[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2190 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2190

To amend the Internal Revenue Code of 1986 and the Employee Retirement 
 Income Security Act of 1974 to provide employees with greater control 
  over assets in their pension accounts by providing them with better 
information about investment of the assets, new diversification rights, 
 and new limitations on pension plan blackouts, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 17, 2002

  Mr. Kerry (for himself, Ms. Snowe, Mrs. Feinstein, and Mr. Chafee) 
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 provide employees with greater control 
  over assets in their pension accounts by providing them with better 
information about investment of the assets, new diversification rights, 
 and new limitations on pension plan blackouts, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Worker Investment 
and Retirement Education Act of 2002'' or the ``WIRE Act''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
                 TITLE I--ADEQUATE INVESTMENT EDUCATION

Sec. 101. Defined contribution plans required to provide adequate 
                            investment education to participants.
Sec. 102. Fiduciary rules for plan sponsors designating independent 
                            investment advisers.
                 TITLE II--DIVERSIFICATION REQUIREMENTS

Sec. 201. Diversification requirements for certain plans holding 
                            employer securities.
Sec. 202. Allowance of deduction for dividends payable on employer 
                            securities divested by participants.
                   TITLE III--PARTICIPANT PROTECTIONS

                     Subtitle A--Participant Access

Sec. 301. Protection of participants or beneficiaries from unannounced 
                            or unduly long pension plan blackout 
                            periods.
Sec. 302. Trades by owners, officers, or directors prohibited during 
                            pension plan blackout periods.
                    Subtitle B--Participant Advocacy

Sec. 311. Office of Pension Participant Advocacy.
                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Effective dates and related rules.

                 TITLE I--ADEQUATE INVESTMENT EDUCATION

SEC. 101. DEFINED CONTRIBUTION PLANS REQUIRED TO PROVIDE ADEQUATE 
              INVESTMENT EDUCATION TO PARTICIPANTS.

    (a) Excise Tax on Failure of Certain Defined Contribution Plans To 
Provide Adequate Investment Information.--
            (1) 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 CERTAIN DEFINED CONTRIBUTION PLANS TO PROVIDE 
              ADEQUATE INVESTMENT INFORMATION.

    ``(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 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 model form and 
                personalized benefit 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) and paragraph (1) is not otherwise 
                applicable, 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) Requirements To Provide Adequate Investment Information.--
            ``(1) In general.--The plan administrator of an applicable 
        defined contribution plan shall provide to each participant and 
        beneficiary at least once annually--
                    ``(A) the model form relating to basic investment 
                guidelines which is described in paragraph (2), and
                    ``(B) in the case of an applicable defined 
                contribution plan with at least 100 participants, the 
                personalized benefit statement described in paragraph 
                (3).
            ``(2) Basic investment guidelines.--
                    ``(A) In general.--The Secretary shall, in 
                consultation with the Secretary of Labor, develop and 
                make available to applicable defined contribution plans 
                for distribution under paragraph (1) a model form 
                containing basic guidelines for investing for 
                retirement. Such guidelines shall include--
                            ``(i) information on the benefits of 
                        diversification,
                            ``(ii) information on the essential 
                        differences, in terms of risk and return, of 
                        pension plan investments, including stocks, 
                        bonds, mutual funds, and money market 
                        investments,
                            ``(iii) information on how a participant's 
                        pension plan investment allocations may differ 
                        depending on the participant's age and years to 
                        retirement and on other factors determined by 
                        the Secretary,
                            ``(iv) sources of information where 
                        participants may learn more about pension 
                        rights, individual investing, and investment 
                        advice, and
                            ``(v) such other information related to 
                        individual investing as the Secretary 
                        determines appropriate.
                    ``(B) Calculation information.--The model form 
                under subparagraph (A) shall include addresses for 
                Internet sites, and a worksheet, which a participant or 
                beneficiary may use to calculate--
                            ``(i) the retirement age annuity value of 
                        the participant's or beneficiary's 
                        nonforfeitable pension benefits under the plan 
                        (determined by reference to varied historical 
                        annual rates of return and annuity interest 
                        rates), and
                            ``(ii) other important amounts relating to 
                        retirement savings, including the amount which 
                        a participant would be required to save to 
                        ensure a retirement income equal to various 
                        percentages of their current salary (adjusted 
                        for historical growth prior to retirement).
                The Secretary of Labor shall develop an Internet site 
                which a participant or beneficiary may use in making 
                such calculations and the address for such site shall 
                be included with the form.
                    ``(C) Public hearing; updating.--The Secretary 
                shall--
                            ``(i) provide at least 90 days for public 
                        comment before publishing final notice of the 
                        model form, and
                            ``(ii) update the model form at least 
                        annually.
            ``(3) Pension benefit statements.--The personalized benefit 
        statement for purposes of paragraph (1)(B) shall include--
                    ``(A) the total accrued benefits of the participant 
                or beneficiary,
                    ``(B) the nonforfeitable pension benefits, if any, 
                of the participant or beneficiary which have accrued, 
                or the earliest date on which such pension benefits 
                will become nonforfeitable,
                    ``(C) the fair market value as of the close of the 
                year of the assets in the participant's or 
                beneficiary's account in each investment option under 
                the plan, and
                    ``(D) the percentage of assets as of the close of 
                the year which each such investment option is of the 
                total assets.
            ``(4) Rules relating to form and statement.--The model form 
        under paragraph (2) and the personalized benefit statement 
        under paragraph (3)--
                    ``(A) shall be written in a manner calculated to be 
                understood by the average plan participant,
                    ``(B) shall be provided in writing or in any other 
                form (including electronic means) to the extent such 
                other form is reasonably accessible to participants and 
                beneficiaries, and
                    ``(C) may be provided at the same time to a 
                participant or beneficiary.
    ``(f) Applicable Defined Contribution Plan.--For purposes of this 
section, the term `applicable defined contribution plan' means a 
defined contribution plan which 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. 4980G. Failure of certain defined contribution plans to provide 
                            adequate investment information.''
    (b) Amendments to ERISA.--
            (1) In general.--Section 104 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1024) is amended by 
        redesignating subsections (c) and (d) as subsections (d) and 
        (e), respectively, and by inserting after subsection (b) the 
        following new subsection:
    ``(c)(1) The plan administrator of an applicable individual account 
plan shall provide to each participant and beneficiary at least once 
annually--
            ``(A) the model form relating to basic investment 
        guidelines which is described in paragraph (2), and
            ``(B) in the case of an applicable individual account plan 
        with at least 100 participants, the personalized benefit 
        statement described in paragraph (3).
    ``(2)(A) The Secretary of the Treasury shall, in consultation with 
the Secretary, develop and make available to applicable individual 
account plans for distribution under paragraph (1) a model form 
containing basic guidelines for investing for retirement. Such 
guidelines shall include--
            ``(i) information on the benefits of diversification,
            ``(ii) information on the essential differences, in terms 
        of risk and return, of pension plan investments, including 
        stocks, bonds, mutual funds, and money market investments,
            ``(iii) information on how a participant's pension plan 
        investment allocations may differ depending on the 
        participant's age and years to retirement and on other factors 
        determined by the Secretary of the Treasury,
            ``(iv) sources of information where participants may learn 
        more about pension rights, individual investing, and investment 
        advice, and
            ``(v) such other information related to individual 
        investing as the Secretary of the Treasury determines 
        appropriate.
    ``(B) The model form under subparagraph (A) shall include addresses 
for Internet sites, and a worksheet, which a participant or beneficiary 
may use to calculate--
            ``(i) the retirement age annuity value of the participant's 
        or beneficiary's nonforfeitable pension benefits under the plan 
        (determined by reference to varied historical annual rates of 
        return and annuity interest rates), and
            ``(ii) other important amounts relating to retirement 
        savings, including the amount which a participant would be 
        required to save to ensure a retirement income equal to various 
        percentages of their current salary (adjusted for historical 
        growth prior to retirement).
The Secretary shall develop an Internet site which a participant or 
beneficiary may use in making such calculations and the address for 
such site shall be included with the form.
    ``(C) The Secretary of the Treasury shall--
            ``(i) provide at least 90 days for public comment before 
        publishing final notice of the model form, and
            ``(ii) update the model form at least annually.
    ``(3) The personalized benefit statement for purposes of paragraph 
(1)(B) shall include--
            ``(A) the total accrued benefits of the participant or 
        beneficiary,
            ``(B) the nonforfeitable pension benefits, if any, of the 
        participant or beneficiary which have accrued, or the earliest 
        date on which such pension benefits will become nonforfeitable,
            ``(C) the fair market value as of the close of the year of 
        the assets in the participant's or beneficiary's account in 
        each investment option under the plan, and
            ``(D) the percentage of assets as of the close of the year 
        which each such investment option is of the total assets.
    ``(4) The model form under paragraph (2) and the personalized 
benefit statement under paragraph (3)--
            ``(A) shall be written in a manner calculated to be 
        understood by the average plan participant,
            ``(B) shall be provided in writing or in any other form 
        (including electronic means) to the extent such other form is 
        reasonably accessible to participants and beneficiaries, and
            ``(C) may be provided at the same time to a participant or 
        beneficiary.
    ``(5) For purposes of this subsection, the term `applicable 
individual account plan' means an individual account plan which permits 
a participant or beneficiary to exercise control over assets in his or 
her account.''
            (2) Enforcement.--Section 502(c)(1) of such Act (29 U.S.C. 
        1132(c)(1)) is amended by striking ``or section 101(e)(1)'' and 
        inserting ``, section 101(e)(1), as section 104(c)''.

SEC. 102. FIDUCIARY RULES FOR PLAN SPONSORS DESIGNATING INDEPENDENT 
              INVESTMENT ADVISERS.

    (a) In General.--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)(1) In the case of an individual account plan which permits a 
plan participant or beneficiary to exercise control over the assets in 
his or her account, if a plan sponsor or other person who is a 
fiduciary designates and monitors a qualified investment adviser 
pursuant to the requirements of paragraph (3), such fiduciary--
            ``(A) shall be deemed to have satisfied the requirements 
        under this section for the prudent designation and periodic 
        review of an investment adviser with whom the plan sponsor or 
        other person who is a fiduciary enters into an arrangement for 
        the provision of advice referred to in section 3(21)(A)(ii),
            ``(B) shall not be liable under this section for any loss, 
        or by reason of any breach, with respect to the provision of 
        investment advice given by such adviser to any plan participant 
        or beneficiary, and
            ``(C) shall not be liable for any co-fiduciary liability 
        under subsections (a)(2) and (b) of section 405 with respect to 
        the provision of investment advice given by such adviser to any 
        plan participant or beneficiary.
    ``(2)(A) For purposes of this section, the term `qualified 
investment adviser' means, with respect to a plan, a person--
            ``(i) who is a fiduciary of the plan by reason of the 
        provision of investment advice by such person to a plan 
        participant or beneficiary;
            ``(ii) who--
                    ``(I) is registered as an investment adviser under 
                the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et 
                seq.),
                    ``(II) is registered as an investment adviser under 
                the laws of the State in which such adviser maintains 
                the principal office and place of business of such 
                adviser, but only if such State has an examination 
                requirement to qualify for such registration,
                    ``(III) is a bank or similar financial institution 
                referred to in section 408(b)(4),
                    ``(IV) is an insurance company qualified to do 
                business under the laws of a State, or
                    ``(V) is any other comparably qualified entity 
                which satisfies such criteria as the Secretary 
                determines appropriate, consistent with the purposes of 
                this subsection, and
            ``(iii) who meets the requirements of subparagraph (B).
    ``(B) The requirements of this subparagraph are met if every 
individual employed (or otherwise compensated) by a person described in 
subparagraph (A)(ii) who provides investment advice on behalf of such 
person to any plan participant or beneficiary is--
            ``(i) an individual described in subclause (I) or (II) of 
        subparagraph (A)(ii),
            ``(ii) registered as a broker or dealer under the 
        Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
            ``(iii) a registered representative as described in section 
        3(a)(18) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78c(a)(18)) or section 202(a)(17) of the Investment Advisers 
        Act of 1940 (15 U.S.C. 80b-2(a)(17)), or
            ``(iv) any other comparably qualified individual who 
        satisfies such criteria as the Secretary determines 
        appropriate, consistent with the purposes of this subsection.
    ``(3) The requirements of this paragraph are met if--
            ``(A) the plan sponsor or other person who is a fiduciary 
        in designating a qualified investment adviser receives at the 
        time of the designation, and annually thereafter, a written 
        verification from the qualified investment adviser that the 
        investment adviser--
                    ``(i) is and remains a qualified investment 
                adviser,
                    ``(ii) acknowledges that the investment adviser is 
                a fiduciary with respect to the plan and is solely 
                responsible for its investment advice,
                    ``(iii) has reviewed the plan documents (including 
                investment options) and has determined that its 
                relationship with the plan and the investment advice 
                provided to any plan participant or beneficiary, 
                including any fees or other compensation it will 
                receive, will not constitute a violation of section 
                406, and
                    ``(iv) has the necessary insurance coverage (as 
                determined by the Secretary) for any claim by any plan 
                participant or beneficiary,
            ``(B) the plan sponsor or other person who is a fiduciary 
        in designating a qualified investment adviser reviews the 
        documents described in paragraph (4) provided by such adviser 
        and determines that there is no material reason not to enter 
        into an arrangement for the provision of advice by such 
        qualified investment adviser, and
            ``(C) the plan sponsor or other person who is a fiduciary 
        in designating a qualified investment adviser determines 
        whether or not to continue the designation of the investment 
        adviser as a qualified investment adviser within 30 days of 
        having information brought to its attention that the investment 
        adviser is no longer qualified or that a substantial number of 
        plan participants or beneficiaries have raised concerns about 
        the services being provided by the investment adviser.
    ``(4) A qualified investment adviser shall provide the following 
documents to the plan sponsor or other person who is a fiduciary in 
designating the adviser:
            ``(A) The contract with the plan sponsor or other person 
        who is a fiduciary for the services to be provided by the 
        investment adviser to the plan participants and beneficiaries.
            ``(B) A disclosure as to any fees or other compensation 
        that will be received by the investment adviser for the 
        provision of such investment advice.
            ``(C) The Uniform Application for Investment Adviser 
        Registration as filed with the Securities and Exchange 
        Commission or a substantially similar disclosure application as 
        determined by and filed with the Secretary.
    ``(5) Any qualified investment adviser that acknowledges it is a 
fiduciary pursuant to paragraph (3)(A)(ii) shall be deemed a fiduciary 
under this part with respect to the provision of investment advice to a 
plan participant or beneficiary.
    ``(6) Any recovery to the plan under section 409 as a result of a 
fiduciary breach by a qualified investment adviser under this part 
shall inure to the benefit of the individual accounts of affected plan 
participants and beneficiaries.''
    (b) Fiduciary Liability.--Section 404(c)(1)(B) is amended by 
inserting ``(other than a qualified investment adviser)'' after 
``fiduciary''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to advisers designated after the date of the enactment of 
this Act.

                 TITLE II--DIVERSIFICATION REQUIREMENTS

SEC. 201. DIVERSIFICATION REQUIREMENTS FOR CERTAIN PLANS HOLDING 
              EMPLOYER SECURITIES.

    (a) Amendments of 1986 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 trust which is part of a defined 
        contribution plan shall not be treated as a qualified trust 
        unless the plan meets the requirements of section 417A.''
            (2) Diversification requirements.--
                    (A) In general.--Subpart B of part I of subchapter 
                D of chapter 1 of the Internal Revenue Code of 1986 
                (relating to special rules) is amended by adding at the 
                end the following new section:

``SEC. 417A. DIVERSIFICATION REQUIREMENTS FOR CERTAIN DEFINED 
              CONTRIBUTION PLANS.

    ``(a) General Rule.--For purposes of section 401(a)(35), a defined 
contribution plan meets the requirements of this section if the plan 
meets--
            ``(1) the voluntary investment requirement of subsection 
        (b),
            ``(2) the investment option requirement of subsection (c), 
        and
            ``(3) the asset investment requirements of subsections (d) 
        and (e).
    ``(b) Voluntary Investment Requirement.--
            ``(1) In general.--A defined contribution plan meets the 
        requirements of this subsection if the plan provides that no 
        employee contribution (or any earnings thereon) may be required 
        to be invested in employer securities--
                    ``(A) pursuant to the terms of the plan, or
                    ``(B) at the direction of a person other than the 
                participant making the employee contribution (or a 
                beneficiary of a participant).
            ``(2) Exception for employee stock ownership plans.--
        Paragraph (1) shall not apply to an employee stock ownership 
        plan.
    ``(c) Investment Options.--A defined contribution plan meets the 
requirements of this subsection if the plan offers not less than 3 
investment options (not inconsistent with regulations prescribed by the 
Secretary) other than employer securities.
    ``(d) Asset Investment Requirements for Employee Contributions.--
            ``(1) In general.--In the case of the portion of a 
        participant's account attributable to employee contributions 
        (or earnings thereon) invested in employer securities readily 
        tradable on an established securities market, a defined 
        contribution plan meets the requirements of this subsection if 
        the participant may at any time elect to divest the account of 
        any such employer securities and reinvest an equivalent amount 
        in other investment options offered under subsection (c).
            ``(2) Special rule for employee stock ownership plans.--
                    ``(A) In general.--In the case of an employee stock 
                ownership plan--
                            ``(i) paragraph (1) shall apply only to a 
                        KSOP which holds employer securities readily 
                        tradable on an established securities market, 
                        and
                            ``(ii) the rules of subparagraph (B) shall 
                        apply to any other employee stock ownership 
                        plan.
                    ``(B) Plan other than ksops.--
                            ``(i) In general.--In the case of an 
                        employee stock ownership plan to which 
                        subparagraph (A)(i) does not apply, a defined 
                        contribution plan meets the requirements of 
                        this subsection if a participant may elect to 
                        divest the portion of the participant's account 
                        attributable to employee contributions (or 
                        earnings thereon) invested in employer 
                        securities readily tradable on an established 
                        securities market at any time during any plan 
                        year beginning after the plan year in which the 
                        participant completes 5 years of service under 
                        the plan.
                            ``(ii) Additional limitation on 
                        reinvestment.--The maximum number of employer 
                        securities described in clause (i) a 
                        participant may elect to divest in any plan 
                        year beginning before the plan year in which 
                        the participant completes 7 years of service 
                        under the plan shall not exceed the excess (if 
                        any) of--
                                    ``(I) 50 percent of the greatest 
                                number of such securities held at any 
                                time in the participant's account, over
                                    ``(II) the number of such 
                                securities the participant elected to 
                                divest for all preceding plan years.
                            ``(iii) Individuals age 55 or over.--
                        Notwithstanding clause (i) or (ii), a 
                        participant may elect to divest the portion of 
                        the account described in clause (i) at any time 
                        during the plan year in which the participant 
                        attains age 55 or any subsequent plan year.
    ``(e) Asset Investment Requirements for Employer Contributions.--
            ``(1) In general.--In the case of a portion of a 
        participant's account attributable to employer contributions 
        (or earnings thereon) invested in employer securities which are 
        readily tradable on an established securities market, a defined 
        contribution plan meets the requirements of this subsection if 
        the participant may elect to divest the account of such 
        employer securities and reinvest an equivalent amount in other 
        investment options offered under subsection (c) only in plan 
        years beginning after the later of--
                    ``(A) the plan year in which the participant 
                completes 5 years of service under the plan, or
                    ``(B) December 31, 2002.
            ``(2) Limitation on reinvestment.--The maximum number of 
        employer securities described in paragraph (1) which a 
        participant may elect to divest in any plan year beginning 
        before the plan year in which the participant completes 7 years 
        of service under the plan shall not exceed the excess (if any) 
        of--
                    ``(A) 50 percent of the greatest number of such 
                securities which were held at any time in the 
                participant's account and with respect to which the 
                participant had a nonforfeitable right, over
                    ``(B) the number of such securities the participant 
                elected to divest for all preceding plan years.
            ``(3) Special rule for matching contributions.--In the case 
        of employer securities described in paragraph (1) attributable 
        to employer matching contributions--
                    ``(A) paragraph (1)(A) shall be applied by 
                substituting `3 years' for `5 years', and
                    ``(B) paragraph (2) shall be applied by 
                substituting `5 years' for `7 years'.
            ``(4) Individuals age 55 and over.--Notwithstanding 
        paragraph (1), (2), or (3), a participant may elect to divest 
        the portion of the account described in paragraph (1) at any 
        time during the plan year in which the participant attains age 
        55 or any subsequent plan year.
    ``(f) Special Rules Applicable to Asset Investment Requirements.--
            ``(1) Information required to be provided to individuals 
        age 55 and over.--
                    ``(A) In general.--A defined contribution plan 
                shall not be treated as meeting the requirements of 
                subsection (c) or (d) unless the plan administrator 
                provides at least once each plan year to all 
                participants who are age 55 or over notice of their 
                right to divest all employer securities held in their 
                accounts.
                    ``(B) Additional notice for nondiversified 
                participants.--In the case of a participant with 
                respect to whom the fair market value of employer 
                securities held in his or her account as of the close 
                of any plan year exceeds 20 percent of the fair market 
                value of all assets in the account as of such time, the 
                plan administrator shall include with the notice under 
                subparagraph (A) for the succeeding plan year a 
                statement advising the participant of such percentage 
                and of the need to seek professional investment advice 
                regarding diversification of assets in the account. 
                This subparagraph shall not apply to an employee stock 
                ownership plan other than a KSOP.
                    ``(C) Simplification.--The Secretary may provide 
                that any notice required under this subparagraph may 
                be--
                            ``(i) included with any other notice a plan 
                        administrator is required to provide, or
                            ``(ii) provided in written, electronic, or 
                        other appropriate form which is reasonably 
                        accessible to a participant.
            ``(2) Times during which divestment allowed.--A defined 
        contribution plan shall not be treated as failing to meet the 
        requirements of subsection (d) or (e)--
                    ``(A) because the plan provides that the divestment 
                and reinvestment of employer securities may occur only 
                during prescribed time periods under the plan if such 
                limitation also applies to the divestment and 
                reinvestment of all other assets under the plan, or
                    ``(B) if the plan allows a participant to divest 
                his or her account of any employer securities earlier 
                than the time such divestment is required to be allowed 
                under such subsection.
            ``(3) Application to beneficiaries.--If a beneficiary of a 
        participant (including an alternate payee within the meaning of 
        section 414(p)(8)) holds employer securities in his or her own 
        account, subsections (d) and (e) shall apply to the beneficiary 
        in the same manner as if the beneficiary were a participant, 
        except that in determining whether any years of service 
        requirement is met, the years of service of the participant 
        shall be taken into account.
    ``(g) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Elective deferrals.--An elective deferral (within the 
        meaning of section 402(g)(3)) shall be treated as an employee 
        contribution.
            ``(2) Employee stock ownership plan.--The term `employee 
        stock ownership plan' has the meaning given such term by 
        section 4975(e)(7).
            ``(3) 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.
            ``(4) KSOP.--The term `KSOP' means an employee stock 
        ownership plan which holds any contribution (or earnings 
        thereon) which is subject to the requirements of subsection 
        (k)(3) or (m) of section 401.
            ``(5) Matching contribution.--The term `matching 
        contribution' has the meaning given such term by section 
        401(m)(4).
            ``(6) Years of service.--The term `years of service' has 
        the meaning given such term by section 411(a).
            ``(7) Application to employer real property.--This section 
        shall be applied to employer real property (as defined in 
        section 407(d)(2) of the Employee Retirement Income Security 
        Act of 1974) in the same manner as this section applies to 
        employer securities.
            ``(8) ESOP qualification requirements.--An employee stock 
        ownership plan shall not be treated as failing to meet any 
        qualification requirement to be such a plan by reason of the 
        plan's compliance with the provisions of this section.''
                    (B) Conforming amendment.--The table of sections 
                for subpart B of part I of subchapter D of chapter 1 of 
                such Code is amended by adding at the end the following 
                new item:

                              ``Sec. 417A. Diversification requirements 
                                        for certain defined 
                                        contribution plans.''
            (3) Coordination with existing diversification 
        requirements.--Section 401(a)(28)(B) of such Code (relating to 
        diversification requirements for employee stock ownership 
        plans) is amended by adding at the end the following new 
        clause:
                            ``(v) Coordination with other 
                        requirements.--If the requirements of section 
                        417A apply by reason of paragraph (35) to a 
                        plan to which this paragraph applies, the plan 
                        shall be required to allow a participant to 
                        direct the investment of the greater of the 
                        percentage determined under this subparagraph 
                        or section 417A with respect to any assets for 
                        any plan year.''
    (b) Amendments of ERISA.--
            (1) In general.--Section 404(c)(1) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(1)) 
        is amended by striking ``In'' and inserting ``Subject to the 
        provisions of section 404A, in''.
            (2) Diversification requirements.--
                    (A) In general.--Part 4 of subtitle B of title I of 
                such Act (29 U.S.C. 401 et seq.) is amended by 
                inserting after section 404 the following new section:

``SEC. 404A. DIVERSIFICATION REQUIREMENTS FOR CERTAIN INDIVIDUAL 
              ACCOUNT PLANS.

    ``(a) General Rule.--Section 404(c) shall apply to an individual 
account plan only if the plan meets--
            ``(1) the voluntary investment requirement of subsection 
        (b),
            ``(2) the investment option requirement of subsection (c), 
        and
            ``(3) the asset investment requirements of subsections (d) 
        and (e).
    ``(b) Voluntary Investment Requirement.--
            ``(1) In general.--An individual account plan meets the 
        requirements of this subsection if the plan provides that no 
        employee contribution (or any earnings thereon) may be required 
        to be invested in employer securities--
                    ``(A) pursuant to the terms of the plan, or
                    ``(B) at the direction of a person other than the 
                participant making the employee contribution (or a 
                beneficiary of a participant).
            ``(2) Exception for employee stock ownership plans.--
        Paragraph (1) shall not apply to an employee stock ownership 
        plan.
    ``(c) Investment Options.--An individual account plan meets the 
requirements of this subsection if the plan offers not less than 3 
investment options (not inconsistent with regulations prescribed by the 
Secretary of the Treasury) other than employer securities.
    ``(d) Asset Investment Requirements for Employee Contributions.--
            ``(1) In general.--In the case of the portion of a 
        participant's account attributable to employee contributions 
        (or earnings thereon) invested in employer securities readily 
        tradable on an established securities market, an individual 
        account plan meets the requirements of this subsection if the 
        participant may at any time elect to divest the account of any 
        such employer securities and reinvest an equivalent amount in 
        other investment options offered under subsection (c).
            ``(2) Special rule for employee stock ownership plans.--
                    ``(A) In general.--In the case of an employee stock 
                ownership plan--
                            ``(i) paragraph (1) shall apply only to a 
                        KSOP which holds employer securities readily 
                        tradable on an established securities market, 
                        and
                            ``(ii) the rules of subparagraph (B) shall 
                        apply to any other employee stock ownership 
                        plan.
                    ``(B) Plan other than ksops.--
                            ``(i) In general.--In the case of an 
                        employee stock ownership plan to which 
                        subparagraph (A)(i) does not apply, an 
                        individual account plan meets the requirements 
                        of this subsection if a participant may elect 
                        to divest the portion of the participant's 
                        account attributable to employee contributions 
                        (or earnings thereon) invested in employer 
                        securities readily tradable on an established 
                        securities market at any time during any plan 
                        year beginning after the plan year in which the 
                        participant completes 5 years of service under 
                        the plan.
                            ``(ii) Additional limitation on 
                        reinvestment.--The maximum number of employer 
                        securities described in clause (i) a 
                        participant may elect to divest in any plan 
                        year beginning before the plan year in which 
                        the participant completes 7 years of service 
                        under the plan shall not exceed the excess (if 
                        any) of--
                                    ``(I) 50 percent of the greatest 
                                number of such securities held at any 
                                time in the participant's account, over
                                    ``(II) the number of such 
                                securities the participant elected to 
                                divest for all preceding plan years.
                            ``(iii) Individuals age 55 or over.--
                        Notwithstanding clause (i) or (ii), a 
                        participant may elect to divest the portion of 
                        the account described in clause (i) at any time 
                        during the plan year in which the participant 
                        attains age 55 or any subsequent plan year.
    ``(e) Asset Investment Requirements for Employer Contributions.--
            ``(1) In general.--In the case of a portion of a 
        participant's account attributable to employer contributions 
        (or earnings thereon) invested in employer securities which are 
        readily tradable on an established securities market, an 
        individual account plan meets the requirements of this 
        subsection if the participant may elect to divest the account 
        of such employer securities and reinvest an equivalent amount 
        in other investment options offered under subsection (c) only 
        in plan years beginning after the later of--
                    ``(A) the plan year in which the participant 
                completes 5 years of service under the plan, or
                    ``(B) December 31, 2002.
            ``(2) Limitation on reinvestment.--The maximum number of 
        employer securities described in paragraph (1) which a 
        participant may elect to divest in any plan year beginning 
        before the plan year in which the participant completes 7 years 
        of service under the plan shall not exceed the excess (if any) 
        of--
                    ``(A) 50 percent of the greatest number of such 
                securities which were held at any time in the 
                participant's account and with respect to which the 
                participant had a nonforfeitable right, over
                    ``(B) the number of such securities the participant 
                elected to divest for all preceding plan years.
            ``(3) Special rule for matching contributions.--In the case 
        of employer securities described in paragraph (1) attributable 
        to employer matching contributions--
                    ``(A) paragraph (1)(A) shall be applied by 
                substituting `3 years' for `5 years', and
                    ``(B) paragraph (2) shall be applied by 
                substituting `5 years' for `7 years'.
            ``(4) Individuals age 55 and over.--Notwithstanding 
        paragraph (1), (2), or (3), a participant may elect to divest 
        the portion of the account described in paragraph (1) at any 
        time during the plan year in which the participant attains age 
        55 or any subsequent plan year.
    ``(f) Special Rules Applicable to Asset Investment Requirements.--
            ``(1) Information required to be provided to individuals 
        age 55 and over.--
                    ``(A) In general.--An individual account plan shall 
                not be treated as meeting the requirements of 
                subsection (c) or (d) unless the plan administrator 
                provides at least once each plan year to all 
                participants who are age 55 or over notice of their 
                right to divest all employer securities held in their 
                accounts.
                    ``(B) Additional notice for nondiversified 
                participants.--In the case of a participant with 
                respect to whom the fair market value of employer 
                securities held in his or her account as of the close 
                of any plan year exceeds 20 percent of the fair market 
                value of all assets in the account as of such time, the 
                plan administrator shall include with the notice under 
                subparagraph (A) for the succeeding plan year a 
                statement advising the participant of such percentage 
                and of the need to seek professional investment advice 
                regarding diversification of assets in the account. 
                This subparagraph shall not apply to an employee stock 
                ownership plan other than a KSOP.
                    ``(C) Simplification.--The Secretary of the 
                Treasury may provide that any notice required under 
                this subparagraph may be--
                            ``(i) included with any other notice a plan 
                        administrator is required to provide, or
                            ``(ii) provided in written, electronic, or 
                        other appropriate form which is reasonably 
                        accessible to a participant.
            ``(2) Times during which divestment allowed.--An individual 
        account plan shall not be treated as failing to meet the 
        requirements of subsection (d) or (e)--
                    ``(A) because the plan provides that the divestment 
                and reinvestment of employer securities may occur only 
                during prescribed time periods under the plan if such 
                limitation also applies to the divestment and 
                reinvestment of all other assets under the plan, or
                    ``(B) if the plan allows a participant to divest 
                his or her account of any employer securities earlier 
                than the time such divestment is required to be allowed 
                under such subsection.
            ``(3) Application to beneficiaries.--If a beneficiary of a 
        participant (including an alternate payee within the meaning of 
        section 414(p)(8)) holds employer securities in his or her own 
        account, subsections (d) and (e) shall apply to the beneficiary 
        in the same manner as if the beneficiary were a participant, 
        except that in determining whether any years of service 
        requirement is met, the years of service of the participant 
        shall be taken into account.
    ``(g) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Elective deferrals.--An elective deferral (within the 
        meaning of section 402(g)(3) of the Internal Revenue Code of 
        1986) shall be treated as an employee contribution.
            ``(2) Employee stock ownership plan.--The term `employee 
        stock ownership plan' has the meaning given such term by 
        section 4975(e)(7) of such Code.
            ``(3) Employer securities.--The term `employer securities' 
        has the meaning given such term by section 407(d)(1).
            ``(4) KSOP.--The term `KSOP' means an employee stock 
        ownership plan which holds any contribution (or earnings 
        thereon) which is subject to the requirements of subsection 
        (k)(3) or (m) of section 401 of such Code.
            ``(5) Matching contribution.--The term `matching 
        contribution' has the meaning given such term by section 
        401(m)(4) of such Code.
            ``(6) Years of service.--The term `years of service' has 
        the meaning given such term by section 411(a) of such Code.
            ``(7) Application to employer real property.--This section 
        shall be applied to employer real property (as defined in 
        section 407(d)(2)) in the same manner as this section applies 
        to employer securities.
            ``(8) ESOP qualification requirements.--An employee stock 
        ownership plan shall not be treated as failing to meet any 
        qualification requirement to be such a plan by reason of the 
        plan's compliance with the provisions of this section.''
                    (B) Conforming amendment.--The table of sections 
                for part 4 of subtitle B of title I of such Code is 
                amended by adding after the item relating to section 
                404 the following new item:

                              ``Sec. 404A. Diversification requirements 
                                        for certain individual account 
                                        plans.''

SEC. 202. ALLOWANCE OF DEDUCTION FOR DIVIDENDS PAYABLE ON EMPLOYER 
              SECURITIES DIVESTED BY PARTICIPANTS.

    (a) In General.--Section 404(k) of the Internal Revenue Code of 
1986 (relating to deduction for dividends paid on certain employer 
securities) is amended by adding at the end the following new 
paragraph:
            ``(7) Special rule for payments with respect to divested 
        securities.--
                    ``(A) In general.--If a participant or beneficiary 
                of a defined contribution plan who has not attained the 
                age of 55 elects under section 417A to divest his or 
                her account of applicable employer securities, then the 
                corporation which pays dividends with respect to such 
                securities may elect to make the payments described in 
                subparagraph (B) and such payments shall be treated as 
                applicable dividends for purposes of paragraph (1).
                    ``(B) Applicable payments.--Payments described in 
                this subparagraph are amounts paid in cash to the 
                defined contribution plan which--
                            ``(i) are paid during the period beginning 
                        on the date the employer securities were 
                        divested and ending on the last day of the 2nd 
                        taxable year following the taxable year of 
                        divestment,
                            ``(ii) are equivalent to the dividends 
                        which would have been paid on such securities 
                        during such period if the securities had not 
                        been divested, and
                            ``(iii) are, in accordance with the plan 
                        provisions, treated in the same manner as 
                        applicable dividends.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years ending after the date of the enactment of this Act.

                   TITLE III--PARTICIPANT PROTECTIONS

                     Subtitle A--Participant Access

SEC. 301. PROTECTION OF PARTICIPANTS OR BENEFICIARIES FROM UNANNOUNCED 
              OR UNDULY LONG PENSION PLAN BLACKOUT PERIODS.

    (a) Amendments of 1986 Code.--
            (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 APPLICABLE PLANS TO PROVIDE NOTICE OF 
              TRANSACTION SUSPENSION PERIOD.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of--
            ``(1) any applicable defined contribution plan to meet the 
        notice requirements of subsection (e)(1) with respect to any 
        participant or beneficiary, and
            ``(2) any plan administrator of any applicable defined 
        contribution plan to meet the data production requirements of 
        subsection (e)(2).
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a)--
                    ``(A) on any failure described in subsection (a)(1) 
                with respect to any participant or beneficiary shall be 
                $100 for each day in the noncompliance period with 
                respect to the failure, and
                    ``(B) on any failure described in subsection (a)(2) 
                shall be $1,000 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.--
            ``(1) Notice.--The following shall be liable for the tax 
        imposed by subsection (a)(1):
                    ``(A) In the case of a plan other than a 
                multiemployer plan, the employer.
                    ``(B) In the case of a multiemployer plan, the 
                plan.
            ``(2) Document production.--The plan administrator with 
        respect to the failure to meet the requirements of subsection 
        (e)(2) shall be liable for the tax imposed by subsection 
        (a)(2).
    ``(e) Notice of Blackout Period; Transfer of Data During Change of 
Administrators.--
            ``(1) Notice of blackout period.--
                    ``(A) In general.--The plan administrator of an 
                applicable defined contribution plan shall provide 
                notice of any blackout period to each participant or 
                beneficiary to whom the blackout period applies (and to 
                any employee organization representing such 
                participants).
                    ``(B) Notice.--The notice required by subparagraph 
                (A) 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 participants and beneficiaries to 
                understand the timing and effect of the blackout 
                period.
                    ``(C) Timing of notice.--Except as provided in 
                paragraph (3), the notice required by subparagraph (A) 
                shall be provided not later than 30 days before the 
                beginning of the blackout period.
                    ``(D) Form and manner of notice.--The notice 
                required by subparagraph (A) 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.
            ``(2) Data transfers during change of plan 
        administrators.--
                    ``(A) In general.--If there is a change of plan 
                administrators resulting in a blackout period for an 
                applicable defined contribution plan with respect to 
                which the fair market value of employer securities held 
                by the plan exceed 20 percent of the fair market value 
                of all assets held by the plan, the plan administrator 
                that is being replaced shall transfer to the new plan 
                administrator all necessary data in usable form no 
                later than 30 days after the beginning of the blackout 
                period.
                    ``(B) Fiduciary responsibility.--A plan sponsor or 
                plan administrator shall not be treated as having 
                satisfied any fiduciary responsibility or duty solely 
                by reason of having met the requirements of this 
                paragraph.
            ``(3) Exceptions and modifications.--
                    ``(A) In general.--The Secretary of Labor, in 
                consultation with the Secretary, may prescribe rules or 
                regulations which waive or modify any requirement under 
                paragraph (1) or (2)--
                            ``(i) for any applicable defined 
                        contribution plan with fewer than 100 
                        participants,
                            ``(ii) in the case of any blackout period 
                        due to unforeseen events outside of the control 
                        of a plan sponsor or administrator, or
                            ``(iii) in the case of any blackout period 
                        due to an acquisition or disposition to which 
                        section 410(b)(6)(C) applies or due to such 
                        other circumstances as the Secretary of Labor 
                        may prescribe.
                    ``(B) Waiver requests.--The Secretary of Labor may 
                provide procedures for requesting a waiver or 
                modification under subparagraph (A) and for expedited 
                procedures for considering any such request.
    ``(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 permits a participant or beneficiary to 
        exercise control over assets in his or her account.
            ``(2) Blackout period.--
                    ``(A) In general.--The term `blackout period' means 
                a temporary or indefinite period of 3 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.''
            (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 applicable plans to provide notice of 
                            transaction suspension period.''
    (b) Amendments of ERISA.--
            (1) Notice.--
                    (A) In general.--Section 104 of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1024), as amended by section 101(b), is amended by 
                redesignating subsections (d) and (e) as subsections 
                (e) and (f), respectively, and by adding after 
                subsection (c) the following new subsection:
    ``(d)(1)(A) The plan administrator of an applicable individual 
account plan shall provide notice of any blackout period to each 
participant or beneficiary to whom the blackout period applies (and to 
any employee organization representing such participants).
    ``(B) The notice required by subparagraph (A) 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 participants and beneficiaries to understand the timing and 
effect of the blackout period.
    ``(C) Except as provided in paragraph (2), the notice required by 
subparagraph (A) shall be provided not later than 30 days before the 
beginning of the blackout period.
    ``(D) The notice required by subparagraph (A) 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.
    ``(2)(A) The Secretary, in consultation with the Secretary of the 
Treasury, may prescribe rules or regulations which waive or modify any 
requirement under paragraph (1)--
            ``(i) for any applicable individual account plan with fewer 
        than 100 participants,
            ``(ii) in the case of any blackout period due to unforeseen 
        events outside of the control of a plan sponsor or 
        administrator, or
            ``(iii) in the case of any blackout period due to an 
        acquisition or disposition to which section 410(b)(6)(C) of the 
        Internal Revenue Code of 1986 applies or due to such other 
        circumstances as the Secretary may prescribe.
    ``(B) Waiver requests.--The Secretary may provide procedures for 
requesting a waiver or modification under subparagraph (A) and for 
expedited procedures for considering any such request.
    ``(3) For purposes of this subsection--
            ``(A) the term `applicable individual account plan' means 
        an individual account plan which permits a participant or 
        beneficiary to exercise control over assets in his or her 
        account,
            ``(B) the term `blackout period' means a temporary or 
        indefinite period of 3 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 
        applicable individual account plan, and
            ``(C) 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) Enforcement.--Section 502(c)(1) of such Act (29 
                U.S.C. 1132(c)(1)), as amended by section 101(b), is 
                amended by striking ``section 104(c)'' and inserting 
                ``section 104 (c) or (d)''.
            (2) Data transfer.--Section 404 of such Act (29 U.S.C. 
        1104), as amended by section 102, is amended by adding at the 
        end the following new subsection:
    ``(f)(1)(A) If there is a change of plan administrators resulting 
in a blackout period for an applicable individual account plan with 
respect to which the fair market value of employer securities held by 
the plan exceed 20 percent of the fair market value of all assets held 
by the plan, the plan administrator that is being replaced shall 
transfer to the new plan administrator all necessary data in usable 
form no later than 30 days after the beginning of the blackout period.
    ``(B) A plan sponsor or plan administrator shall not be treated as 
having satisfied any fiduciary responsibility or duty solely by reason 
of having met the requirements of this paragraph.
    ``(2)(A) The Secretary, in consultation with the Secretary of the 
Treasury, may prescribe rules or regulations which waive or modify any 
requirement under paragraph (1)--
            ``(i) for any applicable individual account plan with fewer 
        than 100 participants,
            ``(ii) in the case of any blackout period due to unforeseen 
        events outside of the control of a plan sponsor or 
        administrator, or
            ``(iii) in the case of any blackout period due to an 
        acquisition or disposition to which section 410(b)(6)(C) of the 
        Internal Revenue Code of 1986 applies or due to such other 
        circumstances as the Secretary may prescribe.
    ``(B) The Secretary may provide procedures for requesting a waiver 
or modification under subparagraph (A) and for expedited procedures for 
considering any such request.
    ``(3) For purposes of this subsection--
            ``(A) the term `applicable individual account plan' means 
        an individual account plan which permits a participant or 
        beneficiary to exercise control over assets in his or her 
        account,
            ``(B) the term `blackout period' means a temporary or 
        indefinite period of 3 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 
        applicable individual account plan, and
            ``(C) 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.''

SEC. 302. TRADES BY OWNERS, OFFICERS, AND DIRECTORS PROHIBITED DURING 
              PENSION PLAN BLACKOUT PERIODS.

    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) Trades By Owners, Officers, and Directors Prohibited During 
Pension Plan Suspension Periods.--
            ``(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 blackout period of an 
        applicable defined contribution plan with respect to such 
        equity security. This paragraph shall only apply to equity 
        securities acquired by an individual by reason of the 
        individual's employment with, or status as a beneficial owner, 
        director, or officer of, the issuer.
            ``(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, the 
        terms `applicable defined contribution plan' and `blackout 
        period' have the meanings given such terms by section 4980H of 
        the Internal Revenue Code of 1986.''

                    Subtitle B--Participant Advocacy

SEC. 311. OFFICE OF PENSION PARTICIPANT ADVOCACY.

    (a) In General.--Section 7803 of the Internal Revenue Code of 1986 
(relating to Commissioner of Internal Revenue and other officials) is 
amended by adding at the end the following new subsection:
    ``(e) Office of Pension Participant Advocacy.--
            ``(1) Establishment.--
                    ``(A) In general.--There is established in the 
                Internal Revenue Service an office to be known as the 
                `Office of Pension Participant Advocacy'.
                    ``(B) Pension participant advocate.--The Office of 
                Pension Participant Advocacy shall be under the 
                supervision and direction of an official to be known as 
                the `Pension Participant Advocate' who shall--
                            ``(i) have demonstrated experience in the 
                        area of pension participant assistance, and
                            ``(ii) be selected by the Secretary after 
                        consultation with pension participant advocacy 
                        organizations.
                The Pension Participant Advocate shall report directly 
                to the Secretary and shall be entitled to compensation 
                at the same rate as the highest rate of basic pay 
                established for the Senior Executive Service under 
                section 5382 of title 5, United States Code.
            ``(2) Functions of office.--It shall be the function of the 
        Office of Pension Participant Advocacy to--
                    ``(A) evaluate the efforts of the Federal 
                Government, business, and financial, professional, 
                retiree, labor, women's, and other appropriate 
                organizations in assisting and protecting pension plan 
                participants, including--
                            ``(i) serving as a focal point for, and 
                        actively seeking out, the receipt of 
                        information with respect to the policies and 
                        activities of the Federal Government, business, 
                        and such organizations which affect such 
                        participants,
                            ``(ii) identifying significant problems for 
                        pension plan participants and the capabilities 
                        of the Federal Government, business, and such 
                        organizations to address such problems, and
                            ``(iii) developing proposals for changes in 
                        such policies and activities to correct such 
                        problems, and communicating such changes to the 
                        appropriate officials,
                    ``(B) promote the expansion of pension plan 
                coverage and the receipt of promised benefits by 
                increasing the awareness of the general public of the 
                value of pension plans and by protecting the rights of 
                pension plan participants, including--
                            ``(i) enlisting the cooperation of the 
                        public and private sectors in disseminating 
                        information, and
                            ``(ii) forming private-public partnerships 
                        and other efforts to assist pension plan 
                        participants in receiving their benefits,
                    ``(C) advocating for the full attainment of the 
                rights of pension plan participants, including by 
                making pension plan sponsors and fiduciaries aware of 
                their responsibilities,
                    ``(D) giving priority to the special needs of low 
                and moderate income participants,
                    ``(E) developing needed information with respect to 
                pension plans, including information on the types of 
                existing pension plans, levels of employer and employee 
                contributions, vesting status, accumulated benefits, 
                benefits received, and forms of benefits, and
                    ``(F) pursuing claims on behalf of participants and 
                beneficiaries and providing appropriate assistance in 
                the resolution of disputes between participants and 
                beneficiaries and pension plans, including assistance 
                in obtaining settlement agreements.
            ``(3) Reports.--
                    ``(A) Annual report.--Not later than December 31 of 
                each calendar year, the Pension Participant Advocate 
                shall report to the Committees on Education and the 
                Workforce and Ways and Means of the House of 
                Representatives and the Committees on Health, 
                Education, Labor, and Pensions and Finance of the 
                Senate on its activities during the fiscal year ending 
                in the calendar year. Such report shall--
                            ``(i) identify significant problems the 
                        Advocate has identified,
                            ``(ii) include specific legislative and 
                        regulatory changes to address the problems, and
                            ``(iii) identify any actions taken to 
                        correct problems identified in any previous 
                        report.
                The Advocate shall submit a copy of such report to the 
                Secretary and any other appropriate official at the 
                same time it is submitted to the committees of 
                Congress.
                    ``(B) Specific reports.--The Pension Participant 
                Advocate shall report to the Secretary or any other 
                appropriate official any time the Advocate identifies a 
                problem which may be corrected by the Secretary or such 
                official.
                    ``(C) Reports to be submitted directly.--The report 
                required under subparagraph (A) shall be provided 
                directly to the committees of Congress without any 
                prior review or comment than the Secretary or any other 
                Federal officer or employee.
            ``(4) Specific powers.--
                    ``(A) Receipt of information.--Subject to such 
                confidentiality requirements as may be appropriate, the 
                Secretary and other Federal officials shall, upon 
                request, provide such information (including plan 
                documents) as may be necessary to enable the Pension 
                Participant Advocate to carry out the Advocate's 
                responsibilities under this subsection.
                    ``(B) Appearances.--The Pension Participant 
                Advocate may represent the views and interests of 
                pension plan participants before any Federal agency, 
                including, upon request of a participant, in any 
                proceeding involving the participant.
                    ``(C) Contracting authority.--In carrying out 
                responsibilities under paragraph (2)(E), the Pension 
                Participant Advocate may, in addition to any other 
                authority provided by law--
                            ``(i) contract with any person to acquire 
                        statistical information with respect to pension 
                        plan participants, and
                            ``(ii) conduct direct surveys of pension 
                        plan participants.''
    (b) Effective Date.--The amendment made by this section shall take 
effect on January 1, 2003.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. EFFECTIVE DATES AND RELATED RULES.

    (a) In General.--Except as otherwise provided in this Act, the 
amendments made by this Act shall apply with respect to plan years 
beginning on or after January 1, 2003.
    (b) Plan Amendments.--If the amendments made by this Act require an 
amendment to any plan, such plan amendment shall not be required to be 
made before the first plan year beginning on or after January 1, 2005, 
if--
            (1) during the period after such amendments made by this 
        Act take effect and before such first plan year, the plan is 
        operated in accordance with the requirements of such amendments 
        made by this Act, and
            (2) such plan amendment applies retroactively to the period 
        after such amendments made by this Act take effect and before 
        such first plan year.
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