[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3762 Reported in House (RH)]
Union Calendar No. 233
107th CONGRESS
2d Session
H. R. 3762
[Report No. 107-383, Part I]
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to provide additional protections
to participants and beneficiaries in individual account plans from
excessive investment in employer securities and to promote the
provision of retirement investment advice to workers managing their
retirement income assets, and to amend the Securities Exchange Act of
1934 to prohibit insider trades during any suspension of the ability of
plan participants or beneficiaries to direct investment away from
equity securities of the plan sponsor.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 14, 2002
Mr. Boehner (for himself, Mr. Sam Johnson of Texas, Mr. Oxley, Mr.
Fletcher, Mr. Petri, Mrs. Roukema, Mr. McKeon, Mr. Castle, Mr. Upton,
Mr. Tancredo, Mrs. Biggert, Mr. Keller, Mr. Culberson, Mr. Calvert, Mr.
King, Mr. LaTourette, Mr. Hill, Mr. Rehberg, Mr. Boozman, and Mr.
Wilson of South Carolina) introduced the following bill; which was
referred to the Committee on Education and the Workforce, and in
addition to the Committees on Ways and Means, and Financial Services,
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
April 4, 2002
Reported from the Committee on Education and the Workforce with an
amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
April 4, 2002
Referral to the Committees on Ways and Means and Financial Services
extended until April 9, 2002
April 9, 2002
Additional sponsors: Mrs. Capito, Mr. Bartlett of Maryland, Mr. Latham,
Mr. Tiberi, Mr. Gibbons, Mr. Greenwood, Mr. Reynolds, Mr. Isakson, Ms.
Hart, Mr. Sensenbrenner, Mr. Green of Wisconsin, Mr. Walsh, Mr. Kolbe,
and Mr. Shays
April 9, 2002
The Committees on Ways and Means and Financial Services discharged;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on
February 14, 2002]
_______________________________________________________________________
A BILL
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to provide additional protections
to participants and beneficiaries in individual account plans from
excessive investment in employer securities and to promote the
provision of retirement investment advice to workers managing their
retirement income assets, and to amend the Securities Exchange Act of
1934 to prohibit insider trades during any suspension of the ability of
plan participants or beneficiaries to direct investment away from
equity securities of the plan sponsor.
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 ``Pension Security
Act of 2002''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title.
TITLE I--IMPROVEMENTS IN PENSION SECURITY
Sec. 101. Periodic pension benefits statements.
Sec. 102. Protection from suspensions, limitations, or restrictions on
ability of participant or beneficiary to
direct or diversify plan assets.
Sec. 103. Informational and educational support for pension plan
fiduciaries.
Sec. 104. Limitations on restrictions of investments in employer
securities.
Sec. 105. Prohibited transaction exemption for the provision of
investment advice.
Sec. 106. Study regarding impact on retirement savings of participants
and beneficiaries by requiring fiduciary
consultants for individual account plans.
Sec. 107. Insider trades during pension plan suspension periods
prohibited.
Sec. 108. Effective dates of title and related rules.
TITLE II--ADDITIONAL PROVISIONS
Sec. 201. Amendments to Retirement Protection Act of 1994.
Sec. 202. Notice and consent period regarding distributions.
Sec. 203. Annual report dissemination.
Sec. 204. Technical corrections to Saver Act.
Sec. 205. Missing participants.
Sec. 206. Reduced pbgc premium for new plans of small employers.
Sec. 207. Reduction of additional pbgc premium for new and small plans.
Sec. 208. Authorization for PBGC to pay interest on premium overpayment
refunds.
Sec. 209. Substantial owner benefits in terminated plans.
Sec. 210. Benefit suspension notice.
Sec. 211. Studies.
Sec. 212. Interest rate range for additional funding requirements.
Sec. 213. Provisions relating to plan amendments.
TITLE I--IMPROVEMENTS IN PENSION SECURITY
SEC. 101. PERIODIC PENSION BENEFITS STATEMENTS.
(a) Requirements.--
(1) In general.--Section 105(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1025 (a)) is amended to
read as follows:
``(a)(1)(A) The administrator of an individual account plan shall
furnish a pension benefit statement--
``(i) to each plan participant at least annually,
``(ii) to each plan beneficiary upon written request, and
``(iii) in the case of an applicable individual account
plan, to each plan participant (and to each beneficiary with a
right to direct investments) at least quarterly.
``(B) The administrator of a defined benefit plan shall furnish a
pension benefit statement--
``(i) at least once every 3 years to each participant with
a nonforfeitable accrued benefit who is employed by the
employer maintaining the plan at the time the statement is
furnished to participants, and
``(ii) to a plan participant or plan beneficiary of the
plan upon written request.
``(2) A pension benefit statement under paragraph (1)--
``(A) shall indicate, on the basis of the latest available
information--
``(i) the total benefits accrued, and
``(ii) the nonforfeitable pension benefits, if any,
which have accrued, or the earliest date on which
benefits will become nonforfeitable,
``(B) shall be written in a manner calculated to be
understood by the average plan participant, and
``(C) may be provided in written form or in electronic or
other appropriate form to the extent that such form is
reasonably accessible to the recipient.
``(3)(A) In the case of a defined benefit plan, the requirements of
paragraph (1)(B)(i) shall be treated as met with respect to a
participant if the administrator provides the participant at least once
each year with notice of the availability of the pension benefit
statement and the ways in which the participant may obtain such
statement. Such notice shall be provided in written, electronic, or
other appropriate form, and may be included with other communications
to the participant if done in a manner reasonably designed to attract
the attention of the participant.
``(B) The Secretary may provide that years in which no employee or
former employee benefits (within the meaning of section 410(b) of the
Internal Revenue Code of 1986) under the plan need not be taken into
account in determining the 3-year period under paragraph (1)(B)(i).''.
(2) Conforming amendments.--
(A) Section 105 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1025) is amended by
striking subsection (d).
(B) Section 105(b) of such Act (29 U.S.C. 1025(b))
is amended to read as follows:
``(b) In no case shall a participant or beneficiary of a plan be
entitled to more than one statement described in clause (i) or (ii) of
subsection (a)(1)(A) or clause (i) or (ii) of subsection (a)(1)(B),
whichever is applicable, in any 12-month period. If such report is
required under subsection (a) to be furnished at least quarterly, the
requirements of the preceding sentence shall be applied with respect to
each quarter in lieu of the 12-month period.''.
(3) Effective date of subsection.--The amendments made by
this subsection shall take effect for plan years beginning on
or after January 1, 2003.
(b) Information Required From Applicable Individual Account
Plans.--Section 105 of such Act (as amended by subsection (a)) is
amended further by adding at the end the following new subsection:
``(d)(1) The statements required to be provided at least quarterly
under subsection (a) shall include (together with the information
required in subsection (a)) the following:
``(A) the value of investments allocated to the individual
account, including the value of any assets held in the form of
employer securities, without regard to whether such securities
were contributed by the plan sponsor or acquired at the
direction of the plan or of the participant or beneficiary, and
an explanation of any limitations or restrictions on the right
of the participant or beneficiary to direct an investment; and
``(B) an explanation, written in a manner calculated to be
understood by the average plan participant, of the importance,
for the long-term retirement security of participants and
beneficiaries, of a well-balanced and diversified investment
portfolio, including a discussion of the risk of holding
substantial portions of a portfolio in the security of any one
entity, such as employer securities.
