[Congressional Record Volume 144, Number 104 (Wednesday, July 29, 1998)]
[Senate]
[Pages S9244-S9253]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. Roth:
  S. 2369. A bill to amend the Social Security Act to establish the 
Personal Retirement Accounts Program; to the Committee on Finance.


              the personal retirement accounts act of 1998

  Mr. ROTH. Mr. President, I rise today to introduce the Personal 
Retirement Accounts Act of 1998. This legislation has a simple but 
powerful purpose--to establish personal retirement accounts for working 
Americans. In my view, these accounts promise to give working Americans 
not only a more secure retirement future but a new stake in the 
Nation's economic growth. And, as I will describe, these accounts may 
provide the model for future Social Security reform.
  A few years ago personal retirement accounts were an exotic and even 
controversial concept. But no longer! In 1996, a majority of a Clinton 
Administration task force on Social Security reform endorsed the 
concept. Today, personal retirement accounts are a bipartisan, even 
mainstream, idea. In March, Senator Moynihan, the ranking Democrat on 
the Finance Committee, and Senator Kerrey introduced legislation that 
would create retirement accounts as part of an overhaul of Social 
Security.
  And earlier this month, bipartisan, bicameral Social Security reform 
legislation that included personal retirement accounts was introduced 
by Senators Gregg and Breaux in the Senate, and by Congressmen Kolbe 
and Stenholm in the House. Their bill is based on the unanimous 
recommendations of a privately sponsored National Commission on 
Retirement Policy--comprised of 24 lawmakers, economists, pension 
experts, and businessmen.
  Yesterday, at a Social Security town hall meeting in Albquqerque, NM, 
the President said he had an ``open mind'' on personal retirement 
accounts. And in testimony before the Senate Finance Committee last 
week, a top Clinton Administration official offered several guidelines 
for designing such accounts, including efficiency, such as low 
administrative costs, and protection of the progressive benefits. My 
bill meets these guidelines.
  Mr. President, let me explain why retirement accounts find so much 
support--not only in Congress but among the American people. With even 
conservative investment, such accounts have the potential to provide 
Americans with a substantial retirement nest egg, and an estate they 
can leave to their children and grandchildren.
  Creating these accounts would also give the majority of Americans who 
do not own any investment assets a new stake in America's economic 
growth--because that growth will be returned directly to their benefit. 
More Americans will be the owners of capital--not just workers.
  Creating these accounts may encourage Americans to save more. Today, 
Americans save less than people in almost every other country. But 
personal

[[Page S9245]]

retirement accounts will demonstrate to all Americans the magic of 
compound interest as even small savings grow significantly over time.
  Lastly, creating these accounts will help Americans to better prepare 
for retirement. According to the CRS, 60 percent of Americans are not 
actively participating in a retirement program other than Social 
Security. A recent survey by the Employee Benefits Research Institute 
found that only about 45 percent of working Americans have tried to 
calculate how much they will need for retirement. It is my belief that 
retirement accounts will prompt Americans--particularly baby boomers--
to think more about retirement planning.
  Mr. President, let me describe a few of the features of my bill. 
First, the program would run for 5 years, from 1999 to 2003, utilizing 
half the budget surplus projected by CBO earlier this month.
  Each year, every working American who earned a minimum of 4 quarters 
of Social Security coverage--about $2,900 in 1999--would receive a 
deposit in his or her personal retirement account. About 127 million 
Americans would receive a deposit in 1999.
  The formula for sharing the surplus among the accounts is 
progressive. Each eligible individual would receive a minimum amount of 
$250 per year, plus an additional amount based on how much they paid in 
payroll taxes.
  Over the life of the program, a minimum wage earner--someone earning 
$12,400 this year--would receive about $1,720. That amount is equal to 
a 34-percent rebate of his or her payroll taxes.
  An average wage earner--earning $27,600--would receive about $2,300--
equal to a 20-percent rebate of payroll taxes. And an individual who 
paid the maximum Social Security tax would get $3,840, a 14-percent 
rebate of payroll taxes. These figures do not include any investment 
income or deductions for the costs of running the program.
  Account holders would have three investment choices--prudent choices 
that balance risk and return. The three choices are a stock index 
fund--a mutual fund that reflects the overall performance of the stock 
market; a fund that invests in corporate bonds and other fixed income 
securities; and a fund that invests in U.S. Treasury bonds.
  However, my legislation also provides for a study of additional 
investment options--of other types of investment funds and investment 
managers.

  An account holder would become eligible for benefits when he or she 
signs up for Social Security. An individual could choose between an 
annuity or annual payments based on life expectancy.
  The bill also provides a number of features to ensure the program is 
properly run. First, the program would be neither on budget nor off 
budget. Instead, the program would be outside the Federal budget. The 
money in the program could be used for no other purpose than retirement 
benefits and the program's operating expenses.
  Second, the program would be supervised by a new, independent 
Personal Retirement Board, with members appointed by the President and 
Congressional leaders and subject to Senate confirmation. Board 
officials would be fiduciaries, and required by law to act only in the 
best financial interests of beneficiaries.
  Lastly, the stock funds would be managed by private sector investment 
managers. To insulate companies represented in the stock funds from 
politics, no board official or other government employee would be 
eligible to vote company proxies--only the investment managers.
  Mr. President, the design of this personal retirement accounts plan 
follows a proven model--the Federal Thrift Savings Plan. Back in 1983, 
when I was Chairman of the Governmental Affairs Committee, the 
retirement program for Federal employees needed to be revamped. One of 
the new elements we added was the Federal Thrift Savings Plan--a 
defined contribution employee benefit plan--that has been a great 
success.
  Mr. President, many Americans will undoubtedly ask, ``What size nest 
egg might grow in my personal retirement account?'' According to an 
analysis done by Social Security's actuaries, someone earning the 
minimum wage would have an account worth about $2,150 in 2004, assuming 
a 7.5 percent interest rate. For the average wage earner, the account 
would be worth about $2,870, and for the individual paying the maximum 
Social Security tax, about $4,770.
  Of course, over the long term, accounts can grow significantly. For 
the minimum wage person, after 40 years--in 2039--his or her account 
would be worth about $27,000; the average wage earner would have 
$36,000; and the person paying the maximum payroll tax, $60,000.
  Mr. President, some might ask, ``Why start with personal retirement 
accounts rather than proposing comprehensive Social Security reform?'' 
Indeed, my bill will not affect the current Social Security program. 
Personal retirement accounts are an exciting concept, but still a big 
job, requiring careful work by the Finance Committee.
  And unlike many other Social Security reform proposals, retirement 
accounts have broad support. So let's get these accounts up and 
running, proven and tested, while Congress considers carefully 
protecting and preserving Social Security for the long term.
  Mr. President, in closing, let me add that personal retirement 
accounts have another big promise. Such accounts--if later made a part 
of Social Security--may help restore the confidence of the American 
people in Social Security. Polls show that Social Security is among the 
most popular of government programs, deservedly so. But many 
Americans--particularly young Americans--appear to have lost confidence 
in the program. They believe that there will be no benefits for them 
when they retire. Personal retirement accounts will provide the 
accountability and assurances that Americans are asking for.
  I encourage my colleagues to take a careful look at my bill, and I 
invite members to co-sponsor it.
  Mr. President, I ask for unanimous consent that a copy of this bill 
be printed into the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2369

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Personal 
     Retirement Accounts Act of 1998''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Save Social Security First Trust Fund.
Sec. 4. Establishment of Personal Retirement Accounts Program.

            ``TITLE I--PERSONAL RETIREMENT ACCOUNTS PROGRAM

  ``Subtitle A--Management of the Personal Retirement Accounts Program

``Sec. 101. Personal Retirement Accounts Board.
``Sec. 102. Executive director.

   ``Subtitle B--Establishment of Personal Retirement Savings Fund; 
                      Personal Retirement Accounts

``Sec. 111. Appropriations; annual transfers to the Personal Retirement 
              Savings Fund.
``Sec. 112. Personal Retirement Savings Fund.
``Sec. 113. Personal retirement accounts.

  ``Subtitle C--Investment and Administration of Personal Retirement 
                                Accounts

``Sec. 121. Investment of personal retirement accounts.
``Sec. 122. Accounting and information.
``Sec. 123. Distribution of benefits.
``Sec. 124. Annuities: methods of payment; election; purchase.
``Sec. 125. Protections for spouses and former spouses.
``Sec. 126. Designation of beneficiary; order of precedence.
``Sec. 127. Tax treatment of the Personal Retirement Savings Fund.
``Sec. 128. Administrative provisions.

                 ``Subtitle D--Beneficiary Protections

``Sec. 131. Fiduciary responsibilities; liability and penalties.
``Sec. 132. Bonding.
``Sec. 133. Investigative authority.
``Sec. 134. Exculpatory provisions; insurance.
Sec. 5. Report and recommendations regarding investment options.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) The social security program is the foundation of 
     retirement income for most Americans, and solving the 
     financial problems of the social security program is a vital 
     national priority and essential for the retirement security 
     of today's working Americans and their families.

[[Page S9246]]

       (2) There is a growing bipartisan consensus that personal 
     retirement accounts should be an important feature of social 
     security reform.
       (3) Personal retirement accounts can provide a substantial 
     retirement nest egg and real personal wealth. For an 
     individual 28 years old on the date of enactment of this Act, 
     earning an average wage, and retiring at age 65 in 2035, just 
     1 percent of that individual's wages deposited each year in a 
     personal retirement account and invested in securities 
     consisting of the Standard & Poors 500 would grow to 
     $132,000, and be worth approximately 20 percent of the 
     benefits that would be provided to the individual under the 
     current provisions of the social security program.
       (4) Personal retirement accounts would give the majority of 
     Americans who do not own any investment assets a new stake in 
     the economic growth of America.
       (5) Personal retirement accounts would demonstrate the 
     value of savings and the magic of compound interest to all 
     Americans. Today, Americans save less than people in almost 
     every other country.
       (6) Personal retirement accounts would help Americans to 
     better prepare for retirement generally. According to the 
     Congressional Research Service, 60 percent of Americans are 
     not actively participating in a retirement plan other than 
     social security, although social security was never intended 
     to be the sole source of retirement income.
       (7) The Federal budget will register a surplus of 
     $583,000,000,000 over fiscal years 1998 through 2003, 
     offering a unique opportunity to begin a permanent solution 
     to social security's financing.
       (8) Using the Federal budget surplus to fund personal 
     retirement accounts would be an important first step in 
     comprehensive social security reform and ensuring the 
     delivery of promised retirement benefits.

