Section 1 Short title
This Act may be cited as the “Portable Retirement and Investment Account Act of 2021” or the “PRIA Act of 2021”.
Portable Retirement and Investment Account Act of 2021
A BILL
To create portable retirement and investment accounts for all Americans, and for other purposes.
Sec. 2 Portable Retirement and Investment Board
Establishment— There is established a Portable Retirement and Investment Board (referred to in this Act as the “Board”) to be headed by a Director (referred to in this Act as the “Director”).
Membership—
In general— The Board shall consist of—
3 members appointed by the Secretary of the Treasury;
3 members appointed by the Secretary of Labor;
2 members appointed by the Pension Benefit Guaranty Corporation; and
1 member appointed by the Director of the Bureau of Consumer Financial Protection.
Deadline for appointment— The appointments described under paragraph (1) shall be made not later than 1 year after the date of the enactment of this Act.
Limitation— In making appointments under paragraph (1), the officials making such appointments shall coordinate to ensure that not more than 5 members of the same political party may serve on the Board at the same time.
Terms of office— Each member of the Board shall hold office for a term of 5 years and shall continue in office until such member's successor is appointed in the same manner as the original appointment was made. The terms of office of the members of the Board first taking office after the date of the enactment of this Act shall expire as follows: 1 at the end of 1 year, 2 at the end of 2 years, 2 at the end of 3 years, 2 at the end of 4 years, and 2 at the end of 5 years.
Vacancies— Each member of the Board shall continue in office until a successor is appointed in the same manner as the original appointment was made. Any vacancy on the Board shall be filled in the same manner as the initial appointment was made, and members of the Board appointed to fill vacancies shall be appointed for the remainder of such term.
Director—
In general— The Director shall be selected by the President from among the members of the Board.
Authority to issue regulations— The Director is authorized to issue such regulations or other guidance as the Director determines are necessary to carry out the purposes of this Act.
Sec. 3 Contracts to provide portable retirement and investment accounts
In general— Not later than 1 year after the date of the enactment of this Act, the Director shall establish a program under which—
the Director shall invest the assets in each PRIA Basic Account established under section 4 in a lifecycle fund described in subsection (c); and
the Director shall group PRIA Basic Accounts so established into classes based on the year the beneficiary of each such account will attain age 65.
Certification of trustees— The Director may not award a contract to an entity under subsection (a) unless the Director has certified such entity under this subsection. The Director shall establish certification criteria which shall include the following:
Expertise, including the professional qualifications, business model, experience, and training of the trustee and any service providers that the trustee intends to use.
Registration, licensing, and financial soundness demonstrating that participant funds would be handled by a regulated financial entity.
Reputation and customer service, including records of comments or complaints from employers and participants, timely consideration and resolution of complaints filed, and independent rating or accreditations.
Lifecycle fund— A lifecycle fund described in this subsection is a fund that—
is comprised of an appropriate mix of index funds;
is automatically adjusted over time during the time horizon of the fund;
strikes a balance between expected risk and return over the time horizon of the fund; and
has an initial target retirement date that is consistent with retirement at age 65.
Fiduciary responsibility— A trustee of a portable retirement and investment account shall act as a fiduciary to the account holder and shall discharge his duties with respect to the account in the sole interest of the account holder under rules similar to those applicable to an ERISA fiduciary under section 404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104).
Contracts—
Number of contracts awarded, etc— The Director shall enter into contracts with 10 entities at any given time to provide services under subsection (a), and shall not award a contract to any entity which has an existing contract under such subsection. Each such contract shall have a duration of 5 years.
Consideration— In awarding contracts to entities under subsection (a), the Director shall consider—
the specific composition of the lifecycle funds provided by such trustee;
the services to account holders offered by such trustee, including available investment advice;
the fees charged by such trustee; and
the importance of maintaining a diversity of trustees.
Sec. 4 Establishment; contributions
Establishment—
Portable Retirement and Investment Account Fund— There is established in the Treasury the Portable Retirement and Investment Account Fund (in this Act referred to as the “Fund”). The Board shall, to the greatest extent practicable and consistent with the requirements of this Act, manage the Fund in the same manner as the Thrift Savings Fund established under section 8437 of title 5, United States Code.
Accounts— For each individual for whom a notification is made under clause (iv) of section 205(c)(2)(B) of the Social Security Act (42 U.S.C. 405(c)(2)(B)), as added by paragraph (3), or whose name is included on the list submitted under paragraph (4), not later than 90 days after such notification or submission, the Director shall establish, with such individual as the sole beneficiary, a portable retirement and investment account (in this Act referred to as a “PRIA Basic Account”) within the Fund.
