[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.
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