     SEC. 3. SAVE SOCIAL SECURITY FIRST TRUST FUND.

       (a) Establishment of Trust Fund.--There is established in 
     the Treasury of the United States a trust fund to be known as 
     the ``Save Social Security First Trust Fund'' (in this 
     section referred to as the ``Trust Fund''), consisting of 
     such amounts as are appropriated or credited to the Trust 
     Fund as provided in this section.
       (b) Appropriation to Trust Fund.--There is appropriated to 
     the Trust Fund, out of any sums in the Treasury not otherwise 
     appropriated, an amount equal to $31,500,000,000 for fiscal 
     year 1998 and $40,000,000,000 for fiscal year 1999. The 
     Secretary of the Treasury shall transfer such amounts to the 
     Trust Fund not later than--
       (1) September 30, 1998, in the case of the amount 
     appropriated for fiscal year 1998; and
       (2) September 30, 1999, in the case of the amount 
     appropriated for fiscal year 1999.
       (c) Investment of Trust Fund.--The Secretary of the 
     Treasury shall invest the Trust Fund in public debt 
     securities with suitable maturities and bearing interest at 
     rates determined by the Secretary, taking into consideration 
     current market yields on outstanding marketable obligations 
     of the United States of comparable maturities. The income on 
     such investments shall be credited to and form a part of the 
     Trust Fund.
       (d) Limitation on Use of Trust Fund.--Amounts in the Trust 
     Fund shall not be appropriated or used for any purpose other 
     than to be transferred to the Personal Retirement Savings 
     Fund established under section 112 of the Social Security Act 
     in accordance with section 111(b)(1) of such Act.
       (e) Dissolution of Trust Fund.--On the date of the transfer 
     of all amounts in the Trust Fund to the Personal Retirement 
     Savings Fund in accordance with section 111(b)(1) of the 
     Social Security Act, the Trust Fund established under this 
     section shall be dissolved.

     SEC. 4. ESTABLISHMENT OF PERSONAL RETIREMENT ACCOUNTS 
                   PROGRAM.

       The Social Security Act (42 U.S.C. 301 et seq.) is 
     amended--
       (1) by redesignating title I as title VI; and
       (2) by inserting before title II the following:
            ``TITLE I--PERSONAL RETIREMENT ACCOUNTS PROGRAM
  ``Subtitle A--Management of the Personal Retirement Accounts Program

     ``SEC. 101. PERSONAL RETIREMENT ACCOUNTS BOARD.

       ``(a) Establishment.--There is established in the Executive 
     Branch of the Government a Personal Retirement Accounts Board 
     (in this title referred to as the `Board').
       ``(b) Composition.--The Board shall be composed of--
       ``(1) 3 members appointed by the President, of whom 1 shall 
     be designated by the President as Chairman; and
       ``(2) 2 members appointed by the President, of whom--
       ``(A) 1 shall be appointed by the President after taking 
     into consideration the recommendation made by the Speaker of 
     the House of Representatives in consultation with the 
     Minority Leader of the House of Representatives; and
       ``(B) 1 shall be appointed by the President after taking 
     into consideration the recommendation made by the Majority 
     Leader of the Senate in consultation with the Minority Leader 
     of the Senate.
       ``(c) Advice and Consent.--Appointments under subsection 
     (b) shall be made by and with the advice and consent of the 
     Senate.
       ``(d) Membership Requirements.--Members of the Board shall 
     have substantial experience, training, and expertise in the 
     management of financial investments and pension benefit 
     plans.
       ``(e) Length of Appointments.--
       ``(1) Terms.--A member of the Board shall be appointed for 
     a term of 4 years, except that of the members first appointed 
     under subsection (b)--
       ``(A) the Chairman shall be appointed for a term of 4 
     years;
       ``(B) the members appointed under subsection (b)(2) shall 
     be appointed for terms of 3 years; and
       ``(C) the remaining members shall be appointed for terms of 
     2 years.
       ``(2) Vacancies.--
       ``(A) In general.--A vacancy on the Board shall be filled 
     in the manner in which the original appointment was made and 
     shall be subject to any conditions that applied with respect 
     to the original appointment.
       ``(B) Completion of term.--An individual chosen to fill a 
     vacancy shall be appointed for the unexpired term of the 
     member replaced.
       ``(3) Expiration.--The term of any member shall not expire 
     before the date on which the member's successor takes office.
       ``(f) Duties.--The Board shall--
       ``(1) administer the program established under this title;
       ``(2) establish policies for the investment and management 
     of the Personal Retirement Savings Fund, including policies 
     applicable to the outside entities and qualified professional 
     asset managers with responsibility for managing the 
     investment options described in section 121(b), that shall 
     provide for--
       ``(A) prudent investments suitable for accumulating funds 
     for payment of retirement income; and
       ``(B) low administrative costs.
       ``(3) review the performance of investments made for the 
     Personal Retirement Savings Fund;
       ``(4) review and approve the budget of the Board; and
       ``(5) comply with the provisions of subtitle D.
       ``(g) Administrative Provisions.--
       ``(1) In general.--The Board may--
       ``(A) adopt, alter, and use a seal;
       ``(B) except as provided in paragraph (2), direct the 
     Executive Director to take such action as the Board considers 
     appropriate to carry out the provisions of this title and the 
     policies of the Board;
       ``(C) upon the concurring votes of 4 members, remove the 
     Executive Director from office for good cause shown; and
       ``(D) take such other actions as may be necessary to carry 
     out the functions of the Board.
       ``(2) Meetings.--The Board shall meet--
       ``(A) not less than once during each month; and
       ``(B) at additional times at the call of the Chairman.
       ``(3) Exercise of powers.--
       ``(A) In general.--Except as provided in paragraph (1)(C) 
     and section 102(a)(1), the Board shall perform the functions 
     and exercise the powers of the Board on a majority vote of a 
     quorum of the Board. Three members of the Board shall 
     constitute a quorum for the transaction of business.
       ``(B) Vacancies.--A vacancy on the Board shall not impair 
     the authority of a quorum of the Board to perform the 
     functions and exercise the powers of the Board.
       ``(4) Limitation on investments.--Except in the case of 
     investments required by section 121 to be invested in 
     securities of the Government, the Board may not direct the 
     Executive Director to invest or to cause to be invested any 
     sums in the Personal Retirement Savings Fund in a specific 
     asset or to dispose of or cause to be disposed of any 
     specific asset of such Fund.
       ``(h) Compensation.--
       ``(1) In general.--Each member of the Board who is not an 
     officer or employee of the Federal Government shall be 
     compensated at the daily rate of basic pay for level IV of 
     the Executive Schedule for each day during which such member 
     is engaged in performing a function of the Board.
       ``(2) Expenses.--A member of the Board shall be paid 
     travel, per diem, and other necessary expenses under 
     subchapter I of chapter 57 of title 5, United States Code, 
     while traveling away from such member's home or regular place 
     of business in the performance of the duties of the Board.
       ``(3) Source of funds.--Payments authorized under this 
     subsection shall be paid from the Personal Retirement Savings 
     Fund.
       ``(i) Discharge of Responsibilities.--The members of the 
     Board shall discharge their responsibilities solely in the 
     interest of account holders and beneficiaries under this 
     title.
       ``(j) Annual Independent Audit.--The Board shall annually 
     engage an independent qualified public accountant to audit 
     the activities of the Board.
       ``(k) Submission of Budget to Congress.--The Board shall 
     prepare and submit to the President, and, at the same time, 
     to the appropriate committees of Congress, an annual budget 
     of the expenses and other items relating to the Board which 
     shall be included as a separate item in the budget required 
     to be transmitted to Congress under section 1105 of title 31, 
     United States Code.
       ``(l) Submission of Legislative Recommendations.--The Board 
     may submit to the President, and, at the same time, shall 
     submit to each House of Congress, any legislative 
     recommendations of the Board relating to any of its functions 
     under this title or any other provision of law.

[[Page S9247]]

     ``SEC. 102. EXECUTIVE DIRECTOR.

