Growing Real Ownership for Workers Act of 2005 - Amends title II (Old Age, Survivors and Disability Insurance) to add a new part B (GROW Accounts Program) under which a GROW Accounts Board shall establish a GROW account for each participating individual.
Directs the Secretary of the Treasury, during each calendar year, to transfer to the Board for deposit into an interim fund, amounts equal in the aggregate to 100% of the net OASDI Trust Fund surplus for such calendar year.
Requires the interim fund to be invested by the Board in marketable Government Securities.
Provides for distributions of an account balance at retirement and treatment of part A (Old Age, Survivors, and Disability Insurance) benefit payments.
Amends the Internal Revenue Code to: (1) exempt all GROW accounts from federal taxes; (2) make account distributions taxable as Social Security benefits; and (3) exempt assets of GROW accounts from the estate tax.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3304 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 3304
To amend the Social Security Act and the Internal Revenue Code of 1986
to stop the Congress from spending Social Security's tax revenue
surpluses on other Government programs by dedicating those surpluses to
personal accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 14, 2005
Mr. McCrery (for himself, Mr. Shaw, Mr. Sam Johnson of Texas, Mr. Ryan
of Wisconsin, Mr. Shadegg, Mr. Herger, Mr. Lewis of Kentucky, Mr. Brady
of Texas, Mr. Cantor, Mr. Chocola, Mr. Akin, Mr. Alexander, Mr. Bachus,
Mr. Baker, Mr. Barrett of South Carolina, Mr. Bartlett of Maryland, Mr.
Bishop of Utah, Mr. Conaway, Mr. Feeney, Ms. Foxx, Mr. Flake, Mr.
Gilchrest, Mr. Gingrey, Mr. Hensarling, Mr. Issa, Mr. Istook, Mr.
Jindal, Mr. Kingston, Mr. Kuhl of New York, Mr. McCaul of Texas, Mr.
McHenry, Mrs. Myrick, Mrs. Northup, Mr. Pence, Mr. Pitts, Mr. Price of
Georgia, Mr. Sessions, Mr. Weldon of Florida, and Mr. Wicker)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Social Security Act and the Internal Revenue Code of 1986
to stop the Congress from spending Social Security's tax revenue
surpluses on other Government programs by dedicating those surpluses to
personal accounts.
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 ``Growing Real
Ownership for Workers Act of 2005''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I--GROW ACCOUNTS PROGRAM
Sec. 101. Establishment of the GROW Accounts Program.
``Part B--GROW Accounts Program
``Sec. 251. Definitions.
``Sec. 252. Establishment of Program.
``Sec. 253. Participation in Program.
``Sec. 254. Interim investment by Board.
``Sec. 255. GROW accounts.
``Sec. 256. Investment of accounts.
``Sec. 257. Distributions of account balance at retirement.
``Sec. 258. Treatment of part A benefit payments.
``Sec. 259. Additional rules relating to disposition of account
assets.
``Sec. 260. Administration of the Program.
Sec. 102. Annual account statements.
Sec. 103. Report and Congressional consideration of proposals regarding
alternative investment options and other
matters.
TITLE II--TAX TREATMENT
Sec. 201. Tax treatment of GROW accounts.
Sec. 202. Benefits taxable as Social Security benefits.
Sec. 203. Estate tax not to apply to assets of GROW accounts.
TITLE I--GROW ACCOUNTS PROGRAM
SEC. 101. ESTABLISHMENT OF THE GROW 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--GROW 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 GROW 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
260(b).
``(4) Board.--The term `Board' means the GROW Accounts
Board established under section 260(a)(1).
``(5) Executive director.--The term `Executive Director'
means the Executive Director of the Board appointed under
section 260(a)(2).
``(6) Commissioner.--The term `Commissioner' means the
Commissioner of Social Security.
``(7) Program.--The term `Program' means the GROW Accounts
Program established under this part.
``(8) Retirement benefit.--The term `retirement benefit'
means, with respect to any month--
``(A) an old-age insurance benefit under section
202(a) for such month,
``(B) a wife's insurance benefit or husband's
insurance benefit under subsection (b) or (c) of
section 202 for such month, if the wife or husband has
attained age 62 as of the end of such month,
``(C) a widow's insurance benefit or widower's
insurance benefit under subsection (e) or (f) of
section 202 for such month, if the widow or widower has
attained age 60 as of the end of such month, and
``(D) a parent's insurance benefit under section
202(h).