``(2) The value of any employer securities that are not readily
tradable on an established securities market that is required to be
reported under paragraph (1)(A) may be determined by using the most
recent valuation of the employer securities.
``(3) The Secretary shall issue guidance and model notices which
meet the requirements of this subsection.''.
(c) Definition of Applicable Individual Account Plan.--Section 3 of
such Act (29 U.S.C. 1002) is amended by adding at the end the following
new subsection:
``(42) The term `applicable individual account plan' means any
individual account plan, except that such term does not include an
employee stock ownership plan (within the meaning of section 4975(e)(7)
of the Internal Revenue Code of 1986) unless there are any
contributions to such plan (or earnings thereunder) held within such
plan that are subject to subsection (k)(3) or (m)(2) of section 401 of
the Internal Revenue Code of 1986.''.
(d) Civil Penalties for Failure To Provide Quarterly Benefit
Statements.--Section 502 of such Act (29 U.S.C. 1132) is amended--
(1) in subsection (a)(6), by striking ``(5), or (6)'' and
inserting ``(5), (6), or (7)'';
(2) by redesignating paragraph (7) of subsection (c) as
paragraph (8); and
(3) by inserting after paragraph (6) of subsection (c) the
following new paragraph:
``(7) The Secretary may assess a civil penalty against any plan
administrator of up to $1,000 a day from the date of such plan
administrator's failure or refusal to provide participants or
beneficiaries with a benefit statement on at least a quarterly basis in
accordance with section 105(a)(1)(A)(iii).''.
(e) Model Statements.--The Secretary of Labor shall, not later than
January 1, 2003, issue initial guidance and a model benefit statement,
written in a manner calculated to be understood by the average plan
participant, that may be used by plan administrators in complying with
the requirements of section 105 of the Employee Retirement Income
Security Act of 1974. The Secretary may promulgate such interim final
rules as the Secretary determines are appropriate to carry out the
amendments made by this section.
SEC. 102. PROTECTION FROM SUSPENSIONS, LIMITATIONS, OR RESTRICTIONS ON
ABILITY OF PARTICIPANT OR BENEFICIARY TO DIRECT OR
DIVERSIFY PLAN ASSETS.
(a) Notice Requirements.--
(1) In general.--Section 101 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021) is amended--
(A) by redesignating the second subsection (h) as
subsection (j); and
(B) by inserting after the first subsection (h) the
following new subsection:
``(i) Notice of Suspension, Limitation, or Restriction on Ability
of Participant or Beneficiary To Direct Investments in Individual
Account Plan.--
``(1) In general.--In the case of any action having the
effect of temporarily suspending, limiting, or restricting any
ability of participants or beneficiaries under an applicable
individual account plan, which is otherwise available under the
terms of such plan, to direct or diversify assets credited to
their accounts, if such suspension, limitation, or restriction
is for any period of more than 3 consecutive calendar days, the
plan administrator shall--
``(A) in advance of taking such action, determine,
in accordance with the requirements of part 4, that the
expected period of suspension, limitation, or
restriction is reasonable, and
``(B) after making the determination under
subparagraph (A) and in advance of taking such action,
notify the plan participants and beneficiaries of such
action in accordance with this subsection.
``(2) Notice requirements.--
``(A) In general.--The notices described in
paragraph (1) shall be written in a manner calculated
to be understood by the average plan participant and
shall include--
``(i) the reasons for the suspension,
limitation, or restriction,
``(ii) an identification of the investments
affected,
``(iii) the expected period of the
suspension, limitation, or restriction,
``(iv) a statement that the plan
administrator has evaluated the reasonableness
of the expected period of suspension,
limitation, or restriction,
``(v) a statement that the participant or
beneficiary should evaluate the appropriateness
of their current investment decisions in light
of their inability to direct or diversify
assets credited to their accounts during the
expected period of suspension, limitation, or
restriction, and
``(vi) such other matters as the Secretary
may include in the model notices issued under
subparagraph (E).
``(B) Provision of notice.--Except as otherwise
provided in this subsection, notices described in
paragraph (1) shall be furnished to all participants
and beneficiaries under the plan at least 30 days in
advance of the action suspending, limiting, or
restricting the ability of the participants or
beneficiaries to direct or diversify assets.
``(C) Exception to 30-day notice requirement.--In
any case in which--
``(i) a fiduciary of the plan determines,
in writing, that a deferral of the suspension,
limitation, or restriction would violate the
requirements of subparagraph (A) or (B) of
section 404(a)(1), or
``(ii) the inability to provide the 30-day
advance notice is due to events that were
unforeseeable or circumstances beyond the
reasonable control of the plan administrator,
subparagraph (B) shall not apply, and the notice shall
be furnished to all participants and beneficiaries
under the plan as soon as reasonably possible under the
circumstances.
``(D) Written notice.--The notice required to be
provided under this subsection shall be in writing,
except that such notice may be in electronic or other
form to the extent that such form is reasonably
accessible to the recipient.
``(E) Model notices.--The Secretary shall issue
model notices which meet the requirements of this
paragraph.
``(3) Exception for suspensions, limitations, or
restrictions with limited applicability.--In any case in which
the suspension, limitation, or restriction described in
paragraph (1)--
``(A) applies only to 1 or more individuals, each
of whom is the participant, an alternate payee (as
defined in section 206(d)(3)(K)), or any other
beneficiary pursuant to a qualified domestic relations
order (as defined in section 206(d)(3)(B)(i)), or
``(B) applies only to 1 or more participants or
beneficiaries in connection with a merger, acquisition,
divestiture, or similar transaction involving the plan
or plan sponsor and occurs solely in connection with
becoming or ceasing to be a participant or beneficiary
under the plan by reason of such merger, acquisition,
divestiture, or transaction,
the requirement of this subsection that the notice be provided
to all participants and beneficiaries shall be treated as met
if the notice required under paragraph (1) is provided to all
the individuals referred to in subparagraph (A) or (B) to whom
the suspension, limitation, or restriction applies as soon as
reasonably practicable in advance of the suspension,
limitation, or restriction.
``(4) Changes in expected period of suspension, limitation,
or restriction.--If, following the furnishing of the notice
pursuant to this subsection, there is a change in the expected
period of the suspension, limitation, or restriction on the
right of a participant or beneficiary to direct or diversify
assets, the administrator shall provide affected participants
and beneficiaries notice of the change as soon as reasonably
practicable in advance of the change. Such notice shall meet
the requirements of subparagraphs (A) and (D) of paragraph (2)
in relation to the extended suspension, limitation, or
restriction.
``(5) Regulatory exceptions.--The Secretary may provide by
regulation for additional exceptions to the requirements of
this subsection which the Secretary determines are in the
interests of participants and beneficiaries.
``(6) Guidance and model notices.--The Secretary shall
issue guidance and model notices which meet the requirements of
this subsection.''.
(2) Issuance of initial guidance and model notice.--The
Secretary of Labor shall issue initial guidance and a model
notice pursuant to section 101(i)(6) of the Employee Retirement
Income Security Act of 1974 (as added by this subsection) not
later than January 1, 2003. The Secretary may promulgate such
interim final rules as the Secretary determines are appropriate
to carry out the amendments made by this section.
