109 HR 440 IH: Bipartisan Retirement Security Act of 2005
U.S. House of Representatives
2005-02-01
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title and table of contents
(a)This Act may be cited as the Bipartisan Retirement Security Act of 2005
.
(b)The table of contents is as follows:
Sec. 1. Short title and table of contents
Sec. 2. Individual security accounts
Sec. 3. Minimum social security benefit
Sec. 4. Reduction in the amount of certain transfers to medicare trust fund
Sec. 5. Revised formula for average indexed monthly earnings
Sec. 6. Actuarial adjustment for retirement
Sec. 7. Corrections for CPI overstatement in cost-of-living indexation
Sec. 8. Adjustments to bend points in determining primary insurance amounts
Sec. 9. Adjustment to benefit formula factors
Sec. 10. Modification to PIA formula to reflect changes to life expectancy
Sec. 11. Treatment of disabled beneficiaries
Sec. 12. Maintenance of benefit and contribution base
Sec. 13. Acceleration of increase in social security eligibility age
Sec. 14. Mechanism for remedying unforeseen deterioration in social security solvency
Sec. 15. Increase in widow’s and widower’s insurance benefits
Sec. 16. Limitation on benefits of married couple to level of maximum worker benefits
2.Individual security accounts
(a)Establishment and Maintenance of Individual Security Accounts
(1)Title II of the Social Security Act (42 U.S.C. 401 et seq.) is amended—
(A)by inserting before section 201 the following:
A; and
(B)by adding at the end the following:
BIndividual security system
1Individual security accounts
251.Federally-administered individual security account
(a)
(1)Within 30 days after crediting the first contribution under subsection (b) with respect to an eligible individual, the Commissioner of Social Security shall establish an individual security account for such individual in the Individual Security Fund. Each account shall be identified to its account holder by means of the account holder’s social security account number.
(2)For purposes of this part, the term eligible individual means any individual born after December 31, 1949.
(b)
(1)The Secretary of the Treasury shall transfer from the Federal Old-Age and Survivors Insurance Trust Fund, for crediting by the Commissioner of Social Security to the individual security account of an eligible individual, an amount equal to the sum of any amount received by such Secretary on behalf of such individual under section 3101(a)(2) or 1401(a)(2) of the Internal Revenue Code of 1986.
(2)For provisions relating to additional contributions credited to individual security accounts, see sections 54(d) and 6402(l) of the Internal Revenue Code of 1986.
(c)Except as otherwise provided in section 252, contributions under subsection (b) on behalf of an eligible individual shall be credited—
(1)to the individual security account established for such individual under subsection (a); and
(2)in accordance with the allocation in effect with respect to such individual under subsection (d).
(d)Allocation and Other Designations
(1)The Commissioner of Social Security shall prescribe regulations in accordance with which any eligible individual who is employed or self-employed may designate—
(A)in the event that 2 or more investment options are available in the Individual Security Fund—
(i)the option or options to which such individual wishes to have such individual's contributions under subsection (b) credited; and
(ii)if such individual designates more than 1 option under clause (i), how such individual wishes for those contributions to be allocated; and
(B)the amount of wages or self-employment income such individual wishes to designate for purposes of section 3101(a)(2)(C) or 1401(a)(2)(C) of the Internal Revenue Code of 1986 (as applicable), if any.
(2)In the absence of a required designation under paragraph (1)(A), contributions on behalf of the individual involved shall be allocated in such manner as the Commissioner of Social Security shall prescribe, taking into account the competing objectives of maximizing returns on investments and minimizing the risk involved with such investments.
(3)Any designation under paragraph (1) shall be made in such manner and at such intervals as the Commissioner of Social Security may prescribe in order to ensure ease of administration and to avoid creating an undue burden on employers.
(4)Not later than December 31, 2007, any eligible individual who is employed or self-employed as of such date shall execute all designations required under paragraph (1).
(e)Periodic Statements to Account Holder
(1)The Individual Security Fund Board shall prescribe regulations under which each individual for whom an individual security account is maintained under this section shall be furnished with—
(A)a periodic statement relating to the individual's account, including, for any reporting period as of the end of which the individual's account balance is at least equal to the minimum balance amount (within the meaning of section 252), clear and conspicuous notice to that effect;
(B)a summary description of any investment options or other choices which may be available to such individual under this section or under section 252 (as applicable); and
(C)any forms and information necessary to make a designation under subsection (d) or section 252 (as applicable).
(2)All information, materials, and other matter furnished under this subsection shall be furnished to the account holder at such times and in such manner as the Board considers appropriate in order to permit informed decisionmaking.
252.Privately-administered individual security account
(a)For purposes of this part—
(1)
(A)The term minimum deposit amount means an amount equal to $7,500, as adjusted under subparagraph (B).
(B)The Secretary of the Treasury shall adjust annually (effective for periods beginning after December 2006) the dollar amount set forth in subparagraph (A) under procedures providing for adjustments in the same manner and to the same extent as adjustments are provided for under the procedures used to adjust benefit amounts under section 215(i)(2)(A), except that any amount so adjusted that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(2)Federally-administered individual security accountThe term Federally-administered individual security account means an individual security account maintained, in accordance with applicable provisions of this part, in the Individual Security Fund.
(3)Privately-administered individual security accountThe term privately-administered individual security account means an individual security account maintained, in accordance with applicable provisions of this part, by a certified institution.
(4)The term certified institution refers to an investment firm, credit union, insurance company, or other certified institution under subpart 3.
(b)Option To Designate a Privately-Administered Individual Security Account
(1)Under regulations prescribed by the Individual Security Fund Board, whenever the balance in an individual's Federally-administered individual security account is at least equal to the minimum deposit amount, such individual shall be eligible to designate a privately-administered individual security account (established and maintained on such individual's behalf) to serve as such individual's individual security account under this part, in lieu of such individual's Federally-administered individual security account.
(2)If an individual makes a designation under paragraph (1)—
(A)the entire balance in the individual's Federally-administered individual security account shall be promptly transferred to the privately-administered individual security account specified by such individual in such designation; and
(B)that privately-administered individual security account shall, for all purposes, be treated as the electing individual's individual security account, subject to paragraph (4).
(3)Regulatory management of private investmentA designation under this subsection shall not be effective unless it is made in such time, form, and manner as the Individual Security Fund Board prescribes. The Individual Security Fund Board shall—
(A)maintain individual account records, and
(B)combine account transactions with certified institutions maintaining privately-administered individual security accounts in aggregate amounts, in the same manner as is applicable with respect to records and account transactions with respect to Federally administered individual security accounts.
(4)The Individual Security Fund Board shall provide by regulation opportunity for subsequent designation, from time to time, of another individual security account in lieu of the account previously designated under this section, subject to the following:
(A)The account designated under this paragraph may be either within—
(i)another certified institution, subject to subparagraph (B); or
(ii)the Individual Security Fund.
(B)In order to make a designation referred to in subparagraph (A)(i), the balance in the individual's individual security account must be at least equal to the minimum deposit amount. No minimum balance requirement under this subparagraph shall apply in the case of a designation referred to in subparagraph (A)(ii).
(C)Only 1 account permitted at any timeAn individual may not, at any time, concurrently maintain—
(i)a privately-administered individual security account with each of 2 or more certified institutions; or
(ii)a privately-administered and a Federally-administered individual security account.
(D)A designation under this paragraph has (with respect to the individual's respective accounts, before and after such designation) the same effect as results following a designation under paragraph (2) (with respect to the Federally-administered and privately-administered accounts involved).
253.Distributions from individual security accounts
(a)Date of Earliest DistributionExcept as provided in subsection (c), distributions may not be made from the Federally-administered or privately-administered individual security account of an eligible individual (as the case may be) before the earlier of—
(1)the date the eligible individual attains normal retirement age, as determined under section 216 (or early retirement age, as so determined, if elected by such individual), or
(2)the date on which funds in the eligible individual's account are sufficient to provide a monthly payment over the life expectancy of the eligible individual (determined under reasonable actuarial assumptions) which, when added to the eligible individual's monthly benefit under part A (if any), is at least equal to an amount equal to 1/12 of 185 percent of the poverty line (as defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)) as in effect on such date for an individual) and adjusted annually thereafter by the CPI increase percentage determined under section 215(i).
(b)
(1)Required monthly paymentsExcept as provided in paragraph (2), beginning as of the date distributions begin to be made in accordance with subsection (a), the balance in the individual security account available to provide monthly payments not in excess of the amount described in subsection (a)(2) shall be paid, as elected by the account holder (in such form and manner as shall be prescribed in regulations of the Individual Security Fund Board or the Securities and Exchange Commission, as applicable), by means of the purchase of annuities or equal monthly payments over the life expectancy of the eligible individual (determined under reasonable actuarial assumptions) in accordance with requirements (which shall be provided in regulations of the Board or Commission, as applicable) similar to the requirements applicable to payments of benefits under subchapter III of chapter 84 of title 5, United States Code.
(2)To the extent funds remain in an eligible individual's Federally-administered or privately-administered individual security account (as the case may be) after the application of paragraph (1) and to the extent not inconsistent with the provisions of subchapter III of chapter 84 of title 5, United States Code, such funds shall be payable to the eligible individual in such manner and in such amounts as determined by the eligible individual.
(c)Distribution in the event of death before the date of initial distributionIf the eligible individual dies before the date determined under subsection (a), the balance in such individual's individual security account shall be distributed to the individual's heirs under rules established by the Individual Security Fund Board or the Securities and Exchange Commission, as applicable.
2Individual security fund; individual security fund board
261.There shall be established and maintained in the Treasury of the United States an Individual Security Fund in the same manner as the Thrift Savings Fund under sections 8437 (excluding paragraphs (4) and (5) of subsection (c) thereof), 8438, and 8439 of title 5, United States Code.
262.Individual security fund board
(a)There shall be established and maintained in the Social Security Administration an Individual Security Fund Board in the same manner as the Federal Retirement Thrift Investment Board under subchapter VII of chapter 84 of title 5, United States Code.
(b)Specific investment and reporting dutiesThe Individual Security Fund Board shall manage and report on the activities of the Individual Security Fund and on Federally-administered individual security accounts in the same manner as the Federal Retirement Thrift Investment Board manages and reports on the Thrift Savings Fund and the individual accounts of such Fund under subchapter VII of chapter 84 of title 5, United States Code.
(c)Budgetary treatment of individual security fund and accountsThe receipts and disbursements of the Individual Security Fund and any accounts within such Fund shall not be included in the totals of the budget of the United States Government as submitted by the President or of the congressional budget and shall be exempt from any general budget limitation imposed by statute on expenditures and net lending (budget outlays) of the United States Government.
(d)The Board shall appoint an Executive Director, without regard to the provisions of law governing appointments in the competitive service. The Executive Director shall receive the same compensation, and shall have, with respect to the Individual Security Fund and accounts within such Fund, the same duties and responsibilities, as does the Executive Director (appointed under section 8474(a) of title 5, United States Code) with respect to the Thrift Savings Fund and accounts within such Fund.
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271.Certification of institutions by securities and exchange commission
(a)For purposes of this part, any institution that is engaged, in a fiduciary capacity, in the business of maintaining accounts for individuals for purposes of investment may apply to the Securities and Exchange Commission (in such form and manner as the Commission shall by regulation require) for certification under this subpart.
(b)In reviewing any application for certification under this subpart and determining whether to approve the application for certification, the Commission shall consider the following factors:
(1)The financial history and condition of the institution.
(2)The adequacy of the institution's capital structure.
(3)The future earnings prospects of the institution.
(4)The general character and fitness of the management of the institution.
(5)The convenience and needs of individuals who are account holders with respect to personal retirement accounts for which the institution is to serve as trustee.