``(9) Retirement date.--The term `retirement date' means,
in connection with an individual, the earliest date on which
such individual--
``(A) is entitled to a benefit described in
subparagraph (A) or (D) of paragraph (8), or
``(B) is entitled to a benefit described in
subparagraph (B) or (C) of paragraph (8) and has
attained the age described in such subparagraph.
``establishment of program
``Sec. 252. There is hereby established a GROW Accounts Program.
Except as otherwise provided under this part, the Program shall be
governed by regulations which shall be prescribed by the GROW Accounts
Board. 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
respective 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 a citizen or national of the United States or
has been assigned a social security account number that was, at
the time of assignment, or at any later time, consistent with
the requirements of subclause (I) or (III) of section
205(c)(2)(B)(i),
``(2) who is credited under part A with wages paid for
services performed after December 31, 2005, or self-employment
income derived in any taxable year ending after such date,
``(3) who is born on or after January 1, 1950, and
``(4) with respect to whom there is no election in effect
which has been made in a timely fashion under subsection (b) to
renounce such individual's status as a participating individual
or there is in effect an election under subsection (c) to
renounce an election under subsection (b).
The Commissioner shall notify the Board of the identity of each
individual described in paragraphs (1), (2), and (3).
``(b) Renunciation of Participation.--
``(1) In general.--An individual 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.
``(2) If election is timely.--
``(A) In general.--If an individual makes an
election under this subsection in timely fashion (as
determined under regulations of the Board), such
individual shall not be treated as a participating
individual under this part, effective as if such
individual had never been a participating individual.
``(B) Procedure.--The Board, in consultation with
the Secretary of the Treasury and the Commissioner,
shall prescribe by regulation procedures governing the
termination of an individual's status as a
`participating individual' pursuant to an election
described in subparagraph (A). Such procedures shall
include--
``(i) prompt closing of the individual's
GROW account established under section 255, and
``(ii) proper crediting of the balance of
the account to the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund, allocated
between the Trust Funds as determined
appropriate by the Commissioner.
``(3) If election is not timely.--If an individual makes an
election under this subsection other than in timely fashion (as
determined under regulations of the Board), GROW account
deposits to such individual's GROW account shall cease as soon
as practicable after the date of the election, but such
individual shall continue to be treated as a participating
individual with respect to the balance in such individual's
GROW account.
``(4) Notification requirement.--The Board shall provide
for immediate notification of any election under this
subsection to the Commissioner and the Secretary of the
Treasury.
``(c) Reinstatement of Participation.--
``(1) In general.--Any individual who has filed an election
under subsection (b) to renounce such individual's status as a
`participating individual' under this part may elect, in such
form and manner as shall be prescribed in regulations of the
Board, to reinstate such status. Such regulations shall provide
for regular, periodic opportunities for the filing of such an
election.
``(2) Effectiveness of reinstatement.--An election under
this subsection shall be effective with respect to wages
earned, and self-employment income derived, beginning on the
earliest date on which the Board determines it is practicable
to make such election effective following the date of the
filing of the election. The individual filing the election
shall be treated as becoming a participating individual under
this part on the effective date of the election as if such
individual first met the requirements of subsection (a) on such
date. Nothing in this paragraph shall be construed to affect
the rights or status of an individual with respect to whom GROW
account deposits have ceased under subsection (b)(3) with
respect to the balance in such individual's GROW account at the
time of such individual's election described in subsection
(b)(3).
``(3) Irrevocability.--An election under this subsection
shall be irrevocable.
``(4) Notification requirement.--The Board shall provide
for immediate notification of any election under this
subsection to the Commissioner and the Secretary of the
Treasury.
``interim investment by board
``Sec. 254. (a) Transfers to the Board.--
``(1) In general.--During each calendar year, the Secretary
of the Treasury shall transfer to the Board, for deposit into
an interim fund maintained by the Board, from amounts held in
the general fund of the Treasury, amounts equal, in the
aggregate, to 100 percent of the net OASDI Trust Fund surplus
for such calendar year.
