[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3445 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 3445
To amend the Employee Retirement Income Security Act of 1974 to improve
the retirement security of American families.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 11, 2001
Mr. Andrews (for himself, Mr. George Miller of California, Mr. Kildee,
Mr. Owens, Mr. Payne, Mrs. Mink of Hawaii, Mr. Scott, Ms. Woolsey, Ms.
Rivers, Mr. Hinojosa, Mr. Tierney, Mr. Kind, Ms. Sanchez, Mr. Ford, Mr.
Kucinich, Mr. Holt, Ms. Solis, and Ms. McCollum) introduced the
following bill; which was referred to the Committee on Education and
the Workforce, and in addition to the Committees on Armed Services, and
Government Reform, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 to improve
the retirement security of American families.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Retirement
Enhancement Act of 2001''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title and table of contents.
TITLE I--IMPROVED PARTICIPATION AND VESTING
Sec. 101. Minimum coverage requirements.
Sec. 102. Minimum participation requirements.
Sec. 103. Faster vesting of benefits under defined contribution plans.
Sec. 104. Model small employer group pension plan.
Sec. 105. Enforcement under ERISA of requirements for simplified
employee pensions.
TITLE II--IMPROVED PENSION PROTECTIONS FOR WOMEN
Sec. 201. Elimination of integration with workers' compensation and
similar benefits.
Sec. 202. Spousal consent required for distributions from defined
contribution plans.
Sec. 203. Modifications of joint and survivor annuity requirements.
Sec. 204. Division of pension benefits upon divorce.
Sec. 205. Periods of family and medical leave treated as hours of
service for pension participation and
vesting.
Sec. 206. Right of spouse to know distribution information.
Sec. 207. Repeal of reduction in military survivor benefit plan
annuities at age 62.
Sec. 208. Survivor annuities for widows, widowers, and former spouses
of Federal employees who die before
attaining age for deferred annuity under
Civil Service Retirement System.
Sec. 209. Order of precedence for disposition of amounts remaining in
the thrift savings account of a Federal
employee (or former employee) who dies
before making an effective election
controlling such disposition.
Sec. 210. Interest on amounts paid to make up for certain civil service
annuity benefits wrongfully denied.
Sec. 211. Amendments relating to effective date provision of the Civil
Service Retirement Spouse Equity Act of
1984.
TITLE III--SIMPLIFIED INVESTMENT STANDARDS
Sec. 301. Exemption from prohibited transaction rules for emergent
transactions.
Sec. 302. Prohibited transaction exemption for the provision of
investment advice.
Sec. 303. Participation of participants in trusteeship of defined
contribution plans.
Sec. 304. Diversification in defined contribution plan investments.
Sec. 305. Removal of $500,000 cap on bonding requirement.
Sec. 306. Disclosure regarding investments and voting of proxies.
TITLE IV--IMPROVEMENTS IN PENSION INFORMATION AND ENFORCEMENT
Sec. 401. Periodic pension benefit statements.
Sec. 402. Disclosures to Secretary of Labor relating to plan
termination and relating to plan sponsors
after acquisition or merger of plans.
Sec. 403. Disclosure of operating income of employers adjusted so as to
exclude certain components mandated in FASB
rules governing accounting for defined
benefit pension plans.
Sec. 404. Specific information regarding multiemployer plans included
in annual report.
Sec. 405. Limited scope audits.
Sec. 406. Reporting and enforcement requirements for employee benefit
plans.
Sec. 407. Study of pension trends and characteristics.
Sec. 408. Early resolution program for pension benefit claims.
Sec. 409. De novo review of benefit determinations.
Sec. 410. Allowable relief.
Sec. 411. Assessment by Secretary of Labor of penalties for failures to
meet disclosure requirements.
Sec. 412. Missing participants.
Sec. 413. Fiduciary duties with respect to changes in investment
options.
Sec. 414. Secretary of Labor required to provide assistance.
Sec. 415. Exclusivity of powers and procedures applicable to rights or
claims.
TITLE V--IMPROVED PENSION PROTECTIONS FOR THE CHANGING WORKFORCE
Sec. 501. Loans from retirement plans for health insurance and job
training expenses.
Sec. 502. Automatic rollover upon mandatory distribution in excess of
$1,000.
Sec. 503. Prompt distribution from defined contribution plans upon
termination of participant's covered
employment.
Sec. 504. Extended period for recoupment of overpayments.
TITLE VI--GENERAL PROVISIONS
Sec. 601. General effective date.
Sec. 602. Plan amendments.
TITLE I--IMPROVED PARTICIPATION AND VESTING
SEC. 101. MINIMUM COVERAGE REQUIREMENTS.
(a) In General.--Part 2 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 201 et seq.) is
amended by inserting after section 201 the following new section:
``minimum coverage requirements
``Sec. 201A. (a) General Rule.--Each pension plan maintained by an
employer shall benefit all employees of the employer.
``(b) Exclusion of Certain Employees.--For purposes of this
section, there shall be excluded from consideration--
``(1) employees who are included in a unit of employees
covered by an agreement which, as determined in accordance with
regulations issued by the Secretary, constitutes a collective
bargaining agreement between employee representatives and one
or more employers, if there is evidence that retirement
benefits were the subject of good faith bargaining between such
employee representatives and such employer or employers,
``(2) in the case of a trust established or maintained
pursuant to an agreement which, as determined in accordance
with regulations issued by the Secretary, constitutes a
collective bargaining agreement between airline pilots
represented in accordance with title II of the Railway Labor
Act and one or more employers, all employees not covered by
such agreement, and
``(3) employees who are nonresident aliens and who receive
no earned income (within the meaning of section 911(d)(2) of
the Internal Revenue Code of 1986) from the employer which
constitutes income from sources within the United States
(within the meaning of section 861(a)(3) of such Code).
Paragraph (1) shall not apply with respect to coverage of employees
under a plan pursuant to an agreement under such paragraph. Paragraph
(2) shall not apply in the case of a plan which provides contributions
or benefits for employees whose principal duties are not customarily
performed aboard aircraft in flight.
``(c) Exclusion of Employees Not Meeting Age and Service
Requirements.--
``(1) In general.--If a plan--
``(A) prescribes, consistent with section 202(a),
minimum age and service requirements as a condition of
participation, and
``(B) excludes all employees not meeting such
requirements from participation,
then such employees shall be excluded from consideration for
purposes of this section.
``(2) Requirements may be met separately with respect to
excluded group.--If employees not meeting the minimum age or
service requirements of section 202(a)(1) (without regard to
subparagraph (B) thereof) are covered under a plan of the
employer which meets the requirements of subsection (a)
separately with respect to such employees, such employees may
be excluded from consideration in determining whether any plan
of the employer meets the requirements of subsection (a).
``(3) Requirements not treated as being met before entry
date.--An employee shall not be treated as meeting the age and
service requirements described in this subsection until the
first date on which, under the plan, any employee with the same
age and service would be eligible to commence participation in
the plan.
``(d) Line of Business Exception.--
``(1) In general.--If, under section 414(r) of the Internal
Revenue Code of 1986, an employer is treated as operating
separate lines of business for a year, the employer may apply
the requirements of this section for such year separately with
respect to employees in each separate line of business.
``(2) Plan must be nondiscriminatory.--Paragraph (1) shall
not apply with respect to any plan maintained by an employer
unless such plan benefits such employees as qualify under a
classification set up by the employer and found by the
Secretary of the Treasury not to be discriminatory in favor of
highly compensated employees.
``(e) Definitions and Special Rules.--For purposes of this
section--
``(1) Highly compensated employee.--The term `highly
compensated employee' has the meaning given such term by
section 414(q) of the Internal Revenue Code of 1986.
``(2) Aggregation rules.--An employer may elect to
designate--
``(A) 2 or more trusts,
``(B) 1 or more trusts and 1 or more annuity plans,
or
``(C) 2 or more annuity plans,
as part of 1 plan to determine whether the requirements of this
section are met with respect to such plan.
``(3) Special rules for certain dispositions or
acquisitions.--
``(A) In general.--If a person becomes, or ceases
to be, a member of a group described in subsection (b),
(c), (m), or (o) of section 414 of such Code, then the
requirements of this section shall be treated as having
been met during the transition period with respect to
any plan covering employees of such person or any other
member of such group if--
``(i) such requirements were met
immediately before each such change, and
``(ii) the coverage under such plan is not
significantly changed during the transition
period (other than by reason of the change in
members of a group) or such plan meets such
other requirements as the Secretary of the
Treasury may prescribe by regulation.
``(B) Transition period.--For purposes of
subparagraph (A), the term `transition period' means
the period--
``(i) beginning on the date of the change
in members of a group, and
``(ii) ending on the last day of the 1st
plan year beginning after the date of such
change.
``(4) Eligibility to contribute.--In the case of
contributions which are subject to section 401(k) or 401(m) of
the Internal Revenue Code of 1986, employees who are eligible
to contribute (or elect to have contributions made on their
behalf) shall be treated as benefiting under the plan.
``(5) Regulations.--The Secretary of the Treasury shall
prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this section.''
(b) Employer May Not Request Employee To Waive Rights.--Section 203
of such Act (29 U.S.C. 1053) is amended by adding at the end the
following new subsection:
``(f) An employer may not request an employee to waive any right of
coverage under, or participation in, any pension plan which is granted
by this title.''
SEC. 102. MINIMUM PARTICIPATION REQUIREMENTS.
(a) In General.--Sections 202(a)(3), 203(b)(2), and 204(b)(4) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1052(a)(3), 1053(b)(2), and 1054(b)(4)) are each amended by striking
``1,000 hours'' each place it appears and inserting ``750 hours''.
(b) Conforming Amendments.--
(1) Sections 202(a)(3)(D), 203(b)(2)(D), and 204(b)(4)(E)
(29 U.S.C. 1052(a)(3)(D), 1053(b)(2)(D), and 1054(b)(4)(E)) are
each amended by striking ``125 days'' and inserting ``94
days''.
(2) Sections 202(b)(5)(B) and 203(b)(3)(E)(ii) (29 U.S.C.
1052(b)(5)(B) and 1053(b)(3)(E)(ii)) are each amended by
striking ``501 hours'' and inserting ``376 hours''.
(3) Section 203(b)(3)(A) (29 U.S.C. 1053(b)(3)(A)) is
amended by striking ``500 hours'' and inserting ``375 hours''.
SEC. 103. FASTER VESTING OF BENEFITS UNDER DEFINED CONTRIBUTION PLANS.
Paragraph (2) of section 203(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1053(a)) is amended by striking
subparagraphs (A) and (B) and inserting the following:
``(A) A plan satisfies the requirements of this
subparagraph if an employee has a nonforfeitable right
to 100 percent of the employee's accrued benefit
derived from employer contributions--
``(i) in the case of a defined benefit
plan, as of completion by the employee of at
least 5 years of service, or
``(ii) in the case of a defined
contribution plan, as of completion by the
employee of at least 3 years of service.
``(B) A plan satisfies the requirements of this
subparagraph if an employee has a nonforfeitable right
to a percentage of the employee's accrued benefit
derived from employer contributions determined under
the applicable table set forth in clause (i) or (ii).
``(i) In the case of a defined benefit
plan, the applicable table is the following:
The nonforfeitable
``Years of service: percentage is:
3......................................... 20
4......................................... 40
5......................................... 60
6......................................... 80
7 or more................................. 100.
``(ii) In the case of a defined
contribution plan, the applicable table is the
following:
The nonforfeitable
``Years of service: percentage is:
1......................................... 20
2......................................... 40
3......................................... 60
4......................................... 80
5 or more................................. 100.''.
SEC. 104. MODEL SMALL EMPLOYER GROUP PENSION PLAN.