(6)Whether the institution's corporate powers are consistent with the purposes of this part.
(7)The institution's disclosure policies, including with respect to its administrative fees, investment policies, and investment activities.
(8)The appropriateness of—
(A)the fund or funds that such institution proposes to offer for purposes of this part, and
(B)the criteria by which such institution will make future decisions regarding the selection of new funds or the making of any other modifications in the investment options offered by such institution for purposes of this part, as determined based on guidelines established by the Commission for purposes of this paragraph.
(c)Notice of denial of application for certificationIf the Commission votes to deny any application for certification by any institution, the Commission shall promptly notify the institution of the denial of such application, giving specific reasons in writing for the Commission's determination with reference to the factors described in subsection (b).
(d)Nondelegation requirementThe authority of the Commission to make any determination to deny any application under this section may not be delegated by the Commission.
272.Revocation of certification
(a)The Securities and Exchange Commission shall prescribe regulations in accordance with which the certified status of an institution may be voluntarily or involuntarily revoked.
(b)Any party to any involuntary revocation proceeding under this section to which an institution is a party may obtain a review of any order served pursuant to this section by the filing in the court of appeals of the United States for the circuit in which the home office of the institution is located, or in the United States Court of Appeals for the District of Columbia Circuit, within 30 days after the date of service of such order, a written petition praying that the order of the Commission be modified, terminated, or set aside. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Commission, and thereupon the Commission shall file in the court the record in the proceeding, as provided in section 2112 of title 28, United States Code. Upon the filing of such petition, such court shall have jurisdiction, which upon the filing of the record shall be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Commission. Review of such proceedings shall be had as provided in chapter 7 of title 5, United States Code. The judgment and decree of the court shall be final, except that the judgment and decree shall be subject to review by the Supreme Court upon certiorari, as provided in section 1254 of title 28, United States Code. The commencement of proceedings for judicial review under this subsection shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Commission.
273.
(a)In the case of a privately-administered individual security account which does not form part of an individual account plan covered under part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, rules similar to the rules of such part 4 applicable to individual account plans covered under such part 4 shall apply with respect to a privately-administered individual security account and the terms of any arrangement under which such account is maintained.
(b)In applying under subsection (a) the rules of part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 in the case of a privately-administered individual security account, references in such part to the Secretary of Labor shall be deemed to be references to the Securities and Exchange Commission, references in such part to a participants or beneficiary in connection with an individual account plan covered under such part shall be deemed to be references to the account holder with respect to the privately-administered individual security account, and references in such part to the plan administrator or plan sponsor in connection with an individual account plan covered under such part shall be deemed to be references to the trustee of the privately-administered individual security account.
(c)Any account holder who issues an instruction to the trustee of the account directing an investment of funds held in the account shall sign an acknowledgement prescribed by the Securities and Exchange Commission which states that the account holder understands that an investment of any amount in the account is made at the account holder's risk, that the account holder is not protected by the Government or by the trustee against any loss on such investment, and that a return on such investment is not guaranteed by the Government or by the trustee. Notwithstanding the preceding provisions of this section and any other provision of Federal or State law, the trustee of a privately-administered individual security account shall not be liable for losses suffered in connection with any investment of assets held in the account unless it is shown by clear and convincing evidence that the trustee did not act in the manner in which a reasonable trustee would act under the circumstances then prevailing in evaluating the risk and reward properties of the investment option involved.
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281.The account holder with respect to a privately-administered individual security account who is adversely affected by an act or practice of any party (other than the Securities and Exchange Commission, the Social Security Administration, the Department of the Treasury, or any officer or employee of any of the foregoing) in violation of any provision of this part, may bring an action—
(1)to enjoin such act or practice, or
(2)to obtain other appropriate equitable relief (A) to redress such violation or (B) to enforce such provision.
282.Civil actions under this subpart may be brought in the district courts of the United States in the district where the privately-administered individual security account is administered, where the violation took place, or where a defendant resides or may be found, and process may be served in any district where a defendant resides or may be found. The district courts of the United State shall have jurisdiction, without regard to the amount in controversy or the citizenship of the parties, to grant the relief provided for in section 281 in any action.
283.Right of securities and exchange commission to interveneA copy of the complaint or notice of appeal in any action under this subpart shall be served upon the Securities and Exchange Commission by certified mail. The Commission shall each have the right to intervene in any action.
284.Awards of costs and expensesIn any action brought under this subpart, the court in its discretion may award all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorney's fees, to any party who prevails or substantially prevails in such action.
285.
(a)Except as provided in subsection (c), an action under this subpart may not be brought after the later of—
(1)6 years after the date on which the cause of action arose, or
(2)3 years after the applicable date specified in subsection (b).
(b)The applicable date specified in this subsection is the earliest date on which the plaintiff acquired or should have acquired actual knowledge of the existence of such cause of action.
(c)Cases of fraud or concealmentIn the case of fraud or concealment, the period described in subsection (a)(2) shall be extended to 6 years after the applicable date specified in subsection (b).
286.Penalty for failure to timely provide required informationThe Securities and Exchange Commission may assess a penalty, payable to it, against any person who fails to provide any notice or other material information required under this part or any regulations prescribed under this part within the applicable time limit specified therein. Such penalty shall not exceed $1,000 for each day for which such failure continues.
287.Actions by securities and exchange commissionIf any person is assessed under this subpart and fails to pay the assessment when due, or any person otherwise fails to meet any requirement of this part, the Securities and Exchange Commission may bring a civil action in any district court of the United States within the jurisdiction of which such person's assets are located or in which such person resides or is found for the recovery of the amount of the assessment or for appropriate equitable relief to redress the violation or enforce the provisions of this part, and process may be served in any other district. The district courts of the United States shall have jurisdiction over actions brought under this section by the Commission without regard to the amount in controversy.
288.Criminal penalty for fraud or intentional misrepresentation in connection with investment optionsAny person who makes, or causes to be made, a statement or representation of a material fact for use in selecting an investment option that the person knows or should know is false or misleading or knows or should know omits a material fact or makes such a statement with knowing disregard for the truth shall upon conviction be fined not more than $500,000 or imprisoned for not more than 5 years, or both..
(2)Authorization for funding of initial costsThere are authorized to be appropriated to the Individual Security Fund Board, for each of fiscal years 2006 and 2007, such sums as may be necessary to pay for the expenses incurred during such fiscal year in the administration of part B of title II of the Social Security Act during such fiscal year.
(b)Modification of FICA Rates
(1)Section 3101(a) of the Internal Revenue Code of 1986 (relating to tax on employees) is amended to read as follows:
(a)Old-Age, Survivors, and Disability Insurance
(1)
(A)Individuals covered under part A of title II of the Social Security ActIn addition to other taxes, there is hereby imposed on the income of every individual who is not a part B eligible individual a tax equal to 6.2 percent of the wages received by him with respect to employment.
(B)Individuals covered under part B of title II of the Social Security Act
(i)In addition to other taxes, there is hereby imposed on the income of every part B eligible individual a tax equal to the applicable percentage of the wages received by such individual with respect to employment.
(ii)For purposes of clause (i), the term applicable percentage means the excess of 6.2 percent, over
(I)3 percent, in the case of the first $10,000 of such wages received in the calendar year, and
(II)2 percent, in the case of any additional such wages received in the calendar year.
(2)Contribution of OASDI tax reduction to individual security accountsIn addition to other taxes, there is hereby imposed on the income of every part B eligible individual for the calendar year an individual security account contribution equal to the sum of—
(A)3 percent of so much of the wages as does not exceed the first $10,000 received in such calendar year by such individual with respect to employment,
(B)2 percent of the excess of—
(i)such wages, over
(ii)the wages taken into account under subparagraph (A), plus
(C)so much of such wages (not to exceed $5,000) as is designated by the individual in the same manner as described in section 251(d) of the Social Security Act.
(3)
(A)In the case of any calendar year beginning after 2006, the $10,000 amount in paragraphs (1) and (2) shall be increased by an amount equal to—
(i)such dollar amount, multiplied by
(ii)the wage increase percentage (if any) for such year.
(B)In the case of any calendar year beginning after 2006, the $5,000 amount in paragraph (2)(C) shall be increased by an amount equal to—
(i)such dollar amount, multiplied by
(ii)the percentage increase (if any) for such year determined under section 215(i) of the Social Security Act.
(C)If any dollar amount after being increased under subparagraph (A) or (B) is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10.
(4)For purposes of this subsection—
(A)The term wages shall have the meaning given to such term by section 3121(a).
(B)The term employment shall have the meaning given to such term by section 3121(b).
(C)The term wage increase percentage, with respect to a calendar year, means the percentage increase which would become effective under section 215(i)(2) of the Social Security Act for such year if such increase were determined as described in section 215(i)(5)(A)(i) of such Act..
(2)Section 1401(a) of the Internal Revenue Code of 1986 (relating to tax on self-employment income) is amended to read as follows:
(a)Old-age, survivors, and disability insurance
(1)
(A)Individuals covered under part A of the Social Security ActIn addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual who is not a part B eligible individual for the calendar year ending with or during such taxable year, a tax equal to 12.40 percent of the amount of the self-employment income for such taxable year.
(B)Individuals covered under part B of title II of the Social Security Act
(i)In addition to other taxes, there is hereby imposed for each taxable year, on the self-employment income of every part B eligible individual, a tax equal to the applicable percentage of the amount of the self-employment income for such taxable year.
(ii)For purposes of clause (i), the term applicable percentage means the excess of 12.4 percent, over
(I)3 percent, in the case of the first $10,000 of self-employment income received in the calendar year, and
(II)2 percent, in the case of any additional self-employment income received in the calendar year.
(2)Contribution of OASDI tax reduction to individual security accountsIn addition to other taxes, there is hereby imposed for each taxable year, on the self-employment income of every part B eligible individual for the calendar year, an individual security account contribution equal to the sum of—
(A)3 percent of self-employment income as does not exceed the first $10,000 of such income derived during the taxable year by such individual,
(B)2 percent of self-employment income in the case of any additional self-employment income derived by such individual during the taxable year, and
(C)so much of such self-employment income (not to exceed $5,000) as is designated by the individual in the same manner as described in section 251(d) of the Social Security Act.
(3)
(A)In the case of any calendar year beginning after 2006, the $10,000 amount in paragraphs (1) and (2) shall be increased by an amount equal to—
(i)such dollar amount, multiplied by
(ii)the wage increase percentage (if any) for such year,
(B)In the case of any calendar year beginning after 2006, the $5,000 amount in paragraph (2)(C) shall be increased by an amount equal to—
(i)such dollar amount, multiplied by
(ii)the percentage increase (if any) for such year determined under section 215(i) of the Social Security Act.
(C)If any dollar amount after being increased under subparagraph (A) or (B) is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10.
(4)For purposes of this subsection, the term wage increase percentage, with respect to a calendar year, means the percentage increase which would become effective under section 215(i)(2) of the Social Security Act in such year if such increase were determined as described in section 215(i)(5)(A)(i) of such Act..
(3)Part B eligible individual
(A)Section 3121 of such Code (relating to definitions) is amended by inserting after subsection (s) the following new subsection:
(t)Part B eligible individualFor purposes of this chapter, the term part B eligible individual means, for any calendar year, an individual who is an eligible individual (as defined in section 251(a)(2) of the Social Security Act) for such calendar year..
(B)Section 1402 of such Code (relating to definitions) is amended by adding at the end the following new subsection:
(l)Part B eligible individualThe term part B eligible individual means, for any calendar year, an individual who is an eligible individual (as defined in section 251(a)(2) of the Social Security Act) for such calendar year..
(4)
(A)The amendments made by paragraphs (1) and (3)(A) apply to remuneration paid after December 31, 2005.