``(2) Net oasdi trust fund surplus.--For purposes of
paragraph (1), the term `net OASDI Trust Fund surplus' for a
calendar year means the excess, if any, of--
``(A) the sum of--
``(i) the total amounts which are
appropriated to the Federal Old-Age and
Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund under
subsections (a) and (b) of section 201 and
attributable to such calendar year, and
``(ii) the total amounts which are
appropriated to such Trust Funds under section
121 of the Social Security Amendments of 1983
and attributable to such calendar year, over
``(B) the amount estimated by the Commissioner to
be the total amount to be paid from such Trust Funds
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
excluding any transfer payments between such Trust
Funds and reducing the amount of any transfer to the
Railroad Retirement Account by the amount of any
transfers into such Trust Funds from such Account).
``(3) Transfers based on estimates.--The amounts
transferred to the Board pursuant to paragraph (1) shall be
transferred in at least monthly payments from the general fund
of the Treasury to the Board. Such amounts shall be determined
on the basis of estimates, by the Commissioner and certified to
the Secretary of the Treasury, and proper adjustments shall be
made in amounts subsequently transferred to the extent prior
estimates were in excess of or were less than actual amounts.
``(4) Investment.--Amounts held in the interim fund
maintained by the Board pursuant to paragraph (1) shall be
invested by the Board in the same manner as is provided under
section 256(c)(1).
``(b) Separate Accounting and Crediting.--The Board shall provide
for prompt, separate crediting of the amounts received by the Board
under subsection (a) to the GROW account deposit to be made for each
calendar year under section 255(b) with respect to each participating
individual. Such crediting shall be performed as soon as practicable.
``grow accounts
``Sec. 255. (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 GROW account for each
individual who is a participating individual (for whom a GROW
account has not otherwise been established under this part)
upon receipt of notice from the Commissioner that the
requirements of paragraphs (1), (2), and (3) of section 253(a)
are met with respect to such individual, and
``(2) as provided in paragraph (2) of section 259(a) and
paragraph (2) of section 259(b), the Board shall establish a
GROW account for divorced spouses and surviving spouses
referred to in such paragraphs.
``(b) Transfers to GROW Accounts.--
``(1) In general.--Under regulations which shall be
prescribed by the Board, upon crediting of amounts equivalent
to the GROW account deposit with respect to each participating
individual for a calendar year pursuant to section 254(b), the
Board shall transfer such amounts, from the interim fund
maintained by the Board pursuant to section 254(a)(1), to the
participating individual's GROW account.
``(2) GROW account deposit.--
``(A) In general.--For purposes of paragraph (1),
the GROW 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 at a monthly rate equivalent to the average
monthly rate of the yield on amounts held in the
interim fund maintained by the Board pursuant to
section 254(a)(1) from July 1 of such calendar year to
the date of the deposit into the GROW account (minus
the ratable portion with respect to such participating
individual of the total amount determined by the Board
as administrative costs for such calendar year of such
interim fund, not to exceed 30 basis points per year of
the assets held in such interim fund).
``(B) Surplus percentage.--For purposes of
subparagraph (A)(ii), the term `surplus percentage'
means, for a calendar year, the ratio, expressed as a
percentage, which--
``(i) the net OASDI Trust Fund surplus for
such calendar year (determined under section
254(a)(2)), bears to
``(ii) the sum of--
``(I) the total amount of wages
paid to participating individuals
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
participating individuals during
taxable years ending during such
calendar year on which there was
imposed a tax under section 1401(a) of
such Code.
``(3) Cessation of grow account deposits.--No wages paid to
a participating individual, and no self-employment income
derived by a participating individual, after the date on which
such individual first becomes entitled to a retirement benefit
shall be taken into account in determining wages and self-
employment income for purposes of paragraph (2)(A)(i).
``(4) Transition rule.--Notwithstanding paragraph (1),
amounts payable to GROW accounts under paragraph (1) with
respect to the first calendar year described in paragraph (1)
ending after the date of the enactment of the Growing Real
Ownership for Workers Act of 2005 shall be paid by the Board as
soon as practicable after the Board determines that the
administrative mechanisms necessary to provide for accurate and
efficient payment of such amounts have been established, but no
later than 2 years after such date.