(a) In General.--Section 206 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1056) is amended by adding at the end
the following new subsection:
``(g) Model Simplified Group Pension Plans.--
``(1) Establishment of model plan.--The Secretary, in
consultation with the Secretary of the Treasury, shall
prescribe by regulations one or more model simplified group
pension plans which would--
``(A) provide simplicity and minimal administrative
responsibilities to employers and provide adequate
retirement benefits to employees upon adoption by an
employer, including models which could be established
by a group of small employers, an employee association,
an employer association, or a financial institution,
``(B) cover all employees of the employer,
``(C) accept contributions from successive
employers,
``(D) readily permit and accept rollovers to and
from other qualified plans (as defined in section
203(e)(2)), and
``(E) constitute a plan meeting the requirements of
this Act and Internal Revenue Code of 1986.
In devising a model pension plan, the Secretary shall consider
the adequacy of existing simplified employee pension plan
alternatives and may make recommendations to adopt such plans
as model simplified plans.
``(2) Advertisement of model plan.--The Secretary, in
consultation with the Secretary of the Treasury and the
Administrator of the Small Business Administration, shall
advertise the model plans developed pursuant to paragraph (1),
including through contracts (to the extent provided in
appropriation Acts) with applicable organizations, to ensure
that small employers and their employees are apprised of the
availability of administratively simple single and group
pension plans.''.
(b) Exemption of Plan Sponsor From Fiduciary Liability.--Section
404(a) of such Act (29 U.S.C. 1104(a)) is amended by adding at the end
the following new paragraph:
``(3) A plan sponsor of an employee benefit plan shall not be
liable under this part in connection with such plan for any act or
practice by such plan sponsor consistent with the requirements of such
plan if such plan conforms to the terms of a model simplified group
pension plan prescribed pursuant to section 206(g).''.
(c) Initial Regulations.--Regulations under section 206(g) of the
Employee Retirement Income Security Act of 1974 (added by this section)
for the first model simplified pension plans shall be issued within 12
months of the date of the enactment of this Act.
(d) Study.--Not later than 3 years after the date of the enactment
of this Act, the Secretary of Labor and the Secretary of the Treasury
shall conduct a joint study to determine the feasibility of permitting
non-highly compensated employees whose employer does not cover them
under a pension plan, and other non-covered individuals, to seek an
automatic payroll deduction or other deferral mechanism to make
contributions to a pension plan conforming to the the requirements of a
model simplified group pension plan developed pursuant to section
206(g) of the Employee Retirement Income Security Act of 1974 or to
similar pension plans. Such Secretaries shall submit a joint report to
the Congress describing the results of such study and making such
recommendations as the Secretaries determine necessary or appropriate.
SEC. 105. ENFORCEMENT UNDER ERISA OF REQUIREMENTS FOR SIMPLIFIED
EMPLOYEE PENSIONS.
Subtitle A of title III of the Employee Retirement Income Security
Act of 1974 is amended by adding after section 3004 (29 U.S.C. 1204)
the following new section:
``treatment of simplified employee pensions
``Sec. 3005. For purposes of part 5 of subtitle B of title I, the
requirements of section 408(k) of the Internal Revenue Code of 1986
relating to simplified employee pensions (as defined in section
408(k)(1) of such Code) shall be treated as requirements of title I
applicable to employee pension benefit plans (as defined in section
3(2)) which are such simplified employee pensions.''.
TITLE II--IMPROVED PENSION PROTECTIONS FOR WOMEN
SEC. 201. ELIMINATION OF INTEGRATION WITH WORKERS' COMPENSATION AND
SIMILAR BENEFITS.
Section 206 of the Employee Retirement Income Security Act of 1974
(as amended by section 104(a)) is amended further by adding at the end
the following new subsection:
``(h) Integration With Workers' Compensation and Similar Benefits
Precluded.--Benefits under an employee pension benefit plan may not
vary based on the amount of benefits received by a participant or
beneficiary under an applicable worker's compensation law, unemployment
compensation law, or disability insurance law, or on whether the
participant or beneficiary is entitled to such benefits.''.
SEC. 202. SPOUSAL CONSENT REQUIRED FOR DISTRIBUTIONS FROM DEFINED
CONTRIBUTION PLANS.
(a) In General.--Section 205(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1055(b)) is amended to read as follows:
``(b)(1) This section shall apply to any defined benefit plan and
to any individual account plan.
``(2) This section shall not apply to a plan which the Secretary of
the Treasury or his delegate has determined is a plan described in
section 404(c) of the Internal Revenue Code of 1986 (or a continuation
thereof) in which participation is substantially limited to individuals
who, before January 1, 1976, ceased employment covered by the plan.''
(b) Hardship Distribution.--Section 205 of such Act (29 U.S.C.
1055) is amended by adding at the end the following new subsection:
``(m) This section shall not apply to a hardship distribution under
section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986.''
(c) Special Rule for Cash-Outs.--Section 205(g) of such Act (29
U.S.C. 1055(g)) is amended by adding at the end the following new
paragraph:
``(4) Special rule for defined contribution plans.--
``(A) In general.--In the case of an individual
account plan, notwithstanding paragraph (2), if the
present value of the qualified joint and survivor
annuity or the qualified preretirement survivor annuity
exceeds $10,000, the plan may immediately distribute 50
percent of the present value of such annuity to each
spouse, subject to the requirements of section 203(f)
as if each spouse were a participant.
``(B) Exception.--The plan may distribute a
different percentage of the present value of an annuity
to each spouse if a court order or contractual
agreement between the spouses provides for such
different percentage.''
SEC. 203. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS.
(a) Amount of Annuity.--
(1) In general.--Paragraph (1) of section 205(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1055(a)) is amended by inserting ``or, at the election of the
participant, shall be provided in the form of a qualified joint
and 75 percent survivor annuity'' after ``survivor annuity,''.
(2) Definition.--Subsection (d) of section 205 of such Act
(29 U.S.C. 1055) is amended--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively,
(B) by inserting ``(1)'' after ``(d)'', and
(C) by adding, after subparagraph B, the following
new paragraph:
``(2) For purposes of this section, the term `qualified joint and
75 percent survivor annuity' means a joint and survivor annuity under
which the survivor annuity for the life of the surviving spouse is
equal to at least 75 percent of the amount of the annuity which is
payable during the joint lives of the participant and spouse.''
(3) Conforming amendments.--
(A) Paragraph (1) of section 205(c) of such Act (29
U.S.C. 1055) is amended by inserting ``or qualified
joint and 75 percent survivor annuity'' after
``qualified joint and survivor annuity''.
(B) Subsection (e)(1) of such Act is amended by
inserting ``or, if the participant has so elected, a
qualified joint and 75 percent survivor annuity'' after
``qualified joint and survivor annuity'' each time it
appears.
(b) Illustration Requirement.--Clause (i) of section 205(c)(3)(A)
of such Act (29 U.S.C. 1055(c)(3)(A)) is amended to read as follows:
``(i) the terms and conditions of each qualified joint and
survivor annuity and qualified joint and 75 percent survivor
annuity offered, accompanied by an illustration of the benefits
under each such annuity for the particular participant and
spouse and an acknowledgement form to be signed by the
participant and the spouse that they have read and considered
the illustration before any form of retirement benefit is
chosen.''.
SEC. 204. DIVISION OF PENSION BENEFITS UPON DIVORCE.
(a) In General.--Section 206(d)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1056(d)(3)) is amended by
redesignating subparagraph (N) as subparagraph (O) and by inserting
after subparagraph (M) the following new subparagraph:
``(N) Special rules and procedures for domestic
relations orders not specifying division of pension
benefits.--
``(i) In general.--In any case in which--
``(I) a domestic relations order
(including an annulment or other order
of marital dissolution) relates to
provision of marital property with
respect to a marriage of at least 5
years duration between an individual
who is a participant in a pension plan
and such individual's former spouse,
``(II) such order, and all prior
orders (if any) described in subclause
(I) relating to such marriage, do not
specifically provide that pension
benefits were considered by the parties
and that no division of such benefits
is intended,
``(III) such order is not a
qualified domestic relations order (as
determined without regard to this
subparagraph) and there is no other
prior qualified domestic relations
order issued in connection with the
dissolution of the marriage to which
such order relates, and
``(IV) the former spouse notifies
the plan within the period prescribed
under clause (vii) that the former
spouse is entitled to benefits under
the plan in accordance with the
provisions of this subparagraph,
such domestic relations order shall be treated
as a qualified domestic relations order for
purposes of this paragraph.
``(ii) Amount of benefit.--Any domestic
relations order treated as a qualified domestic
relations order under clause (i) shall be
treated as specifying that the former spouse is entitled to the
applicable percentage of the marital share of the participant's accrued
benefit.
``(iii) Marital share.--For purposes of
clause (ii), the marital share of a
participant's accrued benefit is an amount
equal to the product of--
``(I) such benefit as of the date
of the first payment under the plan (to
the extent such accrued benefit is
vested on the date of the dissolution
of the marriage or any later date), and
``(II) a fraction, the numerator of
which is the period of participation by
the participant under the plan starting
with the date of marriage and ending
with the date of dissolution of
marriage, and the denominator of which
is the total period of participation by
the participant under the plan.
``(iv) Applicable percentage.--For purposes
of clause (ii), the applicable percentage is--
``(I) except as provided in
subclause (II), 50 percent, and
``(II) in the case of a participant
who fails to provide the plan with
notice of a domestic relations order
within the time prescribed under clause
(v), 67 percent.
``(v) Notice by participant.--Each
participant in a pension plan shall, within 60
days after the dissolution of the marriage of
the participant--
``(I) notify the plan administrator
of the plan of such dissolution, and
``(II) provide to the plan
administrator a copy of the domestic
relations order (including an annulment
or other order of marital dissolution)
providing for such dissolution and the
last known address of the participant's
former spouse.
``(vi) Notice by plan administrator.--Each
plan administrator receiving notice under
clause (v) shall promptly notify the former
spouse of a participant of such spouse's rights
under this subparagraph, including the time
period within which such spouse is required to
notify the plan of the spouse's intention to
claim rights under this subparagraph.
``(vii) Notice by former spouse.--A former
spouse may notify the plan administrator of
such spouse's intent to claim rights under this
subparagraph at any time before the last day of
the 1-year period following receipt of notice
under clause (vi).
``(viii) Coordination with plan
procedures.--The determination under
subparagraph (G)(i)(II) with respect to a
domestic relations order to which this
subparagraph applies shall be made within a
reasonable period of time after the plan
administrator receives the notice described in
clause (vii).
``(ix) Interpretation as qualified domestic
relations order.--Each plan shall establish
reasonable rules for determining how any such
deemed domestic relations order is to be
interpreted under the plan so as to constitute
a qualified domestic relations order that
satisfies subparagraphs (C) through (E) (and a
copy of such rules shall be provided to such
former spouse promptly after delivery of the
divorce decree). Such rules--
``(I) may delay the effect of such
an order until the earlier of the date
the participant is fully vested or has
terminated employment,
``(II) may allow the former spouse
to be distributed immediately,
``(III) shall permit the former
spouse to be paid not later than the
earliest retirement age under the plan
or the participant's death,
``(IV) may require the submitter of
the divorce decree to present a
marriage certificate or other evidence
of the marriage date to assist in
benefit calculations, and
``(V) may conform to the rules
applicable to qualified domestic
relations orders regarding form or type
of benefit.''
(b) Effective Date.--The amendment made by this section shall apply
with respect to notifications made by former spouses pursuant to
section 206(d)(3)(N)(vii) of the Employee Retirement Income Security
Act of 1974 after December 31, 2001.
SEC. 205. PERIODS OF FAMILY AND MEDICAL LEAVE TREATED AS HOURS OF
SERVICE FOR PENSION PARTICIPATION AND VESTING.