(b) Civil Penalties for Failure To Provide Notice.--Section 502 of
such Act (as amended by section 2(b)) is amended further--
(1) in subsection (a)(6), by striking ``(6), or (7)'' and
inserting ``(6), (7), or (8)'';
(2) by redesignating paragraph (8) of subsection (c) as
paragraph (9); and
(3) by inserting after paragraph (7) of subsection (c) the
following new paragraph:
``(8) The Secretary may assess a civil penalty against a plan
administrator of up to $100 a day from the date of the plan
administrator's failure or refusal to provide notice to participants
and beneficiaries in accordance with section 101(i). For purposes of
this paragraph, each violation with respect to any single participant
or beneficiary, shall be treated as a separate violation.''.
(c) Inapplicability of Relief From Fiduciary Liability During
Suspension of Ability of Participant or Beneficiary To Direct
Investments.--Section 404(c)(1) of such Act (29 U.S.C. 1104(c)(1)) is
amended--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and by inserting ``(A)'' after
``(c)(1)'';
(2) in subparagraph (A)(ii) (as redesignated by paragraph
(1)), by inserting before the period the following: ``, except
that this clause shall not apply in connection with such
participant or beneficiary for any period during which the
ability of such participant or beneficiary to direct the
investment of the assets in his or her account is suspended by
a plan sponsor or fiduciary''; and
(3) by adding at the end the following new subparagraphs:
``(B) If the person referred to in subparagraph (A)(ii) authorizing
a suspension meets the requirements of this title in connection with
authorizing the suspension, such person shall not be liable under this
title for any loss occurring during the suspension as a result of any
exercise by the participant or beneficiary of control over assets in
his or her account prior to the suspension. Matters to be considered in
determining whether such person has satisfied the requirements of this
title include whether such person--
``(i) has considered the reasonableness of the expected
period of the suspension as required under section
101(i)(1)(A),
``(ii) has provided the notice required under section
101(i)(1)(B), and
``(iii) has acted solely in the interests of plan
participants and beneficiaries in determining to enter into the
suspension.
``(C) Any limitation or restriction that may govern the frequency
of transfers between investment vehicles shall not be treated as a
suspension referred to in subparagraph (A)(ii) to the extent such
limitation or restriction is disclosed to participants or beneficiaries
through the summary plan description or materials describing specific
investment alternatives under the plan.''.
SEC. 103. INFORMATIONAL AND EDUCATIONAL SUPPORT FOR PENSION PLAN
FIDUCIARIES.
Section 404 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1104) is amended by adding at the end the following new
subsection:
``(e) The Secretary shall establish a program under which
information and educational resources shall be made available on an
ongoing basis to persons serving as fiduciaries under employee pension
benefit plans so as to assist such persons in diligently and
effectively carrying out their fiduciary duties in accordance with this
part.''.
SEC. 104. LIMITATIONS ON RESTRICTIONS OF INVESTMENTS IN EMPLOYER
SECURITIES.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 407 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1107) is amended by
adding at the end the following new subsection:
``(g)(1) An applicable individual account plan which holds employer
securities that are readily tradable on an established securities
market may not acquire or hold any employer securities with respect to
which there is any restriction on divestment by a participant or
beneficiary, unless the plan provides that the restriction--
``(A) is not applicable on or after a date which is not
later than the date on which the participant has completed 3
years of service (as defined in section 203(b)(2)) with the
employer or (if the plan so provides) 3 years of participation
(as defined in section 204(b)(4)) in the plan, or
``(B) is not applicable, with respect to any employer
security allocated to the individual account during any
calendar quarter, after a date which is not later than 3 years
after the end of such quarter.
``(2)(A) For purposes of paragraph (1), the term `restriction on
divestment' includes--
``(i) any failure to offer a broad range of investment
alternatives (as may be determined by the Secretary) to which a
participant or beneficiary may direct the proceeds from the
divestment of employer securities, and
``(ii) any restriction on the ability of a participant or
beneficiary to choose from a broad range of otherwise available
investment options (as may be determined by the Secretary) to
which such proceeds may be so directed, other than a
restriction limiting such ability to so choose to a periodic,
reasonable opportunity to so choose occurring no less
frequently than on a quarterly basis.''.
(2) Clerical amendments.--The heading for section 407 of
such Act is amended by striking ``10 percent'' and the item
relating to such section in the table of contents in section 1
of such Act is amended by striking ``10 percent''.
(3) Transition rule.--
(A) In general.--The amendments made by this
subsection shall apply only with respect to assets
acquired on or after the effective date of such
amendments. In the case of any applicable individual
account plan which, on such effective date, holds
assets acquired before such date on which there is any
restriction on divestment by a participant or
beneficiary, such plan shall, before the applicable
effective date, provide for the removal of all such
restrictions on the applicable percentage of such
assets held on such date.
(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage shall be as
follows:
Plan years beginning in: Applicable percentage:
2003.......................................... 20 percent
2004.......................................... 40 percent
2005.......................................... 60 percent
2006.......................................... 80 percent
2007 or thereafter............................ 100 percent.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Subsection (a) of section 401 of the
Internal Revenue Code of 1986 (relating to requirements for
qualification) is amended by inserting after paragraph (34) the
following new paragraph:
``(35) Limitations on restrictions under applicable defined
contribution plans on investments in employer securities.--
``(A) In general.--A trust forming a part of an
applicable defined contribution plan shall not
constitute a qualified trust under this subsection if
the plan acquires or holds any employer securities with
respect to which there is any restriction on divestment
by a participant or beneficiary on or after the date on
which the participant has completed 3 years of
participation (as defined in section 411(b)(4)) under
the plan or (if the plan so provides) 3 years of
service (as defined in section 411(a)(5)) with the
employer.
``(B) Definitions.--For purposes of subparagraph
(A)--
``(i) Applicable defined contribution
plan.--The term `applicable defined
contribution plan' means any defined
contribution plan, except that such term does
not include an employee stock ownership plan
(as defined in section 4975(e)(7)) unless there
are any contributions to such plan (or earnings
thereunder) held within such plan that are
subject to subsections (k)(3) or (m)(2).
``(ii) Restriction on divestment.--The term
`restriction on divestment' includes--
``(I) any failure to offer at least
3 diversified investment options in
which a participant or beneficiary may
direct the proceeds from the divestment
of employer securities, and
``(II) any restriction on the
ability of a participant or beneficiary
to choose from all otherwise available
investment options in which such
proceeds may be so directed.''.
(2) Conforming amendment.--Section 401(a)(28)(B) of such
Code (relating to diversification of investments) is amended by
adding at the end the following new clause:
``(v) Exception.--This subparagraph shall
not apply to an applicable defined contribution
plan (as defined in paragraph (35)(B)(i)).''.
SEC. 105. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF
INVESTMENT ADVICE.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) Exemption from prohibited transactions.--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 investment of assets of the plan is
subject to the direction of plan participants or
beneficiaries,
``(ii) the advice is provided to the plan or 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 the provision of the advice.
``(B) The transactions described in this subparagraph are
the following:
``(i) the provision of the advice to the plan,
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 or in connection with a sale, acquisition, or
holding of a security or other property pursuant to the
advice.''.