``(c) Requirements for Accounts.--The following requirements shall
be met with respect to each GROW account:
``(1) The account assets consist solely of amounts
deposited or transferred pursuant to this part, including
investment earnings thereon under section 256.
``(2) In accordance with section 256, 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 257 and 259.
``(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 to, and
debiting of losses and administrative expenses from, amounts
held in GROW 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) with
respect to the correction of errors or omissions in determinations of
amounts to be transferred to GROW accounts, and rules providing for the
transfer, between such accounts and the interim fund maintained by the
Board, of amounts necessary to compensate for such errors and
omissions. In connection with the implementation of such rules, section
205(g) shall apply by substituting, for any reference therein to the
Commissioner, a reference to the Board.
``investment of accounts
``Sec. 256. (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 the account assets of such individual's GROW account.
``(b) Procedure for Designation.--Any designation made under
subsection (a) shall be made at such times and 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.--The account assets of a participating
individual's GROW account which are not necessary for immediate
withdrawal (including administrative costs charged in accordance with
section 259(e)(1)) 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 at
such time as the Board implements an investment options plan to
provide additional and alternative investment options in
accordance with section 103 of the Growing Real Ownership for
Workers Act of 2005, in such funds as a participating
individual may elect that are offered under such plan.
``distributions of account balance at retirement
``Sec. 257. (a) Availability for Distribution.--The GROW account of
any participating individual shall be available for distribution under
this section only--
``(1) on or after the participating individual's retirement
date, and
``(2) in such form and manner as is provided in this
section.
``(b) Requirements for Annuity Distributions.--
``(1) In general.--In any case in which distribution of all
or a portion of the balance of a participating individual's
GROW account is to be made in the form of an annuity, in
accordance with regulations which shall be prescribed by the
Board, the Executive Director shall provide for such
distribution in the form of an annuity--
``(A) which shall be purchased from the Board, as
soon as practicable after the participating
individual's retirement date, from annuities offered by
the Board, including such annuities as may be made
available under procedures established by the Board
pursuant to subsection (f), and
``(B) which meets the requirements of this
subsection.
``(2) Annuity starting date.--The annuity starting date (as
defined in section 72(c)(4) of the Internal Revenue Code of
1986) of any annuity referred to in paragraph (1) shall be the
first day of the month beginning after the date of the purchase
of the annuity.
``(3) Level payments.--Subject to paragraph (4) and
subsection (d), the terms of any annuity referred to in
paragraph (1) shall provide for a series of substantially equal
annual payments, payable monthly to the participating
individual during the life of the participating individual.
``(4) Cost of living adjustment.--The terms of any annuity
referred to in paragraph (1) shall include provision for
increases in the monthly annuity payments thereunder determined
in the same manner and at the same rate as primary insurance
amounts are increased under section 215(i).
``(5) Assumptions.--Determinations under this subsection
shall be made in accordance with regulations which shall be
prescribed by the Board, providing for the use of 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 shall include the life expectancy of persons born
in the same year as the participating individual, projected
investment earnings based on investment of the account assets,
expected price inflation, and reasonable administrative costs.
``(c) Minimum Annuity Requirement.--
``(1) In general.--Except as provided in paragraph (3), in
any case in which the total amount of retirement benefits
payable under section 258(a) to a participating individual for
the month in which occurs the participating individual's
retirement date is less than the monthly poverty line for such
month, under regulations which shall be prescribed by the
Board, all or a portion of the participating individual's GROW
account balance shall be distributed in the form of an annuity
offered by the Board which meets the requirements of subsection
(b) and is in the form of a minimum annuity.
``(2) Minimum annuity defined.--
``(A) In general.--For purposes of this subsection,
the term `minimum annuity' means an annuity under which
the monthly payments are equal to at least the minimum
annuity amount (subject to subsections (b) and (d)(1)).
``(B) Minimum annuity amount.--For purposes of
subparagraph (A), the term `minimum annuity amount'
means an amount equal to the excess (but not less than
zero) of--
``(i) the monthly poverty line for the
month in which occurs the participating
individual's retirement date, over
``(ii) the total amount of retirement
benefits payable under section 258(a) to the
participating individual for such month.
