[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1818 Introduced in Senate (IS)]







104th CONGRESS
  2d Session
                                S. 1818

To amend the Employee Retirement Income Security Act of 1974 to provide 
                  for retirement savings and security.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 23, 1996

    Mr. Daschle (by request) (for himself, Mr. Bryan, Mr. Dodd, Mr. 
 Kennedy, Mr. Leahy, Ms. Mikulski, Ms. Moseley-Braun, Mr. Rockefeller, 
and Mr. Simon) introduced the following bill; which was read twice and 
         referred to the Committee on Labor and Human Resources

_______________________________________________________________________

                                 A BILL


 
To amend the Employee Retirement Income Security Act of 1974 to provide 
                  for retirement savings and security.

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

                TITLE I--SHORT TITLE; TABLE OF CONTENTS

SEC. 1000. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Retirement Savings 
and Security Act''.
    (b) Table of Contents.--

                TITLE I--SHORT TITLE; TABLE OF CONTENTS

Sec. 1000. Short title; table of contents.
                       TITLE II--ERISA PROVISIONS

Sec. 2000. Amendment of ERISA.
        Subtitle A--Expanded Pension Coverage and Simplification

Sec. 2001. Reporting and fiduciary requirements relating to NESTs.
Sec. 2002. Elimination of requirement for plan descriptions and the 
                            filing requirement for summary plan 
                            descriptions and descriptions of material 
                            modifications to a plan; technical 
                            corrections.
Sec. 2003. Conforming amendment relating to investment in qualified 
                            State prepaid tuition programs.
                        Subtitle B--Portability

Sec. 2011. Missing participants.
Sec. 2012. Elimination of special vesting rule for multiemployer plans.
Sec. 2013. Treatment of loans during military service.
                     Subtitle C--Enhanced Security

                     Chapter 1--General Provisions

Sec. 2021. Multiemployer plan benefits guaranteed.
Sec. 2022. Reversion report.
Sec. 2023. Full funding limitation for multiemployer plans.
Sec. 2024. Prohibited transactions.
Sec. 2025. Substantial owner benefits.
                      Chapter 2--ERISA Enforcement

Sec. 2031. Short title.
Sec. 2032. Repeal of limited scope audit.
Sec. 2033. Reporting and enforcement requirements for employee benefit 
                            plans.
Sec. 2034. Additional requirements for qualified public accountants.
Sec. 2035. Clarification of fiduciary penalties.

                       TITLE II--ERISA PROVISIONS

SEC. 2000. AMENDMENT OF ERISA.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Employee Retirement 
Income Security Act of 1974.

        Subtitle A--Expanded Pension Coverage and Simplification

SEC. 2001. REPORTING AND FIDUCIARY REQUIREMENTS RELATING TO NESTS.

    (a) Reporting Requirements.--Section 101 (29 U.S.C. 1021) is 
amended by redesignating subsection (g) as subsection (h) and by 
inserting after subsection (f) the following new subsection:
    ``(g) NESTs.--
            ``(1) In general.--Except as provided in this subsection, 
        no reporting or disclosure requirements under this title shall 
        apply with respect to a pension plan under section 408(p) of 
        the Internal Revenue Code of 1986.
            ``(2) Summary description.--The trustee or issuer of any 
        NEST established pursuant to a pension plan under section 
        408(p) of such Code shall provide to the employer maintaining 
        the arrangement each year a description containing the 
        following information:
                    ``(A) The name and address of the employer and the 
                trustee.
                    ``(B) The requirements for eligibility for 
                participation.
                    ``(C) The benefits provided with respect to the 
                arrangement.
                    ``(D) The time and method of making elections with 
                respect to the arrangement.
                    ``(E) The procedures for, and effects of, 
                distributions (including rollovers) from the 
                arrangement.
            ``(3) Employee notification.--The employer shall notify 
        each employee immediately before the period for which an 
        election described in section 408(p)(7)(B) of such Code may be 
        made of the employee's opportunity to make such election. Such 
        notice shall include a copy of the description described in 
        paragraph (2) and shall indicate whether matching contributions 
        will be made with respect to the employee's elective 
        contributions, and the level of employer matching and 
        nonelective contributions which will be made, for the year for 
        which the election may be made.''
    (b) Fiduciary Duties.--Section 404 (29 U.S.C. 1104) is amended by 
redesignating subsection (d) as subsection (e) and by adding after 
subsection (c) the following new subsection:
    ``(d)(1) In the case of a NEST established pursuant to a plan under 
section 408(p) of the Internal Revenue Code of 1986, no plan sponsor 
who is otherwise a fiduciary shall be liable under this part for any 
loss, or by reason of any breach, which results from--
            ``(A) the designation of the trustee or issuer of the NEST, 
        or
            ``(B) the manner in which the assets in the NEST are 
        invested,
after the earliest of the dates described in paragraph (2).
    ``(2) The dates described in this paragraph are as follows:
            ``(A) The date on which an affirmative election with 
        respect to the initial investment of any contribution is made 
        by the individual for whose benefit the NEST is established.
            ``(B) The date on which there is a rollover of the assets 
        of the NEST to any other NEST or individual retirement account 
        or annuity described in section 408 of the Internal Revenue 
        Code of 1986.
            ``(C) The date which is 1 year after the NEST is 
        established.
    ``(3) This subsection shall not apply to a participant in a plan 
unless the participant is notified in writing (either separately or as 
part of the notice under section 101(g)(3)) that the participant's 
balance may be transferred without cost or penalty to another 
individual account or annuity in accordance with section 408(d)(3)(G) 
of the Internal Revenue Code of 1986.''
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 1996.