(a) Participation.--
(1) In general.--Paragraph (3) of section 202(a) of the
Employee Retirement Income Security Act of 1974 (relating to
minimum participation standards) is amended by adding at the
end the following new subparagraph:
``(E)(i) For purposes of this subsection, in the case of an
individual who is absent from work on leave required to be given to
such individual under the Family and Medical Leave Act of 1993, the
plan shall treat as hours of service--
``(I) the hours of service which otherwise would normally
have been credited to such individual but for such absence, or
``(II) in any case in which the plan is unable to determine
the hours described in subclause (I), 8 hours of service per
day of absence.
``(ii) The hours described in clause (i) shall be treated as hours
of service as provided in this subparagraph--
``(I) only in the year in which the absence from work
begins, if section 203(b)(2)(E)(ii)(I) requires hours to be
credited to the year in which the absence from work begins, or
``(II) in any other case, in the immediately following
year.''
(2) Coordination with treatment of maternity and paternity
absences under break in service rules.--Subparagraph (A) of
section 202(b)(5) of such Act is amended by adding at the end
of clause (i) the following new sentence: ``The preceding
sentence shall apply to an absence from work only if no part of
such absence is required to be given under the Family and
Medical Leave Act of 1993.''
(b) Vesting.--
(1) In general.--Paragraph (2) of section 203(b) of such
Act (relating to minimum vesting standards) is amended by
adding at the end the following new subparagraph:
``(E)(i) For purposes of this subsection, in the case of an
individual who is absent from work on leave required to be given to
such individual under the Family and Medical Leave Act of 1993, the
plan shall treat as hours of service--
``(I) the hours of service which otherwise would normally
have been credited to such individual but for such absence, or
``(II) in any case in which the plan is unable to determine
the hours described in subclause (I), 8 hours of service per
day of absence.
``(ii) The hours described in clause (i) shall be treated as hours
of service as provided in this subparagraph--
``(I) only in the year in which the absence from work
begins, if the participant's rights in his accrued benefit
derived from employer contributions are to any extent not
nonforfeitable and the participant would have a year of service
solely because the period of absence is treated as hours of
service as provided in clause (i); or
``(II) in any other case, in the immediately following
year.''
(2) Coordination with treatment of maternity and paternity
absences under break in service rules.--Clause (i) of section
203(b)(3)(E) of such Act is amended by adding at the end of
clause (i) the following new sentence: ``The preceding sentence
shall apply to an absence from work only if no part of such
absence is required to be given under the Family and Medical
Leave Act of 1993.''
(c) Application to Current Employees.--The amendments made by this
section shall not apply to any employee who does not have at least 1
hour of service in any plan year beginning after December 31, 2001.
SEC. 206. RIGHT OF SPOUSE TO KNOW DISTRIBUTION INFORMATION.
Paragraph (3) of section 205(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1055(c)(3)) is amended by adding at the
end the following new subparagraph:
``(C) Explanation to spouse.--At the time a plan
provides a participant with a written explanation under
subparagraph (A) or (B), such plan shall provide a copy
of such explanation to such participant's spouse. If
the last known address of the spouse is the same as the
last known address of the participant, the requirement
of the preceding sentence shall be treated as met if
the copy referred to in the preceding sentence is
included in a single mailing made to such address and
addressed to both such participant and spouse.''.
SEC. 207. REPEAL OF REDUCTION IN MILITARY SURVIVOR BENEFIT PLAN
ANNUITIES AT AGE 62.
(a) Computation of Annuity for a Spouse, Former Spouse, or Child.--
Subsection (a) of section 1451 of title 10, United States Code, is
amended--
(1) in paragraph (1), by striking ``shall be determined as
follows:'' and all that follows and inserting the following:
``shall be the amount equal to 55 percent of the base
amount.'';
(2) in paragraph (2), by striking ``shall be determined as
follows:'' and all that follows and inserting the following:
``shall be the amount equal to a percentage of the base amount
that is less than 55 percent and is determined under subsection
(f).''.
(b) Annuities for Survivors of Certain Persons Dying During a
Period of Special Eligibility for SBP.--Subsection (c)(1) of such
section is amended by striking ``shall be determined as follows:'' and
all that follows and inserting the following: ``shall be the amount
equal to 55 percent of the retired pay to which the member or former
member would have been entitled if the member or former member had been
entitled to that pay based upon his years of active service when he
died.''.
(c) Repeal of Requirement for Reduction.--Such section is further
amended by striking subsection (d).
(d) Repeal of Unnecessary Supplemental SBP.--(1) Subchapter III of
chapter 73 of title 10, United States Code, is repealed.
(2) The table of subchapters at the beginning of such chapter is
amended by striking the item relating to subchapter III.
(e) Effective Date.--The amendments made by this section shall take
effect on October 1, 2001, and shall apply with respect to annuity
payments for months beginning on or after that date.
SEC. 208. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS, AND FORMER SPOUSES
OF FEDERAL EMPLOYEES WHO DIE BEFORE ATTAINING AGE FOR
DEFERRED ANNUITY UNDER CIVIL SERVICE RETIREMENT SYSTEM.
(a) Benefits for Widow or Widower.--Section 8341(f) of title 5,
United States Code, is amended--
(1) in the matter preceding paragraph (1) by--
(A) by inserting ``a former employee separated from
the service with title to deferred annuity from the
Fund dies before having established a valid claim for
annuity and is survived by a spouse, or if'' before ``a
Member''; and
(B) by inserting ``of such former employee or
Member'' after ``the surviving spouse'';
(2) in paragraph (1)--
(A) by inserting ``former employee or'' before
``Member commencing''; and
(B) by inserting ``former employee or'' before
``Member dies''; and
(3) in the undesignated sentence following paragraph (2)--
(A) in the matter preceding subparagraph (A) by
inserting ``former employee or'' before ``Member''; and
(B) in subparagraph (B) by inserting ``former
employee or'' before ``Member''.
(b) Benefits for Former Spouse.--Section 8341(h) of title 5, United
States Code, is amended--
(1) in paragraph (1)--
(A) by redesignating such paragraph as paragraph
(1)(A); and
(B) by adding at the end the following:
``(B) Subject to paragraphs (2) through (5) of this subsection, a
former spouse of a former employee who dies after having separated from
the service with title to a deferred annuity under section 8338(a) but
before having established a valid claim for annuity is entitled to a
survivor annuity under this subsection, if and to the extent expressly
provided for in an election under section 8339(j)(3) of this title, or
in the terms of any decree of divorce or annulment or any court order
or court-approved property settlement agreement incident to such
decree.''; and
(2) in paragraph (2)--
(A) in subparagraph (A)(ii) by striking ``or
annuitant,'' and inserting ``annuitant, or former
employee''; and
(B) in subparagraph (B)(iii) by inserting ``former
employee or'' before ``Member''.
(c) Protection of Survivor Benefit Rights.--Section 8339(j)(3) of
title 5, United States Code, is amended by adding at the end the
following: ``The Office shall provide by regulation for the application
of this subsection to the widow, widower, or surviving former spouse of
a former employee who dies after having separated from the service with
title to a deferred annuity under section 8338(a) but before having
established a valid claim for annuity.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act and shall apply only in
the case of a former employee who dies on or after such date.
SEC. 209. ORDER OF PRECEDENCE FOR DISPOSITION OF AMOUNTS REMAINING IN
THE THRIFT SAVINGS ACCOUNT OF A FEDERAL EMPLOYEE (OR
FORMER EMPLOYEE) WHO DIES BEFORE MAKING AN EFFECTIVE
ELECTION CONTROLLING SUCH DISPOSITION.
(a) In General.--Section 8433(e) of title 5, United States Code, is
amended--
(1) by striking ``(e)'' and inserting ``(e)(1)'';
(2) by striking all that follows ``paid'' and inserting
``in accordance with paragraph (2).''; and
(3) by adding at the end the following:
``(2) An amount under paragraph (1) shall be paid in a manner
consistent with the provisions of section 8424(d), except that, in
applying the order of precedence under such provisions--
``(A) the widow or widower of the decedent shall be the
first party entitled to receive (instead of any designated
beneficiary); and
``(B) if there is no widow or widower, the party next
entitled to receive shall be the beneficiary or beneficiaries
designated by the employee or Member (or former employee or
Member) in accordance with the procedures that would otherwise
normally apply, subject to such additional conditions as the
Executive Director shall by regulation prescribe based on
section 205(c)(2) of the Employee Retirement Income Security
Act of 1974.''.
(b) Effective Date.--This section and the amendment made by this
section shall take effect on the 90th day after the date of the
enactment of this Act, and shall apply in the case of any individual
who dies on or after such 90th day.
SEC. 210. INTEREST ON AMOUNTS PAID TO MAKE UP FOR CERTAIN CIVIL SERVICE
ANNUITY BENEFITS WRONGFULLY DENIED.
(a) In General.--Chapter 77 of title 5, United States Code, is
amended by adding at the end the following:
``Sec. 7704. Interest on amounts paid to make up for certain annuity
benefits wrongfully denied
``(a) In the case of an individual who, on the basis of a timely
appeal to the Merit Systems Protection Board under section 8347(d) or
8461(e), or petition for judicial review under section 7703 from a
final order or decision of the Board in any such appeal, is found by
the relevant authority--
``(1) to have been affected by an erroneous application or
interpretation of subchapter III of chapter 83, chapter 84, or
any other provision of law (or any rule or regulation relating
thereto), and
``(2) to be entitled to receive an amount equal to all or
any part of an annuity not paid to such individual as a result
of such erroneous application or interpretation,
the amount under paragraph (2) may, in the discretion of such
authority, be made payable with interest.
``(b) Any such interest--
``(1) shall be computed in such manner as the Merit Systems
Protection Board or the court (as the case may be) considers
appropriate; and
``(2) shall be payable out of the Civil Service Retirement
and Disability Fund.
``(c) For purposes of this section, the term `annuity' means any
annuity (including a survivor annuity) payable out of the Civil Service
Retirement and Disability Fund.''.
(b) Conforming Amendments.--
(1) Section 8348(a)(1)(A) of title 5, United States Code,
is amended by striking ``Fund;'' and inserting ``Fund
(including any interest payable under section 7704);''.
(2) The analysis for chapter 77 of title 5, United States
Code, is amended by adding at the end the following:
``7704. Interest on amounts paid to make up for certain annuity
benefits wrongfully denied.''.
SEC. 211. AMENDMENTS RELATING TO EFFECTIVE DATE PROVISION OF THE CIVIL
SERVICE RETIREMENT SPOUSE EQUITY ACT OF 1984.
(a) Elimination of Certain Bars to Eligibility.--Section 4(b) of
the Civil Service Retirement Spouse Equity Act of 1984 (5 U.S.C. 8341
note) is amended--
(1) in paragraph (1)(B)(i), by striking ``after September
14, 1978, and''; and
(2) by repealing paragraph (4).
(b) New Deadline for Applications.--
(1) In general.--Section 4(b)(1)(B)(iv) of the Civil
Service Retirement Spouse Equity Act of 1984 is amended by
striking ``May 7, 1989'' and inserting ``May 7, 2002''.
(2) Authority to waive deadline.--Section 4(b) of the Civil
Service Retirement Spouse Equity Act of 1984 is amended by
adding at the end the following:
``(6)(A) The Director of the Office of Personnel Management may
waive the deadline under paragraph (1)(B)(iv) in any case in which the
Director determines that the circumstances so warrant.
``(B) In making a determination under this paragraph, one of the
factors which may be taken into account is whether the individual
involved has previously submitted a timely application under this
section--
``(i) which was denied; but
``(ii) which, based on criteria applied under this section
pursuant to changes in law subsequent to the denial, would have
been approved.''.