       ``(a) Appointment of Executive Director.--
       ``(1) In general.--The Board shall appoint, without regard 
     to the provisions of law governing appointments in the 
     competitive service, an Executive Director by action agreed 
     to by a majority of the members of the Board.
       ``(2) Requirements.--The Executive Director shall have 
     substantial experience, training, and expertise in the 
     management of financial investments and pension benefit 
     plans.
       ``(b) Duties.--The Executive Director shall--
       ``(1) carry out the policies established by the Board;
       ``(2) invest and manage the Personal Retirement Savings 
     Fund in accordance with the investment policies and other 
     policies established by the Board;
       ``(3) purchase annuity contracts and provide for the 
     payment of benefits under this title;
       ``(4) administer the provisions of this title; and
       ``(5) prescribe such regulations (other than regulations 
     relating to fiduciary responsibilities) as may be necessary 
     for the administration of this title.
       ``(c) Administrative Authority.--The Executive Director 
     may--
       ``(1) prescribe such regulations as may be necessary to 
     carry out the responsibilities of the Executive Director 
     under this section, other than regulations relating to 
     fiduciary responsibilities;
       ``(2) appoint such personnel as may be necessary to carry 
     out the provisions of this title;
       ``(3) subject to approval by the Board, procure the 
     services of experts and consultants under section 3109 of 
     title 5, United States Code;
       ``(4) secure directly from an Executive agency, the United 
     States Postal Service, or the Postal Rate Commission any 
     information necessary to carry out the provisions of this 
     title and the policies of the Board;
       ``(5) make such payments out of sums in the Personal 
     Retirement Savings Fund as the Executive Director determines 
     are necessary to carry out the provisions of this title and 
     the policies of the Board;
       ``(6) pay the compensation, per diem, and travel expenses 
     of individuals appointed under paragraphs (2), (3), and (7) 
     from the Personal Retirement Savings Fund;
       ``(7) accept and use the services of individuals employed 
     intermittently in the Government service and reimburse such 
     individuals for travel expenses, as authorized by section 
     5703 of title 5, United States Code, including per diem as 
     authorized by section 5702 of such title;
       ``(8) except as otherwise expressly prohibited by law or 
     the policies of the Board, delegate any of the Executive 
     Director's functions to such employees under the Board as the 
     Executive Director may designate and authorize such 
     successive redelegations of such functions to such employees 
     under the Board as the Executive Director may consider to be 
     necessary or appropriate; and
       ``(9) take such other actions as are appropriate to carry 
     out the functions of the Executive Director.
   ``Subtitle B--Establishment of Personal Retirement Savings Fund; 
                      Personal Retirement Accounts

     ``SEC. 111. APPROPRIATIONS; ANNUAL TRANSFERS TO THE PERSONAL 
                   RETIREMENT SAVINGS FUND.

       ``(a) Appropriations.--Out of any money in the Treasury of 
     the United States not otherwise appropriated, there are 
     appropriated for the purpose of making the transfers required 
     under subsection (b)--
       ``(1) for fiscal year 2000, $40,000,000,000;
       ``(2) for fiscal year 2001, $43,000,000,000;
       ``(3) for fiscal year 2002, $70,000,000,000; and
       ``(4) for fiscal year 2003, $68,000,000,000.
       ``(b) Transfers to the Personal Retirement Savings Fund.--
       ``(1) Transfer of amounts in the save social security first 
     trust fund.--Not later than October 1, 1999, the Secretary of 
     the Treasury shall transfer the obligations held by the 
     Secretary for the Save Social Security First Trust Fund 
     established under section 3 of the Personal Retirement 
     Accounts Act of 1998, and the amount standing to the credit 
     of such Trust Fund on the books of the Treasury on such date 
     to the Personal Retirement Savings Fund established under 
     section 112.
       ``(2) Transfer of appropriated amounts.--With respect to a 
     fiscal year for which an amount is appropriated under 
     subsection (a), the Secretary of the Treasury shall transfer 
     to the Personal Retirement Savings Fund established under 
     section 112 the amount appropriated under subsection (a) for 
     that fiscal year not later than--
       ``(A) September 30, 2000, in the case of the amount 
     appropriated under such subsection for fiscal year 2000;
       ``(B) September 30, 2001, in the case of the amount 
     appropriated under such subsection for fiscal year 2001;
       ``(C) September 30, 2002, in the case of the amount 
     appropriated under such subsection for fiscal year 2002; and
       ``(D) September 30, 2003, in the case of the amount 
     appropriated under such subsection for fiscal year 2003.

     ``SEC. 112. PERSONAL RETIREMENT SAVINGS FUND.

       ``(a) Establishment of Trust Fund.--There is established in 
     the Treasury of the United States a Personal Retirement 
     Savings Fund, consisting of all amounts deposited by the 
     Secretary of the Treasury in accordance with section 111(b), 
     increased by the total net earnings from investments of sums 
     in the Personal Retirement Savings Fund or reduced by the 
     total net losses from investments of the Fund, and reduced by 
     the total amount of payments made from the Fund (including 
     payments for administrative expenses).
       ``(b) Availability.--The sums in the Personal Retirement 
     Savings Fund are appropriated and shall remain available 
     without fiscal year limitation--
       ``(1) to invest under section 121;
       ``(2) to pay benefits or purchase annuity contracts under 
     this title;
       ``(3) to pay the administrative expenses of the Board;
       ``(4) to make distributions in accordance with sections 123 
     and 124; and
       ``(5) to purchase insurance as provided in section 
     134(b)(2).
       ``(c) Limitations on Use of Funds.--
       ``(1) In general.--Sums in the Personal Retirement Savings 
     Fund credited to the account of an individual may not be used 
     for, or diverted to, purposes other than for the exclusive 
     benefit of the account holder or the account holder's 
     beneficiaries under this title.
       ``(2) Assignments.--Except as provided in paragraph (3), 
     sums in the Personal Retirement Savings Fund may not be 
     assigned or alienated and are not subject to execution, levy, 
     attachment, garnishment, or other legal process.
       ``(3) Support obligations.--Moneys due or payable from the 
     Personal Retirement Savings Fund to any account holder shall 
     be subject to legal process for the enforcement of the 
     account holder's legal obligations to provide child support 
     or make alimony payments as provided in section 459 or for 
     the enforcement of a court order or other similar process in 
     the nature of a garnishment for the enforcement of a judgment 
     rendered against the account holder for physically, sexually, 
     or emotionally abusing a child.
       ``(d) Payment of Administrative Expenses.--Administrative 
     expenses incurred to carry out this title shall be paid out 
     of net earnings in the Personal Retirement Savings Fund in 
     conjunction with the allocation of investment earnings and 
     losses under section 122(a)(2).
       ``(e) Limitation.--The sums in the Personal Retirement 
     Savings Fund shall not be appropriated for any purpose other 
     than the purposes specified in this section and may not be 
     used for any other purpose.
       ``(f) Funds Held in Trust.--All sums transferred to the 
     Personal Retirement Savings Fund for the benefit of 
     individuals eligible for personal retirement accounts, and 
     all net earnings in such Fund attributable to investment of 
     such sums, are held in such Fund in trust for such 
     individuals.

     ``SEC. 113. PERSONAL RETIREMENT ACCOUNTS.

       ``(a) Establishment of Individual Accounts.--
       ``(1) Fiscal year 2000.--Not later than October 1, 1999, 
     the Executive Director shall establish and maintain a 
     personal retirement savings account for any individual who 
     has worked 4 qualifying quarters of coverage, as determined 
     under title II, in calendar year 1998.
       ``(2) Subsequent fiscal years.--Not later than October 1 of 
     each fiscal year beginning after fiscal year 2000, the 
     Executive Director shall establish and maintain a personal 
     retirement savings account for any individual who has worked 
     4 qualifying quarters of coverage, as determined under title 
     II, in the calendar year ending on December 31 of the 
     preceding fiscal year and for whom the Executive Director has 
     not previously established an account.
       ``(b) Allocation of Funds to Accounts.--Beginning on 
     October 1, 1999, and annually thereafter, the Executive 
     Director shall allocate to each personal retirement savings 
     account maintained on such date for the benefit of an 
     individual who has worked 4 qualifying quarters of coverage, 
     as determined under title II, in the calendar year ending on 
     December 31 of the preceding fiscal year the amount 
     determined under subsection (c).
       ``(c) Amount Determined.--
       ``(1) In general.--For any fiscal year, the amount 
     determined under this subsection is equal to the sum of--
       ``(A) $250, plus
       ``(B) the amount determined under paragraph (2) (if any).
       ``(2) Pro rata share of remainder.--For any fiscal year, 
     the amount determined under this paragraph with respect to 
     the account of each individual maintained on October 1 of 
     such fiscal year is equal to the product of--
       ``(A) the remainder of the Fund Balance for such fiscal 
     year, determined after the application of paragraph (1)(A); 
     and
       ``(B) the ratio determined under paragraph (3).
       ``(3) Ratio determined.--The ratio determined under this 
     paragraph is the ratio, expressed as a percentage, of--
       ``(A) the excess of--
       ``(i) the sum of--

       ``(I) the total tax imposed on the individual's wages under 
     section 3101(a) of the Internal Revenue Code of 1986 
     (relating to taxes on employees) for the taxable year ending 
     in the preceding fiscal year, plus
       ``(II) 50 percent of the total tax imposed on the 
     individual's self-employment income under section 1401(a) of 
     such Code (relating

[[Page S9248]]

     to tax on self-employment income) for such taxable year, over

       ``(ii) $250; to
       ``(B) the total amount of such excess for all such 
     individuals for such fiscal year.
       ``(4) Definition of fund balance.--In this subsection, the 
     term `Fund balance' means the net earnings and net losses 
     from the investment of the sums transferred to the Personal 
     Retirement Savings Fund in accordance with section 111(b), 
     reduced by the appropriate share of the administrative 
     expenses paid out of the net earnings under section 112(d), 
     as determined by the Executive Director.
  ``Subtitle C--Investment and Administration of Personal Retirement 
                                Accounts

     ``SEC. 121. INVESTMENT OF PERSONAL RETIREMENT ACCOUNTS.