SEC. 2002. ELIMINATION OF REQUIREMENT FOR PLAN DESCRIPTIONS AND THE 
              FILING REQUIREMENT FOR SUMMARY PLAN DESCRIPTIONS AND 
              DESCRIPTIONS OF MATERIAL MODIFICATIONS TO A PLAN; 
              TECHNICAL CORRECTIONS.

    (a) Filing Requirements.--Section 101(b) (29 U.S.C. 1021(b)) is 
amended by striking paragraphs (1), (2), and (3) and by redesignating 
paragraphs (4) and (5) as paragraphs (1) and (2), respectively.
    (b) Plan Description.--
            (1) In general.--Section 102(a) (29 U.S.C. 1022(a)) is 
        amended--
                    (A) by striking paragraph (2), and
                    (B) by striking ``(a)(1)'' and inserting ``(a)''.
            (2) Conforming amendments.--
                    (A) Section 102(b) (29 U.S.C. 1022(b)) is amended 
                by striking ``The plan description and summary plan 
                description shall contain'' and inserting ``The summary 
plan description shall contain''.
                    (B) The heading for section 102 is amended by 
                striking ``plan description and''.
    (c) Furnishing of Reports.--
            (1) In general.--Section 104(a)(1) (29 U.S.C. 1024(a)(1)) 
        is amended to read as follows:
    ``Sec. 104. (a)(1) The administrator of any employee benefit plan 
subject to this part shall file with the Secretary the annual report 
for a plan year within 210 days after the close of such year (or within 
such time as may be required by regulations promulgated by the 
Secretary in order to reduce duplicative filing). The Secretary shall 
make copies of such annual reports available for inspection in the 
public document room of the Department of Labor.''
            (2) Secretary may request documents.--
                    (A) In general.--Section 104(a) (29 U.S.C. 1024(a)) 
                is amended by adding at the end the following new 
                paragraph:
    ``(6) The administrator of any employee benefit plan subject to 
this part shall furnish to the Secretary, upon request, any documents 
relating to the employee benefit plan, including but not limited to, 
the latest summary plan description (including any summaries of plan 
changes not contained in the summary plan description), and the 
bargaining agreement, trust agreement, contract, or other instrument 
under which the plan is established or operated.''
                    (B) Penalty.--Section 502(c) (29 U.S.C. 1132(c)) is 
                amended by adding at the end the following new 
                paragraph:
    ``(5) If, within 30 days of a request by the Secretary to a plan 
administrator for documents under section 104(a)(6), the plan 
administrator fails to furnish the material requested to the Secretary, 
the Secretary may assess a civil penalty against the plan administrator 
of up to $100 a day from the date of such failure (but in no event in 
excess of $1,000 per request). No penalty shall be imposed under this 
paragraph for any failure resulting from matters reasonably beyond the 
control of the plan administrator.''
    (d) Conforming Amendments.--
            (1) Section 104(b)(1) (29 U.S.C. 1024(b)(1)) is amended by 
        striking ``section 102(a)(1)'' each place it appears and 
        inserting ``section 102(a)''.
            (2) Section 104(b)(2) (29 U.S.C. 1024(b)(2)) is amended by 
        striking ``the plan description and'' and inserting ``the 
        latest updated summary plan description and''.
            (3) Section 104(b)(4) (29 U.S.C. 1024(b)(4)) is amended by 
        striking ``plan description''.
            (4) Section 106(a) (29 U.S.C. 1026(a)) is amended by 
        striking ``descriptions,''.
            (5) Section 107 (29 U.S.C. 1027) is amended by striking 
        ``description or''.
            (6) Paragraph (2)(B) of section 108 (29 U.S.C. 1028) is 
        amended to read as follows: ``(B) after publishing or filing 
        the annual reports,''.
            (7) Section 502(a)(6) (29 U.S.C. 1132(a)(6)) is amended by 
        striking ``subsection (c)(2) or (i) or (l)'' and inserting 
        ``paragraph (2), (4), or (5) of subsection (c) or subsection 
        (i) or (l)''.
    (e) Technical Corrections to ERISA.--
            (1) Section 502(c)(1) (29 U.S.C. 1132(c)(1)) is amended by 
        adding at the end the following new sentence: ``For purposes of 
        this paragraph, each violation described in subparagraph (A) 
        with respect to any single participant, and each violation 
        described in subparagraph (B) with respect to any single 
        participant or beneficiary, shall be treated as a separate 
        violation.''
            (2) Section 502(c) (29 U.S.C. 1132(c)) is amended--
                    (A) by striking the last two sentences of paragraph 
                (4), and
                    (B) by adding at the end the following new 
                paragraph:
    ``(5) The Secretary and the Secretary of Health and Human Services 
shall maintain such ongoing consultation as may be necessary and 
appropriate to coordinate enforcement under this subsection with 
enforcement under section 1144(c)(9) of the Social Security Act.''
    (f) Effective Date.--The provisions of this section shall take 
effect on the date of the enactment of this Act.