(B)Self-employed individualsThe amendments made by paragraphs (2) and (3)(B) apply to taxable years beginning after December 31, 2005.
(c)
(1)Part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to credits against tax) is amended by adding at the end the following new subpart:
HIndividual security account credits
Sec. 54. Individual security account credit
54.Individual security account credit
(a)Each part B eligible individual is entitled to a credit for the taxable year in an amount equal to the sum of—
(1)$150,
(2)50 percent of the designated wages of such individual for the taxable year,
(3)50 percent of the designated self-employment income of such individual for the taxable year, plus
(4)50 percent of the designated earned income credit.
(b)
(1)The amount determined under paragraphs (2) and (3) of subsection (a) with respect to such individual for any taxable year may not exceed the excess (if any) of—
(A)$600, over
(B)the sum of the amounts received by the Secretary on behalf of such individual under subparagraphs (A) and (B) of section 3101(a)(2) and subparagraphs (A) and (B) of 1401(a)(2) for the taxable year.
(2)Failure to make voluntary contributionsIn the case of a part B eligible individual with respect to whom the amount of wages designated under section 3101(a)(2)(C) plus the amount self-employment income designated under section 1401(a)(2)(C) for the taxable year is zero, the credit to which such individual is entitled under this section shall be equal to zero.
(c)For purposes of this section—
(1)Part B eligible individualThe term part B eligible individual means, for any calendar year, an individual who is an eligible individual (as defined in section 251(a)(2) of the Social Security Act) for such calendar year.
(2)The term designated wages means with respect to any taxable year the amount designated under section 3101(a)(2)(C).
(3)Designated self-employment incomeThe term designated self-employment income means with respect to any taxable year the amount designated under section 1401(a)(2)(C) for such taxable year.
(4)Designated earned income creditThe term designated earned income credit means the amount of the credit allowed under section 32 for the taxable year that is designated by the part B eligible individual in the same manner as described in section 251(d) of the Social Security Act.
(d)Credit Used Only for Individual Security AccountFor purposes of this title, the credit allowed under this section with respect to any part B eligible individual—
(1)shall not be treated as a credit allowed under this part, but
(2)shall be treated as an overpayment of tax under section 6401(b)(3) which may, in accordance with section 6402(l), only be transferred to an individual security account established under part B of title II of the Social Security Act with respect to such individual..
(2)Contribution of EITC amounts to individual security accountsSection 32 of such Code (relating to earned income) is amended by adding at the end the following new subsection:
(n)Contribution to individual security account
(1)An eligible part B individual who is allowed a credit under this section may designate all or a portion of such credit as a contribution to the individual security account established on behalf of such individual.
(2)Credit used only for individual security accountFor purposes of this title, the amount designated under paragraph (1) with respect to any part B individual—
(A)shall not be treated as a credit allowed under this section, but
(B)shall be treated as an overpayment of tax under section 6401(b)(3) which may, in accordance with section 6402(l), only be transferred to an individual security account established under part B of title II of the Social Security Act with respect to such individual..
(3)Contribution of credited amounts to individual security account
(A)Credited amounts treated as overpayment of taxSubsection (b) of section 6401 (relating to excessive credits) is amended by adding at the end the following new paragraph:
(3)Special rule for credit under sections 32 and 54Subject to the provisions of section 6402(l), the following sum shall be considered an overpayment—
(A)The amount of any credit allowed under section 54 for any taxable year, plus
(B)Section 32 designated earned income credit contributionThe amount of the earned income credit designated as a contribution to an individual security account under section 32(n) for the taxable year..
(B)Transfer of credit amount to individual security accountSection 6402 of such Code (relating to authority to make credits or refunds) is amended by adding at the end the following new subsection:
(l)Overpayments attributable to individual security account creditIn the case of any overpayment described in section 6401(b)(3) with respect to any individual, the Secretary shall transfer for crediting by the Commissioner of Social Security to the individual security account of an such individual, an amount equal to the amount of such overpayment..
(4)Notice to EITC recipients of matching contributions to individual security accountsIn connection with information and tax forms relating to the credit allowed under section 32 of the Internal Revenue Code of 1986, the Secretary of the Treasury shall provide notice of the availability of matching contributions pursuant to section 54 of such Code (as added by subsection (a) of this section) to individual security accounts under part B of title II of the Social Security Act.
(5)
(A)Section 1324(b)(2) of title 31, United States Code, is amended by inserting before the period at the end , or enacted by the Bipartisan Retirement Security Act of 2005
.
(B)The table of subparts for part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Subpart H. Individual security account credits.
.
(6)The amendments made by this subsection shall apply to refunds payable after December 31, 2005.
(d)Tax treatment of individual security accounts
(1)Subchapter F of chapter 1 of the Internal Revenue Code of 1986 (relating to exempt organizations) is amended by adding at the end the following new part:
IXIndividual security system
Sec. 530A. Individual security fund
Sec. 530B. Individual security accounts
530A.Individual Security Fund and Federally-administered individual security accountsThe Individual Security Fund established under section 261 of the Social Security Act shall be exempt from taxation under this subtitle.
530B.Individual security accounts
(a)For purposes of this section, the term individual security account means a Federally-administered individual security account and a privately-administered security account.
(b)Individual security accounts definedFor purposes of subsection (a)—
(1)Federally-administered security accountThe term Federally-administered individual security account means the account established under section 251 of the Social Security Act.
(2)Privately-administered security accountThe term privately-administered individual security account means a trust created or organized in the United States exclusively for the benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust meets the following requirements:
(A)Except in the case of rollover contributions from another individual security account of such individual—
(i)no contribution will be accepted unless it is in cash,
(ii)contributions will not be accepted for the taxable year in excess of the sum of—
(I)the amounts collected with respect to such beneficiary under sections 3101(a)(2) and 1401(a)(2), and
(II)the amounts transferred to such account under section 6402(l), and
(iii)any contributions with respect to an account holder which are not accepted pursuant to this paragraph are promptly refunded directly to the account holder.
(B)The trustee is an institution which is certified under subpart 3 of part B of title II of the Social Security Act.
(C)No part of the trust funds will be invested in life insurance contracts.
(D)The interest of an individual in the balance in his account is nonforfeitable.
(E)The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.
(c)
(1)No deduction shall be allowed for contributions credited to an individual security account under part B of title II of the Social Security Act or amounts transferred to such account under section 6402(l).
(2)
(A)Rollover from privately-administered individual security accountThe entire balance of an individual security account of the account holder may be rolled over to another individual security account of the account holder.
(B)Any portion of a distribution to an heir from an individual security account made by reason of the death of the beneficiary of such account may be rolled over to the individual security account of the heir.
(d)Tax treatment of accounts
(1)An individual security account is exempt from taxation under this subtitle unless such account has ceased to be an individual security account by reason of paragraph (2). Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations).
(2)Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to privately-administered individual security accounts, and any amount treated as distributed under such rules shall be includible in gross income and shall not be treated as a social security benefit for purposes of section 86.
(3)An amount is described in this paragraph as a rollover contribution if it meets the requirements of subparagraphs (A) and (B).
(A)The requirements of this subparagraph are met with respect to an amount paid or distributed from an individual security account to the account holder only if the entire amount in such account is received by the account holder and is paid into another individual security account for the benefit of such holder not later than the 60th day after the day on which the holder receives the payment or distribution.
(B)This paragraph shall not apply to any amount described in subparagraph (A) received by an individual from a privately-administered individual security account if, at any time during the 1-year period ending on the day of such receipt, such individual received on 3 other occasions any other amount described in subparagraph (A) from an individual security account which was not includible in the individual’s gross income because of the application of this paragraph.
(e)
(1)The portion of any distribution from an individual security account under section 253 of the Social Security Act which is attributable to amounts contributed to such account under section 3101(a)(2) (other than subparagraph (C) thereof) and section 1401(a)(2) (other than subparagraph (C) thereof), together with earnings thereon, shall be includible in gross income as a social security benefit for purposes of section 86.
(2)The portion of any distribution from an individual security account under section 253 of the Social Security Act which is attributable to amounts contributed to such account under section 3101(a)(2)(C), section 1401(a)(2)(C), and section 6402(l), together with earnings thereon, shall not be includible in gross income.
(3)Period in which distributions must be made from account of decedentIn the case of amounts remaining in an individual security account from which distributions began before the death of the beneficiary, rules similar to the rules of section 401(a)(9)(B) shall apply to distributions of such remaining amounts.
(4)Paragraph (1) shall not apply to amounts rolled over under subsection (c)(2) in a direct transfer by the Commissioner of Social Security, under regulations which the Commissioner shall prescribe.
(f)For purposes of this section, the account beneficiary is the individual for whose benefit the individual security account is established..
(2)The table of parts for subchapter F of chapter 1 of the Internal Revenue Code of 1986 is amended by adding after the item relating to part VIII the following new item:
Part IX. Individual security system..
(3)The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.
3.Minimum social security benefitSection 215 of the Social Security Act (42 U.S.C. 415) is amended by adding at the end the following:
(j)Minimum monthly insurance benefit
(1)Notwithstanding the preceding provisions of this section—
(A)the primary insurance amount of a qualified individual shall be equal to the greater of—
(i)the primary insurance amount determined under this section (without regard to this subsection), or
(ii)1/12 of the applicable percentage of the applicable amount, androunded, if not a multiple of $0.10, to the next lower multiple of $0.10, and thereafter increased as provided in subsection (i), and
(B)any recomputation of the primary insurance amount of a qualified individual shall not result in a primary insurance amount less than the primary insurance amount as in effect immediately prior to such recomputation.
(2)For purposes of this subsection—
(A)The term qualified individual means an individual—
(i)who initially becomes eligible for old-age or disability insurance benefits, or dies (before becoming eligible for such benefits) for a month beginning after December 31, 2009, and
(ii)who, in the case of any such individual other than an individual eligible for old-age insurance benefits, has quarters of coverage greater in number than the number of such individual’s elapsed years (as defined in subsection (a)(1)(C)(ii)).
(B)The term applicable amount means, in connection with an individual—
(i)in any case in which the year of such individual’s initial eligibility is prior to 2014, $8,825, adjusted annually, for each year after 2003 and before the earlier of—
(I)the year of the individual’s initial eligibility, or
(II)2014,by the CPI increase percentage determined under section 215(i) for such year, or
(ii)in any case in which the year of such individual’s initial eligibility is after 2013, the dollar amount determined under clause (i) for 2013, multiplied by the percentage (rounded to the nearest one-tenth of 1 percent) by which the national average wage index (as defined in section 209(k)(1)) for the second year prior to the year of such individual’s initial eligibility exceeds such index for 2011.
(C)
(i)In the case of a qualified individual described in subparagraph (A)(i), the term applicable percentage means the sum of—
(I)the product derived by multiplying 2.0 percent by the number of such individual’s quarters of coverage in excess of 40, to the extent that the number of such quarters of coverage does not exceed 80, and
(II)the product derived by multiplying 0.5 percent by the number of such individual’s quarters of coverage, to the extent that the number of such quarters of coverage is in excess of 80 but does not exceed 160.
(ii)In the case of a qualified individual described in subparagraph (A)(ii), the term applicable percentage means the sum of—
(I)the product derived by multiplying the higher pro-rated percentage increment by the number of such individual’s quarters of coverage, to the extent that the number of such quarters of coverage exceeds the number of such individual’s elapsed years (as defined in subsection (a)(10(C)(ii)) but does not exceed twice the number of such elapsed years, and
(II)the product derived by multiplying the lower pro-rated percentage increment by the number of such individual’s quarters of coverage, to the extent that the number of such quarters of coverage exceeds twice the number of such elapsed years but does not exceed 4 times the number of such elapsed years.
(iii)For purposes of clause (ii)—
(I)the higher pro-rated percentage increment, in connection with the qualified individual, is the quotient obtained by dividing 80 percent by the number of the individual’s elapsed years, and
(II)the lower pro-rated percentage increment, in connection with the qualified individual, is the quotient obtained by dividing 40 percent by twice the number of the individual’s elapsed years,each of which is rounded, if a multiple of 0.05 percent and not of 0.10 percent, to the next higher multiple of 0.10 percent, and in any other case to the next higher multiple of 0.10 percent.
(3)In the case of a qualified individual who becomes eligible for old-age or disability insurance benefits, or who dies (before becoming eligible to such benefits) in a year prior to 2014, in lieu of the amount otherwise determined under paragraph (1)(A)(ii), the amount provided under paragraph (1)(A)(ii) shall be deemed to be equal to the the product derived by multiplying such amount otherwise determined by the percentage set forth in the following table in connection with such year, rounded, if not a multiple of $0.10, to the next lower multiple of $0.10.
The applicable
If the year is:percentage is:
201020
201140
201260
201380.
.
4.Reduction in the amount of certain transfers to medicare trust fundSubparagraph (A) of section 121(e)(1) of the Social Security Amendments of 1983 (42 U.S.C. 401 note), as amended by section 13215(c)(1) of the Omnibus Budget Reconciliation Act of 1993, is amended—
(1)in clause (ii), by striking the amounts
and inserting the applicable percentage of the amounts
; and
(2)by adding at the end the following: For purposes of clause (ii), the applicable percentage for a year is equal to 100 percent, reduced (but not below zero) by 10 percentage points for each year after 2010.
.
5.Revised formula for average indexed monthly earnings
(a)So much of subsection (b) of section 215 of the Social Security Act (42 U.S.C. 415) as precedes paragraph (3) is amended to read as follows:
(b)Average indexed monthly earnings; average monthly wage
(1)
(A)In the case of an individual who is entitled to old-age insurance benefits (except as provided in paragraph (2)(C)), or who has died (before becoming eligible for such benefits or disability insurance benefits), such individual’s average indexed monthly earnings shall be equal to the quotient obtained by dividing—
(i)the total (after adjustment under paragraph (3)) of his wages paid in and self-employment income credited to his computation base years (determined under subparagraph (C)(i)), by
(ii)the product derived by multiplying—
(I)the number of such individual’s elapsed years (determined under subparagraph (C)(ii)), by
(II)12.
(B)
(i)For purposes of clause (i) of subparagraph (A), in the case of an individual who becomes eligible for old-age insurance benefits, or dies (before becoming eligible for such benefits or disability insurance benefits), in any calendar year after 2004 and before 2013, if the number of such individual’s computation base years exceed in number the maximum number for such calendar year, those computation base years referred to in such clause shall consist only of those computation base years, equal in number to such maximum number, for which the total of such individual’s wages and self-employment income, after adjustment under paragraph (3), is the largest. For purposes of this clause, the maximum number for a calendar year is the maximum number set forth in connection with such calendar year in the following table:
The maximum
If the calendar year is:number of years is:
2005 or 200637
2007 or 200839
2009 or 201041
2011 or 201243.
(ii)For purposes of subclause (I) of subparagraph (A)(ii), in the case of an individual who becomes eligible for old-age insurance benefits, or dies (before becoming eligible for such benefits or disability insurance benefits), in any calendar year after 2004, if the number of such individual’s elapsed years exceed in number the maximum number for such calendar year, the number of elapsed years referred to in such subclause shall be deemed equal to such maximum number. For purposes of this clause, the maximum number for a calendar year is the maximum number set forth in connection with such calendar year in the following table:
The maximum
If the calendar year is:number of years is:
2005 or 200636
2007 or 200837
2009 or 201038
2011 or 201239
after 201240.
(C)For purposes of this subsection with respect to any individual—
(i)the term computation base year means any calendar year after 1950 and before—
(I)in the case of an individual entitled to old-age insurance benefits or disability insurance benefits, the year in which occurred (whether by reason of section 202(j)(1) or otherwise) the first month of that entitlement, or
(II)in the case of an individual who has died (without having become entitled to old-age insurance benefits), the year succeeding the year of his death,except that such term excludes any calendar year entirely included in a period of disability, and
(ii)the term elapsed year means (except as otherwise provided by section 104(j)(2) of the Social Security Amendments of 1972) a calendar year—
(I)after 1950 (or, if later, the year in which the individual attained age 21), and
(II)before the year in which the individual died, or, if it occurred earlier (but after 1960), the year in which he attained age 62; except that such term excludes any calendar year any part of which is included in a period of disability.
(2)
(A)In the case of an individual who is entitled to disability insurance benefits, such individual’s average indexed monthly earnings shall be equal to the quotient obtained by dividing—
(i)the total (after adjustment under paragraph (3)) of his wages paid in, and self-employment income credited to, those of his computation base years (determined under paragraph (1)(C)(i)) which—
(I)are elapsed years (determined under paragraph (1)(C)(ii)),
(II)occurred prior to his current period of disability, and
(III)are equal in number to the reduced number determined under subparagraph (B),for which the total of such individual’s wages and self-employment income, after adjustment under paragraph (3), is the largest, by
(ii)the product derived by multiplying—
(I)the number of the individual’s elapsed years, by
(II)12.
(B)The reduced number of an individual’s elapsed years, determined under this subparagraph for purposes of subparagraph (A)(i)(III), is the number of such elapsed years, reduced by the number of years equal to one-fifth of such number of elapsed years (disregarding any resulting fractional part of a year), but not by more than 5 years.
(C)
(i)This paragraph, once applicable with respect to any individual, shall continue to apply for purposes of determining such individual’s primary insurance amount for purposes of any subsequent eligibility for disability or old-age insurance benefits, unless, prior to the month in which such eligibility begins, there occurs a period of at least 12 consecutive months for which he was not entitled to a disability or an old-age insurance benefit.
(ii)If an individual to which this paragraph applies is living with a child (of such individual or his or her spouse) under the age of 3 in any calendar year which is included in such individual’s elapsed years, but which is not disregarded pursuant to subparagraphs (A)(i) and (B) by reason of the reduction in the number of such individual’s elapsed years under subparagraph (B), the number by which the number of such elapsed years is reduced under subparagraph (B) shall be increased by one (up to a combined total not exceeding 3) for each such calendar year, except that—
(I)no calendar year shall be disregarded by reason of this clause (in determining elapsed years to be taken into account under subparagraph (A)(i)) unless the individual was living with such child substantially throughout the period in which the child was alive and under the age of 3 in such year and the individual had no earnings as described in section 203(f)(5) in such year,
(II)the particular calendar years to be disregarded under this clause (in determining such elapsed years) shall be those years (not otherwise disregarded under subparagraph (B)) which, before the application of section 215(f), meet the conditions of subclause (I), and
(III)this clause shall apply only to the extent that its application would not result in a lower primary insurance amount.
(D)The reduction in the number of elapsed years taken into account under subparagraph (A)(i) resulting from the application of subparagraphs (B) and (C) shall not in any case reduce the number of elapsed years taken into account under subparagraph (A)(i) to less than 2..
(b)Section 215(b)(3)(A) of such Act (42 U.S.C. 415(b)(3)(A)) is amended by striking for purposes of the selection therefrom of benefit computation years under paragraph (2)
and inserting for purposes of paragraphs (1)(B)(i) and (2)(A)(i)
.
(c)The amendment made by subsection (a) shall apply with respect to individuals initially becoming eligible for old-age or disability insurance benefits, or dying (before becoming eligible for such benefits), in any calendar year after 2008. For purposes of this subsection, and individual shall be deemed eligible for a benefit for a month if, upon filing application therefor in such month, such individual would be entitled to such benefit for such month.
6.Actuarial adjustment for retirement
(a)
(1)Section 202(q) of the Social Security Act (42 U.S.C. 402(q)) is amended—
(A)in paragraph (1)(A), by striking 5/9
and inserting the applicable old-age benefit fraction (determined under paragraph (12)(A))
, and by striking 25/36
and inserting the applicable spousal benefit fraction (determined under paragraph (12)(B))
; and
(B)by adding at the end the following:
(12)For purposes of paragraph (1)(A)—
(A)the applicable old-age benefit fraction
for an individual who attains the age of 62 in—
(i)any year before 2006, is 5/9;
(ii)2006, is 7/12;
(iii)2007, is 11/18;
(iv)2008, is 23/36;
(v)2009, is 2/3; and
(vi)2010 or any succeeding year, is 25/36; and
(B)the applicable spousal benefit fraction
for an individual who becomes eligible for wife’s or husband’s insurance benefits in—
(i)any year before 2006, is 25/36;
(ii)2006, is 35/48;
(iii)2007, is 55/72;
(iv)2008, is 115/144;
(v)2009, is 5/6; and
(vi)2010 or any succeeding year, is 125/144..
(2)Months beyond first 36 monthsSection 202(q) of such Act (42 U.S.C. 402(q)(9)) (as amended by paragraph (1)) is amended—
(A)in paragraph (9)(A), by striking five-twelfths
and inserting the applicable fraction (determined under paragraph (13))
; and
(B)by adding at the end the following:
(13) For purposes of paragraph (9)(A), the applicable fraction
for an individual who becomes eligible for old-age, wife’s, or husband’s insurance benefits in—
(A)any year before 2006, is 5/12;
(B)2006, is 16/36;
(C)2007, is 16/36;
(D)2008, is 17/36;
(E)2009, is 17/36; and
(F)2010 or any succeeding year, is 1/2..
(3)Section 202(q) of such Act (as amended by the preceding provisions of this subsection) is amended further by adding at the end the following new paragraph:
(14) For purposes of this subsection, an individual shall be deemed eligible for a benefit for a month if, upon filing application therefor in such month, such individual would be entitled to such benefit for such month..
(4)The amendments made by this subsection shall apply to individuals who, in connection with old-age, wife’s, and husband’s insurance benefits under title II of the Social Security Act, become eligible for such benefits (within the meaning of section 202(q)(14) of such Act (as amended by this subsection) in years after 2005.
(b)Section 202(w)(6) of the Social Security Act (42 U.S.C. 402(w)(6)) is amended—
(1)in subparagraph (C), by striking and
at the end;
(2)in subparagraph (D), by striking 2004.
and inserting 2004 and before 2009;
; and
(3)by adding at the end the following:
(E)17/24 of 1 percent in the case of an individual who attains the age of 62 in a calendar year after 2008 and before 2011;
(F)3/4 of 1 percent in the case of an individual who attains the age of 62 in a calendar year after 2010 and before 2013;
(G)19/24 of 1 percent in the case of an individual who attains the age of 62 in a calendar year after 2012 and before 2015; and
(H)5/6 of 1 percent in the case of an individual who attains the age of 62 in a calendar year after 2014..
7.Corrections for CPI overstatement in cost-of-living indexation
(a)Modifications to cost-of-living indexation of social security benefits
(1)Section 215(i)(1)(D) of the Social Security Act (42 U.S.C. 415(i)(1)(D)) is amended to read as follows:
(D)the term CPI increase percentage, with respect to a base quarter or cost-of-living computation quarter in any calendar year, means the percentage (rounded to the nearest one-tenth of 1 percent) by which the Chained Consumer Price Index for All Urban Consumers (published by the Bureau of Labor Statistics of the Department of Labor) for the such base quarter or cost-of-living computation quarter exceeds such index for the later of—
(i)the most recent calendar quarter (prior to such base quarter or cost-of-living computation quarter) which was a base quarter under subparagraph (A)(ii), or
(ii)the most recent cost-of-living computation quarter under subparagraph (B); .