TITLE III--SIMPLIFIED INVESTMENT STANDARDS
SEC. 301. EXEMPTION FROM PROHIBITED TRANSACTION RULES FOR EMERGENT
TRANSACTIONS.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--Section 408 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1108) is amended by adding at the end the following new
subsection:
``(g)(1) Pursuant to regulations issued by the Secretary, a
transaction between an employee benefit plan and an eligible person
constituting the purchase or sale of a financial product which is in
violation of a restriction imposed by section 406 or 407(a) shall be
exempted under subsection (a) from treatment as a violation of such
restriction if--
``(A) prior to engaging in the transaction, the plan
acquires from the eligible person a qualifying guarantee,
consisting of a letter of credit or other form of written
guarantee, issued by a bank or similar financial institution
(other than the eligible person requesting the exemption or an
affiliate) regulated and supervised by, and subject to periodic
examination by, an agency of a State or of the Federal
Government, in a stated amount equal, as of the close of
business on the day preceding the transaction, to not less than
100 percent of the amount of plan assets involved in the
transaction, plus interest on that amount at a rate determined
by the parties to the transaction, or in the absence of such
determination, an interest rate equal to the underpayment rate
defined in section 6621(a)(2) of the Internal Revenue Code of
1986;
``(B) the eligible person receives in such transaction not
more than reasonable compensation;
``(C) such transaction is expressly approved by an
independent fiduciary who has investment authority with respect
to the plan assets involved in the transaction;
``(D) within 60 days after the transaction, the eligible
person submits to the Secretary an application for an exemption
under subsection (a) from such restriction;
``(E) immediately after the acquisition of the financial
product--
``(i) the fair market value of such financial
product does not exceed 1 percent of the fair market
value of the assets of the plan, and
``(ii) the aggregate fair market value of all
outstanding financial products acquired by the plan
from the eligible person pursuant to this subsection
does not exceed 5 percent of the fair market value of
the assets of the plan;
``(F) the Secretary determines not to grant the exemption;
and
``(G) the transaction is reversed within 60 days after the
date of the Secretary's determination.
``(2) For purposes of this subsection--
``(A) a guarantee referred to in paragraph (1) is
`qualifying' if such guarantee is irrevocable and, under the
terms of the guarantee--
``(i) if the Secretary grants the exemption, the
guarantee may expire without any payments made to the
plan, and
``(ii) if the Secretary determines not to grant the
exemption, the plan has the unconditional right to
apply the amounts under the guarantee to any losses
suffered and to the payment of interest determined
under paragraph (1); and
``(B) the term `eligible person' means a person that--
``(i) consists of--
``(I) a bank as defined in section
202(a)(2) of the Investment Advisers Act of
1940,
``(II) an investment adviser registered
under the Investment Advisers Act of 1940,
``(III) an insurance company which is
qualified to do business in more than one
State, or
``(IV) a broker-dealer registered under the
Securities Exchange Act of 1934,
``(ii) has shareholders' or partners' equity in
excess of $1,000,000, and
``(iii) is not described in section 411.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to transactions occurring after December 31, 2001.
SEC. 302. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF
INVESTMENT ADVICE.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 408(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1108(b)) is amended by
adding at the end the following new paragraph:
``(14)(A) Any transaction described in subparagraph (B) in
connection with the provision of investment advice described in
section 3(21)(A)(ii), in any case in which--
``(i) the plan provides for individual accounts and
permits a participant or beneficiary to exercise
control over assets in his or her account,
``(ii) the advice is qualified investment advice
provided to a participant or beneficiary of the plan by
a fiduciary adviser in connection with any sale,
acquisition, or holding of a security or other property
for purposes of investment of plan assets, and
``(iii) the requirements of subsection (g) are met
in connection with each instance of the provision of
the advice.
``(B) The transactions described in this subparagraph are
the following:
``(i) the provision of the advice to the
participant or beneficiary;
``(ii) the sale, acquisition, or holding of a
security or other property (including any lending of
money or other extension of credit associated with the
sale, acquisition, or holding of a security or other
property) pursuant to the advice; and
``(iii) the direct or indirect receipt of fees or
other compensation by the fiduciary adviser or an
affiliate thereof (or any employee, agent, or
registered representative of the fiduciary adviser or
affiliate) in connection with the provision of the
advice.''.
(2) Requirements.--Section 408 of such Act is amended
further by adding at the end the following new subsection:
``(g) Requirements for Exemption From Prohibited Transactions With
Respect to Provision of Investment Advice.--
``(1) In general.--The requirements of this subsection are
met in connection with the provision of qualified investment
advice provided to a participant or beneficiary of an employee
benefit plan by a fiduciary adviser with respect to the plan in
connection with any sale, acquisition, or holding of a security
or other property for purposes of investment of amounts held by
the plan, if the requirements of the following subparagraphs
are met:
``(A) Written disclosures.--At a time
contemporaneous with the provision of the advice in
connection with the sale, acquisition, or holding of
the security or other property, the fiduciary adviser
shall provide to the recipient of the advice a clear
and conspicuous notification, written in a manner to be
reasonably understood by the average plan participant
pursuant to regulations which shall be prescribed by
the Secretary (including mathematical examples), of the
following:
``(i) Interests held by the fiduciary
adviser.--Any interest of the fiduciary adviser
in, or any affiliation or contractual
relationship of the fiduciary adviser (or
affiliates thereof) with any third party having
an interest in, the security or other property.
``(ii) Related fees or compensation in
connection with the provision of the advice.--
All fees or other compensation relating to the
advice (including fees or other compensation
itemized with respect to each security or other
property with respect to which the advice is
provided) that the fiduciary adviser (or any
affiliate thereof) is to receive (including
compensation provided by any third party) in
connection with the provision of the advice or
in connection with the sale, acquisition, or
holding of the security or other property.
``(iii) Ongoing fees or compensation in
connection with the security or property
involved.--All fees or other compensation that
the fiduciary adviser (or any affiliate
thereof) is to receive, on an ongoing basis, in
connection with any security or other property
with respect to which the fiduciary adviser
gives the advice.
``(iv) Applicable limitations on scope of
advice.--Any limitation placed (in accordance
with the requirements of this subsection) on
the scope of the advice to be provided by the
fiduciary adviser with respect to the sale,
acquisition, or holding of the security or
other property.
``(v) Types of services generally
offered.--The types of services offered by the
fiduciary adviser in connection with the
provision of qualified investment advice by the
fiduciary adviser.
``(vi) Fiduciary status of the fiduciary
adviser.--That the fiduciary advisor is a
fiduciary of the plan.
``(B) Disclosure by fiduciary adviser in accordance
with applicable securities laws.--The fiduciary adviser
shall provide appropriate disclosure, in connection
with the sale, acquisition, or holding of the security
or other property, in accordance with all applicable
securities laws.
``(C) Transaction occurring solely at direction of
recipient of advice.--The sale, acquisition, or holding
of the security or other property shall occur solely at
the direction of the recipient of the advice.
``(D) Reasonable compensation.--The compensation
received by the fiduciary adviser and affiliates
thereof in connection with the sale, acquisition, or
holding of the security or other property shall be
reasonable.
``(E) Arm's length transaction.--The terms of the
sale, acquisition, or holding of the security or other
property shall be at least as favorable to the plan as
an arm's length transaction would be.
``(2) Continued availability of information for at least 1
year.--The requirements of paragraph (1)(A) shall be deemed not
to have been met in connection with the initial or any
subsequent provision of advice described in paragraph (1) if,
at any time during the 1-year period following the provision of
the advice, the fiduciary adviser fails to maintain the
information described in clauses (i) through (iv) of
subparagraph (A) in currently accurate form or to make the
information available, upon request and without charge, to the
recipient of the advice.
``(3) Evidence of compliance maintained for at least 6
years.--A fiduciary adviser referred to in paragraph (1) who
has provided advice referred to in such paragraph shall, for a
period of not less than 6 years after the provision of the
advice, maintain any records necessary for determining whether
the requirements of the preceding provisions of this subsection
and of subsection (b)(14) have been met. A transaction
prohibited under section 406 shall not be considered to have
occurred solely because the records are lost or destroyed prior
to the end of the 6-year period due to circumstances beyond the
control of the fiduciary adviser.
``(4) Model disclosure forms.--The Secretary shall
prescribe regulations setting forth model disclosure forms to
assist fiduciary advisers in complying with the disclosure
requirements of under this subsection.
``(5) Exemption for employers contracting for qualified
investment advice.--
``(A) Reliance on contractual arrangements.--
Subject to subparagraph (B), a plan sponsor or other
person who is a fiduciary (other than a fiduciary
adviser) shall not be treated as failing to meet the
requirements of this part solely by reason of the
provision of qualified investment advice (or solely by
reason of contracting for or otherwise arranging for
the provision of the investment advice), if--
``(i) the advice is provided by a fiduciary
adviser pursuant to an arrangement between the
plan sponsor or other fiduciary and the
fiduciary adviser for the provision by the
fiduciary adviser of qualified investment
advice, and
``(ii) the terms of the arrangement require
compliance by the fiduciary adviser with the
requirements of this subsection.
``(B) Continued duty for employer to prudently
select and review fiduciary advisers.--Nothing in
subparagraph (A) shall be construed to exempt a plan
sponsor or other person who is a fiduciary from any
requirement of this part for the prudent selection and
periodic review of a fiduciary adviser with whom the
plan sponsor or other person enters into an arrangement
for the provision of qualified investment advice. The
plan sponsor or other person who is a fiduciary shall
not be liable under this part with respect to the
specific qualified investment advice given by the
fiduciary adviser to any particular recipient of the
advice. Pursuant to regulations which shall be
prescribed by the Secretary, the fiduciary adviser
shall provide appropriate disclosures to the plan
sponsor to enable the plan sponsor to fulfill its
fiduciary responsibilities under this part. In
connection with the provision of the advice by a
fiduciary adviser on an ongoing basis, such regulations
shall provide for such disclosures on at least an
annual basis.
``(C) Plan assets may be used to pay reasonable
expenses.--Nothing in this part shall be construed to
preclude the use of plan assets to pay for reasonable
expenses in providing qualified investment advice.
``(6) Annual reviews by the secretary.--The Secretary shall
conduct annual reviews of randomly selected fiduciary advisers
providing qualified investment advice to participants and
beneficiaries. In the case of each review, the Secretary shall
review the following:
``(A) Compliance by advice computer models with
generally accepted investment management principles.--
The extent to which advice computer models employed by
the fiduciary adviser comply with generally accepted
investment management principles.
``(B) Compliance with disclosure requirements.--The
extent to which disclosures provided by the fiduciary
adviser have complied with the requirements of this
subsection.
``(C) Extent of violations.--The extent to which
any violations of fiduciary duties have occurred in
connection with the provision of the advice.
``(D) Extent of reported complaints.--The extent to
which complaints to relevant agencies have been made in
connection with the provision of the advice.
Any proprietary information obtained by the Secretary shall be
treated as confidential.
``(7) Duty of conflicted fiduciary adviser to provide for
alternative independent advice.--
``(A) In general.--In connection with any qualified
investment advice provided by a fiduciary adviser to a
participant or beneficiary regarding any security or
other property, if the fiduciary adviser--
``(i) has an interest in the security or
other property, or
``(ii) has an affiliation or contractual
relationship with any third party that has an
interest in the security or other property,
the requirements of paragraph (1) shall be treated as
not met in connection with the advice unless the
fiduciary adviser has arranged, as an alternative to
the advice that would otherwise be provided by the
fiduciary advisor, for qualified investment advice with
respect to the security or other property provided by
at least one alternative investment adviser meeting the
requirements of subparagraph (B).
``(B) Independence and qualifications of
alternative investment adviser.--Any alternative
investment adviser whose qualified investment advice is
arranged for by a fiduciary adviser pursuant to
subparagraph (A)--
``(i) shall have no material interest in,
and no material affiliation or contractual
relationship with any third party having a
material interest in, the security or other
property with respect to which the investment
adviser is providing the advice, and
``(ii) shall meet the requirements of a
fiduciary adviser under paragraph (8)(A),
except that an alternative investment adviser
may not be a fiduciary of the plan other than
in connection with the provision of the advice.