SEC. 2003. CONFORMING AMENDMENT RELATING TO INVESTMENTS IN QUALIFIED 
              STATE PREPAID TUITION PROGRAMS.

    (a) In General.--Subsection (b) of section 408 is amended by adding 
at the end the following new paragraph:
            ``(14) any purchase of a qualified State prepaid tuition 
        program instrument to which section 408(q) of the Internal 
        Revenue Code of 1986 applies.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1995.

                        Subtitle B--Portability

SEC. 2011. MISSING PARTICIPANTS.

    (a) In General.--Section 4050 (29 U.S.C. 1350) is amended by 
redesignating subsection (c) as subsection (e) and by inserting after 
subsection (b) the following new subsections:
    ``(c) Multiemployer Plans.--The corporation shall prescribe rules 
similar to the rules in subsection (a) for multiemployer plans covered 
by this title that terminate under section 4041A.
    ``(d) Plans Not Otherwise Subject to Title.--
            ``(1) Transfer to corporation.--The plan administrator of a 
        plan described in paragraph (4) may elect to transfer a missing 
        participant's benefits to the corporation upon termination of 
        the plan.
            ``(2) Information to the corporation.--To the extent 
        provided in regulations, the plan administrator of a plan 
        described in paragraph (4) shall, upon termination of the plan, 
        provide the corporation information with respect to benefits of 
        a missing participant if the plan transfers such benefits--
                    ``(A) to the corporation, or
                    ``(B) to an entity other than the corporation or a 
                plan described in paragraph (4)(B)(ii).
            ``(3) Payment by the corporation.--If benefits of a missing 
        participant were transferred to the corporation under paragraph 
        (1), the corporation shall, upon location of the participant or 
        beneficiary, pay to the participant or beneficiary the amount 
        transferred (or the appropriate survivor benefit) either--
                    ``(A) in a single sum (plus interest), or
                    ``(B) in such other form as is specified in 
                regulations of the corporation.
            ``(4) Plans described.--A plan is described in this 
        paragraph if--
                    ``(A) the plan is a pension plan (within the 
                meaning of section 3(2))--
                            ``(i) to which the provisions of this 
                        section do not apply (without regard to this 
                        subsection), and
                            ``(ii) which is not a plan described in 
                        paragraphs (2) through (11) of section 4021(b), 
                        and
                    ``(B) at the time the assets are to be distributed 
                upon termination, the plan--
                            ``(i) has missing participants, and
                            ``(ii) has not provided for the transfer of 
                        assets to pay the benefits of all missing 
                        participants to another pension plan (within 
                        the meaning of section 3(2)).
            ``(5) Certain provisions not to apply.--Subsections (a)(1) 
        and (a)(3) shall not apply to a plan described in paragraph 
        (4).''
    (b) Conforming Amendments.--Section 206(f) (29 U.S.C. 1056(f)) is 
amended--
            (1) by striking ``title IV'' and inserting ``section 
        4050'', and
            (2) by striking ``the plan shall provide that''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after final regulations implementing 
subsections (c) and (d) of section 4050 of the Employee Retirement 
Income Security Act of 1974 (as added by subsection (a)), respectively, 
are prescribed.