Notification of issuance of social security account number—
In general— Section 205(c)(2)(B) of the Social Security Act (42 U.S.C. 405(c)(2)(B)) is amended by adding at the end the following:
“(iv) Not later than 60 days after assigning a social security account number to an individual, the Commissioner of Social Security shall notify the Director of the Portable Retirement and Investment Account Board of such assignment.”
Effective date— The amendment made by subparagraph (A) shall apply with respect to social security account numbers assigned after a certain date, to be designated by the Director, occurring not later than 3 years after the date of the enactment of this Act.
Transition— Not later than the date designated pursuant to paragraph (3)(B), occurring not later than 3 years after the date of the enactment of this Act, the Commissioner of Social Security shall submit to the Director a list of the name of each living individual who has been assigned a social security account number.
Federal contributions—
In general— In the case of an individual for whom a notification is made under clause (iv) of section 205(c)(2)(B) of the Social Security Act (42 U.S.C. 405(c)(2)(B)), as added by subsection (a)(3), who is a child of a taxpayer who received a credit against tax under section 32 of the Internal Revenue Code of 1986 for the most recent taxable year ending before the date of the notification under such subsection, the Director shall deposit into the portable retirement and investment account (without regard to whether such account is a PRIA Basic Account or a PRIA Choice Account described in subsection (f)) of the individual an amount determined under paragraph (2).
Amount— Subject to paragraph (3), the amount determined under this paragraph is—
in the case of a taxpayer eligible for the maximum credit applicable to such individual under section 32 of the Internal Revenue Code of 1986, the applicable contribution amount; and
in any other case, a lower amount to be determined under regulations issued by the Secretary of the Treasury to reflect a proportional reduction of such amount as the credit under such section decreases.
Applicable contribution amount—
In general— For purposes of this subsection, the term “applicable contribution amount” means $500.
Inflation adjustment— In the case of any taxable year beginning in a calendar year after 2021, the dollar amount in subparagraph (A) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue Code of 1986 for the calendar year in which the taxable year begins, by substituting “calendar year 2020” for “calendar year 2016” in subparagraph (A)(ii) thereof.
Contribution for transfer— If a beneficiary of a PRIA Basic Account (or, in the case of a beneficiary who is under 18 years of age, the parent or guardian of the beneficiary) makes the election under subsection (f), the Director shall provide for a $50 deposit if the beneficiary completes a financial literacy training, as determined appropriate by the Director.
Personal contributions—
In general— Except in the case of an individual who is an active participant (as defined in section 219(g)(5) of the Internal Revenue Code of 1986) for any part of a plan year ending with or within the calendar year, the beneficiary of a PRIA Basic or PRIA Choice Account may contribute additional funds for deposit into such account during the calendar year.
Direct deposit— Any employer who permits wages to be paid to an employee described in paragraph (5) by electronic funds transfer shall permit such employee to elect to deposit, by means of electronic funds transfer, a portion of such wages specified by the employee into the employee’s portable retirement and investment account.
Automatic contribution arrangement— Any employer may provide that an employee described in paragraph (5) is treated as having elected to have the employer make contributions in an amount equal to a uniform percentage of compensation disclosed in advance to the employee until the employee specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage). Such uniform percentage of compensation may automatically increase according to a schedule provided by the employer.
Supersedure— Paragraph (3) shall supersede any law of any State (within the meaning of section 514(c)(1) of title 29) which would directly or indirectly prohibit an employer from adopting an arrangement described in paragraph (3). The Director may prescribe regulations which would establish minimum standards that such an arrangement would be required to satisfy in order for this paragraph to apply in the case of such arrangement.
Employee described— An employee described in this paragraph is an individual—
whose employer does not maintain a qualified retirement plan (as defined in section 4974(c) of the Internal Revenue Code of 1986);
whose employment consists of work (whether or not as an employee) through mobile platforms; or
who is not eligible to participate in the qualified retirement plan (as so defined) of the employee’s employer.
Contribution limit— The aggregate amount of contributions under this subsection for any taxable year to the individual’s PRIA Basis or PRIA Choice Account shall not exceed the amount allowable under section 219(b) of the Internal Revenue Code of 1986 with respect to the individual for the taxable year.
Employer and mobile platform duties and responsibilities—
Contributions— The employer of a beneficiary of a PRIA Basic or PRIA Choice Account may at any time contribute additional funds for deposit into such account, to the extent the total of such contributions under this subsection and subsection (c) does not exceed the limitation in effect with respect to the individual under subsection (c)(6) for the taxable year.
Maintenance of direct deposit mechanism— Any employer that does not maintain a qualified retirement plan (as defined in section 4974(c) of the Internal Revenue Code of 1986) or maintains such a plan eligibility for which is restricted to only certain employees shall provide a mechanism for the direct deposit of funds as described in subsection (c)(2) for each employee of the employer.
Mobile platforms— Any mobile platform through which individuals perform work and receive compensation (whether or not as an employee) shall provide a mechanism for the direct deposit of funds, by means of electronic funds transfer, identified by the individual into the individual's portable retirement and investment account.
Reporting requirements for employers making contributions— In the case of any employer that makes contributions to a PRIA Basic or PRIA Choice Account on behalf of the employer’s employees, rules similar to the rules applicable to simple retirement accounts under section 2(h) of the Employee Retirement and Income Security Act of 1974 (29 U.S.C. 1001(h)) shall apply.
Transfer option—
In general— A beneficiary of a PRIA Basic Account (or, in the case of a beneficiary who is under 18 years of age, the parent or guardian of the beneficiary) may elect at any time to transfer the entire amount in such portable retirement and investment account to any PRIA Choice Account (as defined in section 223A of the Internal Revenue Code of 1986) with such beneficiary as the sole beneficiary. Such account shall be held by a custodial entity such as a bank, credit union, trust company or an entity that is licensed and regulated by the Secretary pursuant to requirements consistent with section 1.408–2e of title 26, Code of Federal Regulations. Investments in such accounts are not subject to the limitation to lifecycle funds described in section 3.
Notifications—
Statements— The Director shall ensure that account statements are delivered to the beneficiary of a portable retirement and investment account by electronic delivery to the extent practicable.
Notice of transfer option— When the amount in a portable retirement and investment account first exceeds $15,000 and when the beneficiary of the account attains the age of 18, the Director shall notify the beneficiary of the account of the option under paragraph (3) to transfer the entire amount in such account to an individual retirement account.
IRA rollover— A beneficiary of a PRIA Basic or a PRIA Choice Account (or, in the case of a beneficiary who is under 18 years of age, the parent or guardian of the beneficiary) may elect at any time to transfer the entire amount in such account to an individual retirement account (as defined in section 408 of the Internal Revenue Code of 1986) with such beneficiary as the sole beneficiary. For purposes of such Code, such a rollover shall be treated as described in section 408(d)(3) of such Code.
Sec. 5 Optional treatment of contributions as Roth contributions
In general— The Fund (or custodial entity in the case of a PRIA Choice Account) shall allow an individual to designate all or a portion of any contributions otherwise allowed to be made to a PRIA Basic or PRIA Choice Account as Roth contributions. Any contribution so designated shall be treated as a contribution to a PRIA Basic or PRIA Choice Account, as the case may be, for purposes of this Act and the Internal Revenue Code of 1986, except that no deduction shall be allowed with respect to any such contribution.
Separate accounting— The Fund (or such custodial entity) shall provide for separate accounts for amounts designated as Roth contributions under subsection (a) and earnings attributable thereto.
Designation limit— The amount of contributions which an individual may designate under subsection (a) shall not exceed the excess (if any) of—
the maximum amount of contributions allowed for such individual for the taxable year under section 4(c)(6); over
the aggregate amount of contributions of the individual for the taxable year which the individual does not designate under subsection (a).
Roth IRA rules applicable— Except to the extent otherwise provided in this section, rules similar to the rules of section 408A of the Internal Revenue Code of 1986 shall apply with respect to amounts designated under subsection (a) (and the earnings attributable thereto).
Sec. 6 Data portal
In general— The Director shall establish a standardized portal for the Fund (or each custodial entity in the case of PRIA Choice Account), and any plan administrator (as defined in section 414(g) of the Internal Revenue Code of 1986) of a plan to which section 6058 of the Internal Revenue Code of 1986 applies, to submit the reports required under subsection (b), the back end of which is developed and standardized to ensure ease of data upload by plan sponsors.