       ``(a) Definitions.--In this section--
       ``(1) the term `Common Stock Index Investment Fund' means 
     the Common Stock Index Investment Fund established under 
     subsection (b)(1)(C);
       ``(2) the term `equity capital' means common and preferred 
     stock, surplus, undivided profits, contingency reserves, and 
     other capital reserves;
       ``(3) the term `Fixed Income Investment Fund' means the 
     Fixed Income Investment Fund established under subsection 
     (b)(1)(B);
       ``(4) the term `Government Securities Investment Fund' 
     means the Government Securities Investment Fund established 
     under subsection (b)(1)(A);
       ``(5) the term `net worth' means capital, paid-in and 
     contributed surplus, unassigned surplus, contingency 
     reserves, group contingency reserves, and special reserves;
       ``(6) the term ``plan'' means an employee benefit plan, as 
     defined in section 3(3) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002(3));
       ``(7) the term `qualified professional asset manager' 
     means--
       ``(A) a bank, as defined in section 202(a)(2) of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(2)) 
     which--
       ``(i) has the power to manage, acquire, or dispose of 
     assets of a plan; and
       ``(ii) has, as of the last day of its latest fiscal year 
     ending before the date of a determination for the purpose of 
     this clause, equity capital in excess of $1,000,000;
       ``(B) a savings and loan association, the accounts of which 
     are insured by the Federal Deposit Insurance Corporation, 
     which--
       ``(i) has applied for and been granted trust powers to 
     manage, acquire, or dispose of assets of a plan by a State or 
     Government authority having supervision over savings and loan 
     associations; and
       ``(ii) has, as of the last day of its latest fiscal year 
     ending before the date of a determination for the purpose of 
     this clause, equity capital or net worth in excess of 
     $1,000,000;
       ``(C) an insurance company which--
       ``(i) is qualified under the laws of more than 1 State to 
     manage, acquire, or dispose of any assets of a plan;
       ``(ii) has, as of the last day of its latest fiscal year 
     ending before the date of a determination for the purpose of 
     this clause, net worth in excess of $1,000,000; and
       ``(iii) is subject to supervision and examination by a 
     State authority having supervision over insurance companies; 
     or
       ``(D) an investment adviser registered under section 203 of 
     the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) if the 
     investment adviser has, on the last day of its latest fiscal 
     year ending before the date of a determination for the 
     purpose of this subparagraph, total client assets under its 
     management and control in excess of $50,000,000, and--
       ``(i) the investment adviser has, on such day, 
     shareholder's or partner's equity in excess of $750,000; or
       ``(ii) payment of all of the investment adviser's 
     liabilities, including any liabilities which may arise by 
     reason of a breach or violation of a duty described in 
     section 131, is unconditionally guaranteed by--

       ``(I) a person (as defined in paragraph (9)) who directly 
     or indirectly, through 1 or more intermediaries, controls, is 
     controlled by, or is under common control with the investment 
     adviser and who has, on the last day of the person's latest 
     fiscal year ending before the date of a determination for the 
     purpose of this clause, shareholder's or partner's equity in 
     an amount which, when added to the amount of the 
     shareholder's or partner's equity of the investment adviser 
     on such day, exceeds $750,000;
       ``(II) a qualified professional asset manager described in 
     subparagraph (A), (B), or (C); or
       ``(III) a broker or dealer registered under section 15 of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78o) that has, 
     on the last day of the broker's or dealer's latest fiscal 
     year ending before the date of a determination for the 
     purpose of this clause, net worth in excess of $750,000;

       ``(8) the term `shareholder's or partner's equity', as used 
     in paragraph (7)(D) with respect to an investment adviser or 
     a person (as defined in paragraph (9)) who is affiliated with 
     the investment adviser in a manner described in clause 
     (ii)(I) of such paragraph, means the equity shown in the most 
     recent balance sheet prepared for such investment adviser or 
     affiliated person, in accordance with generally accepted 
     accounting principles, within 2 years before the date on 
     which the investment adviser's status as a qualified 
     professional asset manager is determined for the purposes of 
     this section; and
       ``(9) the term `person' means an individual, partnership, 
     joint venture, corporation, mutual company, joint-stock 
     company, trust, estate, unincorporated organization, 
     association, or labor organization.
       ``(b) Establishment of Investment Options.--
       ``(1) Initial funds.--The Board shall establish--
       ``(A) a Government Securities Investment Fund under which 
     sums in the Personal Retirement Savings Fund are invested in 
     securities of the United States Government issued as provided 
     in subsection (e);
       ``(B) a Fixed Income Investment Fund under which sums in 
     the Personal Retirement Savings Fund are invested in--
       ``(i) insurance contracts;
       ``(ii) certificates of deposits; or
       ``(iii) other instruments or obligations selected by 
     qualified professional asset managers,

     that return the amount invested and pay interest, at a 
     specified rate or rates, on that amount during a specified 
     period of time;
       ``(C) a Common Stock Index Investment Fund as provided in 
     paragraph (3);
       ``(2) Additional funds.--The Board may approve diversified, 
     indexed funds that are not described in paragraph (1) and 
     that meet such other criteria as the Board may establish for 
     inclusion among the investment choices offered to account 
     holders under this title.
       ``(3) Common stock fund requirements.--
       ``(A) Selection of index.--The Board shall select an index 
     which is a commonly recognized index comprised of common 
     stock the aggregate market value of which is a reasonably 
     complete representation of the United States equity markets.
       ``(B) Investment in portfolio.--The Common Stock Index 
     Investment Fund shall be invested in a portfolio designed to 
     replicate the performance of the index selected under 
     subparagraph (A). The portfolio shall be designed such that, 
     to the extent practicable, the percentage of the Common Stock 
     Index Investment Fund that is invested in each stock is the 
     same as the percentage determined by dividing the aggregate 
     market value of all shares of that stock by the aggregate 
     market value of all shares of all stocks included in such 
     index.
       ``(c) Investment of Fund.--
       ``(1) In general.--The Executive Director shall invest the 
     sums available in the Personal Retirement Savings Fund for 
     investment as provided in elections made under subsection 
     (d).
       ``(2) Investment if no election.--If an election has not 
     been made with respect to any sums in the Personal Retirement 
     Savings Fund available for investment, the Executive Director 
     shall invest such sums in the Government Securities 
     Investment Fund.
       ``(d) Election of Investments.--
       ``(1) Twice yearly.--At least twice each year, an account 
     holder may elect the investment funds referred to in 
     subsection (b) into which the sums in the Personal Retirement 
     Savings Fund credited to such individual's account are to be 
     invested or reinvested.
       ``(2) Regulations.--An election may be made under paragraph 
     (1) only in accordance with regulations prescribed by the 
     Executive Director and within such period as the Executive 
     Director shall provide in such regulations.
       ``(e) Government Securities Investment Fund.--
       ``(1) Authorization to issue certain obligations.--The 
     Secretary of the Treasury is authorized to issue special 
     interest-bearing obligations of the United States for 
     purchase by the Personal Retirement Savings Fund for the 
     Government Securities Investment Fund.
       ``(2) Requirements.--
       ``(A) In general.--Obligations issued for the purpose of 
     this subsection shall have maturities fixed with due regard 
     to the needs of such Fund as determined by the Executive 
     Director, and shall bear interest at a rate equal to the 
     average market yield (computed by the Secretary of the 
     Treasury on the basis of market quotations as of the end of 
     the calendar month next preceding the date of issue of such 
     obligations) on all marketable interest-bearing obligations 
     of the United States then forming a part of the public debt 
     which are not due or callable earlier than 4 years after the 
     end of such calendar month.
       ``(B) Rounding.--Any average market yield computed under 
     subparagraph (A) which is not a multiple of \1/8\ of 1 
     percent, shall be rounded to the nearest multiple of \1/8\ of 
     1 percent.
       ``(f) Limitation on Voting Rights.--The Board, other 
     Government agencies, the Executive Director, and an account 
     holder may not exercise voting rights associated with the 
     ownership of securities by the Personal Retirement Savings 
     Fund.

     ``SEC. 122. ACCOUNTING AND INFORMATION.

       ``(a) Balance of Personal Retirement Accounts.--
       ``(1) In general.--The balance in an individual's account 
     established under section 113 at any time is the excess of--
       ``(A) the sum of--
       ``(i) all allocations made to the account under section 
     113(b); and
       ``(ii) the total amount of the allocations made to and 
     reductions made in the account pursuant to paragraph (2), 
     over
       ``(B) the amounts paid out of the Personal Retirement 
     Savings Fund with respect to such individual.

[[Page S9249]]

       ``(2) Allocation of investment earnings and losses.--
     Pursuant to regulations prescribed by the Executive Director, 
     the Executive Director shall allocate to each account an 
     amount equal to a pro rata share of the net earnings and net 
     losses from each investment of sums in the Personal 
     Retirement Savings Fund attributable to sums credited to such 
     account, reduced by an appropriate share of the 
     administrative expenses paid out of the net earnings under 
     section 112(d), as determined by the Executive Director.
       ``(b) Annual, Independent Audits.--
       ``(1) Definition.--In this subsection, the term `qualified 
     public accountant' shall have the same meaning as provided in 
     section 103(a)(3)(D) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1023(a)(3)(D)).
       ``(2) Independent accountant.--The Executive Director shall 
     annually engage, on behalf of all account holders under this 
     title, an independent qualified public accountant, who shall 
     conduct an examination of all accounts and other books and 
     records maintained in the administration of this title as the 
     public accountant considers necessary to enable the public 
     accountant to make the determination required by paragraph 
     (3). The examination shall be conducted in accordance with 
     generally accepted auditing standards and shall involve such 
     tests of the accounts, books, and records as the public 
     accountant considers necessary.
       ``(3) Determination required.--The public accountant 
     conducting an examination under paragraph (2) shall determine 
     whether the accounts, books, and records referred to in such 
     paragraph have been maintained in conformity with generally 
     accepted accounting principles applied on a basis consistent 
     with the manner in which such principles were applied during 
     the examination conducted under such paragraph during the 
     preceding year. The public accountant shall transmit to the 
     Board a report on his examination, including his 
     determination under this paragraph.
       ``(4) Reliance on actuarial matter.--In making a 
     determination under paragraph (3), a public accountant may 
     rely on the correctness of any actuarial matter certified by 
     an enrolled actuary if the public accountant states his 
     reliance in the report transmitted to the Board under such 
     paragraph.
       ``(c) Statements.--
       ``(1) In general.--The Board shall prescribe regulations 
     under which each account holder under this title shall be 
     furnished with--
       ``(A) a periodic statement relating to the individual's 
     account; and
       ``(B) a summary description of the investment options under 
     section 121 covering, and an evaluation of, each such option 
     the 5-year period preceding the date as of which such 
     evaluation is made.
       ``(2) Timing.--Information under this subsection shall be 
     provided at least 30 calendar days before the beginning of 
     each election period under section 121(d), and in a manner 
     designed to facilitate informed decisionmaking with respect 
     to elections under section 121.
       ``(d) Acknowledgement.--Each account holder who elects to 
     invest in the Common Stock Index Investment Fund, the Fixed 
     Income Investment Fund, or any other Fund designated by the 
     Board shall sign an acknowledgement prescribed by the 
     Executive Director which states that the account holder 
     understands that an investment in such Fund is made at the 
     account holder's risk, that the account holder is not 
     protected by the Government against any loss on such 
     investment, and that a return on such investment is not 
     guaranteed by the Government.