(2) Requirements.--Section 408 of such Act is amended
further by adding at the end the following new subsection:
``(g) Requirements Relating to Provision of Investment Advice by
Fiduciary Advisers.--
``(1) In general.--The requirements of this subsection are
met in connection with the provision of investment advice
referred to in section 3(21)(A)(ii), provided to an employee
benefit plan or 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--
``(A) in the case of the initial provision of the
advice with regard to the security or other property by
the fiduciary adviser to the plan, participant, or
beneficiary, the fiduciary adviser provides to the
recipient of the advice, at a time reasonably
contemporaneous with the initial provision of the
advice, a written notification (which may consist of
notification by means of electronic communication)--
``(i) of all fees or other compensation
relating to the advice 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,
``(ii) of any material affiliation or
contractual relationship of the fiduciary
adviser or affiliates thereof in the security
or other property,
``(iii) of any limitation placed on the
scope of the investment advice to be provided
by the fiduciary adviser with respect to any
such sale, acquisition, or holding of a
security or other property,
``(iv) of the types of services provided by
the fiduciary adviser in connection with the
provision of investment advice by the fiduciary
adviser,
``(v) that the adviser is acting as a
fiduciary of the plan in connection with the
provision of the advice, and
``(vi) that a recipient of the advice may
separately arrange for the provision of advice
by another adviser, that could have no material
affiliation with and receive no fees or other
compensation in connection with the security or
other property.
``(B) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition,
or holding of the security or other property, in
accordance with all applicable securities laws,
``(C) the sale, acquisition, or holding occurs
solely at the direction of the recipient of the advice,
``(D) the compensation received by the fiduciary
adviser and affiliates thereof in connection with the
sale, acquisition, or holding of the security or other
property is reasonable, and
``(E) the terms of the sale, acquisition, or
holding of the security or other property are at least
as favorable to the plan as an arm's length transaction
would be.
``(2) Standards for presentation of information.--
``(A) In general.--The notification required to be
provided to participants and beneficiaries under
paragraph (1)(A) shall be written in a clear and
conspicuous manner and in a manner calculated to be
understood by the average plan participant and shall be
sufficiently accurate and comprehensive to reasonably
apprise such participants and beneficiaries of the
information required to be provided in the
notification.
``(B) Model form for disclosure of fees and other
compensation.--The Secretary shall issue a model form
for the disclosure of fees and other compensation
required in paragraph (1)(A)(i) which meets the
requirements of subparagraph (A).
``(3) Exemption conditioned on continued availability of
required information on request for 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) to the plan, participant, or
beneficiary if, at any time during the provision of advisory
services to the plan, participant, or beneficiary, the
fiduciary adviser fails to maintain the information described
in clauses (i) through (iv) of subparagraph (A) in currently
accurate form and in the manner described in paragraph (2) or
fails--
``(A) to provide, without charge, such currently
accurate information to the recipient of the advice no
less than annually,
``(B) to make such currently accurate information
available, upon request and without charge, to the
recipient of the advice, or
``(C) in the event of a material change to the
information described in clauses (i) through (iv) of
paragraph (1)(A), to provide, without charge, such
currently accurate information to the recipient of the
advice at a time reasonably contemporaneous to the
material change in information.
``(4) Maintenance for 6 years of evidence of compliance.--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.
``(5) Exemption for plan sponsor and certain other
fiduciaries.--
``(A) In general.--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 investment advice referred
to in section 3(21)(A)(ii) (or solely by reason of
contracting for or otherwise arranging for the
provision of the 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 investment advice referred
to in such section,
``(ii) the terms of the arrangement require
compliance by the fiduciary adviser with the
requirements of this subsection, and
``(iii) the terms of the arrangement
include a written acknowledgment by the
fiduciary adviser that the fiduciary adviser is
a fiduciary of the plan with respect to the
provision of the advice.
``(B) Continued duty of prudent selection of
adviser and periodic review.--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 advice referred to in section
3(21)(A)(ii). The plan sponsor or other person who is a
fiduciary has no duty under this part to monitor the
specific investment advice given by the fiduciary
adviser to any particular recipient of the advice.
``(C) Availability of plan assets for payment for
advice.--Nothing in this part shall be construed to
preclude the use of plan assets to pay for reasonable
expenses in providing investment advice referred to in
section 3(21)(A)(ii).
``(6) Definitions.--For purposes of this subsection and
subsection (b)(14)--
``(A) Fiduciary adviser.--The term `fiduciary
adviser' means, with respect to a plan, a person who is
a fiduciary of the plan by reason of the provision of
investment advice by the person to the plan or to a
participant or beneficiary and who is--
``(i) registered as an investment adviser
under the Investment Advisers Act of 1940 (15
U.S.C. 80b-1 et seq.) or under the laws of the
State in which the fiduciary maintains its
principal office and place of business,
``(ii) a bank or similar financial
institution referred to in section 408(b)(4),
but only if the advice is provided through a
trust department of the bank or similar
financial institution which is subject to
periodic examination and review by Federal or
State banking authorities,
``(iii) an insurance company qualified to
do business under the laws of a State,
``(iv) a person registered as a broker or
dealer under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.),
``(v) an affiliate of a person described in
any of clauses (i) through (iv), or
``(vi) an employee, agent, or registered
representative of a person described in any of
clauses (i) through (v) who satisfies the
requirements of applicable insurance, banking,
and securities laws relating to the provision
of the advice.
``(B) Affiliate.--The term `affiliate' of another
entity means an affiliated person of the 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 the 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 the entity
for the investment adviser referred to in such
section).''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Exemption from prohibited transactions.--Subsection (d)
of section 4975 of the Internal Revenue Code of 1986 (relating
to exemptions from tax on prohibited transactions) is amended--
(A) in paragraph (14), by striking ``or'' at the
end;
(B) in paragraph (15), by striking the period at
the end and inserting ``; or''; and
(C) by adding at the end the following new
paragraph:
``(16) any transaction described in subsection (f)(7)(A) in
connection with the provision of investment advice described in
subsection (e)(3)(B), in any case in which--
``(A) the investment of assets of the plan is
subject to the direction of plan participants or
beneficiaries,
``(B) the advice is provided to the plan or 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
``(C) the requirements of subsection (f)(7)(B) are
met in connection with the provision of the advice.''.
(2) Allowed transactions and requirements.--Subsection (f)
of such section 4975 (relating to other definitions and special
rules) is amended by adding at the end the following new
paragraph:
``(7) Provisions relating to investment advice provided by
fiduciary advisers.--
``(A) Transactions allowable in connection with
investment advice provided by fiduciary advisers.--The
transactions referred to in subsection (d)(16), in
connection with the provision of investment advice by a
fiduciary adviser, are the following:
``(i) the provision of the advice to the
plan, 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 or
in connection with a sale, acquisition, or
holding of a security or other property
pursuant to the advice.
``(B) Requirements relating to provision of
investment advice by fiduciary advisers.--The
requirements of this subparagraph (referred to in
subsection (d)(16)(C)) are met in connection with the
provision of investment advice referred to in
subsection (e)(3)(B), provided to a plan or a
participant or beneficiary of a 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--
``(i) in the case of the initial provision
of the advice with regard to the security or
other property by the fiduciary adviser to the
plan, participant, or beneficiary, the
fiduciary adviser provides to the recipient of
the advice, at a time reasonably
contemporaneous with the initial provision of
the advice, a written notification (which may
consist of notification by means of electronic
communication)--
``(I) of all fees or other
compensation relating to the advice
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,
``(II) of any material affiliation
or contractual relationship of the
fiduciary adviser or affiliates thereof
in the security or other property,
``(III) of any limitation placed on
the scope of the investment advice to
be provided by the fiduciary adviser
with respect to any such sale,
acquisition, or holding of a security
or other property,
``(IV) of the types of services
provided by the fiduciary advisor in
connection with the provision of
investment advice by the fiduciary
adviser, and
``(V) that the adviser is acting as
a fiduciary of the plan in connection
with the provision of the advice,
``(ii) the fiduciary adviser provides
appropriate disclosure, in connection with the
sale, acquisition, or holding of the security
or other property, in accordance with all
applicable securities laws,
``(iii) the sale, acquisition, or holding
occurs solely at the direction of the recipient
of the advice,
``(iv) the compensation received by the
fiduciary adviser and affiliates thereof in
connection with the sale, acquisition, or
holding of the security or other property is
reasonable, and
``(v) the terms of the sale, acquisition,
or holding of the security or other property
are at least as favorable to the plan as an
arm's length transaction would be.