``(C) Monthly poverty line.--For purposes of this
subparagraph (B)(i), the term `monthly poverty line'
for any month means the monthly equivalent of the
poverty line for an individual (determined under the
poverty guidelines of the Department of Health and
Human Services issued under section 673(2) of the
Omnibus Budget Reconciliation Act of 1981), as most
recently published prior to the date of the annuity
purchase in the Federal Register by the Department of
Health and Human Services.
``(3) Exception for minimal account balances.--Paragraph
(1) shall not apply in any case in which the assets of the GROW
account are insufficient to purchase a minimum annuity.
``(d) Requirement of Joint and Survivor Annuity.--
``(1) In general.--Except as provided in paragraph (2), if
the participating individual is married as of the participating
individual's retirement date, the entire GROW account balance
available for distribution shall be distributed in the form of
an annuity--
``(A) which meets the requirements of subsection
(b), and
``(B) is in the form of a joint and survivor
annuity under which payments are made during the joint
lives of the participating individual and the
participating individual's spouse, with a survivor
annuity for the life of the one of them who survives
the other for the life of the survivor which is not
less than 66\2/3\ percent of (and not greater than 100
percent of) the amount which would have continued to be
payable to the participating individual but for the
death of either spouse.
``(2) Election.--Paragraph (1) shall not apply in any case
in which the participating individual and his or her spouse
elect (in such form and manner as shall be prescribed by the
Board) not to take the distribution of the participating
individual's GROW account in the form described in paragraph
(1).
``(e) Authority to Contract for Annuities.--The Board may, under
regulations prescribed by the Board, contract with insurance companies
in the private sector through competitive bidding to provide for
annuities to be offered by the Board under this section in cases in
which the Board determines that annuities obtained in such manner would
be in the best interest of participating individuals and administrative
costs for such annuities would be reasonable.
``(f) Other Distributions.--The Board shall provide by regulation
for distribution, on or after the participating individual's retirement
date, of any balance in the GROW account of a participating individual
which remains available for distribution after the preceding
requirements of this section, and the requirements for distribution
under any payout options plan which has been implemented by the Board
pursuant to section 103 of the Growing Real Ownership for Workers Act
of 2005, have been met. Any such distribution shall be in the form of a
lump sum or in any other form provided for by the Board and elected by
the participating individual.
``treatment of part a benefit payments
``Sec. 258. (a) Application of GROW Account Credits and Excess GROW
Account Credits.--The total amount payable to an individual under part
A as retirement benefits for any month shall be equal to the excess
(but not less than zero) of--
``(1) the total amount payable (after all applicable
deductions and reductions) as determined without regard to this
section and section 202(z), over
``(2) the sum of--
``(A) the amount of the individual's GROW account
credit for such month (if any), plus
``(B) the sum of the excess GROW account credits
for such month (if any) determined in the case of such
individual for such month under subsection (c).
``(b) GROW Account Credit.--
``(1) In general.--In accordance with regulations of the
Board, the Board shall determine, for purposes of this section,
the GROW account credit of each participating individual for
each month for which such individual is entitled to any
retirement benefit.
``(2) Determination of grow account credit.--
``(A) In general.--The GROW account credit of a
participating individual for any month shall be equal
to the amount which would be the monthly payment for
such month under an annuity--
``(i) purchased with the participating
individual's benchmark account balance, and
``(ii) meeting the requirements of section
257(b) and of section 257(d) (with no election
under section 257(d)(2) and a reduction for the
survivor annuity to 66\2/3\ percent).
``(B) Reduction in grow account credit in the case
of survivors.--In any case in which the participating
individual is married as of the participating
individual's retirement date, the GROW account credit
determined for any month in connection with the
participating individual shall reflect, for months
after the death of the participating individual or the
death of the participating individual's spouse, a
reduction in the amount of the survivor annuity
described in section 257(d)(1) to 66\2/3\ percent.
``(C) Benchmark account balance.--For purposes of
subparagraph (A), the benchmark account balance is an
amount equal to--
``(i) the total amount deposited into the
participating individual's GROW account under
section 255(b) as of immediately before the
participating individual's retirement date,
``(ii) increased by any net deposits to the
account, and decreased by any net withdrawals
from the account, under section 259(a),
occurring prior to such date,
``(iii) increased by any deposits to the
account under section 259(b) in the case of a
spouse who dies prior to such spouse's
retirement date, and
``(iv) adjusted, under regulations of the
Board, to reflect any net increase or any net
decrease in the balance, as it accrued under
clauses (i), (ii), and (iii), which would be
attributable to investment of the balance in
the manner described in section 256(c)(1),
assuming payment of administrative costs at the
rate experienced in connection with investments
of the account assets of the participating
individual's GROW account under section 256
(not to exceed 30 basis points per year).