     ``SEC. 123. DISTRIBUTION OF BENEFITS.

       ``(a) Timing of Distributions.--Notwithstanding any other 
     provision of law, distributions may only be made from a 
     personal retirement savings account of an individual on or 
     after the earlier of the date on which the individual begins 
     receiving old-age benefits under title II or the date of the 
     individual's death.
       ``(b) Form of Distribution.--
       ``(1) In general.--Subject to section 125, an individual is 
     entitled and may elect to withdraw from the Personal 
     Retirement Savings Fund the balance of the individual's 
     personal retirement savings account as--
       ``(A) an annuity; or
       ``(B) substantially equal payments to be made over a period 
     not greater than the life expectancy of the individual or the 
     joint life expectancies of the individual and the 
     individual's designated beneficiary.
       ``(2) Lump-sum required for minimum amounts.--
     Notwithstanding paragraph (1), if the balance in an 
     individual's personal retirement savings account is below 
     such minimum amount as the Board, by regulation, shall 
     establish, the account shall be distributed in a single lump-
     sum payment.
       ``(c) Change of Election of Distribution.--
       ``(1) In general.--Subject to paragraph (2) and subsections 
     (a) and (c) of section 125, an account holder may change an 
     election previously made under this section.
       ``(2) Limitation.--An account holder may not change an 
     election under this section on or after the date on which a 
     payment is made in accordance with such election or, in the 
     case of an election to receive an annuity, the date on which 
     an annuity contract is purchased to provide for the annuity 
     elected by the account holder.
       ``(d) Rules if No Election.--If an account holder dies 
     without having made an election under this section or after 
     having elected an annuity under this section but before 
     making an election under section 124, an amount equal to the 
     value of that individual's account (as of death) shall, 
     subject to any decree, order, or agreement referred to in 
     section 125(c)(2), be paid in a manner consistent with 
     section 126(b).

     ``SEC. 124. ANNUITIES: METHODS OF PAYMENT; ELECTION; 
                   PURCHASE.

       ``(a) Methods of Payment.--
       ``(1) In general.--The Board shall prescribe methods of 
     payment of annuities under this title.
       ``(2) Requirements.--The methods of payment prescribed 
     under paragraph (1) shall include--
       ``(A) a method that provides for the payment of a monthly 
     annuity only to an annuitant during the life of the 
     annuitant;
       ``(B) a method that provides for the payment of a monthly 
     annuity to an annuitant for the joint lives of the annuitant 
     and the spouse of the annuitant and an appropriate monthly 
     annuity to the one of them who survives the other of them for 
     the life of the survivor;
       ``(C) a method described in subparagraph (A) that provides 
     for automatic adjustments in the amount of the annuity 
     payable so long as the amount of the annuity payable in any 1 
     year shall not be less than the amount payable in the 
     previous year;
       ``(D) a method described in subparagraph (B) that provides 
     for automatic adjustments in the amount of the annuity 
     payable so long as the amount of the annuity payable in any 1 
     year shall not be less than the amount payable in the 
     previous year; and
       ``(E) a method which provides for the payment of a monthly 
     annuity--
       ``(i) to the annuitant for the joint lives of the annuitant 
     and an individual who is designated by the annuitant under 
     regulations prescribed by the Executive Director and--

       ``(I) is a former spouse of the annuitant; or
       ``(II) has an insurable interest in the annuitant; and

       ``(ii) to the one of them who survives the other of them 
     for the life of the survivor.
       ``(b) Timing.--Subject to section 125(b), under such 
     regulations as the Executive Director shall prescribe, an 
     account holder who elects under section 123 to receive an 
     annuity under this title shall elect, on or before the date 
     on which an annuity contract is purchased to provide for that 
     annuity, one of the methods of payment prescribed under 
     subsection (a).
       ``(c) Elimination of Methods.--Notwithstanding the 
     elimination of a method of payment by the Board, an account 
     holder may elect the eliminated method if the elimination of 
     such method becomes effective less than 5 years before the 
     date on which that account holder's annuity commences.
       ``(d) Purchase Requirements.--
       ``(1) Timing.--Not earlier than 90 days (or such shorter 
     period as the Executive Director may by regulation prescribe) 
     before an annuity is to commence under this title, the 
     Executive Director shall expend the balance in the 
     annuitant's account to purchase an annuity contract from any 
     entity which, in the normal course of its business, sells and 
     provides annuities.
       ``(2) Compliance with program requirements.--The Executive 
     Director shall ensure, by contract entered into with each 
     entity from which an annuity contract is purchased under 
     paragraph (1), that the annuity shall be provided in 
     accordance with the provisions of this title.
       ``(3) Additional terms and conditions.--An annuity contract 
     purchased under paragraph (1) shall include such terms and 
     conditions as the Executive Director requires for the 
     protection of the annuitant.
       ``(4) Bonding requirements.--The Executive Director shall 
     require, from each entity from which an annuity contract is 
     purchased under paragraph (1), a bond or proof of financial 
     responsibility sufficient to protect the annuitant.
       ``(e) Nonapplication of State Tax.--
       ``(1) In general.--No tax, fee, or other monetary payment 
     may be imposed or collected by any State, the District of 
     Columbia, or the Commonwealth of Puerto Rico, or by any 
     political subdivision or other governmental authority 
     thereof, on, or with respect to, any amount paid to purchase 
     an annuity contract under this section.
       ``(2) Rule of construction.--Paragraph (1) shall not be 
     construed to exempt any company or other entity issuing an 
     annuity contract under this section from the imposition, 
     payment, or collection of a tax, fee, or other monetary 
     payment on the net income or profit accruing to or realized 
     by that entity from the sale of an annuity contract under 
     this section if that tax, fee, or payment is applicable to a 
     broad range of business activity.

     ``SEC. 125. PROTECTIONS FOR SPOUSES AND FORMER SPOUSES.

       ``(a) Limitation on Withdrawals.--
       ``(1) Application of requirements.--
       ``(A) In general.--A married account holder may withdraw 
     all or part of a personal retirement savings account under 
     section 123 or change a withdrawal election only if the 
     account holder satisfies the requirements of subparagraph 
     (B).
       ``(B) Joint written waiver.--An account holder may make an 
     election or change referred to in subparagraph (A) if the 
     account holder and the account holder's spouse jointly waive, 
     by written election, any right that the spouse may have to a 
     survivor annuity

[[Page S9250]]

     with respect to such account holder under section 124 or 
     subsection (b).
       ``(2) Exception.--Paragraph (1) shall not apply to an 
     election or change of election by an account holder who 
     establishes to the satisfaction of the Executive Director (at 
     the time of the election or change and in accordance with 
     regulations prescribed by the Executive Director)--
       ``(A) that the spouse's whereabouts cannot be determined; 
     or
       ``(B) that, due to exceptional circumstances, requiring the 
     spouse's waiver would otherwise be inappropriate.
       ``(b) Method of Annuity.--
       ``(1) Survivor annuities.--Notwithstanding any election 
     under section 124(b), the method described in section 
     124(a)(2)(B) (or, if more than one form of such method is 
     available, the form that the Board determines to be the one 
     that for a surviving spouse a survivor annuity most closely 
     approximating the annuity of a surviving spouse under section 
     8442 of title 5, United States Code) shall be deemed the 
     applicable method under section 124(b) in the case of an 
     account holder who is married on the date on which an annuity 
     contract is purchased to provide for the account holder's 
     annuity under this title.
       ``(2) Exceptions.--Paragraph (1) shall not apply if--
       ``(A) a joint waiver of such method is made, in writing, by 
     the account holder and the spouse; or
       ``(B) the account holder waives such method, in writing, 
     after establishing to the satisfaction of the Executive 
     Director that circumstances described under subparagraph (A) 
     or (B) of subsection (a)(2) make the requirement of a joint 
     waiver inappropriate.
       ``(c) Nonapplication of Election.--
       ``(1) In general.--An election or change of election shall 
     not be effective under this title to the extent that the 
     election, change, or transfer conflicts with any court 
     decree, order, or agreement described in paragraph (2).
       ``(2) Court decree, order, or agreement described.--A court 
     decree, order, or agreement described in this paragraph is, 
     with respect to an account holder, a court decree of divorce, 
     annulment, or legal separation issued in the case of such 
     account holder and any former spouse of the account holder or 
     any court order or court-approved property settlement 
     agreement incident to such decree if--
       ``(A) the decree, order, or agreement expressly relates to 
     any portion of the balance in the individual's personal 
     retirement savings account; and
       ``(B) notice of the decree, order, or agreement was 
     received by the Executive Director before--
       ``(i) the date on which payment is made, or
       ``(ii) in the case of an annuity, the date on which an 
     annuity contract is purchased to provide for the annuity,

     in accordance with the election, change, or contribution 
     referred to in paragraph (1).
       ``(3) 2 or more cases.--The Executive Director shall 
     prescribe regulations under which this subsection shall be 
     applied in any case in which the Executive Director receives 
     2 or more decrees, orders, or agreements referred to in 
     paragraph (1).
       ``(d) Procedures for Waivers.--Waivers and notifications 
     required by this section and waivers of the requirements for 
     such waivers and notifications (as authorized by this 
     section) may be made only in accordance with procedures 
     prescribed by the Executive Director.
       ``(e) Nonapplication.--None of the provisions of this 
     section requiring notification to, or the consent or waiver 
     of, a spouse or former spouse of an account holder shall 
     apply in any case in which the account balance of the 
     individual is equal to or less than such amount as the Board, 
     by regulation, shall prescribe.