``(C) Standards for presentation of information.--
The notification required to be provided to
participants and beneficiaries under subparagraph
(B)(i) shall be written in a clear and conspicuous
manner and in a manner calculated to be understood by
the average plan participant and shall be sufficiently
accurate and comprehensive to reasonably apprise such
participants and beneficiaries of the information
required to be provided in the notification.
``(D) Exemption conditioned on making required
information available annually, on request, and in the
event of material change.--The requirements of
subparagraph (B)(i) shall be deemed not to have been
met in connection with the initial or any subsequent
provision of advice described in subparagraph (B) to the plan,
participant, or beneficiary if, at any time during the provision of
advisory services to the plan, participant, or beneficiary, the
fiduciary adviser fails to maintain the information described in
subclauses (I) through (IV) of subparagraph (B)(i) in currently
accurate form and in the manner required by subparagraph (C), or
fails--
``(i) to provide, without charge, such
currently accurate information to the recipient
of the advice no less than annually,
``(ii) to make such currently accurate
information available, upon request and without
charge, to the recipient of the advice, or
``(iii) in the event of a material change
to the information described in subclauses (I)
through (IV) of subparagraph (B)(i), to
provide, without charge, such currently
accurate information to the recipient of the
advice at a time reasonably contemporaneous to
the material change in information.
``(E) Maintenance for 6 years of evidence of
compliance.--A fiduciary adviser referred to in
subparagraph (B) who has provided advice referred to in
such subparagraph 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
paragraph and of subsection (d)(16) have been met. A
transaction prohibited under subsection (c)(1) 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.
``(F) Exemption for plan sponsor and certain other
fiduciaries.--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
section solely by reason of the provision of investment
advice referred to in subsection (e)(3)(B) (or solely
by reason of contracting for or otherwise arranging for
the provision of the 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 investment advice referred
to in such section,
``(ii) the terms of the arrangement require
compliance by the fiduciary adviser with the
requirements of this paragraph,
``(iii) the terms of the arrangement
include a written acknowledgment by the
fiduciary adviser that the fiduciary adviser is
a fiduciary of the plan with respect to the
provision of the advice, and
``(iv) the requirements of part 4 of
subtitle B of title I of the Employee
Retirement Income Security Act of 1974 are met
in connection with the provision of such
advice.
``(G) Definitions.--For purposes of this paragraph
and subsection (d)(16)--
``(i) Fiduciary adviser.--The term
`fiduciary adviser' means, with respect to a
plan, a person who is a fiduciary of the plan
by reason of the provision of investment advice
by the person to the plan or to a participant
or beneficiary and who is--
``(I) registered as an investment
adviser under the Investment Advisers
Act of 1940 (15 U.S.C. 80b-1 et seq.)
or under the laws of the State in which
the fiduciary maintains its principal
office and place of business,
``(II) a bank or similar financial
institution referred to in subsection
(d)(4),
``(III) an insurance company
qualified to do business under the laws
of a State,
``(IV) a person registered as a
broker or dealer under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.),
``(V) an affiliate of a person
described in any of subclauses (I)
through (IV), or
``(VI) an employee, agent, or
registered representative of a person
described in any of subclauses (I)
through (V) who satisfies the
requirements of applicable insurance,
banking, and securities laws relating
to the provision of the advice.
``(ii) Affiliate.--The term `affiliate' of
another entity means an affiliated person of
the entity (as defined in section 2(a)(3) of
the Investment Company Act of 1940 (15 U.S.C.
80a-2(a)(3))).
``(iii) 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 the 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 the
entity for the investment adviser referred to
in such section).''.
SEC. 106. STUDY REGARDING IMPACT ON RETIREMENT SAVINGS OF PARTICIPANTS
AND BENEFICIARIES BY REQUIRING FIDUCIARY CONSULTANTS FOR
INDIVIDUAL ACCOUNT PLANS.
(a) Study.--As soon as practicable after the date of the enactment
of this Act, the Secretary of Labor shall undertake a study of the
costs and benefits to participants and beneficiaries of requiring
independent fiduciary consultants to advise plan fiduciaries in
connection with individual account plans. In conducting such study, the
Secretary shall consider--
(1) the benefits to plan participants and beneficiaries of
engaging independent fiduciary advisers to provide investment
advice regarding the assets of the plan to persons who have
fiduciary duties with respect to the management or disposition
of such assets,
(2) the extent to which independent advisers are currently
retained by plan fiduciaries,
(3) the availability of assistance to fiduciaries from
appropriate Federal agencies,
(4) the availability of qualified independent fiduciary
consultants to serve the needs of individual account plans in
the United States,
(5) the impact of the additional fiduciary duty of an
independent advisor on the strict fiduciary obligations of plan
fiduciaries,
(6) the impact of new requirements (consulting fees,
reporting requirements, and new plan duties to prudently
identify and contract with qualified independent fiduciary
consultants) on the availability of individual account plans,
and
(7) the impact of a new requirement on the plan
administration costs per participant for small and mid-size
employers and the pension plans they sponsor.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Secretary of Labor shall report the results of the
study undertaken pursuant to this section, together with any
recommendations for legislative changes, to the Committee on Education
and the Workforce of the House of Representatives and the Committee on
Health, Education, Labor, and Pensions of the Senate.
SEC. 107. INSIDER TRADES DURING PENSION PLAN SUSPENSION PERIODS
PROHIBITED.
Section 16 of the Securities Exchange Act of 1934 (15 U.S.C. 78p)
is amended by adding at the end the following new subsection:
``(h) Insider Trades During Pension Plan Suspension Periods
Prohibited.--
``(1) Prohibition.--It shall be unlawful for any such
beneficial owner, director, or officer of an issuer, directly
or indirectly, to purchase (or otherwise acquire) or sell (or
otherwise transfer) any equity security of such issuer (other
than an exempted security), during any pension plan suspension
period with respect to such equity security.
``(2) Remedy.--Any profit realized by such beneficial
owner, director, or officer from any purchase (or other
acquisition) or sale (or other transfer) in violation of this
subsection shall inure to and be recoverable by the issuer
irrespective of any intention on the part of such beneficial
owner, director, or officer in entering into the transaction.
``(3) Rulemaking permitted.--The Commission may issue rules
to clarify the application of this subsection, to ensure
adequate notice to all persons affected by this subsection, and
to prevent evasion thereof.
``(4) Definitions.--For purposes of this subsection--
``(A) Pension plan suspension period.--The term
`pension plan suspension period' means, with respect to
an equity security, any period during which the ability
of a participant or beneficiary under an applicable
individual account plan maintained by the issuer to
direct the investment of assets in his or her
individual account away from such equity security is
suspended by the issuer or a fiduciary of the plan.