``(c) Excess GROW Account Credit.--
``(1) In general.--In accordance with regulations of the
Board meeting the requirements of this section, for purposes of
determining under subsection (a) the total amount payable to
any individual under part A as retirement benefits for any
month, the Board shall determine, in the case of any such
individual who was married to his or her spouse on such
spouse's retirement date, the excess GROW account credit of
such spouse for such month.
``(2) Determination of excess grow account credit.--The
excess GROW account credit of the spouse referred to in
paragraph (1) for a month is the excess (not less than zero)
of--
``(A) such spouse's GROW account credit for such
month, over
``(B) the total of the retirement benefits (if any)
to which such spouse is entitled for such month.
``additional rules relating to disposition of account assets
``Sec. 259. (a) Splitting of Account Assets Upon Divorce After 1
Year of Marriage.--Subject to subsection (c)--
``(1) In general.--In the case of a divorce of a
participating individual for whom a GROW account has been
established under this part, if the divorce occurs--
``(A) prior to the participating individual's
retirement date, and
``(B) the participating individual and his or her
divorced spouse were married to each other for at least
1 year prior to the date of the divorce,
the Board shall, upon the date of the divorce, direct the
appropriate certified account manager to transfer, from the
GROW account of the participating individual to the GROW
account of the divorced spouse, an amount equal to one-half of
the total amount of GROW account deposits made to the GROW
account of the participating individual under section 255(b)
during the period of the marriage (taking into account earnings
and losses attributable to such deposits during such period),
disregarding, for purposes of determining such total amount,
any amounts similarly transferred, pursuant to this paragraph,
to such participating individual's account from the account (if
any) of such divorced spouse.
``(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
transfer required under paragraph (1), is not a participating
individual--
``(A) the divorced spouse shall be deemed a
participating individual for purposes of this part
(subject to renunciation under section 253(b)), and
``(B) the Board shall establish a GROW account for
the divorced spouse and shall direct the appropriate
certified account manager to perform the transfer.
``(3) Preemption.--The provisions of this subsection, and
subsection (c) (to the extent it relates to 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.--Subject to subsection (c)--
``(1) In general.--Upon the death of a participating
individual, the Executive Director shall close out any
remaining balance in the participating individual's GROW
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 GROW account of the surviving spouse of
such participating individual,
``(B) if there is no person described in
subparagraph (A), to such other person as may be
designated by the participating individual in
accordance with regulations which shall be prescribed
by the Board,
``(C) if there is no person described in
subparagraph (A) or (B), to such successors in interest
to such balance as may be specified under applicable
law and claim such interest (within such reasonable
time and in such form and manner as shall be prescribed
in regulations of the Board), or
``(D) if there is no person described in
subparagraph (A), (B), or (C), to the Federal Old-Age
and Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund, allocated between such
Trust Funds as determined appropriate by the
Commissioner.
``(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--
``(A) the surviving spouse shall be deemed a
participating individual for purposes of this part
(subject to renunciation under section 253(b)), and
``(B) the Board shall establish a GROW account for
the surviving spouse and shall direct the appropriate
certified account manager to perform the such transfer.
``(3) Death determinations and abandoned accounts.--The
Board shall prescribe rules similar to the rules applicable
under part A for purposes of determining whether an individual
has died and such individual's date of death, including rules
for treatment under this subsection of abandoned accounts.
``(c) Closing of Account of Participating Individuals Who Are
Ineligible for Benefits Upon Applicable Close-Out Date.--
``(1) In general.--In any case in which a participating
individual is not eligible for a retirement benefit as of the
applicable close-out date, 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 GROW 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.
``(2) Applicable close-out date.--For purposes of paragraph
(1), the term `applicable close-out date', in connection with a
participating individual, means the later of--
``(A) the date on which the participating
individual attains retirement age (as defined in
section 216(l)), or
``(B) in the case of a participating individual who
is married on the date on which the participating
individual attains retirement age (as so defined), the
date on which the participating individual's spouse
attains retirement age (as so defined), or dies before
attaining such age.