``(C) Scope and fees of alternative investment
advice.--Any qualified investment advice provided
pursuant to this paragraph by an alternative investment
adviser shall be of the same type and scope, and
provided under the same terms and conditions (including
no additional charge to the participant or
beneficiary), as apply with respect to the qualified
investment advice to be provided by the fiduciary
adviser.
``(8) Fiduciary adviser defined.--For purposes of this
subsection and subsection (b)(14)--
``(A) In general.--The term `fiduciary adviser'
means, with respect to a plan, a person who--
``(i) is a fiduciary of the plan by reason
of the provision of qualified investment advice
by such person to a participant or beneficiary,
``(ii) meets the qualifications of
subparagraph (B), and
``(iii) meets the additional requirements
of subparagraph (C).
``(B) Qualifications.--A person meets the
qualifications of this subparagraph if such person--
``(i) is registered as an investment
adviser under the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.),
``(ii) if not registered as an investment
adviser under such Act by reason of section
203A(a)(1) of such Act (15 U.S.C. 80b-
3a(a)(1)), is registered under the laws of the
State in which the fiduciary maintains its
principal office and place of business, and, at
the time the fiduciary last filed the
registration form most recently filed by the
fiduciary with such State in order to maintain
the fiduciary's registration under the laws of
such State, also filed a copy of such form with
the Secretary,
``(iii) is registered as a broker or dealer
under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.),
``(iv) is a bank or similar financial
institution referred to in section 408(b)(4),
``(v) is an insurance company qualified to
do business under the laws of a State, or
``(vi) is any other comparable entity which
satisfies such criteria as the Secretary
determines appropriate.
``(C) Additional requirements with respect to
certain employees or other agents of certain
advisers.--A person meets the additional requirements
of this subparagraph if every individual who is
employed (or otherwise compensated) by such person and
whose scope of duties includes the provision of
qualified investment advice on behalf of such person to
any participant or beneficiary is--
``(i) a registered representative of such
person,
``(ii) an individual described in subclause
(I), (II), or (III) of subparagraph (A)(ii), or
``(iii) such other comparable qualified
individual as may be designated in regulations
of the Secretary.
``(9) Additional definitions.--For purposes of this
subsection and subsection (b)(14)--
``(A) Qualified investment advice.--The term
`qualified investment advice' means, in connection with
a participant or beneficiary, investment advice
referred to in section 3(21)(A)(ii) which--
``(i) consists of an individualized
recommendation to the participant or
beneficiary with respect to the purchase, sale,
or retention of securities or other property
for the individual account of the participant
or beneficiary, in accordance with generally
accepted investment management principles, and
``(ii) takes into account all investment
options under the plan.
``(B) Affiliate.--The term `affiliate' of another
entity means an affiliated person of such entity (as
defined in section 2(a)(3) of the Investment Company
Act of 1940 (15 U.S.C. 80a-2(a)(3))).
``(C) Registered representative.--The term
`registered representative' of another entity means a
person described in section 3(a)(18) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(18))
(substituting such entity for the broker or dealer
referred to in such section) or a person described in
section 202(a)(17) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(17)) (substituting such entity
for the investment adviser referred to in such
section).''.
(b) Enforcement.--
(1) Liability for breach.--
(A) Liability in connection with individual account
plans.--Section 409 of such Act (29 U.S.C. 1109) is
amended by adding at the end the following new
subsection:
``(c)(1) In any case in which the provision by a fiduciary adviser
of qualified investment advice to a participant or beneficiary
regarding any security or other property consists of a breach described
in subsection (a), the fiduciary adviser shall be personally liable to
make good to the individual account of the participant or beneficiary
any losses to the individual account resulting from the breach, and to
restore to the individual account any profits of the fiduciary adviser
which have been made through use of assets of the individual account
by--
``(A) the fiduciary adviser, or
``(B) any other party with respect to whom a material
affiliation or contractual relationship of the fiduciary
adviser resulted in a violation of section 408(g)(1)(A) in
connection with the advice.
``(2) In the case of any action under this title by a participant
or beneficiary against a fiduciary adviser for relief under this
subsection in connection with the provision of any qualified investment
advice--
``(A) if the participant or beneficiary shows that the
fiduciary adviser had any interest in, or had any affiliation
or contractual relationship with a third party having an
interest in, the security or other property, there shall be a
presumption (rebuttable by a preponderance of the evidence)
that the fiduciary adviser failed to meet the requirements of
subparagraphs (A) and (B) of section 404(a)(1) in connection
with the provision of the advice, and
``(B) the dispute may be settled by arbitration, but only
pursuant to terms and conditions established by agreement
entered into voluntarily by both parties after the commencement
of the dispute.
``(3) For purposes of this subsection, the terms `fiduciary
adviser' and `qualified investment advice' shall have the meanings
provided such terms in subparagraphs (A) and (B), respectively, of
section 406(g)(7).''.
(B) Limitation on exemption from liability.--
Section 403(c) of such Act (29 U.S.C. 1104(c)) is
amended--
(i) by redesignating paragraph (2) as
paragraph (3) (and by adjusting the margination
of such paragraph to full measure and adjusting
the margination of subparagraphs (A) through
(B) thereof accordingly); and
(ii) by inserting after paragraph (1) the
following new paragraph:
``(2)(A) In any case in which--
``(i) a participant or beneficiary exercises control over
the assets in his or her account by means of a sale,
acquisition, or holding of a security or other property with
regard to which qualified investment advice was provided by a
fiduciary adviser, and
``(ii) any transaction in connection with the exercise of
such control is not a prohibited transaction solely by reason
of section 408(b)(14), paragraph (1) shall not apply with
respect to the fiduciary adviser in connection with the provision of
the advice.
``(B) For purposes of this subsection, the terms `fiduciary
adviser' and `qualified investment advice' shall have the meanings
provided such terms in subparagraphs (A) and (B), respectively, of
section 408(g)(7).''.
(2) Attorney's fees.--Section 502(g) of such Act (29 U.S.C.
1132(g)) is amended--
(A) in paragraph (1), by inserting ``or (3)'' after
``paragraph (2)''; and
(B) by adding at the end the following new
paragraph:
``(3) In any action under this title by the participant or
beneficiary against a fiduciary adviser for relief under section 409(c)
in which the plaintiff prevails, the court shall allow a reasonable
attorney's fee and costs of action to the prevailing plaintiff.''.
(3) Applicability of state fraud laws.--Section 514(b) of
such Act (29 U.S.C. 1144(b)) is amended--
(A) by redesignating paragraph (9) as paragraph
(10); and
(B) by inserting after paragraph (8) the following
new paragraph:
``(9) Nothing in this title shall be construed to supersede any
State action for fraud against a fiduciary adviser for any act or
failure to act by the fiduciary adviser constituting a violation of
section 409(c).''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to advice referred to in section 3(21)(A)(ii) of the
Employee Retirement Income Security Act of 1974 provided on or after
January 1, 2002.
SEC. 303. PARTICIPATION OF PARTICIPANTS IN TRUSTEESHIP OF DEFINED
CONTRIBUTION PLANS.
(a) In General.--Section 403(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1103(a)) is amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively;
(2) by inserting ``(1)'' after ``(a)''; and
(3) by adding at the end the following new paragraph:
``(2)(A) Subject to subparagraph (B), the assets of a single-
employer plan which is a defined contribution plan and under which some
or all of the assets are derived from employee contributions shall be
held in trust by a joint board of trustees, which shall consist of two
or more trustees representing on an equal basis the interests of the
employer or employers maintaining the plan and the interests of the
participants and their beneficiaries.
``(B) This paragraph shall apply for any plan year only if a
majority of the participants of the defined contribution plan indicates
to the plan administrator, in such form and manner as shall be
prescribed in regulations of the Secretary, its intention to have this
paragraph so apply.
``(C)(i) Except as provided in clause (ii), in any case in which
the plan is maintained pursuant to one or more collective bargaining
agreements between one or more employee organizations and one or more
employers, the trustees representing the interests of the participants
and their beneficiaries shall be designated by such employee
organizations.
``(ii) Clause (i) shall not apply with respect to a plan described
in such clause if the employee organization (or all employee
organizations, if more than one) referred to in such clause file with
the Secretary, in such form and manner as shall be prescribed in
regulations of the Secretary, a written waiver of their rights under
clause (i).
``(iii) In any case in which clause (i) does not apply with respect
to a single-employer plan because the plan is not described in clause
(i) or because of a waiver filed pursuant to clause (ii), the trustee
or trustees representing the interests of the participants and their
beneficiaries shall be selected in accordance with regulations of the
Secretary. Such regulations may provide for selection of trustees by
the employer, but only from individuals who have been demonstrated to
be independent and to have no conflict of interest. An individual shall
not be treated as ineligible for selection as trustee solely because
such individual is an employee of the plan sponsor, except that the
employee so selected may not be a highly compensated employee (as
defined in section 414(q) of the Internal Revenue Code of 1986).
``(iv) The Secretary shall provide by regulation for the
appointment of a neutral, in accordance with the procedures under
section 203(f) of the Labor Management Relations Act, 1947 (29 U.S.C.
173(f)), to cast votes as necessary to resolve tie votes by the
trustees.''.
(b) Regulations.--The Secretary of Labor shall prescribe the
initial regulations necessary to carry out the provisions of such
amendments not later than 90 days after the date of the enactment of
this Act.
SEC. 304. DIVERSIFICATION IN DEFINED CONTRIBUTION INVESTMENTS.
(a) Effective Direction of Investment by Participants and
Beneficiaries.--Section 407(d)(3) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1107(d)(3)) is amended by adding at the
end the following:
``(D)(i) The term `eligible individual account plan' does
not include that portion of a profit-sharing plan that consists
of employer contributions (including elective deferrals (as
defined in section 402(g)(3) of the Internal Revenue Code of
1986) pursuant to a qualified cash or deferred arrangement (as
defined in section 401(k) of such Code)) and earnings allocable
thereto, if--
``(I) under the documents and instruments governing
the plan, such contributions (or earnings allocable
thereto) are required to be invested at the direction
of a person other than the participant on whose behalf
such contributions are made to the plan (or the
participant's beneficiary), or
``(II) the documents and instruments governing the
plan do not provide for effective implementation of
investments directed by such a participant (or
beneficiary) within 3 years after such direction is
made known to the plan.
``(ii) For purposes of subsection (a), such portion shall
be treated as a separate plan.
``(iii) This subparagraph shall not apply to an individual
account plan if the fair market value of the assets of all
individual account plans maintained by the employer equals not
more than 10 percent of the fair market value of the assets of
all pension plans maintained by the employer.
``(iv) This subparagraph shall not apply to an individual
account plan that is an employee stock ownership plan as
defined in section 409(a) or 4975(e)(7) of the Internal Revenue
Code or that is a stock bonus plan.''.
(b) Diversification of Investments Under Employee Stock Ownership
Plans by Participants and Beneficiaries Over 55 Years of Age.--Section
206 of such Act (29 U.S.C. 1056) (as amended by sections 104 and 201)
is amended further by adding at the end the following new subsection:
``(i) Diversification of Investments Under Employee Stock Ownership
Plans by Participants and Beneficiaries Over 55 Years of Age.--
``(1) In general.--An employee stock ownership plan shall
provide that each qualified participant may elect within 90
days after the close of each plan year in the qualified
election period to direct the plan as to the investment of at
least 25 percent of the participant's account in the plan (to
the extent such portion exceeds the amount to which a prior
election under this subsection applies). In the case of the
election year in which the participant can make the
participant's last election, the preceding sentence shall be
applied by substituting `50 percent' for `25 percent'.
``(2) Method of meeting requirements.--A plan shall be
treated as meeting the requirements of paragraph (1) if--
``(A) the portion of the participant's account
covered by the election under paragraph (1) is
distributed within 90 days after the period during
which the election may be made, or
``(B) the plan offers at least 3 investment options
(not inconsistent with regulations prescribed by the
Secretary of the Treasury) to each participant making
an election under paragraph (1) and within 90 days
after the period during which the election may be made,
the plan invests the portion of the participant's
account covered by the election in accordance with such
election.