Such term does not include any limitation or
restriction that may govern the frequency of transfers
between investment vehicles to the extent such
limitation and restriction is disclosed to participants
and beneficiaries through the summary plan description
or materials describing specific investment
alternatives under the plan.
``(B) Applicable individual account plan.--The term
`applicable individual account plan' has the meaning
provided such term in section 3(42) of the Employee
Retirement Income Security Act of 1974.''.
SEC. 108. EFFECTIVE DATES OF TITLE AND RELATED RULES.
(a) In General.--Except as provided in subsection (b), the
amendments made by sections 101, 102, 103, 104, and 107 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 sections 101, 102,
103, and 104 of 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 such
sections take effect and before such first plan year, the plan
is operated in accordance with the requirements of such
amendments made by such sections, and
(2) such plan amendment applies retroactively to the period
after such amendments made by such sections take effect and
before such first plan year.
(d) Amendments Relating to Investment Advice.--The amendments made
by section 104 shall apply with respect to advice referred to in
section 3(21)(A)(ii) of the Employee Retirement Income Security Act of
1974 or section 4975(c)(3)(B) of the Internal Revenue Code of 1986
provided on or after January 1, 2003.
TITLE II--ADDITIONAL PROVISIONS
SEC. 201. AMENDMENTS TO RETIREMENT PROTECTION ACT OF 1994.
(a) Transition Rule Made Permanent.--Paragraph (1) of section
769(c) of the Retirement Protection Act of 1994 is amended--
(1) by striking ``transition'' each place it appears in the
heading and the text, and
(2) by striking ``for any plan year beginning after 1996
and before 2010''.
(b) Special Rules.--Paragraph (2) of section 769(c) of the
Retirement Protection Act of 1994 is amended to read as follows:
``(2) Special rules.--The rules described in this paragraph
are as follows:
``(A) For purposes of section 302(d)(9)(A) of the
Employee Retirement Income Security Act of 1974, the
funded current liability percentage for any plan year
shall be treated as not less than 90 percent.
``(B) For purposes of section 302(e) of the
Employee Retirement Income Security Act of 1974, the
funded current liability percentage for any plan year
shall be treated as not less than 100 percent.
``(C) For purposes of determining unfunded vested
benefits under section 4006(a)(3)(E)(iii) of the
Employee Retirement Income Security Act of 1974, the
mortality table shall be the mortality table used by
the plan.''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2001.
SEC. 202. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.
(a) Expansion of Period.--
(1) Amendment of erisa.--
(A) In general.--Section 205(c)(7)(A) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1055(c)(7)(A)) is amended by striking ``90-day''
and inserting ``180-day''.
(B) Modification of regulations.--The Secretary of
the Treasury shall modify the regulations under part 2
of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 to the extent that they
relate to sections 203(e) and 205 of such Act to
substitute ``180 days'' for ``90 days'' each place it
appears.
(2) Effective date.--The amendment made by paragraph (1)(A)
and the modification required by paragraph (1)(B) shall apply
to years beginning after December 31, 2002.
(b) Consent Regulation Inapplicable to Certain Distributions.--
(1) In general.--The Secretary of the Treasury shall modify
the regulations under section 205 of the Employee Retirement
Income Security Act of 1974 to provide that the description of
a participant's right, if any, to defer receipt of a
distribution shall also describe the consequences of failing to defer
such receipt.
(2) Effective date.--
(A) In general.--The modifications required by
paragraph (1) shall apply to years beginning after
December 31, 2002.
(B) Reasonable notice.--In the case of any
description of such consequences made before the date
that is 90 days after the date on which the Secretary
of the Treasury issues a safe harbor description under
paragraph (1), a plan shall not be treated as failing
to satisfy the requirements of section 205 of such Act
by reason of the failure to provide the information
required by the modifications made under paragraph (1)
if the Administrator of such plan makes a reasonable
attempt to comply with such requirements.
SEC. 203. ANNUAL REPORT DISSEMINATION.
(a) Report Available Through Electronic Means.--Section 104(b)(3)
of the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1024(b)(3)) is amended by adding at the end the following new sentence:
``The requirement to furnish information under the previous sentence
with respect to an employee pension benefit plan shall be satisfied if
the administrator makes such information reasonably available through
electronic means or other new technology.''.
(b) Effective Date.--The amendment made by this section shall apply
to reports for years beginning after December 31, 2002.
SEC. 204. TECHNICAL CORRECTIONS TO SAVER ACT.
Section 517 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1147) is amended--
(1) in subsection (a), by striking ``2001 and 2005 on or
after September 1 of each year involved'' and inserting ``2002,
2006, and 2010'';
(2) in subsection (b), by adding at the end the following
new sentence: ``To effectuate the purposes of this paragraph,
the Secretary may enter into a cooperative agreement, pursuant
to the Federal Grant and Cooperative Agreement Act of 1977 (31
U.S.C. 6301 et seq.), with any appropriate, qualified
entity.'';
(3) in subsection (e)(2)--
(A) by striking ``Committee on Labor and Human
Resources'' in subparagraph (D) and inserting
``Committee on Health, Education, Labor, and
Pensions'';
(B) by striking subparagraph (F) and inserting the
following:
``(F) the Chairman and Ranking Member of the
Subcommittee on Labor, Health and Human Services, and
Education of the Committee on Appropriations of the
House of Representatives and the Chairman and Ranking
Member of the Subcommittee on Labor, Health and Human
Services, and Education of the Committee on
Appropriations of the Senate;'';
(C) by redesignating subparagraph (G) as
subparagraph (J); and
(D) by inserting after subparagraph (F) the
following new subparagraphs:
``(G) the Chairman and Ranking Member of the
Committee on Finance of the Senate;
``(H) the Chairman and Ranking Member of the
Committee on Ways and Means of the House of
Representatives;
``(I) the Chairman and Ranking Member of the
Subcommittee on Employer-Employee Relations of the
Committee on Education and the Workforce of the House
of Representatives; and'';
(4) in subsection (e)(3)--
(A) by striking ``There shall be not more than 200
additional participants.'' in subparagraph (A) and
inserting ``The participants in the National Summit
shall also include additional participants appointed
under this subparagraph.'';
(B) by striking ``one-half shall be appointed by
the President,'' in subparagraph (A)(i) and inserting
``not more than 100 participants shall be appointed
under this clause by the President,'';
(C) by striking ``one-half shall be appointed by
the elected leaders of Congress'' in subparagraph
(A)(ii) and inserting ``not more than 100 participants
shall be appointed under this clause by the elected
leaders of Congress'';
(D) by redesignating subparagraph (B) as
subparagraph (C); and
(E) by inserting after subparagraph (A) the
following new subparagraph:
``(B) Presidential authority for additional
appointments.--The President, in consultation with the
elected leaders of Congress referred to in subsection
(a), may appoint under this subparagraph additional
participants to the National Summit. The number of such
additional participants appointed under this
subparagraph may not exceed the lesser of 3 percent of
the total number of all additional participants
appointed under this paragraph, or 10. Such additional
participants shall be appointed from persons nominated
by the organization referred to in subsection (b)(2)
which is made up of private sector businesses and
associations partnered with Government entities to
promote long term financial security in retirement
through savings and with which the Secretary is
required thereunder to consult and cooperate and shall
not be Federal, State, or local government
employees.'';
(5) in subsection (e)(3)(C) (as redesignated), by striking
``January 31, 1998'' and inserting ``3 months before the
convening of each summit''
(6) in subsection (f)(1)(C), by inserting ``, no later than
90 days prior to the date of the commencement of the National
Summit,'' after ``comment'';
(7) in subsection (g), by inserting ``, in consultation
with the congressional leaders specified in subsection
(e)(2),'' after ``report'' the first place it appears;
(8) in subsection (i)--
(A) by striking ``for fiscal years beginning on or
after October 1, 1997,''; and
(B) by adding at the end the following new
paragraph:
``(3) Reception and representation authority.--The
Secretary is hereby granted reception and representation
authority limited specifically to the events at the National
Summit. The Secretary shall use any private contributions
accepted in connection with the National Summit prior to using
funds appropriated for purposes of the National Summit pursuant
to this paragraph.''; and
(9) in subsection (k)--
(A) by striking ``shall enter into a contract on a
sole-source basis'' and inserting ``may enter into a
contract on a sole-source basis''; and
(B) by striking ``in fiscal year 1998''.