Reports required— Each such plan administrator, and the Fund or each such custodial entity in the case of a PRIA Basic or PRIA Choice Account, shall report on a quarterly basis to the Director, by uploading such report to the portal established under subsection (a). Each such report shall include—
information on the assets held by such account as of market close the day before the last day of the quarter;
the balance of the account on the first and last day of the quarter;
the gross of contributions, withdrawals, transfers, and realized and unrealized gains and losses (reported separately by fund) with respect to the account;
expense ratios, reported separately by fund;
the rate of return for the preceding 12 months, reported both overall and separately by fund; and
the lifetime income stream equivalent of the total benefits accrued (as defined in section 105(a)(2)(D)(i)(II) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1025(a)(2)(D)(i)(II))) in the account as of the last day of the quarter.
Failure To provide report— Any failure to provide the report pursuant to subsection (b) shall be treated by the Secretary of the Treasury as a failure to file a return or statement required under section 6058 of the Internal Revenue Code of 1986.
Regulations— The Director may prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.
Appropriations— There is appropriated to the Director, out of any funds in the Treasury not otherwise appropriated, such funds as are necessary to carry out the requirements of this section, including for the development and ongoing hosting costs of the portal established under subsection (a).
Rule of construction— Compliance with the provisions of this section requiring plan sponsors to disclose or share information shall not constitute a violation of the provisions of Gramm-Leach-Bliley Act or the Employee Retirement Income Security Act of 1974.
Sec. 7 Tax treatment of portable retirement and investment accounts
In general— Section 7701 of the Internal Revenue Code of 1986 is amended by redesignating subsection (p) as subsection (q) and by inserting after subsection (o) the following new subsection:
“(p) Tax treatment of portable retirement and investment accounts—For purposes of this title—
“(1) In general—Any portable retirement and investment account shall be treated as an individual retirement plan, and, except to the extent provided in section 223A or the Portable Retirement and Investment Account Act of 2021, any contribution to, or distribution from, such a portable retirement and investment account shall be treated in the same manner as contributions to, or distributions from, such a plan.
“(2) Treatment of Roth contributions—Any portable retirement and investment account to which Roth contributions are made pursuant to section 5 of such Act shall be treated as a Roth IRA with respect to such contributions under rules similar to the rules of paragraph (1).
“(3) Portable retirement and investment account—The term portable retirement and investment account means—
“(A) a PRIA Basic Account established under section 4 of the Portable Retirement and Investment Account Act of 2021, and
“(B) a PRIA Choice Account (as defined in section 223A(c)).”
Other rules relating to PRIA Choice Accounts— Part VII of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 223 the following new section:
“223A. PRIA Choice Accounts
“(a) Deduction allowed
“(1) In general—There shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year to a PRIA Choice Account by the account beneficiary.
“(2) Certain rules to apply—Rules similar to section 219(d)(2) (relating to no deduction for rollovers) shall apply for purposes of this section.
“(b) Maximum amount of deduction—The amount allowable as a deduction under subsection (a) to any individual for any taxable year shall not exceed the amount allowable under section 219(b) of the Internal Revenue Code of 1986 with respect to the individual for the taxable year.
“(c) PRIA Choice Account
“(1) In general—For purposes of this title, the term “PRIA Choice Account” means a trust created or organized in the United States for the exclusive benefit of an individual, but only if the written governing instrument creating the trust meets the following requirements:
“(A) The trustee is a bank (as defined in section 408(n) of the Internal Revenue Code of 1986) or such other person who demonstrates to the satisfaction of the Secretary that the manner in which such other person will administer the trust will be consistent with the requirements of this section.
“(B) The amounts in the trust may consist only of—
“(i) deposits under section 4(b) of the Portable Retirement and Investment Account Act of 2021,
“(ii) amounts described in subsection (a)(1),
“(iii) amounts deposited by an employer of the account beneficiary,
“(iv) interest on amounts in such trust, and
“(v) proceeds from investment of amounts in such trust.
“(C) Except in the case of a rollover contribution described in subsection (d)(4), no contribution will be accepted unless it is in cash.
“(D) No contributions in excess of the amount that is twice the dollar amount in effect under subsection (b)(1)(A) will be accepted during a calendar year.
“(E) Amounts in the trust will be invested in not more than 15 total funds, and will be invested in at least 5 total broad market, low-fee funds, bonds, or lifecycle funds. The remaining funds may include not more than 5 niche funds and not more than 5 annuity funds, but all investments must be made in diversified funds which represent a prudent investment.
“(F) No distribution that would bring the account balance below the amount deposited in such trust under section 4(b)(1) of the Portable Retirement and Investment Account Act of 2021 is allowed to an account beneficiary who has not attained the age 59½.
“(2) PRIA Choice Annuities—Rules similar to the rules of section 408(b) shall apply with respect to PRIA Choice Accounts in the case of a taxpayer purchasing an annuity contract or an endowment contract from a life insurance company.
“(d) Tax treatment of accounts
“(1) In general—A PRIA Choice Account is exempt from taxation under this subtitle unless such account has ceased to be a PRIA Choice Account. Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc., organizations).
“(2) Account terminations—Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to PRIA Choice Accounts, and subsection (e)(2) shall not apply to any amount treated as distributed under such rules.
“(e) Tax treatment of distributions—For rules relating to distributions, see section 7701(p).
“(f) Loans treated as distributions—For purposes of this section—
“(1) In general—If during any taxable year a participant or beneficiary receives (directly or indirectly) any amount as a loan from a PRIA Choice Account, such amount shall be treated as having been received by such individual as a distribution from such account.
“(2) Exception for certain loans
“(A) General rule—Paragraph (1) shall not apply to any loan to the extent that such loan (when added to the outstanding balance of all other loans from such account), does not exceed the lesser of—
“(i) $50,000, reduced by the excess (if any) of—
“(I) the highest outstanding balance of loans from the account during the 1-year period ending on the day before the date on which such loan was made, over
“(II) the outstanding balance of loans from the plan on the date on which such loan was made, or
“(ii) the greater of—
“(I) one-half of the amount in the account, or
“(II) $10,000.
“(B) Requirement that loan be repayable within 5 years
“(i) In general—Subparagraph (A) shall not apply to any loan unless such loan, by its terms, is required to be repaid within 5 years.
“(ii) Exception for home loans—Clause (i) shall not apply to any loan used to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as the principal residence of the participant.
“(C) Requirement of level amortization—Except as provided in regulations, this paragraph shall not apply to any loan unless substantially level amortization of such loan (with payments not less frequently than quarterly) is required over the term of the loan.
“(g) Employer deductions
“(1) In general—For deductions related to employer contributions, see section 162.
“(2) Nondiscrimination—Under regulations prescribed by the Secretary, notwithstanding section 162, no deduction shall be allowed for employer contributions to a PRIA Choice Account on behalf of an employee who is a highly compensated employee (as defined in section 414(q)) if the employer contributions made on behalf of all employees discriminate in favor of such employees who are highly compensated employees.
“(3) Certain controlled groups—All employees who are treated as employed by a single employer under subsections (b), (c), and (m) of section 414 shall be treated as employed by a single employer for purposes of this subsection.
“(h) Inflation adjustment
“(1) In general—In the case of any taxable year beginning in a calendar year after 2021, the dollar amounts under subsection (b) and subsection (c)(4) shall be increased by an amount equal to—
“(A) such dollar amount, multiplied by
“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2020” for “calendar year 2016” in subparagraph (A)(ii) thereof.
“(2) Rounding rules—If any amount after adjustment under paragraph (1) is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500.
“(i) Portable Retirement and Investment Board—The Portable Retirement and Investment Board established under section 2 of the Portable Retirement and Investment Account Act of 2021 shall deposit any contribution to the PRIA Basic Account of an individual who has made the election under section 4(f)(1) of such Act into the PRIA Choice Account of the individual. Such contribution shall be treated as if made directly to such PRIA Choice Account.”
Clerical amendments— The table of sections for chapter 1 is amended by inserting after the item related to section 223 the following new item:
Sec. 8 Option to roll over
In general— Any individual who holds an account described in subsection (c) may elect to roll over the entire amount in such account into a PRIA Choice Account (as defined in section 223A of the Internal Revenue Code of 1986). Such rollover shall be treated as a rollover described in section 223A(e)(4) of the Internal Revenue Code of 1986.
Orphaned accounts— The trustee of any account described in subsection (c) the beneficiary of which cannot be located or has ceased to exercise control over the assets of the account may transfer such account to a PRIA Basic or PRIA Choice Account in the name of the beneficiary in accordance with regulations issued by the Secretary of the Treasury. Such a transfer shall be treated as a rollover described in section 223A(e)(4) of the Internal Revenue Code of 1986.
Accounts described— This subsection shall apply to accounts opened or annuity contracts purchased pursuant to the following sections of the Internal Revenue Code of 1986:
Section 401(k).
Section 403(b).
Section 457.
Section 409A.
Section 408.
Sec. 9 Regulations
Not later than 180 days after the date of the enactment of this Act, the Secretary of the Treasury, in coordination with the Commissioner of Social Security, as determined necessary by the Secretary, shall issue regulations to carry out this Act.