     ``SEC. 126. DESIGNATION OF BENEFICIARY; ORDER OF PRECEDENCE.

       ``(a) Designation of Beneficiaries.--Under regulations 
     prescribed by the Board, an account holder may designate 1 or 
     more beneficiaries under this section.
       ``(b) Payments.--
       ``(1) In general.--Benefits authorized to be paid to an 
     account holder to individuals surviving the account holder 
     and alive at the time of distribution shall be made according 
     to the following:
       ``(A) First, to the beneficiary or beneficiaries designated 
     by the account holder in a signed and witnessed writing 
     received by the Executive Director before the death of such 
     account holder. For this purpose, a designation, change, or 
     cancellation of beneficiary in a will or other document not 
     so executed and filed has no force or effect.
       ``(B) Second, if there is no designated beneficiary, to the 
     widow or widower of the account holder.
       ``(C) Third, if none of the above, to the child or children 
     of the account holder and descendants of deceased children by 
     representation.
       ``(D) Fourth, if none of the above, to the parents of the 
     account holder or the survivor of them.
       ``(E) Fifth, if none of the above, to the duly appointed 
     executor or administrator of the estate of the account 
     holder.
       ``(F) Sixth, if none of the above, to such other next of 
     kin of the account holder as the Board determines to be 
     entitled under the laws of the domicile of the account holder 
     at the date of death of the account holder.
       ``(2) Bar on other recoveries.--A payment made in 
     accordance with paragraph (1) shall bar any other recovery 
     by--
       ``(A) the individual receiving the payment; and
       ``(B) any other individual.
       ``(3) Definition of child.--In this section, the term 
     `child' includes a natural child and an adopted child, but 
     does not include a stepchild.
       ``(c) Termination of an Annuity.--Any annuity accrued and 
     unpaid on the termination, except by death, of the annuity of 
     an annuitant or survivor shall be paid to that individual. 
     Annuity accrued and unpaid on the death of a survivor shall 
     be paid in the following order of precedence, and the payment 
     bars recovery by any other person:
       ``(1) First, to the duly appointed executor or 
     administrator of the estate of the survivor.
       ``(2) Second, if there is no executor or administrator, 
     payment may be made, after 30 days from the date of death of 
     the survivor, to such next of kin of the survivor as the 
     Board determines to be entitled under the laws of the 
     domicile of the survivor at the date of death.

     ``SEC. 127. TAX TREATMENT OF THE PERSONAL RETIREMENT SAVINGS 
                   FUND.

       ``For purposes of the Internal Revenue Code of 1986--
       ``(1) the Personal Retirement Savings Fund shall be treated 
     as a trust described in section 401(a) of such Code that is 
     exempt from taxation under section 501(a) of such Code;
       ``(2) any contribution to, or distribution from, such Fund 
     shall be treated in the same manner as contributions to or 
     distributions from such a trust; and
       ``(3) allocations made to an account holder's personal 
     retirement savings account shall not be treated as 
     distributed or made available to the account holder.

     ``SEC. 128. ADMINISTRATIVE PROVISIONS.

       ``(a) Duty of Executive Director.--The Executive Director 
     shall make or provide for payments and transfers in 
     accordance with an election of an account holder under 
     section 123 or 124(b) or, if applicable, in accordance with 
     section 125.
       ``(b) Written Requirements.--Any election, change of 
     election, or modification of a deferred annuity commencement 
     date made under this title shall be in writing and shall be 
     filed with the Executive Director in accordance with 
     regulations prescribed by the Executive Director.
                 ``Subtitle D--Beneficiary Protections

     ``SEC. 131. FIDUCIARY RESPONSIBILITIES; LIABILITY AND 
                   PENALTIES.

       ``(a) Definitions.--For the purposes of this section--
       ``(1) the term `account' is not limited to the personal 
     retirement savings account established for an individual 
     under section 113;
       ``(2) the term `adequate consideration' means--
       ``(A) in the case of a security for which there is a 
     generally recognized market--
       ``(i) the price of the security prevailing on a national 
     securities exchange that is registered under section 6 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78f); or
       ``(ii) if the security is not traded on such a national 
     securities exchange, a price not less favorable to the 
     Personal Retirement Savings Fund than the offering price for 
     the security as established by the current bid and asked 
     prices quoted by persons independent of the issuer and of any 
     party in interest; and
       ``(B) in the case of an asset other than a security for 
     which there is a generally recognized market, the fair market 
     value of the asset as determined in good faith by a fiduciary 
     or fiduciaries in accordance with regulations prescribed by 
     the Secretary of Labor;
       ``(3) the term `fiduciary' means--
       ``(A) a member of the Board;
       ``(B) the Executive Director;
       ``(C) any person who has or exercises discretionary 
     authority or discretionary control over the management or 
     disposition of the assets of the Personal Retirement Savings 
     Fund; and
       ``(D) any person who, with respect to the Personal 
     Retirement Savings Fund, is described in section 3(21)(A) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1002(21)(A)); and
       ``(4) the term `party in interest' includes--
       ``(A) any fiduciary;
       ``(B) any counsel to a person who is a fiduciary, with 
     respect to the actions of such person as a fiduciary;
       ``(C) any individual for which a personal retirement 
     account is established under section 113;
       ``(D) any person providing services to the Board and, with 
     respect to the actions of the Executive Director as a 
     fiduciary, any person providing services to the Executive 
     Director;
       ``(E) a spouse, sibling, ancestor, lineal descendant, or 
     spouse of a lineal descendant of a person described in 
     subparagraph (A), (B), or (D);
       ``(F) a corporation, partnership, or trust or estate of 
     which, or in which, at least 50 percent of--
       ``(i) the combined voting power of all classes of stock 
     entitled to vote or the total value of shares of all classes 
     of stock of such corporation;
       ``(ii) the capital interest or profits interest of such 
     partnership; or
       ``(iii) the beneficial interest of such trust or estate;

     is owned directly or indirectly, or held by a person 
     described in subparagraph (A), (B), or (D);

[[Page S9251]]

       ``(G) an official (including a director) of, or an 
     individual employed by, a person described in subparagraph 
     (A), (B), (D), or (F), or an individual having powers or 
     responsibilities similar to those of such an official;
       ``(H) a holder (directly or indirectly) of at least 10 
     percent of the shares in a person described in any 
     subparagraph referred to in subparagraph (G); and
       ``(I) a person who, directly or indirectly, is at least a 
     10 percent partner or joint venturer (measured in capital or 
     profits) in a person described in any subparagraph referred 
     to in subparagraph (G).
       ``(b) Discharge of Responsibilities.--
       ``(1) In general.--To the extent not inconsistent with the 
     provisions of this title and the policies prescribed by the 
     Board, a fiduciary shall discharge his or her 
     responsibilities with respect to the Personal Retirement 
     Savings Fund or any applicable portion thereof solely in the 
     interest of the account holders and beneficiaries of such 
     Fund and--
       ``(A) for the exclusive purpose of--
       ``(i) providing benefits to such account holders and 
     beneficiaries; and
       ``(ii) defraying reasonable expenses of administering the 
     Personal Retirement Savings Fund or applicable portions 
     thereof;
       ``(B) with the care, skill, prudence, and diligence under 
     the circumstances then prevailing that a prudent individual 
     acting in a like capacity and familiar with such matters 
     would use in the conduct of an enterprise of a like character 
     and with like objectives; and
       ``(C) to the extent permitted by section 121, by 
     diversifying the investments of the Personal Retirement 
     Savings Fund or applicable portions thereof so as to minimize 
     the risk of large losses, unless under the circumstances it 
     is clearly prudent not to do so.
       ``(2) Limitation on ownership.--No fiduciary may maintain 
     the indicia of ownership of any assets of the Personal 
     Retirement Savings Fund outside the jurisdiction of the 
     district courts of the United States.
       ``(c) Limitations on Transactions.--
       ``(1) Prohibited transactions.--A fiduciary shall not 
     permit the Personal Retirement Savings Fund to engage in any 
     of the following transactions, except in exchange for 
     adequate consideration:
       ``(A) A transfer of any assets of the Personal Retirement 
     Savings Fund to any person the fiduciary knows or should know 
     to be a party in interest or the use of such assets by any 
     such person.
       ``(B) An acquisition of any property from or sale of any 
     property to the Personal Retirement Savings Fund by any 
     person the fiduciary knows or should know to be a party in 
     interest.
       ``(C) A transfer or exchange of services between the 
     Personal Retirement Savings Fund and any person the fiduciary 
     knows or should know to be a party in interest.
       ``(2) Other prohibitions.--Notwithstanding paragraph (1), a 
     fiduciary with respect to the Personal Retirement Savings 
     Fund shall not--
       ``(A) deal with any assets of the Personal Retirement 
     Savings Fund in his or her own interest or for his or her own 
     account;
       ``(B) act, in an individual capacity or any other capacity, 
     in any transaction involving the Personal Retirement Savings 
     Fund on behalf of a party, or representing a party, whose 
     interests are adverse to the interests of the Personal 
     Retirement Savings Fund or the interests of the account 
     holders and beneficiaries of such Fund; or
       ``(C) receive any consideration for his or her own personal 
     account from any party dealing with sums credited to the 
     Personal Retirement Savings Fund in connection with a 
     transaction involving assets of the Personal Retirement 
     Savings Fund.
       ``(3) Exemption by the secretary of labor.--
       ``(A) In general.--The Secretary of Labor may, in 
     accordance with procedures which the Secretary shall by 
     regulation prescribe, grant a conditional or unconditional 
     exemption of any fiduciary or transaction, or class of 
     fiduciaries or transactions, from all or part of the 
     restrictions imposed by paragraph (2).
       ``(B) Nonapplication to other applicable provisions.--An 
     exemption granted under this paragraph shall not relieve a 
     fiduciary from any other applicable provision of this title.
       ``(C) Requirements.--The Secretary of Labor may not grant 
     an exemption under this paragraph unless the Secretary finds 
     that such exemption is--
       ``(i) administratively feasible;
       ``(ii) in the interests of the Personal Retirement Savings 
     Fund and of the account holders and beneficiaries of such 
     Fund; and
       ``(iii) protective of the rights of such account holders 
     and beneficiaries.
       ``(D) Notice.--An exemption under this paragraph may not be 
     granted unless--
       ``(i) notice of the proposed exemption is published in the 
     Federal Register;
       ``(ii) interested persons are given an opportunity to 
     present views; and
       ``(iii) the Secretary of Labor affords an opportunity for a 
     hearing and makes a determination on the record with respect 
     to the respective requirements of clauses (i), (ii), and 
     (iii) of subparagraph (C).
       ``(E) ERISA exemptions.--Notwithstanding subparagraph (D), 
     the Secretary of Labor may determine that an exemption 
     granted for any class of fiduciaries or transactions under 
     section 408(a) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1108(a)) shall, upon publication of notice 
     in the Federal Register under this subparagraph, constitute 
     an exemption for purposes of the provisions of paragraph (2).
       ``(d) Benefits and Compensation.--This section does not 
     prohibit any fiduciary from--
       ``(1) receiving any benefit that the fiduciary is entitled 
     to receive under this title as a beneficiary of the Personal 
     Retirement Savings Fund;
       ``(2) receiving any reasonable compensation authorized by 
     this title for services rendered, or for reimbursement of 
     expenses properly and actually incurred, in the performance 
     of the fiduciary's duties under this title; or
       ``(3) serving as a fiduciary in addition to being an 
     officer, employee, agent, or other representative of a party 
     in interest.
       ``(e) Breach of Duties.--
       ``(1) Personal liability.--
       ``(A) In general.--Any fiduciary that breaches the 
     responsibilities, duties, and obligations set out in 
     subsection (b) or violates subsection (c) shall be personally 
     liable to the Personal Retirement Savings Fund for any losses 
     to such Fund resulting from each such breach or violation and 
     to restore to such Fund any profits made by the fiduciary 
     through use of assets of such Fund by the fiduciary, and 
     shall be subject to such other equitable or remedial relief 
     as a court considers appropriate, except as provided in 
     paragraphs (3) and (4). A fiduciary may be removed for a 
     breach referred to in the preceding sentence.
       ``(B) Civil penalties.--The Secretary of Labor may assess a 
     civil penalty against a party in interest with respect to 
     each transaction that is engaged in by the party in interest 
     and is prohibited by subsection (c). The amount of such 
     penalty shall be equal to 5 percent of the amount involved in 
     each such transaction (as defined in section 4975(f)(4) of 
     the Internal Revenue Code of 1986) for each year or part 
     thereof during which the prohibited transaction continues, 
     except that, if the transaction is not corrected (in such 
     manner as the Secretary of Labor shall prescribe by 
     regulation consistent with section 4975(f)(5) of such Code) 
     within 90 days after the date the Secretary of Labor 
     transmits notice to the party in interest (or such longer 
     period as the Secretary of Labor may permit), such penalty 
     may be in an amount not more than 100 percent of the amount 
     involved.
       ``(C) Acts committed prior to or after service.--A 
     fiduciary shall not be liable under subparagraph (A) with 
     respect to a breach of fiduciary duty under subsection (b) 
     committed before becoming a fiduciary or after ceasing to be 
     a fiduciary.
       ``(D) Joint and several liability.--A fiduciary shall be 
     jointly and severally liable under subparagraph (A) for a 
     breach of fiduciary duty under subsection (b) by another 
     fiduciary only if--
       ``(i) the fiduciary participates knowingly in, or knowingly 
     undertakes to conceal, an act or omission of such other 
     fiduciary, knowing such act or omission is such a breach;
       ``(ii) by the fiduciary's failure to comply with subsection 
     (b) in the administration of the fiduciary's specific 
     responsibilities that give rise to the fiduciary status, the 
     fiduciary has enabled such other fiduciary to commit such a 
     breach; or
       ``(iii) the fiduciary has knowledge of a breach by such 
     other fiduciary, unless the fiduciary makes reasonable 
     efforts under the circumstances to remedy the breach.
       ``(E) Regulations.--The Secretary of Labor shall prescribe, 
     in regulations, procedures for allocating fiduciary 
     responsibilities among fiduciaries, including investment 
     managers. Any fiduciary who, pursuant to such procedures, 
     allocates to a person or persons any fiduciary responsibility 
     shall not be liable for an act or omission of such person or 
     persons unless--
       ``(i) such fiduciary violated subsection (b) with respect 
     to the allocation, with respect to the implementation of the 
     procedures prescribed by the Secretary of Labor (or the 
     Board), or in continuing such allocation; or
       ``(ii) such fiduciary would otherwise be liable in 
     accordance with subparagraph (D).
       ``(2) Requirements for civil actions.--
       ``(A) In general.--No civil action may be maintained 
     against any fiduciary with respect to the responsibilities, 
     liabilities, and penalties authorized or provided for in this 
     section except in accordance with subparagraphs (B) and (C).
       ``(B) Jurisdiction.--A civil action may be brought in the 
     district courts of the United States--
       ``(i) by the Secretary of Labor against any fiduciary other 
     than a Member of the Board or the Executive Director of the 
     Board--

       ``(I) to determine and enforce a liability under paragraph 
     (1)(A);
       ``(II) to collect any civil penalty under paragraph (1)(B);
       ``(III) to enjoin any act or practice that violates any 
     provision of subsection (b) or (c);
       ``(IV) to obtain any other appropriate equitable relief to 
     redress a violation of any such provision; or
       ``(V) to enjoin any act or practice that violates 
     subsection (g)(3) or (i) of section 101;

       ``(ii) by any beneficiary or fiduciary against any 
     fiduciary--

       ``(I) to enjoin any act or practice that violates any 
     provision of subsection (b) or (c);
       ``(II) to obtain any other appropriate equitable relief to 
     redress a violation of any such provision; or

[[Page S9252]]

       ``(III) to enjoin any act or practice that violates 
     subsection (g)(3) or (i) of section 101; or

       ``(iii) by any beneficiary or fiduciary--

       ``(I) to recover benefits of the beneficiary under the 
     provisions of this title, to enforce any right of the 
     beneficiary under such provisions, or to clarify any such 
     right to future benefits under such provisions; or
       ``(II) to enforce any claim otherwise cognizable under 
     sections 1346(b) and 2671 through 2680 of title 28, United 
     States Code, provided that the remedy against the United 
     States provided by sections 1346(b) and 2672 of such title 
     for damages for injury or loss of property caused by the 
     negligent or wrongful act or omission of any fiduciary while 
     acting within the scope of his duties or employment shall be 
     exclusive of any other civil action or proceeding by the 
     beneficiary for recovery of money by reason of the same 
     subject matter against the fiduciary (or the estate of such 
     fiduciary) whose act or omission gave rise to such action or 
     proceeding, whether or not such action or proceeding is based 
     on an alleged violation of subsection (b) or (c).

       ``(C) Legal representation.--
       ``(i) Department of labor.--In all civil actions under 
     subparagraph (B)(i), attorneys appointed by the Secretary of 
     Labor may represent the Secretary (except as provided in 
     section 518(a) of title 28, United States Code), however all 
     such litigation shall be subject to the direction and control 
     of the Attorney General.
       ``(ii) Department of justice.--The Attorney General shall 
     defend any civil action or proceeding brought in any court 
     against any fiduciary referred to in subparagraph 
     (B)(iii)(II) (or the estate of such fiduciary) for any such 
     injury. Any fiduciary against whom such a civil action or 
     proceeding is brought shall deliver, within such time after 
     date of service or knowledge of service as determined by the 
     Attorney General, all process served upon such fiduciary (or 
     an attested copy thereof) to the Executive Director of the 
     Board, who shall promptly furnish copies of the pleading and 
     process to the Attorney General and the United States 
     Attorney for the district wherein the action or proceeding is 
     brought.
       ``(iii) Removal.--Upon certification by the Attorney 
     General that a fiduciary described in subparagraph 
     (B)(iii)(II) was acting in the scope of such fiduciary's 
     duties or employment as a fiduciary at the time of the 
     occurrence or omission out of which the action arose, any 
     such civil action or proceeding commenced in a State court 
     shall be--

       ``(I) removed without bond at any time before trial by the 
     Attorney General to the district court of the United States 
     for the district and division in which it is pending; and
       ``(II) deemed a tort action brought against the United 
     States under the provisions of title 28, United States Code, 
     and all references thereto.