SEC. 2012. ELIMINATION OF SPECIAL VESTING RULE FOR MULTIEMPLOYER PLANS.

    (a) In General.--Paragraph (2) of section 203(a) (29 U.S.C. 
1053(a)) is amended--
            (1) by striking ``subparagraph (A), (B), or (C)'' and 
        inserting ``subparagraph (A) or (B)''; and
            (2) by striking subparagraph (C).
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning on or after the earlier of--
            (1) the later of--
                    (A) January 1, 1997, or
                    (B) the date on which the last of the collective 
                bargaining agreements pursuant to which the plan is 
                maintained terminates (determined without regard to any 
                extension thereof after the date of the enactment of 
                this Act), or
            (2) January 1, 1999.
Such amendments shall not apply to any individual who does not have 
more than 1 hour of service under the plan on or after the 1st day of 
the 1st plan year to which such amendments apply.

SEC. 2013. TREATMENT OF LOANS DURING MILITARY SERVICE.

    (a) In General.--Section 408(b)(1) (29 U.S.C. 1148(b)) is amended 
by adding at the end the following new sentence: ``A loan made by a 
plan shall not fail to meet the requirements of the preceding sentence 
by reason of a loan repayment suspension described under section 
414(u)(4) of the Internal Revenue Code of 1986.''
    (b) Effective Date.--The amendment made by this section shall be 
effective as of December 12, 1994.

                     Subtitle C--Enhanced Security

                     CHAPTER 1--GENERAL PROVISIONS

SEC. 2021. MULTIEMPLOYER PLAN BENEFITS GUARANTEED.

    (a) In General.--Section 4022A(c) (29 U.S.C. 1322a(c)) is amended--
            (1) by striking ``$5'' each place it appears in paragraph 
        (1) and inserting ``$11'',
            (2) by striking ``$15'' in paragraph (1) and inserting 
        ``$33'', and
            (3) by striking paragraphs (2), (5), and (6) and by 
        redesignating paragraphs (3) and (4) as paragraphs (2) and (3), 
        respectively.
    (b) Effective Date.--The amendments made by this section shall 
apply to any multiemployer plan that has not received financial 
assistance (within the meaning of section 4261 of the Employee 
Retirement Income Security Act of 1974) within the 1-year period ending 
on the date of the enactment of this Act.

SEC. 2022. REVERSION REPORT.

    (a) In General.--Section 4008 (29 U.S.C. 1308) is amended by adding 
at the end the following new subsection:
    ``(b) Reversion Report.--As soon as practicable after the close of 
each fiscal year, the Secretary of Labor (acting in the Secretary's 
capacity as chairman of the corporation's board) shall transmit to the 
President and the Congress a report providing information on plans from 
which residual assets were distributed to employers pursuant to section 
4044(d).''
    (b) Conforming Amendment.--Section 4008 (29 U.S.C. 1308) is amended 
by striking ``Sec. 4008.'' and inserting ``Sec. 4008. (a) Annual 
Report.--''.
    (c) Effective Date.--The amendments made by this section shall 
apply to fiscal years beginning after September 30, 1996.

SEC. 2023. FULL FUNDING LIMITATION FOR MULTIEMPLOYER PLANS.

    (a) Full-Funding Limitation.--Section 302(c)(7)(C) (29 U.S.C. 
1082(c)(7)(C)) is amended--
            (1) by inserting ``or in the case of a multiemployer 
        plan,'' after ``paragraph (6)(B),'', and
            (2) by inserting ``and multiemployer plans'' after 
        ``paragraph (6)(b)'' in the heading thereof.
    (b) Valuation.--Section 302(c)(9) (29 U.S.C. 1082(c)(9)) is 
amended--
            (1) by inserting ``(3 years in the case of a multiemployer 
        plan)'' after ``year'', and
            (2) by striking ``Annual valuation'' in the heading and 
        inserting ``Valuation''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 1996.

SEC. 2024. PROHIBITED TRANSACTIONS.

    (a) In General.--Section 502(i) (29 U.S.C. 1132(i)) is amended by 
striking ``5 percent'' and inserting ``10 percent''.
    (b) Effective Date.--The amendments made by this section shall 
apply to prohibited transactions occurring after the date of enactment 
of this Act.

SEC. 2025. SUBSTANTIAL OWNER BENEFITS.