SEC. 205. 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 such Act (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 amendment made by this section shall apply
to distributions made after final regulations implementing subsections
(c) and (d) of section 4050 of the Employee Retirement Income Security
Act of 1974 (as added by subsection (a)), respectively, are prescribed.
SEC. 206. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL EMPLOYERS.
(a) In General.--Subparagraph (A) of section 4006(a)(3) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(A)) is amended--
(1) in clause (i), by inserting ``other than a new single-
employer plan (as defined in subparagraph (F)) maintained by a
small employer (as so defined),'' after ``single-employer
plan,'',
(2) in clause (iii), by striking the period at the end and
inserting ``, and'', and
(3) by adding at the end the following new clause:
``(iv) in the case of a new single-employer plan (as
defined in subparagraph (F)) maintained by a small employer (as
so defined) for the plan year, $5 for each individual who is a
participant in such plan during the plan year.''.
(b) Definition of New Single-Employer Plan.--Section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)) is amended by adding at the end the following new
subparagraph:
``(F)(i) For purposes of this paragraph, a single-employer plan
maintained by a contributing sponsor shall be treated as a new single-
employer plan for each of its first 5 plan years if, during the 36-
month period ending on the date of the adoption of such plan, the
sponsor or any member of such sponsor's controlled group (or any
predecessor of either) did not establish or maintain a plan to which
this title applies with respect to which benefits were accrued for
substantially the same employees as are in the new single-employer
plan.
``(ii)(I) For purposes of this paragraph, the term `small employer'
means an employer which on the first day of any plan year has, in
aggregation with all members of the controlled group of such employer,
100 or fewer employees.
``(II) In the case of a plan maintained by two or more contributing
sponsors that are not part of the same controlled group, the employees
of all contributing sponsors and controlled groups of such sponsors
shall be aggregated for purposes of determining whether any
contributing sponsor is a small employer.''.
(c) Effective Date.--The amendments made by this section shall
apply to plans established after December 31, 2001.
SEC. 207. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND SMALL PLANS.
(a) New Plans.--Subparagraph (E) of section 4006(a)(3) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)) is amended by adding at the end the following new
clause:
``(v) In the case of a new defined benefit plan, the amount
determined under clause (ii) for any plan year shall be an amount equal
to the product of the amount determined under clause (ii) and the
applicable percentage. For purposes of this clause, the term
`applicable percentage' means--
``(I) 0 percent, for the first plan year.
``(II) 20 percent, for the second plan year.
``(III) 40 percent, for the third plan year.
``(IV) 60 percent, for the fourth plan year.
``(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as defined in
section 3(35)) maintained by a contributing sponsor shall be treated as
a new defined benefit plan for each of its first 5 plan years if,
during the 36-month period ending on the date of the adoption of the
plan, the sponsor and each member of any controlled group including the
sponsor (or any predecessor of either) did not establish or maintain a
plan to which this title applies with respect to which benefits were
accrued for substantially the same employees as are in the new plan.''.
(b) Small Plans.--Paragraph (3) of section 4006(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)), as amended
by section 206(b), is amended--
(1) by striking ``The'' in subparagraph (E)(i) and
inserting ``Except as provided in subparagraph (G), the'', and
(2) by inserting after subparagraph (F) the following new
subparagraph:
``(G)(i) In the case of an employer who has 25 or fewer employees
on the first day of the plan year, the additional premium determined
under subparagraph (E) for each participant shall not exceed $5
multiplied by the number of participants in the plan as of the close of
the preceding plan year.
``(ii) For purposes of clause (i), whether an employer has 25 or
fewer employees on the first day of the plan year is determined taking
into consideration all of the employees of all members of the
contributing sponsor's controlled group. In the case of a plan
maintained by two or more contributing sponsors, the employees of all
contributing sponsors and their controlled groups shall be aggregated
for purposes of determining whether the 25-or-fewer-employees
limitation has been satisfied.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to plans established after December 31, 2001.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to plan years beginning after December 31, 2002.
SEC. 208. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM OVERPAYMENT
REFUNDS.
(a) In General.--Section 4007(b) of the Employment Retirement
Income Security Act of 1974 (29 U.S.C. 1307(b)) is amended--
(1) by striking ``(b)'' and inserting ``(b)(1)'', and
(2) by inserting at the end the following new paragraph:
``(2) The corporation is authorized to pay, subject to regulations
prescribed by the corporation, interest on the amount of any
overpayment of premium refunded to a designated payor. Interest under
this paragraph shall be calculated at the same rate and in the same
manner as interest is calculated for underpayments under paragraph
(1).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to interest accruing for periods beginning not earlier than the
date of the enactment of this Act.
SEC. 209. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.
(a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1322(b)(5)) is amended to read as follows:
``(5)(A) For purposes of this paragraph, the term `majority owner'
means an individual who, at any time during the 60-month period ending
on the date the determination is being made--
``(i) owns the entire interest in an unincorporated trade
or business,
``(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, 50 percent or more of either the
capital interest or the profits interest in such partnership,
or
``(iii) in the case of a corporation, owns, directly or
indirectly, 50 percent or more in value of either the voting
stock of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of
section 1563(e) of the Internal Revenue Code of 1986 shall apply
(determined without regard to section 1563(e)(3)(C)).
``(B) In the case of a participant who is a majority owner, the
amount of benefits guaranteed under this section shall equal the
product of--
``(i) a fraction (not to exceed 1) the numerator of which
is the number of years from the later of the effective date or
the adoption date of the plan to the termination date, and the
denominator of which is 10, and
``(ii) the amount of benefits that would be guaranteed
under this section if the participant were not a majority
owner.''.
(b) Modification of Allocation of Assets.--
(1) Section 4044(a)(4)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by
striking ``section 4022(b)(5)'' and inserting ``section
4022(b)(5)(B)''.
(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is
amended--
(A) by striking ``(5)'' in paragraph (2) and
inserting ``(4), (5),'', and
(B) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively, and by
inserting after paragraph (2) the following new
paragraph:
``(3) If assets available for allocation under paragraph
(4) of subsection (a) are insufficient to satisfy in full the
benefits of all individuals who are described in that
paragraph, the assets shall be allocated first to benefits
described in subparagraph (A) of that paragraph. Any remaining
assets shall then be allocated to benefits described in
subparagraph (B) of that paragraph. If assets allocated to such
subparagraph (B) are insufficient to satisfy in full the
benefits described in that subparagraph, the assets shall be
allocated pro rata among individuals on the basis of the
present value (as of the termination date) of their respective
benefits described in that subparagraph.''.