       ``(iv) Settlement.--The Attorney General may compromise or 
     settle any claim asserted in such civil action or proceeding 
     in the manner provided in section 2677 of title 28, United 
     States Code, and with the same effect. To the extent section 
     2672 of such title provides that persons other than the 
     Attorney General or his designee may compromise and settle 
     claims, and that payment of such claims may be made from 
     agency appropriations, such provisions shall not apply to 
     claims based upon an alleged violation of subsection (b) or 
     (c).
       ``(v) Nonapplication of provision.--For the purposes of 
     subparagraph (B)(iii)(II), the provisions of section 2680(h) 
     of title 28, United States Code, shall not apply to any claim 
     based upon an alleged violation of subsection (b) or (c).
       ``(vi) Payment.--Notwithstanding sections 1346(b) and 2671 
     through 2680 of title 28, United States Code, whenever an 
     award, compromise, or settlement is made under such sections 
     upon any claim based upon an alleged violation of subsection 
     (b) or (c), payment of such award, compromise, or settlement 
     shall be made to the appropriate account within the Personal 
     Retirement Savings Fund, or where there is no such 
     appropriate account, to the beneficiary bringing the claim.
       ``(vii) Limitation on definition of fiduciary.--For 
     purposes of subparagraph (B)(iii)(II), fiduciary includes 
     only the members of the Board and the Board's Executive 
     Director.
       ``(D) Limitation on recovery.--Any relief awarded against a 
     member of the Board or the Executive Director of the Board in 
     a civil action authorized by subparagraph (B) may not include 
     any monetary damages or any other recovery of money.
       ``(E) Limitation on commencement of actions.--An action may 
     not be commenced under subparagraph (B) with respect to a 
     fiduciary's breach of any responsibility, duty, or obligation 
     under subsection (b) or a violation of subsection (c) after 
     the earlier of--
       ``(i) 6 years after--

       ``(I) the date of the last action that constituted a part 
     of the breach or violation; or
       ``(II) in the case of an omission, the latest date on which 
     the fiduciary could have cured the breach or violation; or

       ``(ii) 3 years after the earliest date on which the 
     plaintiff had actual knowledge of the breach or violation, 
     except that, in the case of fraud or concealment, such action 
     may be commenced not later than 6 years after the date of 
     discovery of such breach or violation.
       ``(F) Exclusive jurisdiction.--
       ``(i) In general.--The district courts of the United States 
     shall have exclusive jurisdiction of civil actions under this 
     subsection.
       ``(ii) Venue.--An action under this subsection may be 
     brought in the District Court of the United States for the 
     District of Columbia or a district court of the United States 
     in the district where the breach alleged in the complaint or 
     petition filed in the action took place or in the district 
     where a defendant resides or may be found. Process may be 
     served in any other district where a defendant resides or may 
     be found.
       ``(G) Filing of complaint.--
       ``(i) Service.--A copy of the complaint or petition filed 
     in any action brought under this subsection (other than by 
     the Secretary of Labor) shall be served on the Executive 
     Director, the Secretary of Labor, and the Secretary of the 
     Treasury by certified mail.
       ``(ii) Intervention.--Any officer referred to in clause (i) 
     of this subparagraph shall have the right in his or her 
     discretion to intervene in any action. If the Secretary of 
     Labor brings an action under this paragraph on behalf of a 
     beneficiary, the officer shall notify the Executive Director 
     and the Secretary of the Treasury.
       ``(f) Regulations.--The Secretary of Labor may prescribe 
     regulations to carry out this section.
       ``(g) Audits.--
       ``(1) In general.--The Secretary of Labor shall establish a 
     program to carry out audits to determine the level of 
     compliance with the requirements of this section relating to 
     fiduciary responsibilities and prohibited activities of 
     fiduciaries.
       ``(2) Conduct.--An audit under this subsection may be 
     conducted by the Secretary of Labor, by contract with a 
     qualified nongovernmental organization, or in cooperation 
     with the Comptroller General of the United States, as the 
     Secretary considers appropriate.

     ``SEC. 132. BONDING.

       ``(a) Requirement.--
       ``(1) In general.--Except as provided in paragraph (2), 
     each fiduciary and each person who handles funds or property 
     of the Personal Retirement Savings Fund shall be bonded as 
     provided in this section.
       ``(2) Exceptions.--
       ``(A) In general.--Bond shall not be required of a 
     fiduciary (or of any officer or employee of such fiduciary) 
     if such fiduciary--
       ``(i) is a corporation organized and doing business under 
     the laws of the United States or of any State;
       ``(ii) is authorized under such laws to exercise trust 
     powers or to conduct an insurance business;
       ``(iii) is subject to supervision or examination by Federal 
     or State authority; and
       ``(iv) has at all times a combined capital and surplus in 
     excess of such minimum amount (not less than $1,000,000) as 
     the Secretary of Labor prescribes in regulations.
       ``(B) Banks or other financial institutions.--If--
       ``(i) a bank or other financial institution would, but for 
     this subparagraph, not be required to be bonded under this 
     section by reason of the application of the exception 
     provided in subparagraph (A);
       ``(ii) the bank or financial institution is authorized to 
     exercise trust powers; and
       ``(iii) the deposits of the bank or financial institution 
     are not insured by the Federal Deposit Insurance Corporation,

     such exception shall apply to such bank or financial 
     institution only if the bank or institution meets bonding 
     requirements under State law which the Secretary of Labor 
     determines are at least equivalent to those imposed on banks 
     by Federal law.
       ``(b) Amount of Bond.--
       ``(1) Minimum requirements.--The Secretary of Labor shall 
     prescribe the amount of a bond under this section at the 
     beginning of each fiscal year. Except as otherwise provided 
     in this paragraph, such amount shall not be less than 10 
     percent of the amount of funds handled. In no case shall such 
     bond be less than $1,000 nor more than $500,000, except that 
     the Secretary of Labor, after due notice and opportunity for 
     hearing to all interested parties, and other consideration of 
     the record, may prescribe an amount in excess of $500,000.
       ``(2) Determination of amount of funds.--For the purpose of 
     prescribing the amount of a bond under paragraph (1), the 
     amount of funds handled shall be determined by reference to 
     the amount of the funds handled by the person, group, or 
     class to be covered by such bond or by their predecessor or 
     predecessors, if any, during the preceding fiscal year, or to 
     the amount of funds to be handled during the current fiscal 
     year by such person, group, or class, estimated as provided 
     in regulations prescribed by the Secretary of Labor.
       ``(c) Other Requirements.--A bond required by subsection 
     (a)--
       ``(1) shall include such terms and conditions as the 
     Secretary of Labor considers necessary to protect the 
     Personal Retirement Savings Fund against loss by reason of 
     acts of fraud or dishonesty on the part of the bonded person 
     directly or through connivance with others;
       ``(2) shall have as surety thereon a corporate surety 
     company that is an acceptable surety on Federal bonds under 
     authority granted by the Secretary of the Treasury pursuant 
     to sections 9304 through 9308 of title 31, United States 
     Code; and
       ``(3) shall be in a form or of a type approved by the 
     Secretary of Labor, including individual bonds or schedule or 
     blanket forms of bonds that cover a group or class.

[[Page S9253]]

       ``(d) Prohibitions.--
       ``(1) Bond required.--It shall be unlawful for any person 
     to whom subsection (a) applies, to receive, handle, disburse, 
     or otherwise exercise custody or control of any of the funds 
     or other property of the Personal Retirement Savings Fund 
     without being bonded as required by this section.
       ``(2) Meet all requirements.--It shall be unlawful for any 
     fiduciary, or any other person having authority to direct the 
     performance of functions described in paragraph (1), to 
     permit any such function to be performed by any person to 
     whom subsection (a) applies unless such person has met the 
     requirements of such subsection.
       ``(e) Nonapplication of Other Laws.--Notwithstanding any 
     other provision of law, any person who is required to be 
     bonded as provided in subsection (a) shall be exempt from any 
     other provision of law that, but for this subsection, would 
     require such person to be bonded for the handling of the 
     funds or other property of the Personal Retirement Savings 
     Fund.
       ``(f) Regulations.--The Secretary of Labor shall prescribe 
     such regulations as may be necessary to carry out the 
     provisions of this section, including exempting a person or 
     class of persons from the requirements of this section.

     ``SEC. 133. INVESTIGATIVE AUTHORITY.

       Any authority available to the Secretary of Labor under 
     section 504 of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1134) is hereby made available to the 
     Secretary of Labor, and any officer designated by the 
     Secretary of Labor, to determine whether any person has 
     violated, or is about to violate, any provision of section 
     131 or 132.

     ``SEC. 134. EXCULPATORY PROVISIONS; INSURANCE.

       ``(a) Nonapplication of Exculpatory Provisions.--Any 
     provision in an agreement or instrument that purports to 
     relieve a fiduciary from responsibility or liability for any 
     responsibility, obligation, or duty under this title shall be 
     void.
       ``(b) Liability Insurance.--Sums credited to the Personal 
     Retirement Savings Fund may be used at the discretion of the 
     Executive Director to purchase insurance to cover the 
     potential liability of persons who serve in a fiduciary 
     capacity with respect to the Personal Retirement Savings 
     Fund, without regard to whether a policy of insurance permits 
     recourse by the insurer against the fiduciary in the case of 
     a breach of a fiduciary obligation.''.

     SEC. 5. REPORT AND RECOMMENDATIONS REGARDING INVESTMENT 
                   OPTIONS.

       Not later than 36 months after the date of enactment of 
     this Act, the Personal Retirement Accounts Board established 
     under section 101 of the Social Security Act (as amended by 
     section 4 of this Act) shall submit to the appropriate 
     committees of Congress a report regarding recommendations for 
     additional investment options for individuals with personal 
     retirement accounts established under title I of the Social 
     Security Act (as so amended). The report shall include 
     recommendations regarding--
       (1) whether the Board should make available to such account 
     holders investment funds managed by qualified professional 
     asset managers (as defined in section 121(a)(7) of the Social 
     Security Act (as amended by section 4 of this Act));
       (2) whether such account holders should be permitted to 
     transfer all or a portion of the balance in their personal 
     retirement accounts to a new form of individual retirement 
     account that would be managed by qualified professional asset 
     managers (as so defined);
       (3) whether the Board should provide an alternative for the 
     investment of a personal retirement account for which no 
     investment election is made to investment in the Government 
     Securities Investment Fund provided for under section 
     121(c)(2) of the Social Security Act (as so amended); and
       (4) whether the Board should offer diversified investment 
     selections for such account holders that takes into 
     consideration the age of the individual.
                                 ______