[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1971 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 1971

To amend the Internal Revenue Code of 1986 and the Employee Retirement 
   Income Security Act of 1974 to protect the retirement security of 
    American workers by ensuring that pension assets are adequately 
   diversified and by providing workers with adequate access to, and 
    information about, their pension plans, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 27, 2002

 Mr. Grassley introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 and the Employee Retirement 
   Income Security Act of 1974 to protect the retirement security of 
    American workers by ensuring that pension assets are adequately 
   diversified and by providing workers with adequate access to, and 
    information about, their pension plans, and for other purposes.

    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 ``National Employee Savings and Trust 
Equity Guarantee Act''.

            TITLE I--DIVERSIFICATION OF PENSION PLAN ASSETS

SEC. 101. DEFINED CONTRIBUTION PLANS REQUIRED TO PROVIDE EMPLOYEES WITH 
              FREEDOM TO INVEST THEIR PLAN ASSETS.

    (a) Amendments of Internal Revenue Code.--
            (1) Qualification requirement.--Section 401(a) of the 
        Internal Revenue Code of 1986 (relating to qualified pension, 
        profit-sharing, and stock bonus plans) is amended by inserting 
        after paragraph (34) the following new paragraph:
            ``(35) Diversification requirements for certain defined 
        contribution plans.--
                    ``(A) In general.--A trust which is part of an 
                applicable defined contribution plan shall not be 
                treated as a qualified trust unless the plan--
                            ``(i) provides that a participant or 
                        beneficiary of a participant has the right at 
                        any time to invest any elective deferrals (and 
                        earnings thereon) contributed to his or her 
                        account in the form of publicly traded employer 
                        securities in any other investment option 
                        offered under the plan,
                            ``(ii) provides that a participant with 3 
                        or more years of service and any beneficiary of 
                        a participant has the right to invest any 
                        publicly traded employer securities (and 
                        earnings thereon) to which clause (i) does not 
                        apply and which are allocated to his or her 
                        account in any other investment option offered 
                        under the plan, and
                            ``(iii) offers at least 3 investment 
                        options (not inconsistent with regulations 
                        prescribed by the Secretary).
                    ``(B) Certain restrictions and conditions not 
                allowed.--A plan shall not meet the requirements of 
                subparagraph (A) if the plan imposes restrictions or 
                conditions on the investment of publicly traded 
                employer securities which are not imposed on the 
                investment of other assets of the plan. This 
                subparagraph shall not apply to any restrictions or 
                conditions imposed by reason of application of 
                securities laws.
                    ``(C) Applicable defined contribution plan.--For 
                purposes of this paragraph--
                            ``(i) In general.--The term `applicable 
                        defined contribution plan' means any defined 
                        contribution plan which holds any publicly 
                        traded employer securities.
                            ``(ii) Exception for certain esops.--Such 
                        term does not include an employee stock 
                        ownership plan (within the meaning of section 
                        4975(e)(7)) if--
                                    ``(I) there are no contributions to 
                                such plan (or earnings thereunder) 
                                which are held within such plan and are 
                                subject to subsections (k)(3) or 
                                (m)(2), and
                                    ``(II) such plan is a separate plan 
                                (within the meaning of section 414(l)) 
                                with respect to any other defined 
                                benefit plan or defined contribution 
                                plan maintained by the same employer or 
                                employers.
                    ``(D) Other definitions.--For purposes of this 
                paragraph--
                            ``(i) Publicly traded employer 
                        securities.--The term `publicly traded employer 
                        securities' means employer securities which are 
                        readily tradable on an established securities 
                        market.
                            ``(ii) Employer securities.--The term 
                        `employer securities' has the meaning given 
                        such term by section 407(d)(1) of the Employee 
                        Retirement Income Security Act of 1974.
                            ``(iii) Year of service.--The term `year of 
                        service' has the meaning given such term by 
                        section 411(a)(5).''
            (2) Conforming amendment.--Section 401(a)(28)(B) of such 
        Code (relating to additional requirements relating to employee 
        stock ownership plans) is amended by adding at the end the 
        following new clause:
                            ``(v) Exception.--This paragraph shall not 
                        apply to an applicable defined contribution 
                        plan (as defined in paragraph (35)(C)).''
    (b) Amendment of ERISA.--Section 204 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1054) is amended by 
redesignating subsection (j) as subsection (k) and by adding at the end 
the following new subsection:
    ``(j)(1) An applicable individual account plan shall provide that--
            ``(A) a participant or beneficiary of a participant has the 
        right at any time to invest any elective deferrals (and 
        earnings thereon) contributed to his or her account in the form 
        of publicly traded employer securities in any other investment 
        option offered under the plan,
            ``(B) a participant with 3 or more years of service and any 
        beneficiary of a participant has the right to invest any 
        publicly traded employer securities (and earnings thereon) to 
        which subparagraph (A) does not apply and which are allocated 
        to his or her account in any other investment option offered 
        under the plan, and
            ``(C) offers at least 3 investment options (not 
        inconsistent with regulations prescribed by the Secretary).
    ``(2) A plan shall not meet the requirements of paragraph (1) if 
the plan imposes restrictions or conditions on the investment of 
publicly traded employer securities which are not imposed on the 
investment of other assets of the plan.
    ``(3)(A) For purposes of this subsection, the term `applicable 
individual account plan' means any individual account plan which holds 
any publicly traded employer securities.
    ``(B) 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) if--
            ``(i) there are no contributions to such plan (or earnings 
        thereunder) which are held within such plan and subject to 
        subsection (k)(3) or (m)(2) of section 401 of such Code, and
            ``(ii) such plan is a separate plan (within the meaning of 
        section 414(l) of such Code) with respect to any other defined 
        benefit plan or defined contribution plan maintained by the 
        same employer or employers.
    ``(4) For purposes of this subsection--
            ``(A) the term `publicly traded employer securities' means 
        employer securities which are readily tradable on an 
        established securities market,
            ``(B) the term `employer security' has the meaning given 
        such term by section 407(d)(1), and
            ``(C) the term `year of service' has the meaning given such 
        term by section 203(b)(2).''
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning on or after January 1, 2003.
            (2) Special rule for collectively bargained agreements.--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 earlier of--
                    (A) the later of--
                            (i) January 1, 2004, or
                            (ii) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof after such date of enactment), or
                    (B) January 1, 2005.

   TITLE II--PROTECTION OF EMPLOYEES DURING PENSION PLAN TRANSACTION 
                           SUSPENSION PERIOD

SEC. 201. PROTECTION OF PARTICIPANTS OR BENEFICIARIES FROM SUSPENSION 
              OF ABILITY TO DIVERSIFY PLAN ASSETS.

    (a) Notice Requirements.--
            (1) Excise tax.--
                    (A) In general.--Chapter 43 of the Internal Revenue 
                Code of 1986 (relating to qualified pension, etc., 
                plans) is amended by adding at the end the following 
                new section:

``SEC. 4980G. FAILURE OF APPLICABLE PLANS TO PROVIDE NOTICE OF 
              TRANSACTION SUSPENSION PERIOD.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of any applicable defined contribution plan to meet the 
requirements of subsection (e) with respect to any participant or 
beneficiary.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to any participant 
        or beneficiary shall be $100 for each day in the noncompliance 
        period with respect to the failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period beginning on the date the failure first 
        occurs and ending on the date the notice to which the failure 
        relates is provided or the failure is otherwise corrected.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply where failure not discovered and 
        reasonable diligence exercised.--No tax shall be imposed by 
        subsection (a) on any failure during any period for which it is 
        established to the satisfaction of the Secretary that any 
        person subject to liability for tax under subsection (d) did 
        not know that the failure existed and exercised reasonable 
        diligence to meet the requirements of subsection (e).
            ``(2) Tax not to apply to failures corrected as soon as 
        reasonably practicable.--No tax shall be imposed by subsection 
        (a) on any failure if--
                    ``(A) any person subject to liability for the tax 
                under subsection (d) exercised reasonable diligence to 
                meet the requirements of subsection (e), and
                    ``(B) such person provides the notice described in 
                subsection (e) as soon as reasonably practicable after 
                the first date such person knew, or exercising 
                reasonable diligence should have known, that such 
                failure existed.
            ``(3) Overall limitation for unintentional failures.--
                    ``(A) In general.--If the person subject to 
                liability for tax under subsection (d) exercised 
                reasonable diligence to meet the requirements of 
                subsection (e), the tax imposed by subsection (a) for 
                failures during the taxable year of the employer (or, 
                in the case of a multiemployer plan, the taxable year 
                of the trust forming part of the plan) shall not exceed 
                $500,000. For purposes of the preceding sentence, all 
                multiemployer plans of which the same trust forms a 
                part shall be treated as 1 plan.
                    ``(B) Taxable years in the case of certain 
                controlled groups.--For purposes of this paragraph, if 
                all persons who are treated as a single employer for 
                purposes of this section do not have the same taxable 
                year, the taxable years taken into account shall be 
                determined under principles similar to the principles 
                of section 1561.
            ``(4) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive or otherwise inequitable relative to the failure 
        involved.
    ``(d) Liability for Tax.--The following shall be liable for the tax 
imposed by subsection (a):
            ``(1) In the case of a plan other than a multiemployer 
        plan, the employer.
            ``(2) In the case of a multiemployer plan, the plan.
    ``(e) Notice of Transaction Suspension Period.--
            ``(1) In general.--The plan administrator of an applicable 
        defined contribution plan shall provide notice of any 
        transaction suspension period to each participant or 
        beneficiary to whom the transaction suspension period applies 
        (and to any employee organization representing such 
        participants).
            ``(2) Notice.--The notice required by paragraph (1) shall 
        be written in a manner calculated to be understood by 
the average plan participant and shall provide sufficient information 
(as determined in accordance with rules or other guidance adopted by 
the Secretary) to allow applicable individuals to understand the timing 
and effect of such transaction suspension period.
            ``(3) Timing of notice.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the notice required by paragraph (1) 
                shall be provided not later than 30 days before the 
                beginning of the transaction suspension period.
                    ``(B) Exceptions to 30-day notice.--
                            ``(i) Unplanned events.--In the case of any 
                        transaction suspension period which is imposed 
                        by reason of an event outside of the control of 
                        a plan sponsor or administrator, subparagraph 
                        (A) shall not apply and the notice shall be 
                        furnished as soon as reasonably possible under 
                        the circumstances.
                            ``(ii) Acquisitions, etc.--In the case of 
                        any transaction suspension period--
                                    ``(I) in connection with an 
                                acquisition or disposition to which 
                                section 410(b)(6)(C) applies, or
                                    ``(II) due to such other 
                                circumstances specified by the 
                                Secretary,
                        the Secretary may provide that subparagraph (A) 
                        shall not apply and the notice shall be 
                        furnished at such time as the Secretary 
                        specifies.
            ``(4) Form and manner of notice.--The notice required by 
        paragraph (1) 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 applicable individual.
    ``(f) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Applicable defined contribution plan.--The term 
        `applicable defined contribution plan' means a defined 
        contribution plan which--
                    ``(A) is a qualified retirement plan (as defined in 
                section 4974(c)), and
                    ``(B) permits a participant or beneficiary to 
                exercise control over assets in his or her account.
            ``(2) Transaction suspension period.--
                    ``(A) In general.--The term `transaction suspension 
                period' means a temporary or indefinite period of 2 or 
                more consecutive business days during which there is a 
                substantial reduction (other than by reason of 
                application of securities laws) in the rights of 1 or 
                more participants or beneficiaries to direct 
                investments in a defined contribution plan.
                    ``(B) Business day.--For purposes of this 
                paragraph, a day shall not be treated as a business day 
                to the extent that 1 or more established securities 
                markets for trading securities are not open.''
                    (B) Clerical amendment.--The table of sections for 
                chapter 43 of such Code is amended by adding at the end 
                the following new item:

``Sec. 4980G. Failure of applicable plans to provide notice of 
                            transaction suspension period.''
            (2) Amendments of erisa.--
                    (A) In general.--Section 101 of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                11021) is amended by redesignating the second 
                subsection (h) as subsection (j) and by inserting after 
                the first subsection (h) the following new subsection:
    ``(i)(1) The plan administrator of an individual account plan which 
permits a participant or beneficiary to exercise control over assets in 
his or her account applies shall provide notice of any transaction 
suspension period to each participant or beneficiary to whom the 
transaction suspension period applies (and to any employee organization 
representing such participants).
    ``(2) The notice required by paragraph (1) shall be written in a 
manner calculated to be understood by the average plan participant and 
shall provide sufficient information (as determined in accordance with 
rules or other guidance adopted by the Secretary of the Treasury) to 
allow applicable individuals to understand the timing and effect of 
such transaction suspension period.
    ``(3)(A) Except as provided in subparagraph (B), the notice 
required by paragraph (1) shall be provided not later than 30 days 
before the beginning of the transaction suspension period.
    ``(B)(i) In the case of any transaction suspension period which is 
imposed outside of the control of a plan sponsor or administrator, 
subparagraph (A) shall not apply and the notice shall be furnished as 
soon as reasonably possible under the circumstances.
    ``(ii) In the case of any transaction suspension period--
            ``(I) in connection with an acquisition or disposition to 
        which section 410(b)(6)(C) of the Internal Revenue Code of 1986 
        applies, or
            ``(II) due to such other circumstances specified by the 
        Secretary of the Treasury,
the Secretary of the Treasury may provide that subparagraph (A) shall 
not apply and the notice shall be furnished at such time as the 
Secretary specifies.
    ``(4) The notice required by paragraph (1) 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 applicable 
individual.
    ``(5)(A) For purposes of this subparagraph, the term `transaction 
suspension period' means a temporary or indefinite period of 2 or more 
consecutive business days during which there is a substantial reduction 
(other than by reason of application of securities laws) in the rights 
of 1 or more participants or beneficiaries to direct investments in an 
individual account plan.
    ``(B) For purposes of this paragraph, a day shall not be treated as 
a business day to the extent that 1 or more established securities 
markets for trading securities are not open.''
                    (B) Civil penalties for failure to provide 
                notice.--Section 502 of such Act is amended--
                            (i) in subsection (a)(6), by striking ``or 
                        (6)'' and inserting ``(6), or (7)'';
                            (ii) by redesignating paragraph (7) of 
                        subsection (c) as paragraph (8); and
                            (iii) by inserting after paragraph (6) of 
                        subsection (c) the following new paragraph:
    ``(7) The Secretary may assess a civil penalty against any person 
of up to $100 a day from the date of the person'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.''
    (b) 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) in subparagraph (B), by inserting before the period the 
        following: ``, except that this subparagraph shall not apply 
        for any period during which the ability of a participant or 
        beneficiary to direct the investment of assets in his or her 
        individual account is suspended by a plan sponsor or 
        fiduciary''; and
            (2) by adding at the end the following:
``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 (B) 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.''
    ``(c) Safe Harbor Guidance.--The Secretary of Labor, in 
consultation with the Secretary of Treasury, shall, prior to December 
31, 2002, issue final regulations providing clear guidance, including 
safe harbors, on how plan sponsors or any other affected fiduciaries 
can satisfy their fiduciary responsibilities during any period which 
the ability of a participant or beneficiary to direct the investment of 
assets in his or her individual account is suspended.''
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2002.
            (2) Exceptions to 30-day notice.--The Secretary of the 
        Treasury shall, no later than 120 days after the date of the 
        enactment of this Act, specify the circumstances under section 
        4980G(e)(3)(B)(ii) of the Internal Revenue Code of 1986 under 
        which the 30-day notice rule would not apply and the time by 
        which the notice is required to be provided.

SEC. 202. CERTAIN SALES AND PURCHASES OF COMPANY STOCK BY CORPORATE 
              INSIDERS TO BE SUBJECT TO EXCISE TAX ON GOLDEN PARACHUTE 
              PAYMENTS.

    (a) In General.--Section 4999 of the Internal Revenue Code of 1986 
(relating to golden parachute payments) is amended by redesignating 
subsection (c) as subsection (d) and by inserting after subsection (b) 
the following new subsection:
    ``(c) Certain Sales of Company Stock by Corporate Insiders.--
            ``(1) Treatment as excess parachute payment.--
                    ``(A) In general.--For purposes of this section, if 
                there is a sale or exchange, or purchase, of stock in a 
                corporation by a corporate insider during any period in 
                which a transaction suspension period affecting the 
                ability of participants and beneficiaries to invest 
                stock in such corporation is in effect with respect to 
                a defined contribution plan--
                            ``(i) to which section 401(a) (28) or (35) 
                        applies, and
                            ``(ii) which is maintained by such 
                        corporation (or any other entity consolidated 
                        with such corporation for purposes of reporting 
                        to the Securities and Exchange Commission),
                any amount realized by the corporate insider on such 
                sale or exchange (or the purchase price in the case of 
                a purchase) shall be treated as an excess parachute 
                payment.
                    ``(B) Limitation.--Subparagraph (A) shall only 
                apply to stock acquired by an individual by reason of 
                the individual's employment with the corporation or by 
                reason of any other relationship with the corporation 
that makes the individual a corporate insider.
            ``(2) Application to other instruments.--For purposes of 
        paragraph (1)--
                    ``(A) any sale or exchange, or purchase, of an 
                option, warrant, or other derivative of stock in a 
                corporation,
                    ``(B) any transaction involving the exercise of an 
                option, warrant, or other derivative of stock in a 
                corporation, or
                    ``(C) any similar transaction,
        shall be treated in the same manner as a transaction involving 
        the sale or exchange, or purchase, of stock.
            ``(3) Corporate insider.--For purposes of this subsection, 
        the term `corporate insider' means, with respect to a 
        corporation, any individual who is subject to the requirements 
        of section 16(a) of the Securities Exchange Act of 1934 with 
        respect to such corporation.
            ``(4) Transaction suspension period.--The term `transaction 
        suspension period' has the meaning given such term by section 
        4980G(f)(2).''
    (b) Effective Date.--The amendments made by this section shall 
apply to sales and exchanges after the 120th day after the date of the 
enactment of this Act.

       TITLE III--PROVIDING OF INFORMATION TO ASSIST PARTICIPANTS

SEC. 301. PERIODIC PENSION BENEFITS STATEMENTS.

    (a) Excise Tax.--
            (1) In general.--Chapter 43 of the Internal Revenue Code of 
        1986 (relating to qualified pension, etc., plans), as amended 
        by this Act, is amended by adding at the end the following new 
        section:

``SEC. 4980H. FAILURE OF CERTAIN DEFINED CONTRIBUTION PLANS TO PROVIDE 
              REQUIRED QUARTERLY STATEMENTS.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of an applicable defined contribution plan to meet the 
requirements of subsection (e) with respect to any participant or 
beneficiary.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to any participant 
        or beneficiary shall be $100 for each day in the noncompliance 
        period with respect to the failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period beginning on the date the failure first 
        occurs and ending on the date the statement to which the 
        failure relates is provided or the failure is otherwise 
        corrected.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply where failure not discovered and 
        reasonable diligence exercised.--No tax shall be imposed by 
        subsection (a) on any failure during any period for which it is 
        established to the satisfaction of the Secretary that any 
        person subject to liability for tax under subsection (d) did 
        not know that the failure existed and exercised reasonable 
        diligence to meet the requirements of subsection (e).
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) any person subject to liability for the tax 
                under subsection (d) exercised reasonable diligence to 
                meet the requirements of subsection (e), and
                    ``(B) such person provides the statement described 
                in subsection (e) during the 30-day period beginning on 
                the first date such person knew, or exercising 
                reasonable diligence should have known, that such 
                failure existed.
            ``(3) Overall limitation for unintentional failures.--
                    ``(A) In general.--If the person subject to 
                liability for tax under subsection (d) exercised 
                reasonable diligence to meet the requirements of 
                subsection (e), the tax imposed by subsection (a) for 
                failures during the taxable year of the employer (or, 
                in the case of a multiemployer plan, the taxable year 
                of the trust forming part of the plan) shall not exceed 
                $500,000. For purposes of the preceding sentence, all 
                multiemployer plans of which the same trust forms a 
                part shall be treated as 1 plan.
                    ``(B) Taxable years in the case of certain 
                controlled groups.--For purposes of this paragraph, if 
                all persons who are treated as a single employer for 
                purposes of this section do not have the same taxable 
                year, the taxable years taken into account shall be 
                determined under principles similar to the principles 
                of section 1561.
            ``(4) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive or otherwise inequitable relative to the failure 
        involved.
    ``(d) Liability for Tax.--The following shall be liable for the tax 
imposed by subsection (a):
            ``(1) In the case of a plan other than a multiemployer 
        plan, the employer.
            ``(2) In the case of a multiemployer plan, the plan.
    ``(e) Requirement To Provide Quarterly Statements.--
            ``(1) In general.--The administrator of an applicable 
        defined contribution plan shall furnish a pension benefit 
        statement--
                    ``(A) to a plan participant at least once each 
                calendar quarter, and
                    ``(B) to a plan beneficiary upon written request 
                but no more frequently than once during any 12-month 
                period.
            ``(2) Statement.--
                    ``(A) In general.--A pension benefit statement 
                under paragraph (1) 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) Specific information.--A pension benefit 
                statement under paragraph (1) shall include (together 
                with the information required in subparagraph (A))--
                            ``(i) 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
                            ``(ii) an explanation 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.
            ``(3) Manner of statement.--A pension benefit statement 
        under paragraph (1)--
                    ``(A) shall be written in a manner calculated to be 
                understood by the average plan participant, and
                    ``(B) may be provided in written, electronic, or 
                other appropriate form.
    ``(f) Applicable Defined Contribution Plan.--For purposes of this 
section, the term `applicable defined contribution plan' means a 
defined contribution plan which--
            ``(1) is a qualified retirement plan (as defined in section 
        4974(c)), and
            ``(2) permits a participant or beneficiary to exercise 
        control over assets in his or her account.''
            (2) Clerical amendment.--The table of sections for chapter 
        43 of such Code is amended by adding at the end the following 
        new item:

``Sec. 4980H. Failure of certain defined contribution plans to provide 
                            required quarterly statements.''
    (b) Amendments of ERISA.--
            (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 a plan participant at least once annually (each 
        calendar quarter in the case of an applicable individual 
        account plan), and
            ``(ii) to a plan beneficiary upon written request.
    ``(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 participant or beneficiary of the plan upon 
        written request.
Information furnished under subparagraph (B) to a participant (other 
than at the request of the participant) may be based on reasonable 
estimates determined under regulations prescribed by the Secretary.
    ``(2)(A) A pension benefit statement under paragraph (1)--
            ``(i) 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,
            ``(ii) shall be written in a manner calculated to be 
        understood by the average plan participant, and
            ``(iii) may be provided in written, electronic, telephonic, 
        or other appropriate form.
    ``(B) In the case of an applicable individual account plan, the 
pension benefit statement under paragraph (1) shall include (together 
with the information required in subparagraph (A))--
            ``(i) 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
            ``(ii) an explanation 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 1 entity, such as employer 
        securities.
    ``(C) For purposes of this subsection, the term `applicable 
individual account plan' means an individual account plan to which 
section 404(c) applies.
    ``(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, 
telephonic, 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).''
    (c) Conforming Amendments.--
            (1) Section 105 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1025) is amended by striking subsection 
        (d).
            (2) 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 1 statement described in subsection (a)(1) 
(A)(ii) or (B)(ii), whichever is applicable, in any 12-month period.''
    (d) Model Statements.--The Secretary of Labor shall develop 1 or 
more model benefit statements, 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 4980H of 
the Internal Revenue Code of 1986 and section 105 of the Employee 
Retirement Income Security Act of 1974.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2003.
                                 <all>