[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6990 Introduced in House (IH)]
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115th CONGRESS
2d Session
H. R. 6990
To create portable retirement and investment accounts for all
Americans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 28, 2018
Mr. Himes introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To create portable retirement and investment accounts for all
Americans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Portable Retirement and Investment
Account Act of 2018'' or the ``PRIA Act of 2018''.
SEC. 2. PORTABLE RETIREMENT AND INVESTMENT ACCOUNT BOARD.
(a) Establishment.--There is established a Portable Retirement and
Investment Board (referred to in this Act as the ``Board'') to be
headed by a Director (referred to in this Act as the ``Director'').
(b) Membership.--
(1) In general.--The Board shall consist of--
(A) 3 members appointed by the Secretary of the
Treasury;
(B) 3 members appointed by the Secretary of Labor;
(C) 2 members appointed by the Pension Benefit
Guaranty Corporation; and
(D) 1 member appointed by the Director of the
Bureau of Consumer Financial Protection.
(2) Deadline for appointment.--The appointments described
under paragraph (1) shall be made not later than 1 year after
the date of the enactment of this Act.
(3) Limitation.--In making appointments under paragraph
(1), the officials making such appointments shall coordinate to
ensure that not more than 5 members of the same political party
may serve on the Board at the same time.
(4) Terms of office.--Each member of the Board shall hold
office for a term of 5 years and shall continue in office until
his successor is appointed in the same manner as the original
appointment was made. The terms of office of the members of the
Board first taking office after the date of the enactment of
this Act shall expire as follows: one at the end of 1 year, two
at the end of 2 years, two at the end of 3 years, two at the
end of 4 years, and two at the end of 5 years.
(5) Vacancies.--Each member of the Board shall continue in
office until his successor is appointed in the same manner as
the original appointment was made. Any vacancy on the Board
shall be filled in the same manner as the initial appointment
was made, and members of the Board appointed to fill vacancies
shall be appointed for the remainder of such term.
(c) Director.--
(1) In general.--The Director shall be selected by the
President from among the members of the Board.
(2) Authority to issue regulations.--The Director is
authorized to issue such regulations or other guidance as the
Director determines are necessary to carry out the purposes of
this Act.
SEC. 3. CONTRACTS TO PROVIDE PORTABLE RETIREMENT AND INVESTMENT
ACCOUNTS.
(a) In General.--Not later than 1 year after the date of the
enactment of this Act, the Director shall establish a program under
which the Director shall award one contract each year on a competitive
basis to an entity in the private sector to act as trustee of all
portable retirement and investment accounts (as defined in section 223A
of the Internal Revenue Code of 1986) established pursuant to section
4(a)(2) during such year. Each amount in a portable retirement and
investment account provided by a trustee pursuant to a contract under
this subsection shall be invested in a lifecycle fund provided by the
trustee as described in subsection (c). In awarding contracts to
entities under this subsection, the Director shall consider--
(1) the specific composition of the lifecycle funds
provided by such trustee;
(2) the services to account holders offered by such
trustee, including available investment advice;
(3) the fees charged by such trustee; and
(4) the importance of maintaining a diversity of trustees.
(b) Certification of Trustees.--The Director may not award a
contract to an entity under subsection (a) unless the Director has
certified such entity under this subsection. The Director shall
establish certification criteria which shall include the following:
(1) Expertise, including the professional qualifications,
business model, experience, and training of the trustee and any
service providers that the trustee intends to use.
(2) Registration, licensing, and financial soundness
demonstrating that participant funds would be handled by a
regulated financial entity.
(3) Reputation and customer service, including records of
comments or complaints from employers and participants, timely
consideration and resolution of complaints filed, and
independent rating or accreditations.
(c) Lifecycle Fund.--A lifecycle fund described in this subsection
is a fund that--
(1) is comprised of an appropriate mix of index funds;
(2) is automatically adjusted over time during the time
horizon of the fund;
(3) strikes a balance between expected risk and return over
the time horizon of the fund; and
(4) has an initial target retirement date that is
consistent with retirement at age 65.
(d) Fiduciary Responsibility.--A trustee of a portable retirement
and investment account shall act as a fiduciary to the account holder
and shall discharge his duties with respect to the account in the sole
interest of the account holder under rules similar to those applicable
to an ERISA fiduciary under section 404 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104).
SEC. 4. ESTABLISHMENT; CONTRIBUTIONS.
(a) Establishment.--
(1) Portable retirement and investment account fund.--There
is established in the Treasury the Portable Retirement and
Investment Account Fund (in this Act referred to as the
``Fund''). The Board shall, to the greatest extent practicable
and consistent with the requirements of this Act, manage the
Fund in the same manner as the Thrift Savings Fund established
under section 8437 of title 5, United States Code.
(2) Accounts.--For each individual for whom a notification
is made under clause (iv) of section 205(c)(2)(B) of the Social
Security Act (42 U.S.C. 405(c)(2)(B)), as added by paragraph
(3), or whose name is included on the list submitted under
paragraph (4), not later than 90 days after such notification
or submission, the Director shall establish, with such
individual as the sole beneficiary, a portable retirement and
investment account within the Fund.
(3) Notification of issuance of social security account
number.--
(A) In general.--Section 205(c)(2)(B) of the Social
Security Act (42 U.S.C. 405(c)(2)(B)) is amended by
adding at the end the following:
``(iv) Not later than 60 days after assigning a social security
account number to an individual, the Commissioner of Social Security
shall notify the Director of the Portable Retirement and Investment
Account Board of such assignment.''.
(B) Effective date.--The amendment made by
subparagraph (A) shall apply with respect to social
security account numbers assigned after a certain date,
to be designated by the Director, occurring not later
than 3 years after the date of the enactment of this
Act.
(4) Transition.--Not later than the date designated
pursuant to paragraph (3)(B), occurring not later than 3 years
after the date of the enactment of this Act, the Commissioner
of Social Security shall submit to the Director a list of the
name of each living individual who has been assigned a social
security account number.
(b) Federal Contributions.--
(1) In general.--In the case of an individual for whom a
notification is made under clause (iv) of section 205(c)(2)(B)
of the Social Security Act (42 U.S.C. 405(c)(2)(B)), as added
by subsection (a)(3), who is a child of a taxpayer who received
a credit against tax under section 32 of the Internal Revenue
Code of 1986 for the most recent taxable year ending before the
date of the notification under such subsection, the Director
shall deposit into the portable retirement and investment
account of the individual an amount determined under paragraph
(2).
(2) Amount.--Subject to paragraph (3), the amount
determined under this paragraph is--
(A) in the case of a taxpayer eligible for the
maximum credit applicable to such individual under
section 32 of the Internal Revenue Code of 1986, the
applicable contribution amount; and
(B) in any other case, a lower amount to be
determined under regulations issued by the Secretary of
the Treasury to reflect a proportional reduction of
such amount as the credit under such section decreases.
(3) Applicable contribution amount.--
(A) In general.--For purposes of this subsection,
the term ``applicable contribution amount'' means $500.
(B) Inflation adjustment.--In the case of any
taxable year beginning in a calendar year after 2020,
the dollar amount in subparagraph (A) shall be
increased by an amount equal to--
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment
determined under section 1(f)(3) of the
Internal Revenue Code of 1986 for the calendar
year in which the taxable year begins, by
substituting ``calendar year 2019'' for
``calendar year 2016'' in subparagraph (A)(ii)
thereof.
Any increase determined under the preceding sentence
shall be rounded to the nearest multiple of $10.
(4) Contribution for transfer.--A beneficiary of a portable
retirement and investment account, or in the case of a
beneficiary who has not attained the age of 18, the parent or
guardian of such beneficiary, may elect at any time to transfer
the entire amount in the account to a portable retirement and
investment account in the private sector. Such account shall be
held by a custodial entity such as a bank, credit union, trust
company or an entity that is licensed and regulated by the
Secretary pursuant to requirements consistent with section
1.408-2e of title 26, Code of Federal Regulations. Upon such
election, the Director shall provide for a $50 deposit if the
beneficiary completes a financial literacy training, as
determined appropriate by the Director. Investments in such
accounts are not subject to the limitation to lifecycle funds
described in section 3.
(c) Personal Contributions.--
(1) In general.--The beneficiary of a portable retirement
and investment account may at any time contribute additional
funds for deposit into such account.
(2) Direct deposit.--Any employer who permits wages to be
paid to an employee by electronic funds transfer shall permit
such employee to elect to deposit, by means of electronic funds
transfer, a portion of such wages specified by the employee
into the employee's portable retirement and investment account.
(3) Automatic contribution arrangement.--Any employer may
provide that an employee is treated as having elected to have
the employer make contributions in an amount equal to a uniform
percentage of compensation disclosed in advance to the employee
until the employee specifically elects not to have such
contributions made (or specifically elects to have such
contributions made at a different percentage).
(4) Supersedure.--Paragraph (4) shall supercede any law of
any State (within the meaning of section 514(c)(1) of title 29)
which would directly or indirectly prohibit an employer from
adopting an arrangement described in paragraph (4). The
Director may prescribe regulations which would establish
minimum standards that such an arrangement would be required to
satisfy in order for this paragraph to apply in the case of
such arrangement.
(d) Employer Contributions.--The employer of a beneficiary of a
portable retirement and investment account may at any time contribute
additional funds for deposit into such account.
(e) Transfer Option.--
(1) In general.--A beneficiary of a portable retirement and
investment account (or, in the case of a beneficiary who is
under 18 years of age, the parent or guardian of the
beneficiary) may elect at any time to transfer the entire
amount in such portable retirement and investment account to
any portable retirement and investment account in the private
sector (as defined in section 223A of the Internal Revenue Code
of 1986) with such beneficiary as the sole beneficiary.
(2) Notifications.--
(A) Statements.--The Director shall ensure that
account statements are delivered to the beneficiary of
a portable retirement and investment account by
electronic delivery to the extent practicable.
(B) Notice of transfer option.--When the amount in
a portable retirement and investment account first
exceeds $15,000 and when the beneficiary of the account
attains the age of 18, the Director shall notify the
beneficiary of the account of the option under
paragraph (3) to transfer the entire amount in such
account to another account.
SEC. 5. TAX TREATMENT.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section 223
the following new section:
``SEC. 223A. PORTABLE RETIREMENT AND INVESTMENT ACCOUNTS.
``(a) Deduction Allowed.--
``(1) In general.--There shall be allowed as a deduction
for the taxable year an amount equal to the aggregate amount
paid in cash during such taxable year to a portable retirement
and investment account by the account beneficiary.
``(2) Certain rules to apply.--Rules similar to section
219(d)(2) (relating to no deduction for rollovers) shall apply
for purposes of this section.
``(b) Maximum Amount of Deduction.--
``(1) In general.--The amount allowable as a deduction
under subsection (a) to any individual for any taxable year
shall not exceed the lesser of--
``(A) $18,500, or
``(B) an amount equal to the compensation
includible in the individual's gross income for such
taxable year.
``(2) Catch-up contributions for individuals 50 or older.--
In the case of an individual who has attained the age of 50
before the close of the taxable year, the amounts described in
paragraph (1)(A) and subsection (c)(4) for such taxable year
shall be increased by $6,000.
``(c) Portable Retirement and Investment Account.--For purposes of
this title, the term `portable retirement and investment account' means
a trust created or organized in the United States for the exclusive
benefit of an individual, but only if the written governing instrument
creating the trust meets the following requirements:
``(1) The trustee is a bank (as defined in section 408(n)
of the Internal Revenue Code of 1986) or such other person who
demonstrates to the satisfaction of the Secretary that the
manner in which such other person will administer the trust
will be consistent with the requirements of this section.
``(2) The amounts in the trust may consist only of--
``(A) deposits under section 4(b) of the Portable
Retirement and Investment Account Act of 2018,
``(B) amounts described in subsection (a)(1),
``(C) amounts deposited by an employer of the
account beneficiary,
``(D) interest on amounts in such trust, and
``(E) proceeds from investment of amounts in such
trust.
``(3) Except in the case of a rollover contribution
described in subsection (d)(4), no contribution will be
accepted unless it is in cash.
``(4) No contributions in excess of the amount that is
twice the dollar amount in effect under subsection (b)(1)(A)
will be accepted during a calendar year.
``(5) No distribution that would bring the account balance
below the amount deposited in such trust under section (b)(1)
of the PRIA Act of 2018 is allowed to an account beneficiary
who has not attained the age 59\1/2\.
``(d) Tax Treatment of Accounts.--
``(1) In general.--A portable retirement and investment
account is exempt from taxation under this subtitle unless such
account has ceased to be a portable retirement and investment
account. 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) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to
portable retirement and investment accounts, and subsection
(e)(2) shall not apply to any amount treated as distributed
under such rules.
``(e) Tax Treatment of Distributions.--
``(1) In general.--Any amount paid or distributed out of a
portable retirement and investment account shall be included in
the gross income of such beneficiary.
``(2) Additional tax on certain distributions.--The tax
imposed by this chapter on the account beneficiary for any
taxable year in which there is a payment or distribution from a
portable retirement and investment account of such beneficiary
shall be increased by 10 percent unless such payment or
distribution is--
``(A) paid or distributed on or after the date on
which the account beneficiary attains age 59\1/2\,
``(B) paid or distributed to an account beneficiary
who is disabled within the meaning of subsection
(m)(7), or
``(C) paid or distributed to an account beneficiary
who has attained age 55 and becomes unemployed after
attaining such age.
``(3) Certain distributions not taxed.--
``(A) In general.--Paragraphs (1) and (2) shall not
apply to any amount paid or distributed from a portable
retirement and investment account to the account
beneficiary to the extent the amount received is paid
into a portable retirement and investment account, or
for an annuity, for the benefit of such beneficiary not
later than the 60th day after the day on which the
beneficiary receives the payment or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from a portable retirement and investment
account if, at any time during the 1-year period ending
on the day of such receipt, such individual received
any other amount described in subparagraph (A) from a
portable retirement and investment account which was
not includible in the individual's gross income because
of the application of this paragraph.