(2)Section 215(i)(1)(G) of such Act (42 U.S.C. 415(i)(1)(G)) is amended to read as follows:
(G)the Chained Consumer Price Index for All Urban Consumers for a base quarter, a cost-of-living computation quarter, or any other calendar quarter shall be the arithmetical mean of such index (published by the Bureau of Labor Statistics of the Department of Labor as of the end of such quarter) for the 3 months in such quarter. .
(3)The amendments made by this subsection shall apply with respect to increases under section 215(i) of the Social Security Act effective with the month of December of years after 2004.
(b)Consumer price index adjustments applicable to the Internal Revenue Code provisions
(1)Paragraph (3) of section 1(f) of the Internal Revenue Code of 1986 (defining Consumer Price Index) is amended to read as follows:
(3)Cost-of-living adjustment
(A)For purposes of paragraph (2), the cost-of-living adjustment for any calendar year is the product of—
(i)the CPI fraction for calendar years before 2006, multiplied by
(ii)the Chained CPI fraction for calendar years after 2005, reduced by 1.
(B)CPI fraction for calendar years before 2006The CPI fraction for calendar years before 2006 is the fraction—
(i)the numerator of which is the CPI for the calendar year 2004, and
(ii)the denominator of which is the CPI for the calendar year 1992.
(C)Chained CPI fraction for calendar years after 2005The Chained CPI fraction for calendar years after 2005 is the fraction—
(i)the numerator of which is the Chained CPI for the preceding calendar year, and
(ii)the denominator of which is the Chained CPI for the calendar year 2004. .
(2)
(A)Paragraph (4) of section 1(f) of such Code is amended to read as follows:
(4)CPI and chained CPI for any calendar yearFor purposes of paragraph (3)—
(A)The CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year.
(B)The Chained CPI for any calendar year is the average of the Chained Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year. .
(B)Paragraph (5) of section 1(f) of such Code is amended to read as follows:
(5)Consumer Price Index and Chained Consumer Price IndexFor purposes of paragraph (4)—
(A)The term Consumer Price Index means the last Consumer Price Index for all-urban consumers published by the Department of Labor. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used.
(B)Chained Consumer Price IndexThe term Chained Consumer Price Index means the initial Chained Consumer Price Index for all-urban consumers published by the Department of Labor. .
(3)The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005.
(c) Cost-of-living adjustments under other provisions utilizing the consumer price index
(1)Except as provided in paragraph (2), for purposes of determining the amount of any cost-of-living increase which takes effect for benefits payable after December 31, 2005, with respect to any benefit described in paragraph (4), any such increase for the period for which the percentage change is determined shall be deemed to be, in lieu of the increase otherwise determined under applicable law in connection with such benefits, the increase determined under such applicable law by substituting the Chained CPI for any month for the CPI for such month.
(2)Increases determined from a constant base year
(A)In any case in which the amount of the cost-of-living increase which takes effect for benefits payable after December 31, 2005, with respect to any benefit described in paragraph (4) is determined under applicable law by reference to a change in the CPI over a period which is determined by reference to a base period which remains constant from year to year, any such increase for any period shall be deemed to be, in lieu of the increase otherwise determined under applicable law in connection with such benefits, the increase, expressed as a percentage increase, equal to the product of—
(i)the CPI fraction prior to 2006, multiplied by
(ii)the Chained CPI fraction after 2005,reduced by 1.
(B)CPI fraction prior to 2006The CPI fraction prior to 2006 is the fraction—
(i)the numerator of which is the CPI for the period, ending with or during 2004, which corresponds to the base period, and
(ii)the denominator of which is the CPI for the base period.
(C)Chained CPI fraction after 2005The Chained CPI fraction after 2005 is the fraction—
(i)the numerator of which is the Chained CPI for the period, ending with or during the year preceding the year in which the determination takes effect, which corresponds to the base period, and
(ii)the denominator of which is the Chained CPI for the period, ending with or during 2004, which corresponds to the base period.
(3)For purposes of paragraph (1)—
(A)The CPI for any period means, in connection with any benefit described in paragraph (4), the average monthly Consumer Price Index for such period, as determined under the applicable law in connection with such benefit (without regard to this subsection).
(B)The Chained CPI for any period means, in connection with any benefit described in paragraph (4), the average monthly Chained Consumer Price Index for all urban consumers (published by the Bureau of Labor Statistics of the Department of Labor) for such period, determined under applicable law in the same manner as the CPI for such period would be determined.
(4)Rules to apply only to computation of benefit amountsThe preceding provisions of this subsection shall apply only for purposes of determining the amount of benefits and not for purposes of determining—
(A)whether a threshold increase in the Consumer Price Index has been met, or
(B)increases in amounts under other provisions of law not described in paragraph (5) which operate by reference to increases in such benefits.
(5)Benefits to which subsection appliesFor purposes of this subsection, the benefits described in this paragraph are—
(A)retired and retainer pay subject to adjustment under section 1401a of title 10, United States Code;
(B)civil service retirement benefits under section 8340 of title 5, United States Code, foreign service retirement benefits under section 826 of the Foreign Service Act of 1980, Central Intelligence Agency retirement benefits under part J of the Central Intelligence Agency Retirement Act of 1964 for certain employees, and any other benefits under any similar provision under any retirement system for employees of the government of the United States;
(C)Federal workers' compensation under section 8146a of title 5, United States Code;
(D)benefits under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974; and
(E)benefits and expenditure limits under title XVIII or XIX of the Social Security Act.
(6)For purposes of this section, the term benefit includes a payment.
(d)Recapture to federal old-age and survivors insurance trust fundSection 201 of the Social Security Act (42 U.S.C. 401) is amended by adding at the end the following new subsection:
(o)On July 1 of each calendar year specified in the following table, the Secretary of the Treasury shall transfer, from the general fund of the Treasury to the Federal Old-Age and Survivors Insurance Trust Fund, an amount equal to the applicable percentage for such year, specified in such table, of the total wages paid in and self-employment income credited to such year.
For the followingThe applicable
calendar years:percentage is:
After 2006 and before 20080.02
After 2007 and before 20090.04
After 2008 and before 20100.10
After 2009 and before 20110.12
After 2010 and before 20120.13
After 2011 and before 20130.20
After 2012 and before 20140.24
After 2013 and before 20150.29
After 2014 and before 20210.33
After 2020 and before 20450.39
After 2044 and before 20650.47
After 20640.57.
.
8.Adjustments to bend points in determining primary insurance amounts
(a)Section 215(a)(1)(A) of the Social Security Act (42 U.S.C. 415(a)(1)(A)) is amended to read as follows:
(a)
(1)
(A)
(i)Subject to clause (ii), the primary insurance amount of an individual shall (except as otherwise provided in this section) be equal to the sum of—
(I)90 percent of the individual’s average indexed monthly earnings (determined under subsection (b)) to the extent that such earnings do not exceed the amount established for purposes of this subclause by subparagraph (B),
(II)70 percent of the individual’s average indexed monthly earnings to the extent that such earnings exceed the amount established for purposes of subclause (I) but do not exceed the amount established for purposes of this subclause by subparagraph (B),
(III)20 percent of the individual’s average indexed monthly earnings to the extent that such earnings exceed the amount established for purposes of subclause (II) but do not exceed the amount established for purposes of this subclause by subparagraph (B), and
(IV)10 percent of the individual’s average indexed monthly earnings to the extent that such earnings exceed the amount established for purposes of this clause by subparagraph (B).
(ii)In the case of individuals becoming eligible for old-age or disability insurance benefits, or dying (before becoming eligible for such benefits), in any calendar year after 2005 and before 2016—
(I)In lieu of the percentage specified in subclause (II) of clause (i), the applicable percentage set forth in the following table in connection with such calendar year shall apply:
The applicable
If the calendar year is:percentage is:
200635.8
200739.6
200843.4
200947.2
201051.0
201154.8
201258.6
201362.4
201466.2.
(II)In lieu of the percentage specified in subclause (III) of clause (i), the applicable percentage set forth in the following table in connection with such calendar year shall apply:
The applicable
If the calendar year is:percentage is:
200630.8
200729.6
200828.4
200927.2
201026.0
201124.8
201223.6
201322.4
201421.2.
(III)In lieu of the percentage specified in subclause (IV) of clause (i), the applicable percentage set forth in the following table in connection with such calendar year shall apply:
The applicable
If the calendar year is:percentage is:
200614.5
200714.0
200813.5
200913.0
201012.5
201112.0
201211.5
201311.0
201410.5.
.
(b)Initial level of additional bend pointSection 215(a)(1)(B) of such Act (42 U.S.C. 415(a)(1)(B)) is amended—
(1)in clause (i), by inserting (as then in effect)
after subparagraph (A)
, and by adding at the end the following new sentence: For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits) after 2005, such dollar amounts shall be deemed to have been so established in 1979 for purposes of subclauses (I) and (III) of subparagraph (A)(i), respectively, as in effect with respect to such individuals.
;
(2)by redesignating clause (iii) as clause (iv);
(3)by inserting after clause (ii) the following new clause:
(iii)For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in any calendar year after 2005, the amount established for purposes of clause (ii) of subparagraph (A) for such calendar year after 2005 shall be 183.8 percent of the amount established for purposes of clause (i) for such calendar year.; and
(4)in clause (iv) (as redesignated by paragraph (1)), by striking clause (ii)
and inserting clauses (ii) and (iii)
.
(c)The amendments made by this section shall apply with respect to individuals becoming eligible for old-age insurance benefits or disability insurance benefits, or dying (before becoming eligible for such benefits), after 2005.
9.Adjustment to benefit formula factorsSection 215(a)(1)(B) of the Social Security Act (42 U.S.C. 415(a)(1)(B)) (as amended by section 8) is amended further—
(1)by redesignating clause (iv) as clause (vii); and
(2)by inserting after clause (iii) the following:
(iv)For an individual who initially becomes eligible for old-age insurance benefits, or who dies (before becoming eligible for such benefits or disability insurance benefits), in any calendar year after 2011, each of the amounts otherwise established for purposes of subclauses (I), (II), (III), and (IV) of subparagraph (A)(i) under this subparagraph shall be substituted with the product derived by successively multiplying, once for each year of the factoring period for such individual—
(I)such amount (after applying this clause for earlier years of the factoring period), by
(II)the designated factor for such year.
(v)For purposes of clause (iii), the term factoring period means, for an individual, the period beginning with 2012 and ending with the earlier of—
(I)the year of the individual's initial eligibility or death, or
(II)2060.
(vi)For purposes of clause (iii), the term designated factor means—
(I)for a year prior to 2031, 0.975, except that, for any such year, such factor shall be 1.000 with respect to amounts otherwise established for purposes of subclause (I) of subparagraph (A)(i) under this subparagraph, and
(II)for a year after 2030, 0.985..
10.Modification to PIA formula to reflect changes to life expectancy
(a)Section 215(a)(1) of the Social Security Act (42 U.S.C. 415(a)(1)(B)) is amended by redesignating subparagraph (C) and (D) as subparagraphs (D) and (E), respectively, and by inserting after subparagraph (B) the following new subparagraph:
(C)
(i)For individuals who initially become eligible for old-age insurance benefits (or who die before becoming eligible for such benefits) in any calendar year after 2011, the primary insurance amount computed under this paragraph shall be the product derived by multiplying such amount as computed under the preceding subparagraphs of this paragraph by the life expectancy ratio for such calendar year.
(ii)The Commissioner of Social Security, using generally accepted actuarial principles, shall determine and publish in the Federal Register on or before November 1 of each calendar year the life expectancy ratio for the following calendar year.
(iii)For purposes of clause (ii), the life expectancy ratio for any calendar year is the ratio of—
(I)the period life expectancy of an individual attaining age 62 on January 1, 2008, to
(II)the period life expectancy of an individual attaining age 62 on January 1 of the third calendar year preceding the calendar year in which the determination under clause (ii) is made..
(b)Study of the effect of increases in life expectancy
(1)Not later than December 15, 2006, the Commissioner of Social Security shall submit to Congress a detailed study plan for evaluating the effects of increases in life expectancy on the expected level of retirement income from social security, pensions, and other sources. The study plan shall include a description of the methodology, data, and funding that will be required in order to provide to the Congress not later than February 15, 2008—
(A)an evaluation of trends in mortality and their relationship to trends in health status, among individuals approaching eligibility for old-age insurance benefits under title II of the Social Security Act;
(B)an evaluation of trends in labor force participation among individuals approaching eligibility for such benefits and among individuals receiving such benefits, and of the factors that influence the choice between retirement and participation in the labor force;
(C)an evaluation of changes, if any, in the disability insurance program under title II of the Social Security Act that would reduce the impact of changes in the retirement income of workers in poor health or physically demanding occupations;
(D)an evaluation of the methodology used to develop projections for trends in mortality, health status, and labor force participation among individuals approaching eligibility for old-age insurance benefits and among individuals receiving such benefits; and
(E)an evaluation of such other matters as the Commissioner deems appropriate for evaluating the effects of increases in life expectancy.
(2)Report on results of studyNot later than February 15, 2008, the Commissioner of Social Security shall provide to the Congress an evaluation of the implications of the trends studied under paragraph (1), along with recommendations, if any, of the extent to which the conclusions of such evaluations indicate that projected increases in life expectancy require modification in the disability insurance program under title II of the Social Security Act and other income support programs.
11.Treatment of disabled beneficiariesSection 215(a) of the Social Security Act (42 U.S.C. 415(a)) is amended by adding at the end the following new paragraph:
(8)
(A)Notwithstanding the preceding provisions of this subsection, in the case of an individual who has or has had a period of disability and becomes entitled to old-age insurance benefits under section 202(a) (or dies) in or after 2006, the primary insurance amount of such individual shall be the sum of—
(i)the amount determined under subparagraph (B), and
(ii)the product derived by multiplying—
(I)the excess of the amount determined under subparagraph (C) over the amount determined under subparagraph (B), by
(II)the adjustment factor for such individual determined under subparagraph (D).
(B)The amount determined under this subparagraph is the amount of such individual's primary insurance amount as determined under this section without regard to this paragraph.
(C)The amount determined under this subparagraph is the amount of such individual's primary insurance amount as determined under this section as in effect with respect to individuals becoming eligible for old-age or disability insurance benefits under section 202(a) in 2004.
(D)
(i)Subject to clause (ii), the adjustment factor determined under this subparagraph for any individual is the ratio (not greater than 1) of—
(I)the number of months, ending after the date on which such individual has attained age 22 and preceding the earlier of such individual's first month of entitlement to old-age insurance benefits under section 202(a) or the month of such individual's death, which occurred during a period of disability of such individual, to
(II)480.
(ii)In the case of an individual who has attained age 22 as of the date of the enactment of the Bipartisan Retirement Security Act of 2005, the adjustment factor determined under this subparagraph for such individual is the product derived by multiplying the ratio determined under clause (i) by the ratio (not greater than 1) of—
(I)the number of calendar years for which contributions have been made to such individual’s individual security account pursuant to section 251(b)(1), to
(II)40..
12.Maintenance of benefit and contribution base
(a)So much of section 230 of the Social Security Act (42 U.S.C. 430) as precedes subsection (d) is amended to read as follows:
230.Maintenance of benefit and contribution base
(a)Not later than November 1 of each calendar year (beginning with or after 2005), the Commissioner shall determine and publish in the Federal Register the contribution and benefit base determined under subsections (b) and (c) which shall be effective with respect to remuneration paid after such calendar year and taxable years beginning after such year.
(b)For purposes of this section, and for purposes of determining wages and self-employment income under sections 209, 211, 213, and 215 of this Act and sections 54, 1402, 3121, 3122, 3125, 6413, and 6654 of the Internal Revenue Code of 1986—
(1)the contribution and benefit base
with respect to remuneration paid (and taxable years beginning)—
(A)in 2006 shall be $97,500,
(B)in 2007 shall be $106,800,
(C)in 2008 shall be $117,000,
(D)in 2009 shall be $129,000, and
(E)in 2010 shall be $142,500; and
(2)the contribution and benefit base
with respect to remuneration paid (and taxable years beginning) in any calendar year after 2010 shall be equal to the dollar amount equal to the lowest amount which, if applied under this title as the benefit and contribution base for the preceding year, would have caused the total untaxed covered remuneration for such year to constitute no more than 13 percent of the total amount of wages paid, and self-employment income derived, in such year by all individuals.Each contribution and benefit base determined under paragraph (2) shall (if not a multiple of $25) be rounded to the nearest multiple of $25.
(c)For purposes of this section, the term total untaxed covered remuneration for a calendar year means the total amount of wages paid to, and self-employment income derived by, all individuals in such calendar year, which was, with respect to each individual paid such wages and deriving such self-employment income, in excess of the contribution and benefit base for that calendar year..
(b)The amendment made by this section shall apply to remuneration paid in (and taxable years beginning in) any calendar year after 2005.
13.Acceleration of increase in social security eligibility ageSection 216(l) of the Social Security Act (42 U.S.C. 416(l) is amended—
(1)in paragraph (1), by striking subparagraphs (A), (B), (C), (D), and (E) and inserting the following:
(A)with respect to an individual who attains early retirement age (as defined in paragraph (2)) before January 1, 2000, 65 years of age; and
(B)with respect to an individual who attains early retirement age after December 31, 1999, and before January 1, 2012, 65 years of age plus 2/12 of the number of months in the period beginning with January 2000 and ending with December of the year in which the individual attains early retirement age; and
(C)with respect to an individual who attains early retirement age after December 31, 2011, 67 years of age.; and
(2)by striking paragraph (3).
14.Mechanism for remedying unforeseen deterioration in social security solvency
(a)Section 709 of the Social Security Act (42 U.S.C. 910) is amended—
(1)by redesignating subsection (b) as subsection (c); and
(2)by striking Sec. 709. (a) If the Board of Trustees
and all that follows through any such Trust Fund
and inserting the following:
709.
(a)
(1)
(A)If the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund determines at any time, using intermediate actuarial assumptions, that the balance ratio of either such Trust Fund for any calendar year during the succeeding period of 75 calendar years will be zero, the Board shall promptly submit to each House of the Congress and to the President a report setting forth its recommendations for statutory adjustments affecting the receipts and disbursements of such Trust Fund necessary to maintain the balance ratio of such Trust Fund at not less than 20 percent, with due regard to the economic conditions which created such inadequacy in the balance ratio and the amount of time necessary to alleviate such inadequacy in a prudent manner. The report shall set forth specifically the extent to which benefits would have to be reduced, taxes under section 1401, 3101, or 3111 of the Internal Revenue Code of 1986 would have to be increased, or a combination thereof, in order to obtain the objectives referred to in the preceding sentence.
(B)In addition to any reports under subparagraph (A), the Board shall, not later than May 30, 2006, prepare and submit to Congress and the President recommendations for statutory adjustments to the disability insurance program under title II of this Act to modify the changes in disability benefits under the Bipartisan Retirement Security Act of 2005 without reducing the balance ratio of the Federal Disability Insurance Trust Fund. The Board shall develop such recommendations in consultation with the National Council on Disability, taking into consideration the adequacy of benefits under the program, the relationship of such program with old age benefits under such title, and changes in the process for determining initial eligibility and reviewing continued eligibility for benefits under such program.
(2)
(A)The President shall, no later than 30 days after the submission of the report to the President, transmit to the Board and to the Congress a report containing the President's approval or disapproval of the Board's recommendations.
(B)If the President approves all the recommendations of the Board, the President shall transmit a copy of such recommendations to the Congress as the President's recommendations, together with a certification of the President's adoption of such recommendations.
(C)If the President disapproves the recommendations of the Board, in whole or in part, the President shall transmit to the Board and the Congress the reasons for that disapproval. The Board shall then transmit to the Congress and the President, no later than 60 days after the date of the submission of the original report to the President, a revised list of recommendations.
(D)If the President approves all of the revised recommendations of the Board transmitted to the President under subparagraph (C), the President shall transmit a copy of such revised recommendations to the Congress as the President's recommendations, together with a certification of the President's adoption of such recommendations.
(E)If the President disapproves the revised recommendations of the Board, in whole or in part, the President shall transmit to the Board and the Congress the reasons for that disapproval, together with such revisions to such recommendations as the President determines are necessary to bring such recommendations within the President’s approval. The President shall transmit a copy of such recommendations, as so revised, to the Board and the Congress as the President’s recommendations, together with a certification of the President’s adoption of such recommendations.
(3)
(A)This paragraph is enacted by Congress—
(i)as an exercise of the rulemaking power of the Senate and the House of Representatives, respectively, and as such it is deemed a part of the rules of each House, respectively, but applicable only to the extent that it is inconsistent with such rules; and
(ii)with full recognition of the constitutional right of either House to change the rules (so far as relating to the procedure of that House) at any time, in the same manner, and to the same extent as in the case of any other rule of that House.
(B)For purposes of this paragraph, the term joint resolution means only a joint resolution which is introduced within the 10-day period beginning on the date on which the President transmits the President's recommendations, together with the President's certification, to the Congress under subparagraph (B), (D), or (E) of paragraph (2), and—
(i)which does not have a preamble;
(ii)the matter after the resolving clause of which is as follows: That the Congress approves the recommendations of the President as transmitted on ______ pursuant to section 709(a) of the Social Security Act, as follows:________
, the first blank space being filled in with the appropriate date and the second blank space being filled in with the statutory adjustments contained in the recommendations; and
(iii)the title of which is as follows: Joint resolution approving the recommendations of the President regarding social security.
(C)A joint resolution described in subparagraph (B) that is introduced in the House of Representatives shall be referred to the Committee on Ways and Means of the House of Representatives. A joint resolution described in subparagraph (B) introduced in the Senate shall be referred to the Committee on Finance of the Senate.
(D)If the committee to which a joint resolution described in subparagraph (B) is referred has not reported such joint resolution (or an identical joint resolution) by the end of the 20-day period beginning on the date on which the President transmits the recommendation to the Congress under paragraph (2), such committee shall be, at the end of such period, discharged from further consideration of such joint resolution, and such joint resolution shall be placed on the appropriate calendar of the House involved.
(E)
(i)On or after the third day after the date on which the committee to which such a joint resolution is referred has reported, or has been discharged (under subparagraph (D)) from further consideration of, such a joint resolution, it is in order (even though a previous motion to the same effect has been disagreed to) for any Member of the respective House to move to proceed to the consideration of the joint resolution. A Member may make the motion only on the day after the calendar day on which the Member announces to the House concerned the Member's intention to make the motion, except that, in the case of the House of Representatives, the motion may be made without such prior announcement if the motion is made by direction of the committee to which the joint resolution was referred. All points of order against the joint resolution (and against consideration of the joint resolution) are waived. The motion is highly privileged in the House of Representatives and is privileged in the Senate and is not debatable. The motion is not subject to amendment, or to a motion to postpone, or to a motion to proceed to the consideration of other business. A motion to reconsider the vote by which the motion is agreed to or disagreed to shall not be in order. If a motion to proceed to the consideration of the joint resolution is agreed to, the respective House shall immediately proceed to consideration of the joint resolution without intervening motion, order, or other business, and the joint resolution shall remain the unfinished business of the respective House until disposed of.
(ii)Debate on the joint resolution, and on all debatable motions and appeals in connection therewith, shall be limited to not more than 2 hours, which shall be divided equally between those favoring and those opposing the joint resolution. An amendment to the joint resolution is not in order. A motion further to limit debate is in order and not debatable. A motion to postpone, or a motion to proceed to the consideration of other business, or a motion to recommit the joint resolution is not in order. A motion to reconsider the vote by which the joint resolution is agreed to or disagreed to is not in order.
(iii)Immediately following the conclusion of the debate on a joint resolution described in subparagraph (B) and a single quorum call at the conclusion of the debate if requested in accordance with the rules of the appropriate House, the vote on final passage of the joint resolution shall occur.
(iv)Appeals from the decisions of the Chair relating to the application of the rules of the Senate or the House of Representatives, as the case may be, to the procedure relating to a joint resolution described in subparagraph (B) shall be decided without debate.
(F)
(i)If, before the passage by one House of a joint resolution of that House described in subparagraph (B), that House receives from the other House a joint resolution described in subparagraph (B), then the following procedures shall apply:
(I)The joint resolution of the other House shall not be referred to a committee and may not be considered in the House receiving it except in the case of final passage as provided in subclause (II).
(II)With respect to a joint resolution described in subparagraph (B) of the House receiving the joint resolution, the procedure in that House shall be the same as if no joint resolution had been received from the other House, but the vote on final passage shall be on the joint resolution of the other House.
(ii)Upon disposition of the joint resolution received from the other House, it shall no longer be in order to consider the joint resolution that originated in the receiving House.
(b)If the Board of Trustees of the Federal Hospital Insurance Trust Fund or the Federal Supplementary Medical Insurance Trust Fund determines at any time that the balance ratio of either such Trust Fund.
(b)
(1)Section 709(b) of such Act (as amended by subsection (a) of this section) is amended by striking any such
and inserting either such
.
(2)Section 709(c) of such Act (as redesignated by subsection (a) of this section) is amended by inserting or (b)
after subsection (a)
.
15.Increase in widow’s and widower’s insurance benefits
(a)Widow’s insurance benefitsSection 202(e) of the Social Security Act (42 U.S.C. 402(e)) is amended by adding at the end the following new paragraph:
(9)
(A)In any case in which the amount of a widow’s insurance benefit (as determined under the preceding paragraphs of this subsection) for the entitlement month of the widow (or surviving divorced wife) is less than the minimum benefit amount for such month determined under subparagraph (C), the amount of such benefit for such month and each succeeding month shall be increased to such minimum benefit amount (or the amount most recently established in lieu thereof under section 215(i)).
(B)For purposes of this paragraph, the term entitlement month of a widow (or surviving divorced wife) means, in connection with her benefit under this subsection, the first month of her entitlement to such benefit.
(C)For purposes of subparagraph (A), the minimum benefit amount determined under this subparagraph for the entitlement month of the widow (or surviving divorced wife) is an amount equal to the lesser of—
(i)75 percent of the sum of—
(I)the imputed deceased individual’s benefit for such month, as determined under subparagraph (D) or (E) (as applicable), and
(II)the imputed survivor benefit for such month, as determined under subparagraph (F), or
(ii)the increased benefit cap determined under subparagraph (G) for such month.
(D)
(i)For purposes of subparagraph (C)(i)(I), if the deceased individual died in a month for which he was not entitled to any benefit under this title based on his wages or self-employment income or the wages and self-employment income of the widow (or surviving divorced wife), the imputed deceased individual’s benefit for the entitlement month of the widow (or surviving divorced wife) is the sum of—
(I)the imputed old-age insurance benefit (determined under clause (ii)) of the deceased individual for her entitlement month (if any), and
(II)the imputed husband’s insurance benefit (determined under clause (iii)) of the deceased individual for her entitlement month (if any).
(ii)The amount of the imputed old-age insurance benefit of the deceased individual for the entitlement month of the widow (or surviving divorced wife) is the amount of the old-age insurance benefit to which he would have been entitled for such month—
(I)determined, in the case of such a deceased individual who had attained age 62 as of the date of his death, as if he had applied for such benefit in the month of his death and had survived throughout the subsequent period ending with her entitlement month, or
(II)determined, in the case of such a deceased individual who died before attaining age 62 but would have attained age 62 before the end of her entitlement month, as if he had survived throughout the subsequent period ending with her entitlement month, and had applied for such benefit during the first month for which he would have been eligible for such benefit (assuming a primary insurance amount for the deceased individual determined under paragraph (2)(B) of this subsection).For purposes of determining the deceased individual’s imputed old-age insurance benefit under this clause, the determination of whether the deceased individual was a fully-insured individual (as defined in section 214(a)) shall be made as of the date of his death. In any case in which the deceased individual died before attaining age 62 and would not have attained age 62 before the end of the entitlement month of the widow (or surviving divorced wife), the deceased individual’s imputed old-age insurance benefit shall be deemed to be zero.
(iii)The amount of the imputed husband’s insurance benefit of the deceased individual for the entitlement month of the widow (or surviving divorced wife) is the amount of the husband’s insurance benefit under subsection (c) to which he would have been entitled for such month (assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age insurance benefit for such month, if any, as described in clause (ii))—
(I)determined, in the case of such a deceased individual who had attained age 62 as of the date of his death, as if he had applied for such benefit in the month of his death and had survived throughout the subsequent period ending with her entitlement month, or
(II)determined, in the case of such a deceased individual who died before attaining age 62 but would have attained age 62 before the end of her entitlement month, as if he had survived throughout the subsequent period ending with her entitlement month and had applied for such benefit during the first month for which he would have been eligible for such benefit.In any case in which the deceased individual died before he attained age 62 and would not have attained age 62 before the end of the entitlement month of the widow (or surviving divorced spouse), the deceased individual’s imputed husband’s insurance benefit shall be deemed to be zero.
(E)
(i)For purposes of subparagraph (C), if the deceased individual died during a month for which he otherwise would have been entitled (but for his death) to an old-age insurance benefit under subsection (a) or a disability insurance benefit under section 223, or to a husband’s insurance benefit under subsection (c) based on the wages and self-employment income of the widow (or surviving divorced wife), the imputed deceased individual’s benefit for the entitlement month of the widow (or surviving divorced wife) is the sum of—
(I)the amount of the old-age or disability insurance benefit (if any) to which he would have been entitled for her entitlement month if he had survived throughout the period subsequent to his death and ending with such month, and
(II)the amount of the husband’s insurance benefit (if any) to which he would have been entitled for her entitlement month based on her wages and self-employment income if he had survived throughout the period subsequent to his death and ending with such month (assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age or disability insurance benefit for such month, if any, as described in subclause (I)).
(ii)If the deceased individual otherwise would have been entitled (but for his death) to a disability insurance benefit under section 223 for the month in which he died, the amount determined under clause (i) shall be determined as if he had survived throughout the period commencing with the month of his death and ending with the entitlement month of the widow (or surviving divorced wife) and he had remained entitled to disability insurance benefits throughout such period (or until becoming entitled to old-age insurance benefits under subsection (a) during such period).
(F)For purposes of subparagraph (C)(i)(II)—
(i)In the case of a widow (or surviving divorced wife) who is entitled for her entitlement month to an old-age insurance benefit under subsection (a) or a disability insurance benefit under section 223, or otherwise would have been entitled (but for the deceased individual’s death) to a wife’s insurance benefit under subsection (b) for such month, the amount of her imputed survivor benefit for such month is the sum of—
(I)the amount of such old-age or disability insurance benefit (if any), and
(II)the amount of such wife’s insurance benefit (if any), assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age insurance or disability insurance benefit for such month (if any), as described in subclause (I).
(ii)In the case of a widow (or surviving divorced wife) who is not described in clause (i) but has attained (or would attain) age 62 as of the end of her entitlement month, the amount of her imputed survivor benefit is the sum of—
(I)the amount of the old-age insurance benefit under subsection (a) to which she would be entitled for such month if she filed application for such benefit during such month, and
(II)the amount to which she otherwise would have been entitled (but for the deceased individual’s death) as a wife’s insurance benefit under subsection (b) for such month, based on the deceased individual’s wages and self-employment income, if she had filed application for such benefit during such month (assuming a primary insurance amount for the deceased individual determined under paragraph (2)(B) of this subsection and assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age insurance benefit for such month, if any, as described in subclause (I)).In any case in which the widow (or surviving divorced wife) would not attain age 62 before the end of the her entitlement month, her imputed survivor benefit shall be deemed to be zero.
(G)The increased benefit cap determined under this subparagraph for the entitlement month of the widow (or surviving divorced wife) is the amount which would be the amount of a theoretical individual’s old-age insurance benefit under subsection (a) (reduced as provided in subsection (q)) if—
(i)such theoretical individual’s primary insurance amount for the first month of entitlement were equal to the average of the primary insurance amounts upon which old-age insurance benefits under subsection (a) are payable for—
(I)in any case in which the entitlement month of the widow (or surviving divorced wife) is the month of December, such month, or
(II)in any other case, the latest month of December preceding such entitlement month,
(ii)such first month of such theoretical individual’s entitlement to such old-age insurance benefit were the entitlement month of the widow (or surviving divorced spouse), and
(iii)the month in which the theoretical individual attained or would attain retirement age (as defined in section 216(l)) were the month in which the widow (or surviving divorced wife) attained or would attain retirement age (as so defined).
(H)If, in determining the amount of the benefit under this section pursuant to this paragraph, the imputed old-age insurance benefit or imputed husband’s insurance benefit of the deceased individual was deemed to be zero pursuant to the last sentence of clause (ii) or (iii) of subparagraph (D), or the imputed survivor benefit of the widow (or surviving divorced wife) was deemed to be zero pursuant to the last sentence of subparagraph (F), effective for any month after the entitlement month of the widow (or surviving divorced wife) in which the deceased individual would have attained age 62 or she attains age 62, the Commissioner shall recompute the amount of the benefit under this paragraph by substituting a reference to such later month for each reference in the preceding provisions of this paragraph to her entitlement month.
(I)
(i)Any reference in this paragraph to the widow’s insurance benefit (as determined under the preceding paragraphs of this subsection) shall be deemed a reference to such benefit, taking into account all applicable reductions and deductions under this title.
(ii)Any reference in this paragraph to the imputed old-age insurance benefit or imputed husband’s insurance benefit described in subparagraph (D), the old-age insurance benefit, disability insurance benefit, or husband’s insurance benefit described in subparagraph (E), or the old-age insurance benefit, disability insurance benefit, or wife’s insurance benefit described in subparagraph (F) shall be deemed a reference to such benefit, taking into account applicable reductions under this section but disregarding reductions or deductions otherwise applicable under this title.
(iii)A widow’s insurance benefit which has been increased under this paragraph shall be subject to all reductions and deductions otherwise applicable to widow’s insurance benefits under this title, except that such benefit shall not be subject to any reduction otherwise applicable under subsection (q)(1). .
(b)Widower’s insurance benefitsSection 202(f) of such Act (42 U.S.C. 402(f)) is amended by adding at the end the following new paragraph:
(9)
(A)In any case in which the amount of a widower’s insurance benefit (as determined under the preceding paragraphs of this subsection) for the entitlement month of the widower (or surviving divorced husband) is less than the minimum benefit amount for such month determined under subparagraph (C), the amount of such benefit for such month and each succeeding month shall be increased to such minimum benefit amount (or the amount most recently established in lieu thereof under section 215(i)).
(B)For purposes of this paragraph, the term entitlement month of a widower (or surviving divorced husband) means, in connection with his benefit under this subsection, the first month of his entitlement to such benefit.