    (a) Modification of Phase-in of Guarantee.--Subparagraphs (B) and 
(C) of section 4022(b)(5) (29 U.S.C. 1322(b)(5)) are amended to read as 
follows:
    ``(B) For purposes of this title, the term `majority owner' has the 
same meaning as substantial owner under subparagraph (A), except that 
subparagraph (A) shall be applied by substituting `50 percent or more' 
for `more than 10 percent' each place it appears.
    ``(C) In the case of a participant who is a majority owner, the 
amount of benefits guaranteed under this section shall not exceed the 
product of--
            ``(i) a fraction (not to exceed 1) the numerator of which 
        is the number of years from the later of the effective date or 
        the adoption date of the plan to the termination date, and the 
        denominator of which is 30, and
            ``(ii) the amount of the majority owner's monthly benefits 
        guaranteed under subsection (a) (as limited by paragraph (3) of 
        this subsection).''
    (b) Modification of Allocation of Assets.--
            (1) Section 4044(a)(4)(B) (29 U.S.C. 1344(a)(4)(B)) is 
        amended by striking ``section 4022(b)(5)'' and inserting 
        ``section 4022(b)(5)(C)''.
            (2) Section 4044(b) (29 U.S.C. 1344(b)) is amended--
                    (A) by striking ``(5)'' in paragraph (2) and 
                inserting ``(4), (5),'', and
                    (B) by redesignating paragraphs (3) through (6) as 
                paragraphs (4) through (7), respectively, and by 
                inserting after paragraph (2) the following new 
                paragraph:
            ``(3) If assets available for allocation under paragraph 
        (4) of subsection (a) are insufficient to satisfy in full the 
        benefits of all individuals who are described in that 
        paragraph, the assets shall be allocated first to benefits 
        described in subparagraph (A) of that paragraph. Any remaining 
        assets shall then be allocated to subparagraph (B). If assets 
        allocated to subparagraph (B) are insufficient to satisfy in 
        full the benefits in that subparagraph, the assets shall be 
        allocated pro rata among individuals on the basis of the 
        present value (as of the termination date) of their respective 
        benefits described in that subparagraph.''
    (c) Effective Date.--The amendments made by this section shall 
apply to plan terminations--
            (1) under section 4041(c) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1341(c)) with respect to which 
        notices of intent to terminate are provided under section 
        4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) on or after the 
        date of the enactment of this Act, or
            (2) under section 4042 of such Act (29 U.S.C. 1342) with 
        respect to which proceedings are instituted by the corporation 
        on or after such date.

                      CHAPTER 2--ERISA ENFORCEMENT

SEC. 2031. SHORT TITLE.

    This part may be cited as the ``Pension Audit Improvement Act of 
1996''.

SEC. 2032. REPEAL OF LIMITED SCOPE AUDIT.

    (a) In General.--Section 103(a)(3) (29 U.S.C. 1023(a)(3)) is 
amended by striking subparagraph (C) and by redesignating subparagraph 
(D) as subparagraph (C).
    (b) Conforming Amendments.--
            (1) Section 103(a)(3)(A) (29 U.S.C. 1023(a)(3)(A)) is 
        amended by striking ``Except as provided in subparagraph (C), 
        the'' and inserting ``The''.
            (2) Section 104(a)(5)(A) (29 U.S.C. 1024(a)(5)(A)) is 
        amended by striking ``section 103(a)(3)(D)'' and inserting 
        ``section 103(a)(3)(C)''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to opinions required under section 103(a)(3)(A) of 
the Employee Retirement Income Security Act of 1974 for plan years 
beginning on or after January 1 of the calendar year following the date 
of the enactment of this Act.

SEC. 2033. REPORTING AND ENFORCEMENT REQUIREMENTS FOR EMPLOYEE BENEFIT 
              PLANS.

    (a) In General.--Part 1 of subtitle B of title I (29 U.S.C. 1021 et 
seq.) is amended--
            (1) by redesignating section 111 as section 112, and
            (2) by inserting after section 110 the following new 
        section:

                  ``direct reporting of certain events

    ``Sec. 111. (a) Required Notifications.--
            ``(1) Notifications by plan administrator.--The 
        administrator of an employee benefit plan shall, within 5 
        business days after the administrator determines that there is 
        evidence (or after the administrator is notified under 
        paragraph (2)) that an irregularity may have occurred with 
        respect to the plan--
                    ``(A) notify the Secretary of the irregularity in 
                writing; and
                    ``(B) furnish a copy of such notification to the 
                accountant who is currently engaged under section 
                103(a)(3)(A).
            ``(2) Notifications by accountant.--
                    ``(A) In general.--An accountant engaged by the 
                administrator of an employee benefit plan under section 
                103(a)(3)(A) shall, within 5 business days after the 
                accountant in connection with such engagement 
                determines that there is evidence that an irregularity 
                may have occurred with respect to the plan--
                            ``(i) notify the plan administrator of the 
                        irregularity in writing, or
                            ``(ii) if the accountant determines that 
                        there is evidence that the irregularity may 
                        have involved an individual who is the plan 
                        administrator or who is a senior official of 
                        the plan administrator, notify the Secretary of 
                        the irregularity in writing.
                    ``(B) Notification upon failure of plan 
                administrator to notify.--If an accountant who has 
                provided notification to the plan administrator 
                pursuant to subparagraph (A)(i) does not receive a copy 
                of the administrator's notification to the Secretary 
                required under paragraph (1)(B) within the 5-business 
                day period specified therein, the accountant shall 
                furnish to the Secretary a copy of the accountant's 
                notification made to the plan administrator on the next 
                business day following such period.
            ``(3) Irregularity defined.--
                    ``(A) For purposes of this subsection, the term 
                `irregularity' means--
                            ``(i) a theft, embezzlement, or a violation 
                        of section 664 of title 18, United States Code 
                        (relating to theft or embezzlement from an 
                        employee benefit plan);
                            ``(ii) an extortion or a violation of 
                        section 1951 of such title 18 (relating to 
                        interference with commerce by threats or 
                        violence);
                            ``(iii) a bribery, a kickback, or a 
                        violation of section 1954 of such title 18 
                        (relating to offer, acceptance, or solicitation 
                        to influence operations of an employee benefit 
                        plan);
                            ``(iv) a violation of section 1027 of such 
                        title 18 (relating to false statements and 
                        concealment of facts in relation to employer 
                        benefit plan records); or
                            ``(v) a violation of section 411, 501, or 
                        511 of this title (relating to criminal 
                        violations).
                    ``(B) The term `irregularity' shall not include any 
                act or omission described in this paragraph involving 
                less than $1,000 unless there is reason to believe that 
                the act or omission may bear on the integrity of plan 
                management.
    ``(b) Notification Upon Termination of Engagement of Accountant.--
            ``(1) Notification by plan administrator.--Within 5 
        business days after the termination of an engagement for 
        auditing services under section 103(a)(3)(A) with respect to an 
        employee benefit plan, the administrator of such plan shall--
                    ``(A) notify the Secretary in writing of such 
                termination, giving the reasons for such termination, 
                and
                    ``(B) furnish the accountant whose engagement was 
                terminated with a copy of the notification sent to the 
                Secretary.
            ``(2) Notification by accountant.--If the accountant 
        referred to in paragraph (1)(B) has not received a copy of the 
        administrator's notification to the Secretary as required under 
        paragraph (1)(B), or if the accountant disagrees with the 
        reasons given in the notification of termination of the 
        engagement for auditing services, the accountant shall notify 
        the Secretary in writing of the termination, giving the reasons 
        for the termination, within 10 business days after the 
        termination of the engagement.
    ``(c) Determination of Periods Required for Notification.--In 
determining whether a notification required under this section with 
respect to any act or omission has been made within the required number 
of business days--
            ``(1) the day on which such act or omission begins shall 
        not be included; and
            ``(2) Saturdays, Sundays, and legal holidays shall not be 
        included.
For purposes of this subsection, the term `legal holiday' means any 
Federal legal holiday and any other day appointed as a holiday by the 
State in which the person responsible for making the notification 
principally conducts his business.
    ``(d) Immunity for Good Faith Notification.--Except as provided in 
this Act, no accountant or plan administrator shall be liable to any 
person for any finding, conclusion, or statement made in any 
notification made pursuant to subsection (a)(2) or (b)(2), or pursuant 
to any regulations issued thereunder, if such finding, conclusion, or 
statement is made in good faith.''
    (b) Civil Penalty.--
            (1) In general.--Section 502(c) (29 U.S.C. 1132(c)), as 
        amended by section 2002, is amended by redesignating paragraph 
        (6) as paragraph (7) and by inserting after paragraph (5) the 
        following new paragraph:
    ``(6)(A) The Secretary may assess a civil penalty of up to $100,000 
against any administrator who fails to provide the Secretary with any 
notification as required under section 111.
    ``(B) The Secretary may assess a civil penalty of up to $100,000 
against any accountant who knowingly and willfully fails to provide the 
Secretary with any notification as required under section 111.''
            (2) Conforming amendment.--Section 502(a)(6) (29 U.S.C. 
        1132(a)(6)), as amended by section 2002, is amended by striking 
        ``or (5)'' and inserting ``(5), or (6)''.
    (c) Clerical Amendments.--
            (1) Section 514(d) (29 U.S.C. 1144(d)) is amended by 
        striking ``111'' and inserting ``112''.
            (2) The table of contents in section 1 is amended by 
        striking the item relating to section 111 and inserting the 
        following new items:

``Sec. 111. Direct reporting of certain events.
``Sec. 112. Repeal and effective date.''
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to any irregularity or termination of engagement 
described in such amendments only if the 5-day period described in such 
amendments in connection with such irregularity or termination 
commences at least 90 days after the date of the enactment of this Act.

SEC. 2034. ADDITIONAL REQUIREMENTS FOR QUALIFIED PUBLIC ACCOUNTANTS.

    (a) In General.--Section 103(a)(3)(C) (29 U.S.C. 1023(a)(3)(C)), as 
redesignated by section 2032, is amended--
            (1) by inserting ``(i)'' after ``(C)'';
            (2) by inserting ``, with respect to any engagement of an 
        accountant under subparagraph (A)'' after ``means'';
            (3) by redesignating clauses (i), (ii), and (iii) as 
        subclauses (I), (II), and (III), respectively;
            (4) by striking the period at the end of subclause (III) 
        (as so redesignated) and inserting a comma;
            (5) by adding after subclause (III) (as so redesignated), 
        and flush with clause (i), the following:
``but only if such person meets the requirements of clauses (ii) and 
(iii) with respect to such engagement.''; and
            (6) by adding at the end the following new clauses:
    ``(ii) A person meets the requirements of this clause with respect 
to an engagement of such person as an accountant under subparagraph (A) 
if such person--
            ``(I) has in operation an appropriate internal quality 
        control system;
            ``(II) has undergone a qualified external quality control 
        review of the person's accounting and auditing practices, 
        including such practices relevant to employee benefit plans (if 
        any), during the 3-year period immediately preceding such 
        engagement; and
            ``(III) has completed, within the 2-year period immediately 
        preceding such engagement, at least 80 hours of continuing 
        education or training which contributes to the accountant's 
        professional proficiency, at least 20 hours of which have been 
        completed during the 1-year period immediately preceding the 
        engagement, and at least 16 hours of which relate to employee 
        benefit plan matters.
    ``(iii) A person meets the requirements of this clause with respect 
to an engagement of such person as an accountant under subparagraph (A) 
if such person meets such additional requirements and qualifications of 
regulations which the Secretary deems necessary to ensure the quality 
of plan audits.
    ``(iv) For purposes of clause (ii)(II), an external quality control 
review shall be treated as qualified with respect to a person referred 
to in clause (ii) if--
            ``(I) such review is performed in accordance with the 
        requirements of external quality control review programs of 
        recognized auditing standard-setting bodies, as determined 
        under regulations of the Secretary, and
            ``(II) in the case of any such person who has, during the 
        peer review period, conducted one or more previous audits of 
        employee benefit plans, such review includes the review of an 
        appropriate number (determined as provided in such regulations, 
        but in no case less than one) of plan audits in relation to the 
        scale of such person's auditing practice.
The Secretary shall issue the regulations under subclause (I) no later 
than December 31, 1997.''
    (b) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply with respect to 
        plan years beginning on or after the date which is 3 years 
        after the date of the enactment of this Act.
            (2) Restrictions on conducting examinations.--Clause (iii) 
        of section 103(a)(3)(C) of the Employee Retirement Income 
        Security Act of 1974 (as added by subsection (a)(6)) shall take 
        effect on the date of enactment of this Act.

SEC. 2035. CLARIFICATION OF FIDUCIARY PENALTIES.