``(d) Administrative Expenses.--
``(1) In general.--Under regulations which shall be
prescribed by the Board, account assets are available 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 5
fiscal years that end after the date on which GROW accounts are
first established under section 255(a), there are authorized to
be appropriated such sums as may be necessary for each of such
fiscal years.
``administration of the program
``Sec. 260. (a) General Provisions.--
``(1) Establishment and duties of the grow accounts
board.--
``(A) Establishment.--There is established in the
Executive branch of the Government a GROW Accounts
Board.
``(B) Number and appointment.--The Board shall be
composed of 7 members as follows:
``(i) 3 members appointed by the President,
of whom 1 shall be designated by the President
as Chairman; and
``(ii) 4 members appointed by the
President, of whom--
``(I) 2 shall be appointed by the
President after taking into
consideration the recommendations made
by the Speaker of the House of
Representatives in consultation with
the minority leader of the House of
Representatives; and
``(II) 2 shall be appointed by the
President after taking into
consideration the recommendations made
by the majority leader of the Senate in
consultation with the minority leader
of the Senate.
``(C) Membership requirements.--Members of the
Board shall have substantial experience, training, and
expertise in the management of financial investments
and pension benefit plans. No more than 4 of the
members of the Board may be of the same political
party.
``(D) Terms.--Each member of the Board shall be
appointed for a term of 4 years, except that of the
members first appointed--
``(i) the Chairman shall be appointed for a
term of 4 years;
``(ii) the remaining members appointed
under subsection (B)(i) shall be appointed for
terms of 3 years;
``(iii) one of the members appointed under
subsection (B)(ii)(I) shall be appointed for a
term of 4 years and the other for a term of two
years; and
``(iv) one of the members appointed under
subsection (B)(ii)(II) shall be appointed for a
term of 4 years and the other for a term of 2
years.
``(E) Vacancies.--A vacancy on the Board shall be
filled in the manner in which the original appointment
was made and shall be subject to any conditions which
applied with respect to the original appointment. An
individual chosen to fill a vacancy shall be appointed
for the unexpired term of the member replaced. The term
of any member shall not expire before the date on which
the member's successor takes office.
``(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--
``(I) the terms of the GROW
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 managers, and
``(II) the policies for the
purchase of annuities for purposes of
distribution of GROW accounts under
section 257.
``(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 per year 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; and
``(III) appoint and remove the
Executive Director, as provided in
paragraph (2).
``(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 GROW
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 subclause (II) shall determine
whether the records referred to in such
subclause 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 subclause (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 subclause.
``(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, and
``(iii) 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 on a
reimbursable basis 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.--The Commissioner shall--
``(A) prescribe such regulations (supplementary to
and consistent with the regulations prescribed by the
Board) 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 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) Representatives.--The Board shall provide by regulation for
elections and designations otherwise to be made by an individual under
this part to be made instead on behalf of the individual by a
designated representative of the individual.
``(f) 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.
``(g) Authorization of Appropriations.--There are authorized to be
appropriated to the Board, the Commissioner, and the Secretary of the
Treasury, for fiscal years beginning on or after October 1, 2005, such
sums as are necessary to carry out their respective duties under this
part.''.
(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 subsections (a), (b), (c), (e),
(f), and (h) which are otherwise payable under this part and which are
retirement benefits (as defined in section 251(8)) shall be subject to
adjustment as provided under section 258.''.
(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 GROW Accounts Program
under part B of title II,''.
(2) Section 702(a)(4) of such Act (42 U.S.C. 902(a)(4)) is amended
by inserting ``other than those of the GROW Accounts 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 GROW Accounts
``(e) Beginning not later than 1 year after the date on which the
first deposit is made to a participating individual's GROW account,
each statement provided to such participating individual under this
section shall include information determined by the GROW Accounts Board
as sufficient to fully inform such participating individual annually of
the balance, investment performance, and administrative expenses of
such account.''.
SEC. 103. REPORT AND CONGRESSIONAL CONSIDERATION OF PROPOSALS REGARDING
ALTERNATIVE INVESTMENT OPTIONS AND OTHER MATTERS.
