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The Budgetary Treatment of Personal Retirement Accounts
CONGRESSIONAL BUDGET OFFICE (U S CONGRESS) WASHINGTON DC
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Several Members of Congress, groups, and individuals have proposed reforms to Social Security that would involve personal retirement accounts PRAs. Some of those proposals would require workers or employers to make payments to PRAs. The compulsory payments would either replace or be in addition to current Social Security payroll taxes. Other proposals would allow workers to direct a portion of their Social Security payroll tax or federal income tax payments to PRAs or voluntarily contribute to the accounts from their own funds. Several proposals would have the government deposit funds into PRAs established for the workers benefit. Social Security reforms that would involve PRAs generally would give individual workers some choice about how the money in their account was invested and would permit them to withdraw the funds after retirement. Under some proposals, the federal government would administer the PRAs under others, the private sector would do so. This paper examines the issues related to the treatment of personal retirement accounts in the federal budget, focusing on proposals involving PRAs made during the 105th Congress, which was in session in 1997 and 1998.
APPROVED FOR PUBLIC RELEASE