[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3677 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3677

To amend title I of the Employee Retirement Income Security Act of 1974 
and the Internal Revenue Code of 1986 to provide new protections under 
  applicable fiduciary rules for participants and beneficiaries under 
 401(k) plans and to provide for 3-year vesting of elective deferrals 
                           under such plans.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 5, 2002

  Mr. English introduced he following bill; which was referred to the 
   Committee on Education and the Workforce, and in addition to the 
Committee on Ways and Means, 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 title I of the Employee Retirement Income Security Act of 1974 
and the Internal Revenue Code of 1986 to provide new protections under 
  applicable fiduciary rules for participants and beneficiaries under 
 401(k) plans and to provide for 3-year vesting of elective deferrals 
                           under such plans.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Safeguarding America's Retirement 
Act of 2002''.

SEC. 2. NEW PROTECTIONS UNDER ERISA FIDUCIARY RULES FOR PARTICIPANTS 
              AND BENEFICIARIES UNDER 401(K) PLANS.

    Section 404(a)(2) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1104(a)(2)) is amended--
            (1) by striking ``In the case'' and inserting ``(A) Subject 
        to subparagraph (B), in the case''; and
            (2) by adding at the end the following new subparagraph:
    ``(B)(i) In the case of any individual account plan which includes 
a qualified cash or deferred arrangement (as defined in section 401(k) 
of the Internal Revenue Code of 1986)--
            ``(I) the requirements of clauses (ii), (iii), (iv), and 
        (v) shall be met in connection with such plan, and
            ``(II) subparagraph (A) shall apply in connection with the 
        plan for any plan year only if the plan, as in effect for such 
        plan year, provides for compliance with such requirements.
    ``(ii) The requirements of this clause are met in connection with a 
plan described in clause (i) only if, under the plan, assets 
attributable to employee contributions are invested in employer 
securities only to the extent elected by the employee.
    ``(iii) The requirements of this clause are met in connection with 
a plan described in clause (i) only if, under the plan--
            ``(I) in the case of a participant who has not completed 3 
        years of participation (as defined in section 204(b)(4)) under 
        the plan, not more than 20 percent of the participant's accrued 
        benefit derived from employee contributions may be invested in 
        employer securities, and
            ``(II) in the case of a participant who has completed 3 
        years of participation (as so defined) under the plan, not more 
        than 20 percent of the participant's entire nonforfeitable 
        accrued benefit may be invested in employer securities
    ``(iv) The requirements of this clause are met in connection with a 
plan described in clause (i) only if, under the plan, a participant or 
beneficiary whose nonforfeitable accrued benefit attributable to 
employee contributions is invested in whole or in part in employer 
securities is periodically given a reasonable opportunity (on at least 
a quarterly basis) to invest such accrued benefit in investment 
vehicles, other than employer securities, selected so as to permit 
diversification as described in paragraph (1)(C) with respect to such 
accrued benefit.
    ``(v)(I) The requirements of this clause are met in connection with 
a plan described in clause (i) only if, under the plan, no lockdown may 
be imposed by the plan sponsor, administrator, or any other fiduciary 
in connection with the nonforfeitable accrued benefit of a participant 
or beneficiary.
    ``(II) For purposes of this clause, the term `lockdown' means any 
temporary lockdown, blackout, or freeze with respect to, suspension of, 
or similar limitation on any opportunity otherwise generally available 
to a participant or beneficiary under the plan to transfer some or all 
of the nonforfeitable accrued benefit of the participant or beneficiary 
from investment in the form of employer securities to another 
investment vehicle otherwise available under the plan. Such term does 
not include any reasonable restriction on the frequency of transfers 
between investment vehicles established in accordance with clause 
(iv).''.

SEC. 3. ENFORCEMENT OF NEW FIDUCIARY RULES.