    (a) Modification of Prohibition of Assignment or Alienation.--
            (1) Amendment to erisa.--Section 206(d) (29 U.S.C. 1056(d)) 
        is amended by adding at the end the following new paragraphs:
    ``(4) Paragraph (1) shall not apply to any offset of a 
participant's accrued benefit in an employee pension benefit plan 
against an amount that the participant is ordered or required to pay to 
the plan if--
            ``(A) the order or requirement to pay arises--
                    ``(i) under a judgment of conviction for a crime 
                involving such plan,
                    ``(ii) under a civil judgment (including a consent 
                order or decree) entered by a court in an action 
                brought in connection with a violation (or alleged 
                violation) of part 4 of this subtitle, or
                    ``(iii) pursuant to a settlement agreement between 
                the Secretary and the participant, or a settlement 
                agreement between the Pension Benefit Guaranty 
                Corporation and the participant, in connection with a 
                violation (or alleged violation) of part 4 of this 
                subtitle,
            ``(B) the judgment, order, decree, or settlement agreement 
        expressly provides for the offset of all or part of the amount 
        ordered or required to be paid to the plan against the 
        participant's accrued benefit in the plan, and
            ``(C) if the participant has a spouse at the time at which 
        the offset is to be made--
                    ``(i) such spouse has consented in writing to such 
                offset and such consent is witnessed by a notary public 
                or representative of the plan,
                    ``(ii) such spouse is ordered or required in such 
                judgment, order, decree, or settlement to pay an amount 
                to the plan in connection with a violation of part 4 of 
                this title, or
                    ``(iii) in such judgment, order, decree, or 
                settlement, such spouse retains the right to receive 
                the value of the survivor annuity under a qualified 
                joint and survivor annuity provided pursuant to section 
                205(a)(1) and under a qualified preretirement survivor 
                annuity provided pursuant to section 205(a)(2), 
                determined in accordance with paragraph (5).
    ``(5)(A) The value of the survivor annuity described in paragraph 
(4)(C)(iii) shall be determined as if--
            ``(i) the participant terminated employment on the date of 
        the offset,
            ``(ii) there was no offset,
            ``(iii) the plan permitted retirement only on or after 
        normal retirement age,
            ``(iv) the plan provided only the minimum-required 
        qualified joint and survivor annuity, and
            ``(v) the amount of the qualified preretirement survivor 
        annuity under the plan is equal to the amount of the survivor 
        annuity payable under the minimum-required qualified joint and 
        survivor annuity.
    ``(B) For purposes of this paragraph, the term `minimum-required 
qualified joint and survivor annuity' means the qualified joint and 
survivor annuity which is the actuarial equivalent of a single annuity 
for the life of the participant and under which the survivor annuity is 
50 percent of the amount of the annuity which is payable during the 
joint lives of the participant and the spouse.''
            (2) Effective date.--The amendment made by this subsection 
        shall apply to judgments, orders, and decrees issued, and 
        settlement agreements entered into, on or after the date of 
        enactment of this Act.
    (b) Civil Penalties for Breach of Fiduciary Responsibility.--
            (1) Imposition and amount of penalty made discretionary.--
        Section 502(l)(1) (29 U.S.C. 1132(l)(1)) is amended--
                    (A) by striking ``shall'' and inserting ``may'', 
                and
                    (B) by striking ``equal to'' and inserting ``not 
                greater than''.
            (2) Applicable recovery amount.--Section 502(l)(2) (29 
        U.S.C. 1132(l)(2)) is amended to read as follows:
    ``(2) For purposes of paragraph (1), the term `applicable recovery 
amount' means any amount which is recovered from (or on behalf of) any 
fiduciary or other person with respect to a breach or violation 
described in paragraph (1) on or after the 30th day following receipt 
by such fiduciary or other person of written notice from the Secretary 
of the violation, whether paid voluntarily or by order of a court in a 
judicial proceeding instituted by the Secretary under subsection (a)(2) 
or (a)(5). The Secretary may, in the Secretary's sole discretion, 
extend the 30-day period described in the preceding sentence.''
            (3) Other rules.--Section 502(l) (29 U.S.C. 1132(l)) is 
        amended by adding at the end the following new paragraphs:
    ``(5) A person shall be jointly and severally liable for the 
penalty described in paragraph (1) to the same extent that such person 
is jointly and severally liable for the applicable recovery amount on 
which the penalty is based.
    ``(6) No penalty shall be assessed under this subsection unless the 
person against whom the penalty is assessed is given notice and 
opportunity for a hearing with respect to the violation and applicable 
recovery amount.''
            (4) Effective dates.--
                    (A) In general.--The amendments made by this 
                subsection shall apply to any breach of fiduciary 
                responsibility or other violation of part 4 of subtitle 
                B of title I of the Employee Retirement Income Security 
                Act of 1974 occurring on or after the date of enactment 
                of this Act.
                    (B) Transition rule.--In applying the amendment 
                made by paragraph (2) (relating to applicable recovery 
                amount), a breach or other violation occurring before 
                the date of the enactment of this Act which continues 
                after the 180th day after such date (and which may have 
                been discontinued at any time during its existence) 
                shall be treated as having occurred after such date of 
                enactment.
                                 <all>