits (or dies before becoming eligible
for such benefits), and
``(ii) the denominator of which is the amount which would
be the actuarial present value as of such date of the expected
future benefits under section 202 based on such individual's
wages and self-employment income if such individual became
entitled to old-age insurance benefits on such date
(disregarding the reduction under this paragraph and
disregarding, in the case of an individual's primary insurance
amount determined by reason of such individual's death, such
individual's death on such date).
``(B) For purposes of this paragraph, the total amount of the
deposits referred to in subparagraph (A)(i) made during each calendar
year shall be deemed to be equal to such amount, plus interest on such
amount compounded annually thereafter at the rate equal to the average
market yield (computed by the Secretary of the Treasury on the basis of
market quotations as of the end of the calendar month next preceding
the date of each compounding) on all marketable interest-bearing
obligations of the United States than forming a part of the public debt
which were not due or callable until after the expiration of four years
from the end of such calendar month (rounded to the nearest one-eighth
of one percent).
``(C) The actuarial assumptions and methods used for purposes of
subparagraph (A)(ii) shall be assumptions and methods which are
generally accepted for making actuarial determinations, except that the
Commissioner shall use reasonable life expectancy tables prescribed by
the Commissioner of Social Security by regulation for purposes of this
subparagraph which do not discriminate on the basis of gender.''.
(b) Conforming Amendment Preserving Appropriations for Medicare.--
Section 121(e)(1)(B) of the Social Security Amendments of 1983 (42
U.S.C. 401 note) is amended, in the first sentence, by inserting ``,
including the increase in such tax liabilities which would have
occurred if the amendment made by section 4(a) of the Personal Lockbox
Act of 2000 had not been enacted'' after ``subparagraph (A)(ii)''.
SEC. 5. CREDIT FOR CONTRIBUTIONS TO PERSONAL RETIREMENT ACCOUNTS.
(a) In General.--Part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to credits against tax) is
amended by adding at the end the following new subpart:
``Subpart H--Personal Retirement Account Contributions Credit
``Sec. 54. Personal retirement account contributions credit.
``SEC. 54. PERSONAL RETIREMENT ACCOUNT CONTRIBUTIONS CREDIT.
``(a) In General.--
``(1) Entitlement to payment.--Each eligible individual
shall be entitled to have a payment made on behalf of such
individual for any calendar year (subject to subsection (b))
equal to $300.
``(2) Payment.--Notwithstanding any other provision of this
title, the payment under paragraph (1) shall be paid by the
Secretary (in such manner as the Secretary shall prescribe) to
the personal retirement account of the eligible individual from
amounts available in the Federal Old-Age and Survivors
Insurance Trust Fund.
``(b) Limitations.--
``(1) Payment allowed only for 2 calendar years.--A payment
under subsection (a) on behalf of any individual may not be
made for any calendar year if a payment under subsection (a) on
behalf of such individual was made for any 2 prior calendar
years.
``(2) Limitation based on wages and self-employed income.--
The amount which would (but for this paragraph) be paid under
subsection (a) for the calendar year shall be reduced (but not
below zero) by the amount which bears the same ratio to the
amount which would be so paid as--
``(A) the excess (if any) of--
``(i) the individuals wage and self-
employment income for such calendar year, over
``(ii) $15,000, bears to
``(B) $10,000.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Eligible individual.--The term `eligible individual'
means any individual--
``(A) who is a covered employee or covered self-
employed individual for a calendar year after 2000
under part B of title II of the Social Security Act,
and
``(B) whose wage and self-employment income for the
calendar year is greater than $5,000.
``(2) Wage and self-employment income.--The term `wage and
self-employment income' for a calendar year means with respect
to an individual the sum of--
``(A) wages (as defined in section 3121(a))
received by such individual in the calendar year with
respect to employment (as defined in section 3121(b))
on which tax is imposed under section 3201, and
``(B) self-employment income (as defined in
1402(b)) of such individual for the taxable year ending
in such calendar year on which tax is imposed under
section 1401.
``(3) Personal retirement account.--The term `personal
retirement account' has the meaning given such term by section
531(b).
``(4) Inflation adjustment.--
``(A) In general.--In the case of any calendar year
after 2001, the $300 in subsection (a)(1) and the
$15,000 amount in subsection (b)(2)(A)(ii) shall each
be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `calendar year 2000'
for `calendar year 1992' in subparagraph (B)
thereof.
``(B) Rounding.--If any amount determined under
subparagraph (A) with respect to the $15,000 amount in
subsection (b)(2)(A)(ii) is not a multiple of $50, such
amount shall be rounded to the next lowest multiple of
$50.''.
(b) Conforming Amendment.--The table of subparts for part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new item:
``Subpart H. Personal Retirement Account Contributions Credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2000.
SEC. 6. EXCISE TAX ON EXCESS CONTRIBUTIONS TO PERSONAL RETIREMENT
ACCOUNTS.
(a) In General.--Section 4973 of the Internal Revenue Code of 1986
(relating to tax imposed on excess contributions) is amended--
(1) in subsection (a) by striking ``or'' at the end of
paragraph (3), by inserting ``or'' at the end of paragraph (4),
and by inserting after paragraph (4) the following:
``(5) a personal retirement account (as defined in section
531),'', and
(2) by adding at the end the following new subsection:
``(g) Excess Contributions to Personal Retirement Accounts.--
``(1) In general.--For purposes of this section, in the
case of personal retirement accounts, the term `excess
contributions' means the sum of--
``(A) the amount by which the amount contributed
for the taxable year to the accounts exceeds the amount
allowable as a contribution under section 531(c)(1)(C)
(without regard to section 531(c)(1) (A) and (B)) for
such taxable year, and
``(B) the amount determined under this subsection
for the preceding taxable year, reduced by the sum of--
``(i) the distributions out of the plans
for the taxable year (other than rollover
distributions) of amounts attributable to
voluntary contributions (as defined in section
531(h)(2)), and
``(ii) the excess (if any) of the maximum
amount which may be contributed to the plans
under section 531(c)(1)(C) for the taxable year
over the amount contributed to the plans under
such section for the taxable year.
``(2) Contributions returned before due date.--For
purposes of this subsection, any contribution which is
distributed out of the personal retirement account in a
distribution to which section 531(e)(5) applies shall
be treated as an amount not so contributed.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
SEC. 7. INFORMATION REQUIREMENTS FOR STATEMENTS.
(a) Information Requirements for Social Security Account
Statement.--Section 1143(a) of the Social Security Act (42 U.S.C.
1320b-13(a)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (B), by inserting
``, including a separate estimate of the amount of
interest earned on the contributions,'' after
``disability insurance'';
(B) in subparagraph (C)--
(i) by inserting ``, including a separate
estimate of the amount of interest earned on
the contributions,'' after ``hospital insurance''; and
(ii) by striking ``and'' after the
semicolon;
(C) in subparagraph (D), by striking the period at
the end and inserting a semicolon;
(D) by redesignating subparagraphs (A), (B), (C),
and (D) as subparagraphs (B), (C), (D), and (E),
respectively;
(E) by inserting after the matter preceding
subparagraph (B), as redesignated by subparagraph (D),
the following:
``(A) the name, age, gender, mailing address, and
marital status of the eligible individual;'';
(F) by adding at the end the following:
``(F) the total amount of the employer and employee
contributions for the eligible individual for old-age
and survivors insurance benefits, as of the end of the
month preceding the date of the statement, in both
actual dollars and dollars adjusted for inflation;
``(G) the projected value of--
``(i) the aggregate amount of the employer
and employee contributions for old-age and
survivors insurance benefits that are expected
to be made by or on behalf of the individual
prior to the individual attaining retirement
age, in both actual dollars and dollars
adjusted for inflation;
``(ii) the annual amount of old-age and
survivors insurance benefits that are expected
to be payable on the eligible individual's
account for a single individual and for a
married couple, in dollars adjusted for
inflation;
``(iii) the total amount of old-age and
survivors insurance benefits payable on the
eligible individual's account for the
individual's life expectancy, in dollars
adjusted for inflation, identifying--
``(I) the life expectancy assumed;
``(II) the amount of benefits
received on the basis of each $1 of
contributions made by or on behalf of
the individual; and
``(III) the projected annual rate
of return for the individual, taking
into account the date on which the
contributions are made in the eligible
individual's account and the date on
which the benefits are paid;
``(iv) the total amount of old-age and
survivors insurance benefits that would have
accumulated on the eligible individual's
account on the date on which the individual
attains retirement age if the contributions for
such individual had been invested in Treasury
10-year saving bonds at the prevailing interest
rate for such bonds as of the end of the month
preceding the date of the statement, in dollars
adjusted for inflation, identifying--
``(I) the date of retirement
assumed;
``(II) the interest rate used for
the projection; and
``(III) the amount that would be
received on the basis of each $1 of
contributions made by or on behalf of
the individual;
``(H) the average annual rate of return, adjusted
for inflation, on the Treasury 10-year saving bond as
of the date of the statement;
``(I) the average annual rate of return, adjusted
for inflation, on a domestic stock index selected by
the Commissioner of Social Security, or an equivalent
portfolio of common stock equities that are based on a
broad index of United States market performance, for
the preceding 25 years;
``(J) a brief statement that identifies--
``(i) the balance of the trust fund
accounts as of the end of the month preceding
the date of the statement;
``(ii) the annual estimated balance of the
trust fund accounts for each of the succeeding
30 years; and
``(iii) the assumptions used to provide the
information described in clauses (i) and (ii),
including the rates of return and the nature of
the investments of such trust fund accounts;
and
``(K) a simple 1-page summary and comparison of the
information that is provided to an eligible individual
under subparagraphs (G), (H), and (I).''; and
(2) by striking paragraph (3) and inserting the following:
``(3) The estimated amounts required to be provided in a
statement under this section shall be determined by the
Commissioner using a general methodology for making such
estimates, as formulated and published at the beginning of each
calendar year by the Board of Trustees of the trust fund
accounts. A description of the general methodology used shall
be provided to the eligible individual as part of the statement
required under this section.
``(4) The Commissioner of Social Security shall notify an
individual who receives a social security account statement
under this section that the individual may request that the
information described in paragraph (2) be determined on the
basis of relevant information provided by the individual,
including information regarding the individual's income,
marital status, date of retirement, or race.
``(5) For purposes of this section--
``(A) the term `dollars adjusted for inflation'
means--
``(i) dollars in constant or real value
terms on the date on which the statement is
issued; and
``(ii) an amount that is adjusted on the
basis of the Consumer Price Index.
``(B) the term `eligible individual' means an
individual who--
``(i) has a social security account number;
``(ii) has attained age 25 or over; and
``(iii) has wages or net earnings from
self-employment; and
``(C) the term `trust fund account' means--
``(i) the Federal Old-Age and Survivors
Insurance Trust Fund; and
``(ii) the Federal Disability Insurance
Trust Fund.''.
(b) Mandatory Provision of Statements.--Section 1143(c)(2) of the
Social Security Act (42 U.S.C. 1320b-13(c)(2)) is amended by striking
``With respect to'' and all that follows.
(c) Technical Amendments.--Section 1143 of the Social Security Act
(42 U.S.C. 1320b-13) is amended by striking ``Secretary'' each place it
appears and inserting ``Commissioner of Social Security''.
(d) Effective Date.--The amendments made by this section shall
apply to statements provided for fiscal years beginning after the date
of enactment of this Act.
SEC. 8. PROTECTION OF FEDERAL DISABILITY INSURANCE TRUST FUND.
Section 201(b) of the Social Security Act (42 U.S.C. 401(b)) is
amended by adding at the end (after and below paragraph (2)) the
following:
``In addition to amounts otherwise appropriated under the preceding
provisions of this subsection, there is hereby appropriated for each
fiscal year after fiscal year 2000 to the Federal Disability Insurance
Trust Fund, from amounts in the general fund of the Treasury not
otherwise appropriated, such sums as may as necessary from time to time
to maintain the balance ratio (as defined in section 709(b)) of the
Federal Disability Insurance Trust Fund, for the calendar year
commencing during such fiscal year, at not less than 20 percent. The
sums to be appropriated under the preceding sentence shall be
determined by the Board of Trustees of the Federal Old-Age and
Surviviors Insurance Trust Fund and the Federal Disability Insurance
Trust Fund and certified by the Board of Trustees to each House of the
Congress as part of the Board's report submitted pursuant to section
709. The Board of Trustees shall also transmit a copy of any such
certification to the Secretary of the Treasury, and upon receipt
thereof, such Secretary shall promptly take appropriate actions in
accordance with the certification.''.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR H5849-5850)
Referred to the House Committee on Ways and Means.
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