``(3) Definitions.--For purposes of this subsection--
``(A) Employee stock ownership plan.--The term
`employee stock ownership plan' means a defined
contribution plan which is an employee stock ownership
plan (within the meaning of section 4975(e)(7) of the
Internal Revenue Code of 1986) or which meets the
requirements of section 409(a) of such Code.
``(B) Qualified participant.--The term `qualified
participant' means any participant who has completed at
least 10 years of participation under the plan and has
attained age 55.
``(C) Qualified election period.--The term
`qualified election period' means the 6-plan-year
period beginning with the later of--
``(i) the first plan year in which the
individual first became a qualified
participant, or
``(ii) the first plan year beginning after
December 31, 2001.
For purposes of the preceding sentence, an employer may
elect to treat an individual first becoming a qualified
participant in the first plan year beginning in 2002 as
having become a participant in the first plan year
beginning in 2003.''.
SEC. 305. REMOVAL OF $500,000 CAP ON BONDING REQUIREMENT.
Section 412(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1112(a)) is amended, in the matter following paragraph
(2), by striking ``nor more than $500,000'' and all that follows
through ``preceding sentence''.
SEC. 306. DISCLOSURE REGARDING INVESTMENTS AND VOTING OF PROXIES.
(a) In General.--Section 101 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021) is amended by inserting after
subsection (e) the following new subsection:
``(f) Disclosure Regarding Investments and Voting of Proxies.--
``(1) In general.--Within 30 days after receipt by the plan
administrator of a written request by a participant or
beneficiary for relevant and specific information regarding--
``(A) the nature or extent of any particular
investment of plan assets occurring on a particular
date specified in the request, or
``(B) the manner in which any right to vote in
connection with such investment has been exercised by
or under the plan,
the plan administrator shall furnish such information in
writing to such participant or beneficiary. The administrator
may make a reasonable charge to cover the cost of furnishing
such information.
``(2) Standards and review.--The Secretary shall by
regulation prescribe--
``(A) standards which must be met by requests made
pursuant to this subsection, including standards
relating to relevancy and specificity of the
information requested, the specificity by which the
investment must be identified in the request, and the
reasonableness of charges made for furnishing the
information, and
``(B) procedures by which plan administrators may
rely on such standards in declining requests for
information which fail to meet such standards,
including methods for obtaining timely and binding
determinations by the Secretary regarding whether such
standards are being met by particular requests.''.
(b) Enforcement.--Section 502(c)(1) of such Act (29 U.S.C.
1132(c)(1)) is amended by striking ``section 101(e)(1)'' and inserting
``subsection (e)(1) or (f)(1) of section 101''.
(c) Conforming Amendment.--Section 101(h)(1) of such Act (29 U.S.C.
1021(h)(1)) is amended by inserting ``or subsection (f)'' after ``this
subsection''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to written requests received after December 31,
2001.
TITLE IV--IMPROVEMENTS IN PENSION INFORMATION AND ENFORCEMENT
SEC. 401. PENSION BENEFIT STATEMENTS.
(a) Statements Required on Periodic Basis.--
(1) In general.--Subsection (a) of section 105 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1025) is amended--
(A) by striking ``shall furnish to any plan
participant or beneficiary who so requests in
writing,'' and inserting ``shall furnish at least once
every 3 years, in the case of a participant in a
defined benefit plan who has attained age 35, and
annually, in the case of a defined contribution plan,
to each plan participant, and shall furnish to any plan
participant or beneficiary who so requests,'', and
(B) by adding at the end the following flush
sentence:
``Information furnished under the preceding sentence to a participant
in a defined benefit plan (other than at the request of the
participant) may be based on reasonable estimates determined under
regulations prescribed by the Secretary.''.
(2) Rule for multiemployer plans.--Subsection (d) of
section 105 of such Act (29 U.S.C. 1025) is amended to read as
follows:
``(d) Each administrator of a plan to which more than 1
unaffiliated employer is required to contribute shall furnish to any
plan participant or beneficiary who so requests in writing, a statement
described in subsection (a).''.
(b) Information on Investment Performance.--Section 105(a) of such
Act (29 U.S.C. 1025(a)) is amended--
(1) in paragraph (1), by striking ``and'';
(2) in paragraph (2), by striking the period at the end and
inserting ``, and''; and
(3) by adding at the end the following new paragraph:
``(3) the percentage of the net return on investment of
plan assets for the preceding plan year (or, with respect to
investments directed by the participant, the net return on
investment of plan assets for such year so directed), and,
stated separately, the administrative and transaction fees
incurred in connection with such investment.''.
(c) Model Statements.--The Secretary of Labor shall develop a model
benefit statement to be used by plan administrators in complying with
the requirements of section 105(a) of the Employee Retirement Income
Security Act of 1974. Such statement shall include--
(1) the amount of nonforfeitable accrued benefits as of the
statement date which is payable at normal retirement age under
the plan,
(2) the amount of accrued benefits which are forfeitable
but which may become nonforfeitable under the terms of the
plan,
(3) the amount or percentage of any reduction due to
integration of the benefit with the participant's Social
Security benefits or similar governmental benefits,
(4) information on how to contact the Social Security
Administration to obtain a participant's personal earnings and
benefit estimate statement, and
(5) information on early retirement benefit and joint and
survivor annuity reductions.
(d) Disclosure of Benefit Calculations.--
(1) In general.--Section 105 of such Act (as amended by
subsections (a) and (b)) is amended further--
(A) by redesignating subsections (b), (c), and (d)
as subsections (c), (d), and (e), respectively; and
(B) by inserting after subsection (a) the following
new subsection:
``(b)(1) In the case of a participant or beneficiary who is
entitled to a distribution of a benefit under an employee pension
benefit plan, the administrator of such plan shall provide to the
participant or beneficiary the information described in paragraph (2)
upon the written request of the participant or beneficiary.
``(2) The information described in this paragraph includes--
``(A) a worksheet explaining how the amount of the
distribution was calculated and stating the assumptions used
for such calculation,
``(B) upon written request of the participant or
beneficiary, any documents relating to the calculation (if
available), and
``(C) such other information as the Secretary may
prescribe.
Any information provided under this paragraph shall be in a form
calculated to be understood by the average plan participant.''.
(2) Conforming amendments.--
(A) Section 101(a)(2) of such Act (29 U.S.C.
1021(a)(2)) is amended by striking ``105(a) and (c)''
and inserting ``105(a), (b), and (d)''.
(B) Section 105(c) of such Act (as redesignated by
paragraph (1)(A) of this subsection) is amended by
inserting ``or (b)'' after ``subsection (a)''.
(C) Section 106(b) of such Act (29 U.S.C. 1026(b))
is amended by striking ``sections 105(a) and 105(c)''
and inserting ``subsections (a), (b), and (d) of
section 105''.
SEC. 402. DISCLOSURES TO SECRETARY OF LABOR RELATING TO PLAN
TERMINATION AND RELATING TO PLAN SPONSORS AFTER
ACQUISITION OR MERGER OF PLANS.
(a) In General.--Section 104 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1024) is amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following new
subsection:
``(d)(1) The administrator of any employee benefit plan subject to
this part shall file with the Secretary a written notice of--
``(A) the termination of the plan, or
``(B) in connection with any plan that is acquired by or
merged with another plan, the name and address of the sponsor
of the acquired or merged plan.
``(2) The notice required under paragraph (1) shall be filed with
the Secretary not later than 60 days after the effective date of the
termination, acquisition, or merger.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to terminations, acquisitions, and mergers occurring
after December 31, 2001.
SEC. 403. DISCLOSURE OF OPERATING INCOME OF EMPLOYERS ADJUSTED SO AS TO
EXCLUDE CERTAIN COMPONENTS MANDATED IN FASB RULES
GOVERNING ACCOUNTING FOR DEFINED BENEFIT PENSION PLANS.
(a) Matters To Be Included in Annual Report.--Section 103(c) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1023(c)) is
amended--
(1) by redesignating paragraph (5) as paragraph (6); and
(2) by inserting after paragraph (4) the following new
paragraph:
``(5) In the case of a pension plan that is a defined
benefit plan, the amount of the annual operating income of each
employer maintaining the plan, as shown on the employer's most
recent annual financial statement, together with such amount as
adjusted by excluding all components of net benefit cost other
than the service cost component.''.
(b) Information To Be Provided Annually to Participants and
Beneficiaries.--Section 104(b)(3) of such Act (29 U.S.C. 1024(b)(3)) is
amended by adding at the end the following new sentence: ``In the case
of a defined benefit plan, such other material shall include the
information described in paragraph (5) of section 103(c), together with
an explanation, written in a manner calculated to be understood by the
average plan participant, of such information, of the service cost
component included in the adjusted amount of annual operating income
reported pursuant to such paragraph, and of each component excluded
from such adjusted amount of annual operating income.''.
SEC. 404. SPECIFIC INFORMATION REGARDING MULTIEMPLOYER PLANS INCLUDED
IN ANNUAL REPORT.
Section 103 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1023) is amended by adding at the end the following new
subsection:
``(f) With respect to a pension plan that is a multiemployer plan,
an annual report under this section shall include the following
information regarding each contributing employer:
``(1) the employer's name,
``(2) the employer's taxpayer identification number,
``(3) the contract period relating to the plan, and
``(4) the amount contributed by the employer for the
year.''.
SEC. 405. LIMITED SCOPE AUDITS.
Subparagraph (C) of section 103(a)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1023(a)(3)(C)) is amended to
read as follows:
``(C)(i) Subject to clause (ii), the opinion required by
subparagraph (A) need not be expressed as to any statements required by
subsection (b)(3)(G) prepared by a bank or similar institution or
insurance carrier regulated and supervised and subject to periodic
examination by a State or Federal agency if no less than ninety-five
(95) percent of the plan's assets have a readily ascertainable market
value at the end of the plan year for which the opinion is being
offered, and if such statements--
``(I) are certified by the bank, similar institution or
insurance carrier as complete and accurate,
``(II) certify the current value of each asset,
``(III) include a representation that, within the eighteen
month period preceding the date of its certification, an
independent, qualified public accountant who has satisfied the
requirements of subsection (D), has issued a report, in
accordance with generally accepted auditing standards, to the
bank or similar institution or insurance carrier, stating that
its internal controls and procedures or the internal controls
and procedures of any affiliated entity, as they pertain to the
execution, maintenance of accountability, recording and
processing of transactions related to plan or participant
recordkeeping, are adequate, and
``(IV) are made a part of the annual report.
``(ii) To the extent that the processing of transactions related to
plan or participant recordkeeping is performed by an entity
unaffiliated with the bank or similar institution or insurance carrier,
clause(i) shall not apply unless the plan has obtained a representation
from the entity that, within the eighteen month period preceding the
date of the opinion, an independent, qualified public accountant who
has satisfied the requirements of subsection (D), has issued a report,
in accordance with generally accepted auditing standards, to the entity
stating that its internal controls and procedures, as they pertain to
the execution, maintenance of accountability, recording and processing
of transactions related to plan or participant recordkeeping, are
adequate.
``(iii) For purposes of this subparagraph (C), the term `readily
ascertainable market value' means a value that can be readily
determined on an established securities market or in accordance with
regulations promulgated by the Secretary.''.
SEC. 406. REPORTING AND ENFORCEMENT REQUIREMENTS FOR EMPLOYEE BENEFIT
PLANS.
(a) In General.--Part 1 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021 et seq.) is
amended--
(1) by redesignating section 111 as section 112, and
(2) 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, 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, shall--
``(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), 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, shall--
``(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 title 18, United States Code
(relating to interference with commerce by
threats or violence);
``(iii) a bribery, a kickback, or a
violation of section 1954 of title 18, United
States Code (relating to offer, acceptance, or
solicitation to influence operations of an
employee benefit plan);
``(iv) a violation of section 1027 of title
18, United States Code (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' does 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 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 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 subsections (a)(2) or (b)(2), or pursuant
to any regulations issued under those subsections, if the finding,
conclusion, or statement is made in good faith.''.