``(4) Transfer of account incident to divorce.--The
transfer of an individual's interest in a portable retirement
and investment account to an individual's spouse or former
spouse under a divorce or separation instrument described in
subparagraph (A) of section 71(b)(2) shall not be considered a
taxable transfer made by such individual notwithstanding any
other provision of this subtitle, and such interest shall,
after such transfer, be treated as a portable retirement and
investment account with respect to which such spouse is the
account beneficiary.
``(5) Treatment after death of account beneficiary.--
``(A) Treatment if designated beneficiary is
spouse.--If the account beneficiary's surviving spouse
acquires such beneficiary's interest in a portable
retirement and investment account by reason of being
the designated beneficiary of such account at the death
of the account beneficiary, such portable retirement
and investment account shall be treated as if the
spouse were the account beneficiary.
``(B) Other cases.--If, by reason of the death of
the account beneficiary, any person acquires the
account beneficiary's interest in a portable retirement
and investment account in a case to which subparagraph
(A) does not apply--
``(i) such account shall cease to be a
portable retirement and investment account as
of the date of death, and
``(ii) an amount equal to the fair market
value of the assets in such account on such
date shall be includible if such person is not
the estate of such beneficiary, in such
person's gross income for the taxable year
which includes such date, or if such person is
the estate of such beneficiary, in such
beneficiary's gross income for the last taxable
year of such beneficiary.
``(f) Loans Treated as Distributions.--For purposes of this
section--
``(1) In general.--If during any taxable year a participant
or beneficiary receives (directly or indirectly) any amount as
a loan from a portable retirement and investment account, such
amount shall be treated as having been received by such
individual as a distribution from such account.
``(2) Exception for certain loans.--
``(A) General rule.--Paragraph (1) shall not apply
to any loan to the extent that such loan (when added to
the outstanding balance of all other loans from such
account), does not exceed the lesser of--
``(i) $50,000, reduced by the excess (if
any) of--
``(I) the highest outstanding
balance of loans from the account
during the 1-year period ending on the
day before the date on which such loan
was made, over
``(II) the outstanding balance of
loans from the plan on the date on
which such loan was made, or
``(ii) the greater of--
``(I) one-half of the amount in the
account, or
``(II) $10,000.
``(B) Requirement that loan be repayable within 5
years.--
``(i) In general.--Subparagraph (A) shall
not apply to any loan unless such loan, by its
terms, is required to be repaid within 5 years.
``(ii) Exception for home loans.--Clause
(i) shall not apply to any loan used to acquire
any dwelling unit which within a reasonable
time is to be used (determined at the time the
loan is made) as the principal residence of the
participant.
``(C) Requirement of level amortization.--Except as
provided in regulations, this paragraph shall not apply
to any loan unless substantially level amortization of
such loan (with payments not less frequently than
quarterly) is required over the term of the loan.
``(g) Employer Deductions.--
``(1) In general.--For deductions related to employer
contributions, see section 162.
``(2) Nondiscrimination.--Under regulations prescribed by
the Secretary, notwithstanding section 162, no deduction shall
be allowed for employer contributions to a portable retirement
and investment account on behalf of an employee who is a highly
compensated employee (as defined in section 414(q) 105(h)(5))
if the employer contributions made on behalf of all employees
discriminate in favor of such employees who are highly
compensated employees.
``(3) Certain controlled groups.--All employees who are
treated as employed by a single employer under subsection (b),
(c), and (m) of section 414 shall be treated as employed by a
single employer for purposes of this subsection.
``(h) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning in a calendar year after 2020, the dollar amounts
under subsection (b) and subsection (c)(4) shall be increased
by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2019' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding rules.--If any amount after adjustment under
paragraph (1) is not a multiple of $500, such amount shall be
rounded to the next lower multiple of $500.''.
(b) Clerical Amendments.--The table of sections for chapter 1 is
amended by inserting after the item related to section 223 the
following new item:
``Sec. 223A. Portable Retirement and Investment Accounts.''.
SEC. 6. OPTION TO ROLLOVER.
(a) Rollover Option.--
(1) In general.--Any individual who holds an account
described under paragraph (2) may elect to roll over the entire
amount in such account into a portable retirement and
investment account. Such rollover shall be treated as a
rollover described in section 223A(e)(4) of the Internal
Revenue Code of 1986.
(2) Accounts described.--This subsection shall apply to
accounts opened or annuity contracts purchased pursuant to the
following sections of the Internal Revenue Code of 1986:
(A) Section 401(k).
(B) Section 403(b).
(C) Section 457.
(D) Section 409A.
(E) Section 408.
SEC. 7. REGULATIONS.
Not later than 180 days after the date of the enactment of this
Act, the Secretary of the Treasury, in coordination with the
Commissioner of Social Security, as determined necessary by the
Secretary, shall issue regulations to carry out this section.
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