(C)For purposes of subparagraph (A), the minimum benefit amount determined under this subparagraph for the entitlement month of the widower (or surviving divorced husband) is an amount equal to the lesser of—
(i)75 percent of the sum of—
(I)the imputed deceased individual’s benefit for such month, as determined under subparagraph (D) or (E) (as applicable), and
(II)the imputed survivor benefit for such month, as determined under subparagraph (F), or
(ii)the increased benefit cap determined under subparagraph (G) for such month.
(D)
(i)For purposes of subparagraph (C)(i)(I), if the deceased individual died in a month for which she was not entitled to any benefit under this title based on her wages or self-employment income or the wages and self-employment income of the widower (or surviving divorced husband), the imputed deceased individual’s benefit for the entitlement month of the widower (or surviving divorced husband) is the sum of—
(I)the imputed old-age insurance benefit (determined under clause (ii)) of the deceased individual for his entitlement month (if any), and
(II)the imputed wife’s insurance benefit (determined under clause (iii)) of the deceased individual for his entitlement month (if any).
(ii)The amount of the imputed old-age insurance benefit of the deceased individual for the entitlement month of the widower (or surviving divorced husband) is the amount of the old-age insurance benefit to which she would have been entitled for such month—
(I)determined, in the case of such a deceased individual who had attained age 62 as of the date of her death, as if she had applied for such benefit in the month of her death and had survived throughout the subsequent period ending with his entitlement month, or
(II)determined, in the case of such a deceased individual who died before attaining age 62 but would have attained age 62 before the end of his entitlement month, as if she had survived throughout the subsequent period ending with his entitlement month, and had applied for such benefit during the first month for which she would have been eligible for such benefit (assuming a primary insurance amount for the deceased individual determined under paragraph (2)(B) of this subsection).For purposes of determining the deceased individual’s imputed old-age insurance benefit under this clause, the determination of whether the deceased individual was a fully-insured individual (as defined in section 214(a)) shall be made as of the date of her death. In any case in which the deceased individual died before attaining age 62 and would not have attained age 62 before the end of the entitlement month of the widower (or surviving divorced husband), the deceased individual’s imputed old-age insurance benefit shall be deemed to be zero.
(iii)The amount of the imputed wife’s insurance benefit of the deceased individual for the entitlement month of the widower (or surviving divorced husband) is the amount of the wife’s insurance benefit under subsection (b) to which she would have been entitled for such month (assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age insurance benefit for such month, if any, as described in clause (ii))—
(I)determined, in the case of such a deceased individual who had attained age 62 as of the date of her death, as if she had applied for such benefit in the month of her death and had survived throughout the subsequent period ending with his entitlement month, or
(II)determined, in the case of such a deceased individual who died before attaining age 62 but would have attained age 62 before the end of his entitlement month, as if she had survived throughout the subsequent period ending with his entitlement month and had applied for such benefit during the first month for which she would have been eligible for such benefit.In any case in which the deceased individual died before she attained age 62 and would not have attained age 62 before the end of the entitlement month of the widower (or surviving divorced husband), the deceased individual’s imputed husband’s insurance benefit shall be deemed to be zero.
(E)
(i)For purposes of subparagraph (C), if the deceased individual died during a month for which she otherwise would have been entitled (but for her death) to an old-age insurance benefit under subsection (a) or a disability insurance benefit under section 223, or to a wife’s insurance benefit under subsection (b) based on the wages and self-employment income of the widower (or surviving divorced husband), the imputed deceased individual’s benefit for the entitlement month of the widower (or surviving divorced husband) is the sum of—
(I)the amount of the old-age or disability insurance benefit (if any) to which she would have been entitled for his entitlement month if she had survived throughout the period subsequent to her death and ending with such month, and
(II)the amount of the wife’s insurance benefit (if any) to which she would have been entitled for his entitlement month based on his wages and self-employment income if she had survived throughout the period subsequent to her death and ending with such month (assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age or disability insurance benefit for such month, if any, as described in subclause (I)).
(ii)If the deceased individual otherwise would have been entitled (but for her death) to a disability insurance benefit under section 223 for the month in which she died, the amount determined under clause (i) shall be determined as if she had survived throughout the period commencing with the month of her death and ending with the entitlement month of the widower (or surviving divorced husband) and she had remained entitled to disability insurance benefits throughout such period (or until becoming entitled to old-age insurance benefits under subsection (a) during such period).
(F)For purposes of subparagraph (C)(i)(II)—
(i)In the case of a widower (or surviving divorced husband) who is entitled for his entitlement month to an old-age insurance benefit under subsection (a) or a disability insurance benefit under section 223, or otherwise would have been entitled (but for the deceased individual’s death) to a husband’s insurance benefit under subsection (c) for such month, the amount of her imputed survivor benefit for such month is the sum of—
(I)the amount of such old-age or disability insurance benefit (if any), and
(II)the amount of such husband’s insurance benefit (if any), assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age insurance or disability insurance benefit for such month (if any), as described in subclause (I).
(ii)In the case of a widower (or surviving divorced husband) who is not described in clause (i) but has attained (or would attain) age 62 as of the end of his entitlement month, the amount of his imputed survivor benefit is the sum of—
(I)the amount of the old-age insurance benefit under subsection (a) to which he would be entitled for such month if he filed application for such benefit during such month, and
(II)the amount to which he otherwise would have been entitled (but for the deceased individual’s death) as a husband’s insurance benefit under subsection (c) for such month, based on the deceased individual’s wages and self-employment income, if he had filed application for such benefit during such month (assuming a primary insurance amount for the deceased individual determined under paragraph (2)(B) of this subsection and assuming, for purposes of reduction under subsection (k)(3)(A), the entitlement to an old-age insurance benefit for such month, if any, as described in subclause (I)).In any case in which the widower (or surviving divorced husband) would not attain age 62 before the end of the his entitlement month, his imputed survivor benefit shall be deemed to be zero.
(G)The increased benefit cap determined under this subparagraph for the entitlement month of the widower (or surviving divorced husband) is the amount which would be the amount of a theoretical individual’s old-age insurance benefit under subsection (a) (reduced as provided in subsection (q)) if—
(i)such theoretical individual’s primary insurance amount for the first month of entitlement were equal to the average of the primary insurance amounts upon which old-age insurance benefits under subsection (a) are payable for—
(I)in any case in which the entitlement month of the widower (or surviving divorced husband) is the month of December, such month, or
(II)in any other case, the latest month of December preceding such entitlement month,
(ii)such first month of such theoretical individual’s entitlement to such old-age insurance benefit were the entitlement month of the widower (or surviving divorced husband), and
(iii)the month in which the theoretical individual attained or would attain retirement age (as defined in section 216(l)) were the month in which the widower (or surviving divorced husband) attained or would attain retirement age (as so defined).
(H)If, in determining the amount of the benefit under this section pursuant to this paragraph, the imputed old-age insurance benefit or imputed wife’s insurance benefit of the deceased individual was deemed to be zero pursuant to the last sentence of clause (ii) or (iii) of subparagraph (D), or the imputed survivor benefit of the widower (or surviving divorced husband) was deemed to be zero pursuant to the last sentence of subparagraph (F), effective for any month after the entitlement month of the widower (or surviving divorced husband) in which the deceased individual would have attained age 62 or he attains age 62, the Commissioner shall recompute the amount of the benefit under this paragraph by substituting a reference to such later month for each reference in the preceding provisions of this paragraph to her entitlement month.
(I)
(i)Any reference in this paragraph to the widower’s insurance benefit (as determined under the preceding paragraphs of this subsection) shall be deemed a reference to such benefit, taking into account all applicable reductions and deductions under this title.
(ii)Any reference in this paragraph to the imputed old-age insurance benefit or imputed wife’s insurance benefit described in subparagraph (D), the old-age insurance benefit, disability insurance benefit, or wife’s insurance benefit described in subparagraph (E), or the old-age insurance benefit, disability insurance benefit, or husband’s insurance benefit described in subparagraph (F) shall be deemed a reference to such benefit, taking into account applicable reductions under this section but disregarding reductions or deductions otherwise applicable under this title.
(iii)A widower’s insurance benefit which has been increased under this paragraph shall be subject to all reductions and deductions otherwise applicable to widower’s insurance benefits under this title, except that such benefit shall not be subject to any reduction otherwise applicable under subsection (q)(1)..
(c)Cost-of-living adjustments to guaranteed widow’s and widower’s insurance benefitsSection 215(i)(2)(A)(ii) of such Act (42 U.S.C. 415(i)(2)(A)(ii)) is amended—
(1)in subclause (II), by striking and
at the end;
(2)in subclause (III), by striking 1978.
and inserting 1979, and
;
(3)by adding at the end the following new subclause:
(IV)the benefit amount to which an individual is entitled for that month under subsection (e) or (f) of section 202 if such benefit amount has been increased under paragraph (10) of such subsection.; and
(4)in the matter following subclause (IV) (added by paragraph (3)), by striking (I), (II), and (III)
and inserting (I), (II), (III), and (IV)
.
(d)The amendments made by this section shall apply with respect to widow’s and widower’s insurance benefits for which applications are filed in months after November 2005.
16.Limitation on benefits of married couple to level of maximum worker benefits
(a)Wife’s insurance benefitsSection 202(b)(2) of the Social Security Act (42 U.S.C. 402(b)(2)) is amended to read as follows:
(2)Except as provided in subsections (k)(5) and (q), such wife’s insurance benefit for each month shall be equal to the excess (not less than zero) of—
(A)the lesser of—
(i)150 percent of her husband’s primary insurance amount, or
(ii)the primary insurance amount for such month of a hypothetical individual—
(I)who is entitled to old-age insurance insurance benefits for such month,
(II)who became entitled to such benefit upon attaining age 62 during the month in which her husband became entitled to old-age insurance benefits, and
(III)to whom wages and self-employment income were credited in each of such hypothetical individual’s elapsed years (within the meaning of section 215(b)(2)(B)(iii)) in an amount equal to the maximum amount includible under this title as wages and self-employment income for such year, over
(B)the primary insurance amount of her husband..
(b)Husband’s insurance benefitsSection 202(c)(2) of such Act (42 U.S.C. 402(c)(2)) is amended to read as follows:
(2)Except as provided in subsections (k)(5) and (q), such husband’s insurance benefit for each month shall be equal to the excess (not less than zero) of—
(A)the lesser of—
(i)150 percent of his wife’s primary insurance amount, or
(ii)the primary insurance amount for such month of a hypothetical individual—
(I)who is entitled to old-age insurance insurance benefits for such month,
(II)who became entitled to such benefit upon attaining age 62 during the month in which his wife became entitled to old-age insurance benefits, and
(III)to whom wages and self-employment income were credited in each of such hypothetical individual’s elapsed years (within the meaning of section 215(b)(2)(B)(iii)) in an amount equal to the maximum amount includible under this title as wages and self-employment income for such year, over
(B)the primary insurance amount of his wife..
(c)Application of family maximumSection 203(a) of such Act (42 U.S.C. 403(a)) is amended by adding at the end the following:
(11)For purposes of determining under this subsection the amount of reduction in total monthly benefits to which beneficiaries may be entitled for a month on the basis of the wages and self-employment income of an individual, the amount of a wife’s insurance benefit or a husband’s insurance benefit for each month based on such wages and self-employment income shall be deemed to be equal to one-half of the primary insurance amount of the individual for such month (subject to subsections (k)(5) and (q) of section 202)..
(d)The amendments made by this section shall apply with respect to wife’s insurance benefits and husband’s insurance benefits in cases in which the spouse becomes eligible for old-age insurance benefits or disability insurance benefits in any calendar year after 2005.