(b) Civil Penalty.--
(1) In general.--Section 502(c) (29 U.S.C. 1132(c)) is
amended by inserting after paragraph (6) the following new
paragraph:
``(7)(A) The Secretary may assess a civil penalty of up to $50,000
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 $50,000
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 101(e)(2)A)(i) of the Health
Insurance Portability and Accountability Act of 1996, is
amended by striking ``or (5)'' and inserting ``(5), or (7)''.
(c) Clerical Amendments.--
(1) Section 514(d)(29 U.S.C. 114(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 the amendments, but only if the 5-day period described in
the amendments in connection with the irregularity or termination
commences at least 90 days after the date of the enactment of this Act.
SEC. 407. STUDY OF PENSION TRENDS AND CHARACTERISTICS.
(a) In General.--Section 513 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1143) is amended by adding at the end
the following new subsection:
``(d) Pension Surveys.--
``(1) In general.--The Secretary shall submit to each House
of the Congress, before the close of the second session of each
Congress, a report, based on a study of current statistical and
survey data, which describes dominant and emerging trends and
characteristics of the private pension system, so as to ensure
that the Congress is provided with periodic and timely
information regarding such system.
``(2) Included information.--Each report submitted pursuant
to paragraph (1) shall include, but not be limited to,
information relating to existing pension plans regarding--
``(A) the types of such plans,
``(B) the level of employer and employee
contributions,
``(C) vesting status,
``(D) accrued benefits,
``(E) benefit receipt, and
``(F) form of benefit payments.
Such information shall be presented by category in connection
with cohorts defined on the basis of appropriate attributes of
the participants involved, including gender, age, race, and
income.
``(3) Identification of barriers to pension receipt.--Each
report submitted pursuant to paragraph (1) shall also include
information which summarizes the types of problems that plan
participants and beneficiaries experience in connection with
the receipt of promised retirement benefits.''.
(b) Initial Report.--The initial report submitted pursuant to
section 513(d) of the Employee Retirement Income Security Act of 1974
shall be submitted not later than the close of the second session of
the 107th Congress.
SEC. 408. EARLY RESOLUTION PROGRAM FOR PENSION BENEFIT CLAIMS.
(a) In General.--Section 503 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1133) is amended--
(1) by adding at the end of the heading the following:
``and early resolution of pension claims'';
(2) by inserting ``(a) In General.--'' after ``Sec. 503.'';
and
(3) by adding at the end the following new subsection:
``(b) Early Resolution Program for Pension Benefit Claims.--
``(1) In general.--The Secretary shall establish, in
consultation with national bar and arbitration associations and
other interested organizations, an early resolution program for
mediation of disputes regarding claims for benefits which have
been denied under pension plans.
``(2) Mediators.--The program shall provide for recruitment
of mediators to serve under the program from individuals who
have the requisite expertise for such service. The program
shall provide for ongoing training for all mediators in
employee benefits law as determined necessary. Upon submission
of a claim to mediation proceedings under this subsection, the
program shall provide for appointment of a mediator, from the
roster of mediators serving under the program, to act as the
mediator with regard to the claim. Such appointment shall be
through a random selection procedure which shall be prescribed
in regulations.
``(3) Fees.--The Secretary shall assess fees as necessary
from each party to cover the costs of participation in the
program. The Secretary may reduce or waive a fee on the basis
of inability to pay.
``(4) Initiation of proceedings.--A claimant with a dispute
which is eligible under the program for submission to mediation
thereunder may elect to commence proceedings under the program
by means of filing under the program an election for mediation
of the dispute. An election to commence mediation proceedings
under the program shall be in such form and manner as the
Secretary may prescribe. Any such election shall in all cases
be voluntary, and any provision of the plan or other
arrangement which has the effect of providing for the
commencement of such proceedings other than by means of
voluntary election by the claimant shall be null and void as a
matter of law.
``(5) Participation in proceedings.--Upon receipt of the
election to commence proceedings, the program shall provide for
participation by all relevant parties. Each such party shall
participate, and cooperate fully, in the proceedings. The plan
administrator shall ensure that a copy of the written record of
any claims procedure completed by the plan pursuant to
subsection (a) and all relevant plan documents are presented to
the mediator within 30 days after commencement of the
proceedings. The program shall provide for appropriate
confidentiality of the proceedings.
``(6) Time limit for proceedings.--The mediation
proceedings under the program with respect to the claim in
dispute shall be completed within 30 days after compilation of
all relevant plan documents relating to the claim has been
achieved.
``(7) Process nonbinding.--Findings and conclusions made in
the mediation proceedings under the program shall be treated as
advisory in nature and nonbinding. Except as provided in
paragraph (8), the rights of the parties under this title shall
not be affected by participation in the mediation proceedings
under the program.
``(8) Resolution through settlement agreement.--If a case
is settled through participation in the mediation proceedings
under the program, the mediator shall assist the parties in
drawing up an agreement which shall constitute, upon signature
of the parties, a binding contract between the parties, which
shall be enforceable under section 502 as if the terms of such
agreement were terms of the plan.
``(9) Oversight.--The Secretary shall provide for ongoing
oversight of the program so as to ensure that proceedings are
conducted equitably and that mediators meet prescribed
standards of performance. The Secretary shall monitor and
record the results of mediation proceedings conducted under the
program so as to enable comprehensive evaluation of the
effectiveness of the program as a means of alternative dispute
resolution.
``(10) Notice.--The Secretary shall--
``(A) notify individuals of the program or other
sources of assistance in resolving benefits claim
disputes, and
``(B) provide model information with respect to the
program to be included in all summary plan descriptions
and benefit determinations.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to claims arising on or after December 31, 2001.
SEC. 409. REVIEW OF BENEFIT DETERMINATIONS.
(a) De Novo Review.--
(1) Internal review.--Section 503 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1133) is
amended--
(A) by inserting ``(a)'' after ``Sec. 503.'';
(B) by redesignating paragraph (1) and (2) as
subparagraphs (A) and (B), respectively; and
(C) by adding at the end the following new
paragraph:
``(2) Any review required under paragraph (1)(B)--
``(A) shall be de novo, and
``(B) shall be conducted by an individual who did not make
the initial decision denying the claim and who is authorized to
approve payment of the claim.''.
(2) Court review.--Section 502(e) of such Act (29 U.S.C.
1132(e)) is amended by adding at the end the following new
paragraph:
``(2) Notwithstanding any provision by the plan for the exercise by
a fiduciary of discretionary authority with respect to any benefit
determination, in any action under paragraph (1)(B) or (3) of
subsection (a) or in any other action under this section to review a
final benefit determination under the plan, the review by the court
shall be de novo, and the court may review all evidence presented.''.
(b) Application of Common Law Principles of Contract
Interpretation.--Section 502(e) of such Act (as amended by subsection
(a)(2)) is amended further by adding at the end thereof the following
new paragraph:
``(3) In interpreting the terms of an employee benefit plan under
this section, the court shall employ such common law principles of
contract interpretation as are determined appropriate by the court.
Nothing in this title shall preclude the Federal courts from developing
and applying Federal common law for purposes of this paragraph which is
consistent with the provisions of this title.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to causes of action arising after December 31, 2001.
SEC. 410. ALLOWABLE RELIEF.
(a) Pre-Judgment Interest, Attorney Fees, and Costs of Action.--
(1) Pre-judgment interest on unpaid benefits.--Section
502(a)(1)(B) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1132(a)(1)(B)) is amended by inserting
``(together with reasonable pre-judgment interest on unpaid
pension plan benefits)'' after ``to recover benefits due to him
under the terms of his plan''.
(2) Attorney fees and costs of action.--Section 502(g) of
such Act (29 U.S.C. 1132(g)) is amended--
(A) in paragraph (1), by inserting ``or (3)'' after
``paragraph (2)''; and
(B) by adding at the end the following new
paragraph:
``(3) In any action or settlement proceeding under this title with
respect to an employee pension benefit plan brought by a participant or
beneficiary under such plan in which the participant or beneficiary
prevails or substantially prevails, the participant or beneficiary
shall be entitled to reasonable attorney's fees, reasonable expert
witness fees, and other reasonable costs relating to the action.''.
(b) Allowance for Legal Relief.--Section 502(a) of such Act (29
U.S.C. 1132(a)) is amended, in paragraphs (3)(B), (5)(B), and (8)(B),
by inserting ``legal or'' before ``equitable'' each place it appears.
(c) Effective Date.--The amendments made by this section shall
apply with respect to causes of action arising after December 31, 2001.
SEC. 411. ASSESSMENT BY SECRETARY OF LABOR OF PENALTIES FOR FAILURES TO
MEET DISCLOSURE REQUIREMENTS.
(a) In General.--Section 502(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132(c)) is amended to read as follows:
``(c)(1) The Secretary may assess a civil penalty against any
person of up to $1,000 a day from the date of any failure or refusal by
such person described in paragraph (2).
``(2) A failure or refusal described in this paragraph is any of
the following:
``(A) A failure or refusal by a plan administrator to
comply with a request for any information which such
administrator is required by this title to furnish to a
participant or beneficiary by mailing the material requested to
the last known address of the requesting participant or
beneficiary within 30 days after such request.
``(B) A failure or refusal by a plan administrator to file
the annual report required to be filed with the Secretary under
section 101(b)(4). For purposes of this subparagraph, an annual
report that has been rejected under section 104(a)(4) for
failure to provide material information shall not be treated as
having been filed with the Secretary.
``(C) A failure or refusal by an employer maintaining a
plan to meet the notice requirement of section 101(d) with
respect to any participant or beneficiary.
``(D) A failure or refusal by a plan administrator to meet
the requirements of section 101(e)(1) with respect to a
participant or beneficiary.
``(E) A failure or refusal by an employer maintaining a
plan to meet the requirements of section 101(e)(2) with respect
to any person.
``(F) A failure or refusal by any person to meet the
requirements of section 101(f)(1).
``(G) A failure or refusal by any person to file the
information required to be filed by such person with the
Secretary under regulations prescribed pursuant to section
101(g).
``(H) A failure or refusal by a plan administrator to
furnish documents to the Secretary, as requested by the
Secretary under section 104(a)(6), within 30 days after such a
request.
``(I) A failure or refusal by a plan administrator to meet
the requirements of paragraph (1) or (4) of section 606.
``(3) For purposes of this subsection, each violation described in
paragraph (2) with respect to any single participant, beneficiary, or
other person shall be treated as a separate violation.
``(4) In the case of any failure or refusal described in paragraph
subparagraph (A), (C), or (I) of paragraph (2) by any administrator or
employer with respect to any participant, beneficiary, or other person,
such administrator or employer may, in the court's discretion, be
liable to such participant, beneficiary, or other person in the amount
of up to $1,000 a day from the date of such failure or refusal. Any
liability under this paragraph shall be in addition to any liability
imposed under paragraph (1).
``(5) In addition to any liability imposed under paragraph (1) or
(4), the court may in its discretion order such other relief as it
deems proper.
``(6) No liability may be imposed on any person under this
subsection for any failure resulting from matters reasonably beyond the
control of such person.
``(7) 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)(8) of the Social Security Act.''.
(b) Conforming Amendment.--Section 502(a)(6) of such Act (29 U.S.C.
1132(a)(6)) is amended by striking ``under paragraph (2), (4), (5), or
(6) of subsection (c) or under subsection (i) or (l)'' and inserting
``under subsection (c), (i), or (l)''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to failures and refusals occurring after December
31, 2001.
SEC. 412. MISSING PARTICIPANTS.
(a) In General.--Section 4050 of the Employee Retirement Income
Security Act of 1974 (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) of the Employee
Retirement Income Security Act of 1974 (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 1 year after the date of the
enactment of this Act.
