Summary: H.R.2768 — 105th Congress (1997-1998)All Information (Except Text)

There is one summary for H.R.2768. Bill summaries are authored by CRS.

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Introduced in House (10/29/1997)

TABLE OF CONTENTS:

Title I: Contributions to Personal Retirement Accounts

Title II: Personal Retirement Accounts

Title III: Certification of Financial Institutions Other

Than Insured Depository Institutions

Title IV: Personal Retirement Account Insurance

Title V: Enforcement Authority

Title VI: Transition from Coverage for Old-Age and Survivors

Insurance Benefits Under Title II of the Social Security

Act

Title VII: Provisions Relating to Federal Civilian and

Military Personnel

Title VIII: Social Security Transition Commission

Personal Retirement Accounts Act of 1997 - Title I: Contributions to Personal Retirement Accounts - Requires employers to: (1) have personal retirement account payroll deduction programs in effect for their eligible employees; and (2) deduct and pay into such accounts the prescribed employee contribution, together with a prescribed employer contribution. Authorizes eligible individuals to elect to establish a personal retirement account. Requires self-employed individuals to establish and pay into such accounts. Establishes penalties for employers and self-employed individuals who fail to establish and make required deductions and contributions to such accounts. Requires the Securities and Exchange Commission (SEC) to impose such penalties in a civil action.

Title II: Personal Retirement Accounts - Prescribes general requirements for personal retirement accounts, as well as investment, distribution, and insurance requirements. Provides for tax deductible contributions by an eligible individual to a nonworking spousal retirement account.

(Sec. 205) Exempts personal retirement accounts from income tax, except the tax on unrelated business income of charitable, etc. organizations. Requires inclusion in the gross income of the account holder for the taxable year of any amount paid or distributed out of such an account, except: (1) amounts used to acquire minimum or more generous immediate annuities; and (2) transfers incident to a divorce.

(Sec. 207) Subjects trustees of personal retirement accounts to penalties (for prohibited transactions) for failure to meet investment or distribution requirements.

(Sec. 208) Requires the relevant Federal agency to notify the SEC of: (1) the identity of each insured depository institution or credit union; and (2) any termination of such status.

Directs the trustee of a personal retirement account to make certain reports regarding such account to the SEC and to the account holder with respect to contributions (and the years to which they relate), distributions, and other matters the SEC may require.

(Sec. 210) Directs the SEC to study and report to the President and the Congress on the best means of providing for options under which distributions from a personal retirement account established under this Act may commence in advance of the date on which the account holder attains retirement age.

Title III: Certification of Financial Institutions Other Than Insured Depository Institutions - Allows any financial institution to apply to the SEC for certification.

(Sec. 302) Authorizes the SEC to require any certified financial institution to file certain reports, including 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.

(Sec. 303) Provides for voluntary and involuntary revocation of certification status, including judicial review of involuntary revocations.

Title IV: Personal Retirement Account Insurance - Requires the SEC, in any case in which it declares an insurable event with respect to a qualified financial institution serving as trustee of a personal retirement account, to guarantee the timely distribution of the balance in such account (but not in excess of the minimum annuity amount) to the account holder in accordance with the terms governing such account and the provisions of this Act.

(Sec. 401) Defines as an insurable event with respect to a qualified financial institution serving as trustee of a personal retirement account: (1) termination of the institution's qualified status; (2) the inability of the institution to make full distributions of the balance in the account when due; and (3) termination of the account.

Requires the SEC to guarantee a minimum distribution from the account as of the normal retirement date in the amount of the minimum annuity amount, notwithstanding that the balance in the account as of such date is less than the minimum annuity amount, if certain conditions apply. Requires the SEC also to provide for a range of alternative guarantee arrangements providing for timely distribution of all, or a larger portion, of the balance in the personal retirement account to the account holder, which may be elected by the account holder upon payment to the SEC of supplemental premiums. Allows for the substitution of private insurance providing for a guarantee of timely distributions at the election of the account holder which is at least equivalent to the guarantee provided for by this title.

Entitles an account holder, in certain cases, to a supplemental minimum benefit payment to their account upon application to the SEC on or after the normal retirement date.

(Sec. 402) Directs the SEC to: (1) establish a risk-based assessment system for any qualified financial institution serving as trustee of a personal retirement account; (2) set semiannual assessments for such institutions to achieve and maintain the designated reserve ratio; and (3) notify each qualified financial institution of that institution's semiannual assessment.

Sets forth a special rule until the Social Security Savings Insurance Trust Fund established by this title achieves the designated reserve ratio, as well as a special rule for recapitalizing the Trust Fund if it becomes undercapitalized.

Provides that, in addition to the other assessments on qualified financial institutions, the SEC may impose one or more special assessments on qualified financial institutions if the amount of any such assessment is necessary: (1) to provide sufficient assessment income to repay amounts borrowed from the Secretary of the Treasury which become due; or (2) for any other purpose the Commission may deem necessary.