    (a) Criminal Penalties.--Section 501 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1131) is amended--
            (1) by inserting ``(a)'' before ``Any person''; and
            (2) by adding at the end the following new subsection:
    ``(b) Any person who, acting in the capacity of plan sponsor, plan 
administrator, or other fiduciary of a pension plan, willfully causes, 
in connection with the plan, a violation of the requirements of clause 
(ii), (iii), (iv), or (v) of section 402(a)(2)(B), of any regulation or 
order issued under such clause, or of terms of the plan required under 
any such clause, regulation, or order shall upon conviction be fined 
not more than $5,000 or imprisoned not more than one year, or both; 
except that, in the case of such violation caused by a person not an 
individual, the fine imposed upon such person shall be a fine not 
exceeding $100,000.''.
    (b) Civil Penalties.--
            (1) In general.--Section 502(c) of such Act (29 U.S.C. 
        1132(c)) is amended--
                    (A) by redesignating paragraph (7) as paragraph 
                (8); and
                    (B) by inserting after paragraph (6) the following 
                new paragraph:
    ``(7) The Secretary may assess against any person a civil penalty 
of not more than $1,000 a day for each instance of a violation of the 
requirements of clause (ii), (iii), (iv), or (v) of section 
402(a)(2)(B), of any regulation or order issued under such clause, or 
of terms of the plan required under any such clause, regulation, or 
order caused by such person in connection with the plan acting in the 
capacity of plan sponsor, plan administrator, or other fiduciary of the 
plan until such violation is corrected. For purposes of this paragraph, 
each instance of such violation in connection with any participant or 
beneficiary shall be treated as a separate instance of such 
violation.''.
            (2) Conforming amendment.--Section 502(a)(6) of such Act 
        (29 U.S.C. 1132(a)(6)) is amended by striking ``(5), or (6)'' 
        and inserting ``(5), (6), or (7)''.

SEC. 4. NONFORFEITABILITY AFTER 3 YEARS OF PARTICIPATION.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--Section 203(a) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1053(a)) is amended--
            (1) in the matter preceding paragraph (1), by inserting 
        before the period the following: ``, and, as applicable, 
        paragraph (5) of this subsection''; and
            (2) by adding at the end the following new paragraph:
            ``(5) An individual account plan which includes a cash or 
        deferred arrangement (as defined in section 401(k)(2) of the 
        Internal Revenue Code of 1986) satisfies the requirements of 
        this paragraph if, under the plan, a participant who has 
        completed 3 years of participation (as defined in section 
        204(b)(4)) has a nonforfeitable right to 100 percent of the 
        participant's accrued benefit to the extent it consists of 
        elective deferrals (as defined in section 402(g)(3)(A) of such 
        Code) made pursuant to such arrangement.''.
    (b) Amendments to the Internal Revenue Code of 1986.--Subsection 
(a) of section 411 of the Internal Revenue Code of 1986 (relating to 
minimum vesting standards) is amended--
            (1) in the matter preceding paragraph (1), by inserting ``, 
         the requirements of paragraph (12) of this subsection (as 
        applicable),'' after ``paragraphs (1), (2), and (11) of this 
        subsection''; and
            (2) by adding at the end the following new paragraph:
            ``(12) Elective deferrals under cash or deferred 
        arrangements.--A defined contribution plan which includes a 
        cash or deferred arrangement (as defined in section 401(k)(2)) 
        satisfies the requirements of this paragraph if, under the 
        plan, a participant who has completed 3 years of participation 
        (as defined in subsection (b)(4)) has a nonforfeitable right to 
        100 percent of the participant's accrued benefit to the extent 
        it consists of elective deferrals (as defined in section 
        402(g)(3)(A)) made pursuant to such arrangement.''.

SEC. 5. EFFECTIVE DATE AND RELATED RULES.

    (a) In General.--Subject to subsection (b), the amendments made by 
this Act shall apply with respect to plan years beginning on or after 
January 1, 2003.
    (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, 2003'' the date 
of the commencement of the first plan year beginning on or after the 
earlier of--
            (1) the later of--
                    (A) January 1, 2004, 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, 2005.
    (c) Plan Amendments.--If the amendments made by this Act require 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, 2005, 
if--
            (1) during the period after such amendments made by this 
        Act take effect and before such first plan year, the plan is 
        operated in accordance with the requirements of such amendments 
        made by this Act, and
            (2) such plan amendment applies retroactively to the period 
        after such amendments made by this Act take effect and before 
        such first plan year.
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