SEC. 413. FIDUCIARY DUTIES WITH RESPECT TO CHANGES IN INVESTMENT
OPTIONS.
(a) In General.--Section 403(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(c)) is amended by adding at the
end the following new paragraph:
``(3) For purposes of paragraph (1), in the case of any pension
plan amendment changing investment options under the plan, the plan
shall not be treated as permitting a participant or beneficiary to
exercise control over assets in his or her account unless, under the
terms of such amendment, the participant or beneficiary is permitted to
retain any existing investment option with respect to any assets in his
or her account invested pursuant to such option until such assets are
otherwise invested by the participant or beneficiary.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to plan amendments adopted after the date of the enactment
of this Act.
SEC. 414. DEPARTMENT OF LABOR REQUIRED TO PROVIDE ASSISTANCE.
Section 506 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1136) is amended by adding at the end the following new
subsection:
``(d) Assistance Provided by the Secretary to Participants,
Beneficiaries, and Employee Benefit Plans.--
``(1) In general.--The Secretary of Labor shall--
``(A) establish a program to assist participants
and beneficiaries in understanding their rights to
benefits under employee benefit plans, and
``(B) to the extent feasible, assist participants
in obtaining such benefits, by means of--
``(i) the program established pursuant to
subparagraph (A), and
``(ii) civil actions under section 502.
``(2) Interagency program.--In addition to the program
established pursuant to paragraph (1), the Secretary, together
with the Secretary of the Treasury and the heads of such other
appropriate Federal agencies as the Secretary deems
appropriate, shall establish a program which shall provide
for--
``(A) appropriate coordination of assistance to
participants and beneficiaries in pursuing benefit
claims and obtaining necessary documents for such
purpose, and
``(B) the issuance and publication of coordinated
opinions and advice on applicable Federal law and
regulations, and
``(C) the referral of benefit claims to appropriate
Internal Revenue Service district offices to promote
compliance with applicable Federal law and regulations
and to regional offices of the Department of Labor to
promote protection of individual benefit rights.
``(3) Ombudsman.--The Secretary shall designate an employee
to serve as ombudsman in the Department of Labor for purposes
of coordinating and supervising the program the efforts of the
Department in carrying out the provisions of this subsection.
``(4) Volunary assistance fund.--
``(A) In general.--The Secretary shall establish a
voluntary assistance fund which shall consist of
voluntary contributions from employers, employee
benefit plans, and other individuals for the purpose of
assisting the Department of Labor in carrying out the
provisions of this subsection.
``(B) Use of funds.--Amounts received into the fund
shall be held in a separate trust fund and shall be
available for the sole purpose of carrying out the
provisions of this subsection.
``(5) Annual reports.--Not later than December 31, 2001,
and annually thereafter, the Secretary shall report to each
House of the Congress on--
``(A) progress made in carrying out the provisions
of this subsection, and
``(B) the receipts and disbursements of the
voluntary assistance fund for the preceding fiscal
year.
The report shall include any recommendations of the Secretary
for improving the programs established under this subsection
and with respect to the feasibility and appropriateness of
requiring mandatory contributions to the fund.''.
SEC. 415. EXCLUSIVITY OF POWERS AND PROCEDURES APPLICABLE TO RIGHTS OR
CLAIMS.
Section 502 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1132) is amended by adding at the end the following new
subsection:
``(n) Notwithstanding any Federal statute of general applicability
that would modify any of the powers and procedures expressly applicable
to a right or claim arising under this title and that is not expressly
incorporated by a provision of this title, such powers and procedures
shall be the exclusive powers and procedures applicable to such right
or such claim unless after such right or such claim arises the claimant
voluntarily enters into an agreement to resolve such right or such
claim through arbitration or another procedure.''.
TITLE V--IMPROVED PENSION PROTECTIONS FOR THE CHANGING WORKFORCE
SEC. 501. LOANS FROM RETIREMENT PLANS FOR HEALTH INSURANCE AND JOB
TRAINING EXPENSES.
(a) In General.--Section 206 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1056) (as amended by sections 104, 201,
and 308) is amended further by adding at the end the following new
subsection:
``(j) Loans From Retirement Plans for Health Insurance and Job
Training Expenses.--
``(1) In general.--Notwithstanding any other provision of
this subsection, a pension plan shall provide that a
participant or beneficiary who is involuntarily separated from
employment may, on the date of such separation, obtain a loan
from the plan the proceeds of which are to be used within 6
months after the date of such loan--
``(A) for payments for insurance which constitutes
medical care for the participant and the participant's
spouse and dependents, or
``(B) for job training expenses.
``(2) Qualified loan.--For purposes of this subsection, the
term `qualified loan' means a loan--
``(A) which by its terms requires interest on the
loan to accrue not less frequently than monthly,
``(B) which by its terms requires--
``(i) repayment to begin not later than 18
months after the date of the loan, and
``(ii) repayment in full not later the date
which is 36 months after the date of the loan,
and
``(C) which bears interest from the date of the
loan at a rate not less than 2 percentage points below,
and not more than 2 percentage points above, the rate
for comparable United States Treasury obligations on
such date.
``(3) Limitation on amount of loans.--The aggregate amount
of borrowings for a plan year shall not exceed the sum of the
amount of accruals (other than contributions) during the plan
year prior to the plan year in which the loan is made.
``(4) Limitation on number of loans.--Not more than 3 loans
to an individual under this subsection may be outstanding at
any time.
``(5) Delinquencies treated as distribution.--Any amount
required to be paid by a participant or beneficiary under
paragraph (2)(B) during any plan year which is not paid at the
time required to be paid, and any amount remaining unpaid as of the
beginning of the plan year beginning after the period described in
paragraph (2)(B)(ii), shall be treated as distributed during such plan
year to the participant or beneficiary.''.
(b) Prohibited Transaction Exemption.--Section 408(b) of such Act
(29 U.S.C. 1108(b)) is amended by adding at the end the following new
paragraph:
``(14) Any loan made by the plan to a disqualified person
who is a participant or beneficiary of the plan if such loan--
``(A) is for the payment of health insurance
premiums or job training expenses, and
``(B) meets the requirements of section 206(j).''.
(c) Effective Date.--The amendments made by this section shall
apply to loans made after the effective date specified in section 601.
SEC. 502. AUTOMATIC ROLLOVER UPON MANDATORY DISTRIBUTION IN EXCESS OF
$1,000.
Section 206 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1056) (as amended by sections 104, 201, 308, and 501) is
amended further by adding at the end the following new subsection:
``(k) Direct Transfers of Mandatory Distributions in Excess of
$1,000--
``(1) In general.--A pension plan shall provide that if--
``(A) a distribution described in paragraph (2) is
made, and
``(B) the distributee does not elect to have such
distribution paid directly to an eligible retirement
plan and does not elect to receive the distribution
directly,
the plan administrator shall make such transfer to an
individual retirement plan of a designated trustee or issuer
and shall notify the distributee in writing (either separately
or as part of a notice required under section 402(f) of the
Internal Revenue Code of 1986) that the distribution may be
transferred to another individual retirement plan.
``(2) Distribution described.--A distribution from a plan
is described in this paragraph if such distribution is an
immediate distribution of the entire nonforfeitable accrued
benefit of the participant and is in excess of $1,000.
``(3) Definitions.--For purposes of this subsection--
``(A) Eligible retirement plan.--The term `eligible
retirement plan' has the meaning given such term by
section 402(c)(8)(B) of the Internal Revenue Code of
1986, except that a qualified trust under section
401(a) of such Code shall be considered an eligible
retirement plan only if it is a defined contribution
plan, the terms of which permit the acceptance of
rollover distributions.
``(B) Individual retirement plan.--The term
`individual retirement plan' has the meaning given such
term by section 7701(a)(37) of the Internal Revenue
Code of 1986.''.
SEC. 503. PROMPT DISTRIBUTION FROM DEFINED CONTRIBUTION PLANS UPON
TERMINATION OF PARTICIPANT'S COVERED EMPLOYMENT.
Section 206(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1056(a)) is amended--
(1) by redesignating paragraphs (1), (2), and (3) as
subparagraphs (A), (B), and (C), respectively, and by inserting
``(1)'' after ``(a)'';
(2) in the first sentence, by striking ``pension plan'' and
inserting ``defined benefit plan'';
(3) in the second sentence, by striking ``In the case of a
plan'' and inserting ``In the case of a defined benefit plan'';
and
(4) by adding at the end the following new paragraph:
``(2)(A) Except as provided in subparagraph (B), each defined
contribution plan shall provide that, unless the participant otherwise
elects--
``(i) the payment of benefits under the plan to the
participant will begin not later than the 60th day after the
close of the plan year in which occurs the date on which the
participant attains the earlier of age 65 or the normal
retirement age specified under the plan, and
``(ii) in any case in which the participant terminates his
service with the employer prior to the date described in clause
(i), the participant's accrued benefit shall be distributed, in
the form of one or more rollover contributions under section
402(c), 403(a)(4), or 403(b)(8) of the Internal Revenue Code of
1986, clause (ii), (iii), or (iv) of section 408(d)(3)(A) of
such Code, section 411(a)(12) of such Code, or section
457(e)(16) of such Code, not later than the 60th day after the
date of the participant's termination of such service.
``(B) In any case in which immediate valuation of the participant's
accrued benefit is not practicable, the plan may provide for a period
of more than 60 days in lieu of the 60-day period described in clauses
(i) and (ii) of subparagraph (A), except that any such longer period
provided by the plan may not extend beyond 60 days after the applicable
valuation date under the plan.''.
SEC. 504. EXTENDED PERIOD FOR RECOUPMENT OF OVERPAYMENTS.
Section 206 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1056) (as amended by sections 104, 201, 308, 501(a), and
502) is amended further by adding at the end the following new
subsection:
``(l) Recoupment of Benefit Overpayments.--
``(1) Minimum period for recoupment.--Any minimum period
specified by an employee pension benefit plan during which an
overpayment of benefits under the plan must be repaid to the
plan may not be less than the 5-year period beginning on the
date of the overpayment.
``(2) Waiver permitted.--Nothing in this title shall be
construed to preclude the waiver by any fiduciary on behalf of
the plan of any overpayment of benefits to a participant or
beneficiary in any case in which such participant or
beneficiary is without fault if recovery of the overpayment
would defeat the purpose of this title or would be against equity and
good conscience, and any such waiver may not be precluded under the
terms of the plan. In making for purposes of this subsection any
determination of whether any participant or beneficiary is without
fault, the fiduciary shall specifically take into account any physical,
mental, educational, or linguistic limitation such participant or
beneficiary may have (including any lack of facility with the English
language).''.
TITLE VI--GENERAL PROVISIONS
SEC. 601. GENERAL EFFECTIVE DATE.
(a) In General.--Except as otherwise provided in this Act, and
subject to subsection (b), the amendments made by this Act shall apply
with respect to plan years beginning on or after January 1, 2002.
(b) Special Rule for Collectively Bargained Plans.--In the case of
a plan maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more employers
ratified on or before the date of the enactment of this Act, subsection
(a) shall be applied to benefits pursuant to, and individuals covered
by, any such agreement by substituting for ``January 1, 2002'' the date
of the commencement of the first plan year beginning on or after the
earlier of--
(1) the later of--
(A) January 1, 2003, or
(B) the date on which the last of such collective
bargaining agreements terminates (determined without
regard to any extension thereof after the date of the
enactment of this Act), or
(2) January 1, 2004.
SEC. 602. PLAN AMENDMENTS.
If any amendment made by this Act requires an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after January 1, 2004, if--
(1) during the period after such amendment made by this Act
takes effect and before such first plan year, the plan is
operated in accordance with the requirements of such amendment
made by this Act, and
(2) such plan amendment applies retroactively to the period
after such amendment made by this Act takes effect and such
first plan year.
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