(a) Report.--During the period of 30 calendar days beginning on the
first day of the 111th Congress, the GROW Accounts Board shall submit
to the President and each House of the Congress a report containing a
consolidated implementation plan for the GROW Accounts Program,
consisting of the following 3 components:
(1) Investment options plan.--An investment options plan,
which shall provide for additional and alternative investment
options, for GROW account balances, in broad-based index
funds--
(A) which are similar to the index fund investment
options available within the Thrift Savings Fund
established under section 8437 of title 5, United
States Code, including a lifecycle fund in which
investments are adjusted based on the number of years
remaining prior to the participating individual's
attainment of age 62,
(B) which the Board determines would be prudent
sources of retirement income that could yield greater
amounts of income than the investment described in
section 256(c)(1) of the Social Security Act (added by
this title), and
(C) which a participating individual may elect.
(2) Payout options plan.--A payout options plan, which
shall provide for additional and alternative options for the
payout of GROW account balances to participating individuals
upon their retirement date (as defined in section 251(9) of the
Social Security Act) which the Board determines would be
appropriate.
(3) Public education plan.--A public education plan, which
shall provide for enhancement of information dissemination
under, and public education regarding, the GROW Accounts
Program.
(b) Implementation.--
(1) In general.--Subject to paragraph (2)--
(A) Investment options plan.--The investment
options plan submitted pursuant to subsection (a)(1)
shall take effect on the date immediately following the
90-day period beginning on the date on which such plan
is so submitted.
(B) Payout options plan and public education
plan.--The payout options plan submitted pursuant to
subsection (a)(2) and the public education plan
submitted pursuant to subsection (a)(3) shall be
implemented in accordance with timetables which shall
be included with such plans.
(2) Congressional review.--The consolidated implementation
plan submitted pursuant to subsection (a) shall not become
effective if, during the 90-day period beginning on the date on
which such plan is so submitted, there is enacted by the
Congress a joint resolution of disapproval of such plan.
(3) Time periods.--For purposes of this subsection, the
days on which either House of Congress is not in session
because of an adjournment of more than 3 days to a day certain
shall be excluded in the computation of the 90-day period
referred to in paragraphs (1)(A) and (2).
(c) Definitions.--For purposes of this section--
(1) the term ``Grow Accounts Board'' or ``Board'' means the
GROW Accounts Board established under section 260(a) of the
Social Security Act;
(2) the term ``GROW Accounts Program'' means the GROW
Accounts Program established under part B of title II of such
Act;
(3) the term ``GROW account'' means a GROW account
established under section 255 of such Act; and
(4) the term ``participating individual'' has the meaning
provided in section 253(a) of such Act.
TITLE II--TAX TREATMENT
SEC. 201. TAX TREATMENT OF GROW 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 GROW Accounts.--
``(1) In general.--All GROW accounts established under part
B of title II of the Social Security Act shall be exempt from
taxation under this title.
``(2) Certain dispositions of account assets.--No amount
shall be includible in gross income by reason of a disposition
under subsection (a) or (b) of section 259 of the Social
Security Act.''.
SEC. 202. BENEFITS TAXABLE AS SOCIAL SECURITY BENEFITS.
(a) In General.--Section 86(d)(1) of the Internal Revenue Code of
1986 is amended--
(1) in subparagraph (A) by inserting ``part A of'' after
``benefit under'', and
(2) by striking ``or'' at the end of subparagraph (A), by
redesignating subparagraph (B) as subparagraph (C), and by
inserting after subparagraph (A) the following new
subparagraph:
``(B) any distribution under section 257 of the
Social Security Act, or ''.
(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.
SEC. 203. ESTATE TAX NOT TO APPLY TO ASSETS OF GROW ACCOUNTS.
(a) In General.--Part IV of subchapter A of chapter 11 of the
Internal Revenue Code of 1986 (relating to taxable estate) is amended
by adding at the end the following new section:
``SEC. 2059. GROW 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 GROW
account transferred from such account by the Secretary under section
258 of the Social Security Act.''.
(b) 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. GROW accounts.''.
(c) Effective Date.--The amendments made by this section shall
apply to decedents dying in or after the calendar year in which this
Act is enacted.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Sponsor introductory remarks on measure. (CR E1499)
Referred to the Subcommittee on Social Security.
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