Requires each qualified financial institution to: (1) file with the SEC a certified statement containing such information as the Commission may require for determining the institution's semiannual assessment; and (2) pay to the Commission the semiannual assessment imposed.

Establishes penalties for inaccurate certified statements and for late payments.

(Sec. 403) Establishes in the Treasury the Social Security Savings Insurance Trust Fund, made up of various specified funds, assessments, penalties, earnings, attorney's fees, and receipts. Makes the Trust Fund available for: (1) making guaranteed payments; (2) purchasing the assets of a financial institution which ceases to be qualified; (3) repaying borrowed sums to the Secretary of the Treasury; (4) paying the SEC's operational and administrative expenses; and (5) paying account holders the amounts guaranteed with respect to any personal retirement account. Provides for the investment of trust fund assets.

Authorizes the SEC to borrow from the Secretary of the Treasury.

(Sec. 404) Authorizes the SEC to institute proceedings to terminate a personal retirement account whenever it determines that: (1) the SEC's possible long-run loss with respect to the account may reasonably be expected to increase unreasonably if the account is not terminated; or (2) an insurable event has occurred. Provides for appointment of an alternative trustee pending issuance of a termination decree.

(Sec. 405) Makes each person who is the financial institution serving as trustee of the account on the termination date or a member of the financial institution's controlled group jointly and severally liable to the SEC in any case in which a personal retirement account is terminated in a SEC-instituted proceeding. Sets such liability as the total amount of account assets guaranteed by the SEC which are not available for payment. Provides for payment of the liability.

(Sec. 406) Requires each qualified financial institution, while serving as trustee for a personal retirement account subject to SEC guarantee, to display at each place of business maintained by such institution a sign with specified declarations relating to such accounts.

Title V: Enforcement Authority - Provides for a personal retirement account holder adversely affected by an act or practice of any party other than the SEC in violation of this Act to bring an action in U.S. district court to enjoin such act or practice, or obtain other appropriate equitable relief. Grants the relevant Federal agency, the SEC, and the Social Security Commission the right to intervene in any such action.

Title VI: Transition from Coverage for Old-Age and Survivors Insurance Benefits Under Title II of the Social Security Act - Amends title II (Old Age, Survivors and Disability Insurance) (OASDI) of the Social Security Act (SSA) to provide for primary insurance amounts for transitional eligible individuals under this Act who elect to participate in the personal retirement account payroll deduction programs of their employer.

(Sec. 602) Requires the Commissioner of Social Security to provide a written certification to each individual with a social security account number who has been credited with wages or net earnings from self-employment indicating whether such recipient is or is not an eligible individual, together with a description of OASDI benefits available.

(Sec. 603) Amends the Internal Revenue Code to provide for a reduction in Federal Insurance Contributions Act and Self-Employment Contributions Act of 1954 taxes for wages and self-employment income imposed on an individual who has elected to forego OASDI benefits in favor of a personal retirement account.

(Sec. 604) Amends SSA title II to: (1) add a supplemental retirement benefit program for certain individuals with personal retirement accounts; (2) provide for a phased-in increase in the social security retirement age; and (3) place a limitation on cost-of-living adjustments (COLAs), with a reduction in COLA increases applied to higher primary insurance amounts.

(Sec. 607) Provides for modification of the Consumer Price Index calculation of such COLAs.

(Sec. 608) Amends SSA title II to provide for: (1) a phased-in reduction in spousal benefits other than survivors' benefits to 33 percent of the primary insurance amount; (2) coverage of newly hired State and local employees; and (3) adjustments in the formula for determining primary insurance amounts.

(Sec. 611) Amends Federal law to require submission to the Congress along with the Federal budget of a statement of the current accrued liability of the Federal Government for future benefit payments under the OASDI program.

Title VII: Provisions Relating to Federal Civilian and Military Personnel - Directs the Office of Personnel Management to study and report to the President and the Congress: (1) on how to provide for the application of this Act with respect to Federal civilian and military personnel; and (2) draft legislation which, if enacted, would carry out any recommendations in the report.

(Sec. 702) Requires such report and draft legislation to address specified aspects of the existing Civil Service and Federal Employees' Retirement Systems for such Federal personnel.

(Sec. 703) Specifies matters in the new system for the report and draft legislation to address with respect to the implementation of any other title of this Act.

Title VIII: Social Security Transition Commission - Establishes the Social Security Transition Commission to make findings and recommendations about the most appropriate actions which should be taken to minimize, and adequately fund, any increases in budget outlays resulting from implementation of this Act. Requires all recommended reductions in obligational authority to be done in a manner that makes them permanent.

(Sec. 805) Sets forth procedures (including expedited procedures) for congressional consideration of such recommendations.

(Sec. 807) Authorizes appropriations.