(c) Conforming Amendments.--
(1) Section 4021 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1321) is amended--
(A) in subsection (b)(9), by striking ``as defined
in section 4022(b)(6)'', and
(B) by adding at the end the following new
subsection:
``(d) For purposes of subsection (b)(9), the term `substantial
owner' means an individual who, at any time during the 60-month period
ending on the date the determination is being made--
``(1) owns the entire interest in an unincorporated trade
or business,
``(2) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either the
capital interest or the profits interest in such partnership,
or
``(3) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in value of either the voting
stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of
section 1563(e) of the Internal Revenue Code of 1986 shall apply
(determined without regard to section 1563(e)(3)(C)).''.
(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7))
is amended by striking ``section 4022(b)(6)'' and inserting
``section 4021(d)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan
terminations--
(A) under section 4041(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1341(c)) with respect to which notices of intent to
terminate are provided under section 4041(a)(2) of such
Act (29 U.S.C. 1341(a)(2)) after December 31, 2002, and
(B) under section 4042 of such Act (29 U.S.C. 1342)
with respect to which proceedings are instituted by the
corporation after such date.
(2) Conforming amendments.--The amendments made by
subsection (c) shall take effect on January 1, 2003.
SEC. 210. BENEFIT SUSPENSION NOTICE.
(a) Modification of Regulation.--The Secretary of Labor shall
modify the regulation under subparagraph (B) of section 203(a)(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(a)(3)(B)) to provide that the notification required by such
regulation in connection with any suspension of benefits described in
such subparagraph--
(1) in the case of an employee who returns to service
described in section 203(a)(3)(B)(i) or (ii) of such Act after
commencement of payment of benefits under the plan, shall be
made during the first calendar month or the first 4 or 5-week
payroll period ending in a calendar month in which the plan
withholds payments, and
(2) in the case of any employee who is not described in
paragraph (1)--
(A) may be included in the summary plan description
for the plan furnished in accordance with section
104(b) of such Act (29 U.S.C. 1024(b)), rather than in
a separate notice, and
(B) need not include a copy of the relevant plan
provisions.
(b) Effective Date.--The modification made under this section shall
apply to plan years beginning after December 31, 2002.
SEC. 211. STUDIES.
(a) Model Small Employer Group Plans Study.--As soon as practicable
after the date of the enactment of this Act, the Secretary of Labor, in
consultation with the Secretary of the Treasury, shall conduct a study
to determine--
(1) the most appropriate form or forms of--
(A) employee pension benefit plans which would--
(i) be simple in form and easily maintained
by multiple small employers, and
(ii) provide for ready portability of
benefits for all participants and
beneficiaries,
(B) alternative arrangements providing comparable
benefits which may be established by employee or
employer associations, and
(C) alternative arrangements providing comparable
benefits to which employees may contribute in a manner
independent of employer sponsorship, and
(2) appropriate methods and strategies for making pension
plan coverage described in paragraph (1) more widely available
to American workers.
(b) Matters To Be Considered.--In conducting the study under
subsection (a), the Secretary of Labor shall consider the adequacy and
availability of existing employee pension benefit plans and the extent
to which existing models may be modified to be more accessible to both
employees and employers.
(c) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretary of Labor shall report the results
of the study under subsection (a), together with the Secretary's
recommendations, to the Committee on Education and the Workforce and
the Committee on Ways and Means of the House of Representatives and the
Committee on Health, Education, Labor, and Pensions and the Committee
on Finance of the Senate. Such recommendations shall include one or
more model plans described in subsection (a)(1)(A) and model
alternative arrangements described in subsections (a)(1)(B) and
(a)(1)(C) which may serve as the basis for appropriate administrative
or legislative action.
(d) Study on Effect of Legislation.--Not later than 5 years after
the date of the enactment of this Act, the Secretary of Labor shall
submit to the Committee on Education and the Workforce of the House of
Representatives and the Committee on Health, Education, Labor, and
Pensions of the Senate a report on the effect of the provisions of this
Act and title VI of the Economic Growth and Tax Relief Reconciliation
Act of 2001 on pension plan coverage, including any change in--
(1) the extent of pension plan coverage for low and middle-
income workers,
(2) the levels of pension plan benefits generally,
(3) the quality of pension plan coverage generally,
(4) workers' access to and participation in pension plans,
and
(5) retirement security.
SEC. 212. INTEREST RATE RANGE FOR ADDITIONAL FUNDING REQUIREMENTS.
(a) Special Rule.--Subclause (III) of section 302(d)(7)(C)(i) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1082(d)(7)(C)(i)) is amended--
(1) by striking ``2002 or 2003'' in the text and inserting
``2001, 2002, or 2003'', and
(2) by striking ``2002 AND 2003'' in the heading and
inserting ``2001, 2002, OR 2003''.
(b) PBGC.--Subclause (IV) of section 4006(a)(3)(E)(iii) of such Act
(29 U.S.C. 1306(a)(3)(E)(iii)) is amended to read as follows--
``(IV) In the case of plan years beginning after December
31, 2001, and before January 1, 2004, subclause (II) shall be
applied by substituting `100 percent' for `85 percent' and by
substituting `115 percent' for `100 percent'. Subclause (III)
shall be applied for such years without regard to the preceding
sentence. Any reference to this clause or this subparagraph by
any other sections or subsections (other than sections 4005,
4010, 4011 and 4043) shall be treated as a reference to this
clause or this subparagraph without regard to this
subclause.''.
(c) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by Section 405 of the Job
Creation and Worker Assistance Act of 2002.
SEC. 213. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any plan or contract
amendment--
(1) such plan or contract shall be treated as being
operated in accordance with the terms of the plan for purposes
of the Employee Retirement Income Security Act of 1974 during
the period described in subsection (b)(2)(A); and
(2) except as provided by the Secretary of the Treasury,
such plan shall not fail to meet the requirements of section
204(g) of the Employee Retirement Income Security Act of 1974
by reason of such amendment.
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any plan or annuity contract which is made--
(A) pursuant to any amendment made by this Act or
title VI of the Economic Growth and Tax Relief
Reconciliation Act of 2001, or pursuant to any
regulation issued by the Secretary of Labor under this
Act or such title VI; and
(B) on or before the last day of the first plan
year beginning on or after January 1, 2005.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2007'' for ``2005''.
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative
or regulatory amendment described in paragraph
(1)(A) takes effect (or in the case of a plan
or contract amendment not required by such
legislative or regulatory amendment, the
effective date specified by the plan); and
(ii) ending on the date described in
paragraph (1)(B) (or, if earlier, the date the
plan or contract amendment is adopted),
the plan or contract is operated as if such plan or
contract amendment were in effect; and
(B) such plan or contract amendment applies
retroactively for such period.
Union Calendar No. 233
107th CONGRESS
2d Session
H. R. 3762
[Report No. 107-383, Part I]
_______________________________________________________________________
A BILL
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to provide additional protections
to participants and beneficiaries in individual account plans from
excessive investment in employer securities and to promote the
provision of retirement investment advice to workers managing their
retirement income assets, and to amend the Securities Exchange Act of
1934 to prohibit insider trades during any suspension of the ability of
plan participants or beneficiaries to direct investment away from
equity securities of the plan sponsor.
_______________________________________________________________________
April 9, 2002
The Committees on Ways and Means and Financial Services discharged;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed