[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5397 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 5397
To improve the retirement security of American families.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 19, 2004
Mr. Andrews introduced the following bill; which was referred to the
Committee on Education and the Workforce
_______________________________________________________________________
A BILL
To improve the retirement security of American families.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Retirement
Enhancement Act of 2004''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title and table of contents.
TITLE I--IMPROVED PARTICIPATION AND VESTING
Sec. 101. Minimum coverage requirements.
Sec. 102. Minimum participation requirements.
Sec. 103. Faster vesting of benefits under defined contribution plans.
Sec. 104. Prohibition of requests by plan sponsors for waiver of
employee rights.
Sec. 105. Model small employer group pension plan.
Sec. 106. Enforcement under ERISA of requirements for simplified
employee pensions.
TITLE II--IMPROVED PENSION PROTECTIONS FOR WOMEN
Sec. 201. Elimination of integration with workers' compensation and
similar benefits.
Sec. 202. Spousal consent required for distributions from defined
contribution plans.
Sec. 203. Modification of joint and survivor annuity requirements.
Sec. 204. Division of pension benefits upon divorce.
Sec. 205. Periods of family and medical leave treated as hours of
service for pension participation and
vesting.
Sec. 206. Right of spouse to know distribution information.
Sec. 207. Repeal of reduction in military Survivor Benefit Plan
annuities at age 62.
Sec. 208. Survivor annuities for widows, widowers, and former spouses
of Federal employees who die before
attaining age for deferred annuity under
Civil Service Retirement System.
Sec. 209. Order of precedence for disposition of amounts remaining in
the thrift savings account of a Federal
employee (or former employee) who dies
before making an effective election
controlling such disposition.
Sec. 210. Amendments relating to effective date provision of the Civil
Service Retirement Spouse Equity Act of
1984.
Sec. 211. Entitlement of divorced spouses to railroad retirement
annuities independent of actual entitlement
of employee.
Sec. 212. Extension of tier II railroad retirement benefits to
surviving former spouses pursuant to
divorce agreements.
TITLE III--SIMPLIFIED INVESTMENT STANDARDS
Sec. 301. Exemption from prohibited transaction rules for certain
aborted emergent transactions.
Sec. 302. Prohibited transaction exemption for the provision of
investment advice.
Sec. 303. Participation of participants in trusteeship of single-
employer plans providing for employee
contributions.
Sec. 304. Diversification of investment of account assets held under
individual account plans.
Sec. 305. Removal of $500,000 cap on bonding requirement.
Sec. 306. Disclosure regarding investments and voting of proxies.
Sec. 307. Immediate warning of excessive stock holdings.
Sec. 308. Report to participants and beneficiaries of trades in
employer securities.
TITLE IV--IMPROVEMENTS IN PENSION INFORMATION AND ENFORCEMENT
Sec. 401. Pension benefit information.
Sec. 402. Disclosures to Secretary of Labor relating to plan
termination and relating to plan sponsors
after acquisition or merger of plans.
Sec. 403. Disclosure of operating income of employers adjusted so as to
exclude certain components mandated in FASB
rules governing accounting for defined
benefit pension plans.
Sec. 404. Specific information regarding multiemployer plans included
in annual report.
Sec. 405. Limited scope audits.
Sec. 406. Reporting and enforcement requirements for employee benefit
plans.
Sec. 407. Study of pension trends and characteristics.
Sec. 408. Early resolution program for pension benefit claims.
Sec. 409. Review of benefit determinations.
Sec. 410. Allowable relief.
Sec. 411. Assessment by Secretary of Labor of penalties for failures to
meet disclosure requirements.
Sec. 412. Missing participants and unclaimed benefits.
Sec. 413. Fiduciary duties with respect to changes in investment
options.
Sec. 414. Office of Pension Participant Advocacy.
Sec. 415. Exclusivity of powers and procedures applicable to rights or
claims.
TITLE V--IMPROVED PENSION PROTECTIONS FOR THE CHANGING WORKFORCE
Sec. 501. Loans from retirement plans for health insurance and job
training expenses.
Sec. 502. Automatic rollover upon mandatory distribution in excess of
$1,000.
Sec. 503. Prompt distribution from defined contribution plans upon
termination of participant's covered
employment.
TITLE VI--GENERAL PROVISIONS
Sec. 601. General effective date.
Sec. 602. Plan amendments.
TITLE I--IMPROVED PARTICIPATION AND VESTING
SEC. 101. MINIMUM COVERAGE REQUIREMENTS.
(a) In General.--Part 2 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 201 et seq.) is
amended by inserting after section 201 the following new section:
``minimum coverage requirements
``Sec. 201A. (a) General Rule.--Each pension plan maintained by an
employer shall benefit all employees of the employer.
``(b) Exclusion of Certain Employees.--
``(1) In general.--Subject to paragraph (2), in
determining, in the case of any plan, whether the requirements
of subsection (a) are met with respect to the employees of the
employer maintaining the plan, there shall be excluded from
consideration--
``(A) employees who are included in a unit of
employees covered by an agreement which, as determined
in accordance with regulations issued by the Secretary,
constitutes a collective bargaining agreement between
employee representatives and the employer or 2 or more
employers including the employer, if there is evidence
that retirement benefits were the subject of good faith
bargaining between the employee representatives and the
employer or employers,
``(B) in the case of a trust, forming a part of the
plan, which is established or maintained pursuant to an
agreement which, as determined in accordance with
regulations issued by the Secretary, constitutes a
collective bargaining agreement between airline pilots
represented in accordance with title II of the Railway
Labor Act and the employer or 2 or more employers
including the employer, all employees not covered by
the agreement, and
``(C) employees who are nonresident aliens and who
receive no earned income (within the meaning of section
911(d)(2) of the Internal Revenue Code of 1986) from
the employer which constitutes income from sources
within the United States (within the meaning of section
861(a)(3) of such Code).
``(2) Special rules.--
``(A) Treatment of employees in units covered by
collective bargaining agreements.--Subsection (a) shall
apply separately with respect to employees (of an
employer referred to in paragraph (1)(A)) who are in a
unit of employees described in paragraph (1)(A).
``(B) Treatment of certain airline employees.--
Paragraph (1)(B) shall not apply in the case of any
plan (of which the trust referred to in paragraph
(1)(B) forms a part) if the plan provides for
contributions or benefits for employees whose principal
duties are not customarily performed aboard aircraft in
flight.
``(c) Exclusion of Employees not Meeting Age and Service
Requirements.--
``(1) In general.--If a plan--
``(A) prescribes, consistent with section 202(a),
minimum age and service requirements as a condition of
participation, and
``(B) excludes all employees not meeting such
requirements from participation,
then such employees shall be excluded from consideration for
purposes of this section.
``(2) Requirements may be met separately with respect to
excluded group.--If employees not meeting the minimum age or
service requirements of section 202(a)(1) (without regard to
subparagraph (B) thereof) are covered under a plan of the
employer which meets the requirements of subsection (a)
separately with respect to such employees, such employees may
be excluded from consideration in determining whether any plan
of the employer meets the requirements of subsection (a).
``(3) Requirements not treated as being met before entry
date.--An employee shall not be treated as meeting the age and
service requirements described in this subsection until the
first date on which, under the plan, any employee with the same
age and service would be eligible to commence participation in
the plan.
``(d) Line of Business Exception.--
``(1) In general.--If, under section 414(r) of the Internal
Revenue Code of 1986, an employer is treated as operating
separate lines of business for a year, the employer may apply
the requirements of this section for such year separately with
respect to employees in each separate line of business.
``(2) Plan must be nondiscriminatory.--Paragraph (1) shall
not apply with respect to any plan maintained by an employer
unless such plan benefits such employees as qualify under a
classification set up by the employer and found by the
Secretary of the Treasury not to be discriminatory in favor of
highly compensated employees.
``(e) Definitions and Special Rules.--For purposes of this
section--
``(1) Highly compensated employee.--The term `highly
compensated employee' has the meaning given such term by
section 414(q) of the Internal Revenue Code of 1986.
``(2) Aggregation rules.--An employer may elect to
designate--
``(A) 2 or more trusts,
``(B) 1 or more trusts and 1 or more annuity plans,
or
``(C) 2 or more annuity plans,
as part of 1 plan to determine whether the requirements of this
section are met with respect to such plan.
``(3) Special rules for certain dispositions or
acquisitions.--
``(A) In general.--If a person becomes, or ceases
to be, a member of a group described in subsection (b),
(c), (m), or (o) of section 414 of such Code, then the
requirements of this section shall be treated as having
been met during the transition period with respect to
any plan covering employees of such person or any other
member of such group if--
``(i) such requirements were met
immediately before each such change, and
``(ii) the coverage under such plan is not
significantly changed during the transition
period (other than by reason of the change in
members of a group) or such plan meets such
other requirements as the Secretary of the
Treasury may prescribe by regulation.
``(B) Transition period.--For purposes of
subparagraph (A), the term `transition period' means
the period--
``(i) beginning on the date of the change
in members of a group, and
``(ii) ending on the last day of the 1st
plan year beginning after the date of such
change.
``(4) Eligibility to contribute.--In the case of
contributions which are subject to section 401(k) or 401(m) of
the Internal Revenue Code of 1986, employees who are eligible
to contribute (or elect to have contributions made on their
behalf) shall be treated as benefiting under the plan.
``(5) Regulations.--The Secretary of the Treasury shall
prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this section.''.
(b) Clerical Amendment.--The table of contents in section 1 of such
Act is amended by inserting after the item relating to section 201 the
following new item:
``Sec. 201A. Minimum coverage requirements.''.
SEC. 102. MINIMUM PARTICIPATION REQUIREMENTS.
(a) In General.--Sections 202(a)(3), 203(b)(2), and 204(b)(4) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1052(a)(3), 1053(b)(2), and 1054(b)(4)) are each amended by striking
``1,000 hours'' each place it appears and inserting ``750 hours''.
(b) Conforming Amendments.--
(1) Sections 202(a)(3)(D), 203(b)(2)(D), and 204(b)(4)(E)
(29 U.S.C. 1052(a)(3)(D), 1053(b)(2)(D), and 1054(b)(4)(E)) are
each amended by striking ``125 days'' and inserting ``94
days''.
(2) Sections 202(b)(5)(B) and 203(b)(3)(E)(ii) (29 U.S.C.
1052(b)(5)(B) and 1053(b)(3)(E)(ii)) are each amended by
striking ``501 hours'' and inserting ``376 hours''.
(3) Section 203(b)(3)(A) (29 U.S.C. 1053(b)(3)(A)) is
amended by striking ``500 hours'' and inserting ``375 hours''.
SEC. 103. FASTER VESTING OF BENEFITS UNDER DEFINED CONTRIBUTION PLANS.
Section 203(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1053(a)) is amended--
(1) by striking paragraph (2)(A) and inserting the
following:
``(A) A plan satisfies the requirements of this
subparagraph if an employee has a nonforfeitable right
to 100 percent of the employee's accrued benefit
derived from employer contributions--
``(i) in the case of a defined benefit
plan, as of completion by the employee of at
least 5 years of service, or
``(ii) in the case of a defined
contribution plan, as of completion by the
employee of at least 3 years of service.'';
(2) in paragraph (2)(B), by inserting after ``if'' the
following: ``the plan is a defined benefit plan and, under the
plan,''; and
(3) in paragraph (4), by striking ``paragraph (2) shall be
applied--'' and all that follows through ``subparagraph (B):''
and inserting ``paragraph (2)(B) shall be applied by
substituting for the table contained therein the following
table:''.
SEC. 104. PROHIBITION OF REQUESTS BY PLAN SPONSORS FOR WAIVER OF
EMPLOYEE RIGHTS.
(a) In General.--Part 2 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1051 et seq.) is
amended--
(1) by redesignating section 211 as section 212; and
(2) by inserting after section 210 the following new
section:
``prohibition of requests by plan sponsors for waiver of employee
rights
``Sec. 211. A plan sponsor may not request any individual to waive
any right of coverage under, or participation in, any pension plan
which is granted by this title.''.
(b) Clerical Amendment.--The table of contents in section 1 of such
Act is amended--
(1) by striking the item relating to section 211; and
(2) by inserting after the item relating to section 210 the
following new items:
``Sec. 211. Prohibition of requests by plan sponsors for waiver of
employee rights.
``Sec. 212. Effective dates.''.
SEC. 105. MODEL SMALL EMPLOYER GROUP PENSION PLAN.
(a) In General.--Section 206 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1056) is amended by adding at the end
the following new subsection:
``(g) Model Simplified Group Pension Plans.--
``(1) Establishment of model plan.--The Secretary, in
consultation with the Secretary of the Treasury, shall
prescribe by regulations one or more model simplified group
pension plans which would--
``(A) provide simplicity and minimal administrative
responsibilities to employers and provide adequate
retirement benefits to employees upon adoption by an
employer, including models which could be established
by a group of small employers, an employee association,
an employer association, or a financial institution,
``(B) cover all employees of the employer,
``(C) accept contributions from successive
employers,
``(D) readily permit and accept rollovers to and
from other qualified plans (as defined in section
203(e)(2)), and
``(E) constitute a plan meeting the requirements of
this Act and Internal Revenue Code of 1986.
In devising a model pension plan, the Secretary shall consider
the adequacy of existing simplified employee pension plan
alternatives and may make recommendations to adopt such plans
as model simplified plans.
``(2) Advertisement of model plan.--The Secretary, in
consultation with the Secretary of the Treasury and the
Administrator of the Small Business Administration, shall
advertise the model plans developed pursuant to paragraph (1),
including through contracts (to the extent provided in
appropriation Acts) with applicable organizations, to ensure
that small employers and their employees are apprised of the
availability of administratively simple single and group
pension plans.''.
(b) Exemption of Plan Sponsor From Fiduciary Liability.--Section
404(a) of such Act (29 U.S.C. 1104(a)) is amended by adding at the end
the following new paragraph:
``(3) A plan sponsor of an employee benefit plan shall not be
liable under this part in connection with such plan for any act or
practice by such plan sponsor consistent with the requirements of such
plan if such plan conforms to the terms of a model simplified group
pension plan prescribed pursuant to section 206(g).''.
(c) Initial Regulations.--Regulations under section 206(g) of the
Employee Retirement Income Security Act of 1974 (added by this section)
for the first model simplified pension plans shall be issued within 12
months after the date of the enactment of this Act.
(d) Study.--Not later than 3 years after the date of the enactment
of this Act, the Secretary of Labor and the Secretary of the Treasury
shall conduct a joint study to determine the feasibility of permitting
non-highly compensated employees whose employer does not cover them
under a pension plan, and other non-covered individuals, to seek an
automatic payroll deduction or other deferral mechanism to make
contributions to a pension plan conforming to the the requirements of a
model simplified group pension plan developed pursuant to section
206(g) of the Employee Retirement Income Security Act of 1974 or to
similar pension plans. Such Secretaries shall submit a joint report to
the Congress describing the results of such study and making such
recommendations as the Secretaries determine necessary or appropriate.
SEC. 106. ENFORCEMENT UNDER ERISA OF REQUIREMENTS FOR SIMPLIFIED
EMPLOYEE PENSIONS.
Subtitle A of title III of the Employee Retirement Income Security
Act of 1974 is amended by adding after section 3004 (29 U.S.C. 1204)
the following new section:
``treatment of simplified employee pensions
``Sec. 3005. For purposes of part 5 of subtitle B of title I, the
requirements of section 408(k) of the Internal Revenue Code of 1986
relating to simplified employee pensions (as defined in section
408(k)(1) of such Code) shall be treated as requirements of title I
applicable to employee pension benefit plans (as defined in section
3(2)) which are such simplified employee pensions.''.
TITLE II--IMPROVED PENSION PROTECTIONS FOR WOMEN
SEC. 201. ELIMINATION OF INTEGRATION WITH WORKERS' COMPENSATION AND
SIMILAR BENEFITS.
Section 206 of the Employee Retirement Income Security Act of 1974
(as amended by section 105(a)) is amended further by adding at the end
the following new subsection:
``(h) Integration With Workers' Compensation and Similar Benefits
Precluded.--Benefits under an employee pension benefit plan may not
vary based on the amount of benefits received by a participant or
beneficiary under an applicable worker's compensation law, unemployment
compensation law, or disability insurance law, or on whether the
participant or beneficiary is entitled to such benefits.''.
SEC. 202. SPOUSAL CONSENT REQUIRED FOR DISTRIBUTIONS FROM DEFINED
CONTRIBUTION PLANS.
(a) In General.--Section 205(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1055(b)) is amended to read as follows:
``(b)(1) This section shall apply to any defined benefit plan and
to any individual account plan.
``(2) Notwithstanding paragraph (1), this section shall not apply
to a plan which the Secretary of the Treasury or his delegate has
determined is a plan described in section 404(c) of the Internal
Revenue Code of 1986 (or a continuation thereof) in which participation
is substantially limited to individuals who, before January 1, 1976,
ceased employment covered by the plan.''.
(b) Hardship Distribution.--Section 205 of such Act (29 U.S.C.
1055) is amended by adding at the end the following new subsection:
``(m) This section shall not apply to a hardship distribution under
section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986.''.
(c) Special Rule for Cash-outs.--Section 205(g) of such Act (29
U.S.C. 1055(g)) is amended--
(1) by adjusting the margination of paragraph (3) so as to
align such paragraph with the margination of paragraphs (1) and
(2); and
(2) by adding at the end the following new paragraph:
``(4) Special Rule for Defined Contribution Plans.--
``(A) In general.--In the case of an individual account
plan, notwithstanding paragraph (2), if the present value of
the qualified joint and survivor annuity or the qualified
preretirement survivor annuity exceeds $10,000, the plan shall
immediately distribute 50 percent of the present value of such
annuity to each spouse, unless otherwise elected in advance by
the spouse in writing in accordance with such regulations as
the Secretary may prescribe. Section 211 shall apply with
respect to each spouse's rights under this paragraph as if such
spouse were an employee referred to in such section.
``(B) Exception.--The plan may distribute a different
percentage of the present value of an annuity to each spouse if
a court order or contractual agreement between the spouses
provides for such different percentage.''.
SEC. 203. MODIFICATION OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS.
(a) Option to Elect Qualified Alternative Joint and Survivor
Annuity Form of Benefit Upon Waiver of Qualified Joint and Survivor
Annuity Form of Benefit.--
(1) In general.--Section 205(c)(1)(A) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1055(c)(1)(A)) is amended to read as follows:
``(A) under the plan, each participant--
``(i) may elect at any time during the
applicable election period to waive the
qualified joint and survivor annuity form of
benefit,
``(ii) may elect at any time during the
applicable election period to waive the
qualified preretirement survivor annuity form
of benefit,
``(iii) may elect at any time during the
applicable election period, in any case in
which the qualified joint and survivor annuity
form of benefit is not provided by reason of a
waiver under clause (i), to be provided a
qualified alternative joint and survivor
annuity form of benefit, and
``(iv) may revoke any such election at any
time during the applicable election period,
and''.
(2) Qualified alternative joint and survivor annuity
defined.--Section 205(d) of such Act (29 U.S.C. 1055(d)) is
amended--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively;
(B) by inserting ``(1)'' after ``(d)''; and
(C) by adding at the end the following new
paragraph:
``(2)(A) For purposes of this section, the term `qualified
alternative joint and survivor annuity' means an annuity--
``(i) for the life of the participant with a survivor
annuity for the life of the spouse which is equal to the
applicable percentage (determined under subparagraph (B)) of
(and not greater than 100 percent of) the amount of the annuity
which is payable during the joint lives of the participant and
the spouse, and
``(ii) which is the actuarial equivalent of a single
annuity for the life of the participant.
Such term also includes any annuity form having the effect of an
annuity described in the preceding sentence.
``(B)(i) For purposes of subparagraph (A)--
``(I) if the base survivor annuity percentage is
less than 75 percent, the applicable percentage is 75
percent, and
``(II) if the base survivor annuity percentage is
equal to at least 75 percent, the applicable percentage
is 50 percent.
``(ii) For purposes of clause (i), the term `survivor annuity
percentage' means the percentage which the survivor annuity under the
plan's qualified joint and survivor annuity form of benefit bears to
the annuity payable during the joint lives of the participant and the
spouse under such form of benefit.''.
(b) Exemption in the Case of Plans Offering Fully Subsidized
Qualified Joint and Survivor Annuities.--Section 205(c)(5) of such Act
(29 U.S.C. 1055(c)(5)) is amended--
(1) by redesignating subparagraph (B) as subparagraph (C);
and
(2) by inserting after subparagraph (A) the following new
subparagraph:
``(B) The requirements of this subsection shall not apply with
respect to the qualified alternative joint and survivor annuity form of
benefit if the plan fully subsidizes the costs of the qualified joint
and survivor annuity form of benefit.''.
(c) Illustration Requirement.--Clause (i) of section 205(c)(3)(A)
of such Act (29 U.S.C. 1055(c)(3)(A)) is amended to read as follows:
``(i) the terms and conditions of the qualified joint and
survivor annuity form of benefit offered by the plan, the terms
and conditions of the qualified preretirement survivor annuity
form of benefit offered by the plan, and the terms and
conditions of the qualified alternative joint and survivor
annuity form of benefit offered by the plan, accompanied by an
illustration of the benefits under each such form of benefit
for the particular participant and spouse and an
acknowledgement form to be signed by the participant and the
spouse that they have read and considered the illustration
before any election is made pursuant to clause (i) or (ii) of
subsection (c)(1)(A).''.
(d) Rule of Construction.--For purposes of section 204(g) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)), a
plan shall not be treated as having decreased the accrued benefit of a
participant solely by reason of the adoption of a plan amendment under
which a qualified alternative joint and survivor annuity form of
benefit is added to the plan in accordance with section
205(c)(1)(A)(ii) of such Act (as amended by this section).
SEC. 204. DIVISION OF PENSION BENEFITS UPON DIVORCE.
(a) In General.--Section 206(d)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1056(d)(3)) is amended by
redesignating subparagraph (N) as subparagraph (O) and by inserting
after subparagraph (M) the following new subparagraph:
``(N) Special Rules and Procedures for Domestic Relations Orders
not Specifying Division of Pension Benefits.--
``(i) In general.--In any case in which--
``(I) a domestic relations order (including an
annulment or other order of marital dissolution)
relates to provision of marital property with respect
to a marriage of at least 5 years duration between an
individual who is a participant in a pension plan and
such individual's former spouse,
``(II) such order, and all prior orders (if any)
described in subclause (I) relating to such marriage,
do not specifically provide that pension benefits were
considered by the parties and that no division of such
benefits is intended,
``(III) such order is not a qualified domestic
relations order (as determined without regard to this
subparagraph) and there is no other prior qualified
domestic relations order issued in connection with the
dissolution of the marriage to which such order
relates, and
``(IV) the former spouse notifies the plan within
the period prescribed under clause (vii) that the
former spouse is entitled to benefits under the plan in
accordance with the provisions of this subparagraph,
such domestic relations order shall be treated as a qualified
domestic relations order for purposes of this paragraph.
``(ii) Amount of benefit.--Any domestic relations order
treated as a qualified domestic relations order under clause
(i) shall be treated as specifying that the former spouse is
entitled to the applicable percentage of the marital share of
the participant's accrued benefit.
``(iii) Marital share.--For purposes of clause (ii), the
marital share of a participant's accrued benefit is an amount
equal to the product of--
``(I) such benefit as of the date of the first
payment under the plan (to the extent such accrued
benefit is vested on the date of the dissolution of the
marriage or any later date), and
``(II) a fraction, the numerator of which is the
period of participation by the participant under the
plan starting with the date of marriage and ending with
the date of dissolution of marriage, and the
denominator of which is the total period of
participation by the participant under the plan.
``(iv) Applicable percentage.--For purposes of clause (ii),
the applicable percentage is--
``(I) except as provided in subclause (II), 50
percent, and
``(II) in the case of a participant who fails to
provide the plan with notice of a domestic relations
order within the time prescribed under clause (v), 67
percent.
``(v) Notice by participant.--Each participant in a pension
plan shall, within 60 days after the dissolution of the
marriage of the participant--
``(I) notify the plan administrator of the plan of
such dissolution, and
``(II) provide to the plan administrator a copy of
the domestic relations order (including an annulment or
other order of marital dissolution) providing for such
dissolution and the last known address of the
participant's former spouse.
``(vi) Notice by plan administrator.--Each plan
administrator receiving notice under clause (v) shall promptly
notify the former spouse of a participant of such spouse's
rights under this subparagraph, including the time period
within which such spouse is required to notify the plan of the
spouse's intention to claim rights under this subparagraph.
``(vii) Notice by former spouse.--A former spouse may
notify the plan administrator of such spouse's intent to claim
rights under this subparagraph at any time before the last day
of the 1-year period following receipt of notice under clause
(vi).
``(viii) Coordination with plan procedures.--The
determination under subparagraph (G)(i)(II) with respect to a
domestic relations order to which this subparagraph applies
shall be made within a reasonable period of time after the plan
administrator receives the notice described in clause (vii).
``(ix) Interpretation as qualified domestic relations
order.--Each plan shall establish reasonable rules for
determining how any such deemed domestic relations order is to
be interpreted under the plan so as to constitute a qualified
domestic relations order that satisfies subparagraphs (C)
through (E) (and a copy of such rules shall be provided to such
former spouse promptly after delivery of the divorce decree).
Such rules--
``(I) may delay the effect of such an order until
the earlier of the date the participant is fully vested
or has terminated employment,
``(II) may allow distribution to the former spouse
to be made immediately,
``(III) shall permit the former spouse to be paid
not later than the earliest retirement age under the
plan or the participant's death,
``(IV) may require the submitter of the divorce
decree to present a marriage certificate or other
evidence of the marriage date to assist in benefit
calculations, and
``(V) may conform to the rules applicable to
qualified domestic relations orders regarding form or
type of benefit.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to notifications made by former spouses pursuant to
section 206(d)(3)(N)(vii) of the Employee Retirement Income Security
Act of 1974 (added by this section) after December 31, 2005.
SEC. 205. PERIODS OF FAMILY AND MEDICAL LEAVE TREATED AS HOURS OF
SERVICE FOR PENSION PARTICIPATION AND VESTING.
(a) Participation.--
(1) In general.--Paragraph (3) of section 202(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1052(a)(3)) is amended by adding at the end the following new
subparagraph:
``(E)(i) For purposes of this subsection, in the case of an
individual who is absent from work on leave required to be given to
such individual under the Family and Medical Leave Act of 1993, the
plan shall treat as hours of service--
``(I) the hours of service which otherwise would normally
have been credited to such individual but for such absence, or
``(II) in any case in which the plan is unable to determine
the hours described in subclause (I), 8 hours of service per
day of absence.
``(ii) The hours described in clause (i) shall be treated as hours
of service as provided in this subparagraph--
``(I) only in the year in which the absence from work
begins, if section 203(b)(2)(E)(ii)(I) requires hours to be
credited to the year in which the absence from work begins, or
``(II) in any other case, in the immediately following
year.''.
(2) Coordination with treatment of maternity and paternity
absences under break in service rules.--Subparagraph (A) of
section 202(b)(5) of such Act (29 U.S.C. 1052(b)(5)(A)) is
amended by adding at the end the following new sentence: ``The
preceding sentence shall apply to an absence from work only if
no part of such absence is required to be given under the
Family and Medical Leave Act of 1993.''.
(b) Vesting.--
(1) In general.--Paragraph (2) of section 203(b) of such
Act (29 U.S.C. 1053(b)(2)) is amended by adding at the end the
following new subparagraph:
``(E)(i) For purposes of this subsection, in the case of an
individual who is absent from work on leave required to be given to
such individual under the Family and Medical Leave Act of 1993, the
plan shall treat as hours of service--
``(I) the hours of service which otherwise would normally
have been credited to such individual but for such absence, or
``(II) in any case in which the plan is unable to determine
the hours described in subclause (I), 8 hours of service per
day of absence.
``(ii) The hours described in clause (i) shall be treated as hours
of service as provided in this subparagraph--
``(I) only in the year in which the absence from work
begins, if the participant's rights in his accrued benefit
derived from employer contributions are to any extent not
nonforfeitable and the participant would have a year of service
solely because the period of absence is treated as hours of
service as provided in clause (i); or
``(II) in any other case, in the immediately following
year.''.
(2) Coordination with treatment of maternity and paternity
absences under break in service rules.--Clause (i) of section
203(b)(3)(E) of such Act (29 U.S.C. 1053(b)(3)(E)(i)) is
amended by adding at the end the following new sentence: ``The
preceding sentence shall apply to an absence from work only if
no part of such absence is required to be given under the
Family and Medical Leave Act of 1993.''.
(c) Application to Current Employees.--The amendments made by this
section shall not apply to any employee who does not have at least 1
hour of service in any plan year beginning after December 31, 2005.
SEC. 206. RIGHT OF SPOUSE TO KNOW DISTRIBUTION INFORMATION.
Paragraph (3) of section 205(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1055(c)(3)) is amended by adding at the
end the following new subparagraph:
``(C) At the time a plan provides a participant with a written
explanation under subparagraph (A) or (B), such plan shall provide a
copy of such explanation to such participant's spouse. If the last
known address of the spouse is the same as the last known address of
the participant, the requirement of the preceding sentence shall be
treated as met if the copy referred to in the preceding sentence is
included in a single mailing made to such address and addressed to both
such participant and spouse.''.
SEC. 207. REPEAL OF REDUCTION IN MILITARY SURVIVOR BENEFIT PLAN
ANNUITIES AT AGE 62.
(a) Computation of Annuity for a Spouse, Former Spouse, or Child.--
Subsection (a) of section 1451 of title 10, United States Code, is
amended--
(1) in paragraph (1), by striking ``shall be determined as
follows:'' and all that follows and inserting the following:
``shall be the amount equal to 55 percent of the base
amount.'';
(2) in paragraph (2), by striking ``shall be determined as
follows:'' and all that follows and inserting the following:
``shall be the amount equal to a percentage of the base amount
that is less than 55 percent and is determined under subsection
(f).''.
(b) Annuities for Survivors of Certain Persons Dying During a
Period of Special Eligibility for SBP.--Subsection (c)(1) of such
section is amended by striking ``shall be determined as follows:'' and
all that follows and inserting the following: ``shall be the amount
equal to 55 percent of the retired pay to which the member or former
member would have been entitled if the member or former member had been
entitled to that pay based upon his years of active service when he
died determined as follows:
``(A) In the case of an annuity provided under section
1448(d) of this title (other than in a case covered by
subparagraph (B)), such retired pay shall be computed as if the
member had been retired under section 1201 of this title on the
date of the member's death with a disability rated as total.
``(B) In the case of an annuity provided under section
1448(d)(1)(A) of this title by reason of the death of a member
not in line of duty, such retired pay shall be computed based
upon the member's years of active service when he died.
``(C) In the case of an annuity provided under section
1448(f) of this title, such retired pay shall be computed based
upon the member or former member's years of active service when
he died computed under section 12733 of this title.''.
(c) Repeal of Requirement for Reduction.--Such section is further
amended by striking subsection (d).
(d) Repeal of Unnecessary Supplemental SBP.--(1) Subchapter III of
chapter 73 of title 10, United States Code, is repealed.
(2) The table of subchapters at the beginning of such chapter is
amended by striking the item relating to subchapter III.
(e) Effective Date.--The amendments made by this section shall take
effect on October 1, 2005, and shall apply with respect to annuity
payments for months beginning on or after that date.
SEC. 208. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS, AND FORMER SPOUSES
OF FEDERAL EMPLOYEES WHO DIE BEFORE ATTAINING AGE FOR
DEFERRED ANNUITY UNDER CIVIL SERVICE RETIREMENT SYSTEM.
(a) Benefits for Widow or Widower.--Section 8341(f) of title 5,
United States Code, is amended--
(1) in the matter preceding paragraph (1)--
(A) by inserting ``a former employee separated from
the service with title to deferred annuity from the
Fund dies before having established a valid claim for
annuity and is survived by a spouse, or if'' before ``a
Member''; and
(B) by inserting ``of such former employee or
Member'' after ``the surviving spouse'';
(2) in paragraph (1)--
(A) by inserting ``former employee or'' before
``Member commencing''; and
(B) by inserting ``former employee or'' before
``Member dies''; and
(3) in the undesignated sentence following paragraph (2)--
(A) in the matter preceding subparagraph (A), by
inserting ``former employee or'' before ``Member''; and
(B) in subparagraph (B), by inserting ``former
employee or'' before ``Member''.
(b) Benefits for Former Spouse.--Section 8341(h) of title 5, United
States Code, is amended--
(1) in paragraph (1), by inserting ``former employee
entitled to a deferred annuity under section 8338(a) of this
title,'' after ``employee, Member, annuitant,''; and
(2) in paragraph (2)--
(A) in subparagraph (A)(ii) by striking ``or
annuitant,'' and inserting ``annuitant, or former
employee''; and
(B) in subparagraph (B)(iii) by inserting ``former
employee or'' before ``Member''.
(c) Protection of Survivor Benefit Rights.--Section 8339(j)(3) of
title 5, United States Code, is amended by adding at the end the
following: ``The Office shall provide by regulation for the application
of this subsection to the widow, widower, or surviving former spouse of
a former employee who dies after having separated from the service with
title to a deferred annuity under section 8338(a) but before having
established a valid claim for annuity.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act and shall apply only in
the case of a former employee who dies on or after such date.
SEC. 209. ORDER OF PRECEDENCE FOR DISPOSITION OF AMOUNTS REMAINING IN
THE THRIFT SAVINGS ACCOUNT OF A FEDERAL EMPLOYEE (OR
FORMER EMPLOYEE) WHO DIES BEFORE MAKING AN EFFECTIVE
ELECTION CONTROLLING SUCH DISPOSITION.
(a) In General.--Section 8433(e) of title 5, United States Code, is
amended--
(1) by striking ``(e)'' and inserting ``(e)(1)'';
(2) by striking all that follows ``paid'' and inserting
``in accordance with paragraph (2).''; and
(3) by adding at the end the following:
``(2) An amount under paragraph (1) shall be paid in a manner
consistent with the provisions of section 8424(d), except that, in
applying the order of precedence under such provisions--
``(A) the widow or widower of the decedent shall be the
first party entitled to receive (instead of any designated
beneficiary); and
``(B) if there is no widow or widower, the party next
entitled to receive shall be the beneficiary or beneficiaries
designated by the employee or Member (or former employee or
Member) in accordance with the procedures that would otherwise
normally apply, subject to such additional conditions as the
Executive Director shall by regulation prescribe based on
section 205(c)(2) of the Employee Retirement Income Security
Act of 1974 (relating to spousal consent requirements).''.
(b) Effective Date.--This section and the amendment made by this
section shall take effect on the 90th day after the date of the
enactment of this Act, and shall apply in the case of any individual
who dies on or after such 90th day.
SEC. 210. AMENDMENTS RELATING TO EFFECTIVE DATE PROVISION OF THE CIVIL
SERVICE RETIREMENT SPOUSE EQUITY ACT OF 1984.
(a) Elimination of Certain Bars to Eligibility.--Section 4(b) of
the Civil Service Retirement Spouse Equity Act of 1984 (5 U.S.C. 8341
note) is amended--
(1) in paragraph (1)(B)(i), by striking ``after September
14, 1978, and''; and
(2) by repealing paragraph (4).
(b) New Deadline for Applications.--
(1) In general.--Section 4(b)(1)(B)(iv) of the Civil
Service Retirement Spouse Equity Act of 1984 is amended by
striking ``May 7, 1989'' and inserting ``May 7th of the year
following the year in which the Retirement Enhancement Act of
2004 is enacted''.
(2) Authority to waive deadline.--Section 4(b) of the Civil
Service Retirement Spouse Equity Act of 1984 is amended by
adding at the end the following:
``(6)(A) The Director of the Office of Personnel Management may
waive the deadline under paragraph (1)(B)(iv) in any case in which the
Director determines that the circumstances so warrant.
``(B) In making a determination under this paragraph, one of the
factors which may be taken into account is whether the individual
involved has previously submitted a timely application under this
section--
``(i) which was denied; but
``(ii) which, based on criteria applied under this section
pursuant to changes in law subsequent to the denial, would have
been approved.''.
SEC. 211. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD RETIREMENT
ANNUITIES INDEPENDENT OF ACTUAL ENTITLEMENT OF EMPLOYEE.
(a) In General.--Section 2 of the Railroad Retirement Act of 1974
(45 U.S.C. 231a) is amended--
(1) in subsection (c)(4)(i), by striking ``(A) is entitled
to an annuity under subsection (a)(1) and (B)''; and
(2) in subsection (e)(5), by striking ``or divorced wife''
the second place it appears.
(b) Effective Date.--The amendments made by this section shall take
effect 1 year after the date of the enactment of this Act.
SEC. 212. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS TO
SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE AGREEMENTS.
(a) In General.--Section 5 of the Railroad Retirement Act of 1974
(45 U.S.C. 231d) is amended by adding at the end the following:
``(d) Notwithstanding any other provision of law, the payment of
any portion of an annuity computed under section 3(b) to a surviving
former spouse in accordance with a court decree of divorce, annulment,
or legal separation or the terms of any court-approved property
settlement incident to any such court decree shall not be terminated
upon the death of the individual who performed the service with respect
to which such annuity is so computed unless such termination is
otherwise required by the terms of such court decree.''.
(b) Effective Date.--The amendment made by this section shall take
effect 1 year after the date of the enactment of this Act.
TITLE III--SIMPLIFIED INVESTMENT STANDARDS
SEC. 301. EXEMPTION FROM PROHIBITED TRANSACTION RULES FOR CERTAIN
ABORTED EMERGENT TRANSACTIONS.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--Section 408 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1108) is amended by adding at the end the following new
subsection:
``(g)(1) Pursuant to regulations issued by the Secretary, in the
case of a qualifying transaction between an employee benefit plan and
an eligible person which would, but for this subsection, be in
violation of a restriction imposed by section 406 or 407(a), if--
``(A) the eligible person submits to the Secretary, not
later than 60 days after the date of the transaction, an
application for an exemption under subsection (a) from such
restriction in the case of such transaction,
``(B) the Secretary determines not to grant the exemption,
and
``(C) the transaction is reversed within 60 days after the
date of the Secretary's determination,
then the transaction shall be exempted under subsection (a) from
treatment as a violation of such restriction.
``(2) For purposes of this subsection--
``(A) The term `qualifying transaction' means, in
connection with an eligible person, a transaction between an
employee benefit plan and such eligible person constituting the
purchase or sale of a financial product, if--
``(i) prior to engaging in the transaction, the
plan acquires from the eligible person a sufficient
guarantee, consisting of a letter of credit or other
form of written guarantee, issued by a bank or similar
financial institution (other than the eligible person
requesting the exemption or an affiliate) regulated and
supervised by, and subject to periodic examination by,
an agency of a State or of the Federal Government, in a
stated amount equal, as of the close of business on the
day preceding the transaction, to not less than 100
percent of the amount of plan assets involved in the
transaction, plus interest on that amount at a rate
determined by the parties to the transaction, or in the
absence of such determination, an interest rate equal
to the underpayment rate defined in section 6621(a)(2)
of the Internal Revenue Code of 1986,
``(ii) the eligible person receives in such
transaction not more than reasonable compensation,
``(iii) such transaction is expressly approved by
an independent fiduciary who has investment authority
with respect to the plan assets involved in the
transaction, and
``(iv) immediately after the acquisition of the
financial product--
``(I) the fair market value of such
financial product does not exceed 1 percent of
the fair market value of the assets of the
plan, and
``(II) the aggregate fair market value of
all outstanding financial products acquired by
the plan from the eligible person pursuant to
this subsection does not exceed 5 percent of
the fair market value of the assets of the
plan.
``(3) For purposes of this subsection--
``(A) A guarantee referred to in paragraph (2) is
`sufficient' if such guarantee is irrevocable and, under the
terms of the guarantee, if the Secretary determines not to
grant the exemption, the plan has the unconditional right to
apply the amounts under the guarantee to any losses suffered
and to the payment of interest determined under the terms of
the transaction. A guarantee shall not be treated as failing to
be `sufficient' solely because, under the terms of the
guarantee, if the Secretary grants the exemption, the guarantee
may expire without any payments made to the plan.
``(B) The term `eligible person' means a person that--
``(i) consists of--
``(I) a bank as defined in section
202(a)(2) of the Investment Advisers Act of
1940,
``(II) an investment adviser registered
under the Investment Advisers Act of 1940,
``(III) an insurance company which is
qualified to do business in more than one
State, or
``(IV) a broker-dealer registered under the
Securities Exchange Act of 1934,
``(ii) has shareholders' or partners' equity in
excess of $1,000,000, and
``(iii) is not described in section 411.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to transactions occurring after December 31, 2005.
SEC. 302. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF
INVESTMENT ADVICE.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 408(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1108(b)) is amended by
adding at the end the following new paragraph:
``(14)(A) Any transaction described in subparagraph (B) in
connection with the provision of investment advice described in
section 3(21)(A)(ii), in any case in which--
``(i) the plan provides for individual accounts and
permits a participant or beneficiary to exercise
control over assets in his or her account,
``(ii) the advice is qualified investment advice
provided to a participant or beneficiary of the plan by
a fiduciary adviser in connection with any sale,
acquisition, or holding of a security or other property
for purposes of investment of plan assets, and
``(iii) the requirements of subsection (g) are met
in connection with each instance of the provision of
the advice.
``(B) The transactions described in this subparagraph are
the following:
``(i) the provision of the advice to the
participant or beneficiary;
``(ii) the sale, acquisition, or holding of a
security or other property (including any lending of
money or other extension of credit associated with the
sale, acquisition, or holding of a security or other
property) pursuant to the advice; and
``(iii) the direct or indirect receipt of fees or
other compensation by the fiduciary adviser or an
affiliate thereof (or any employee, agent, or
registered representative of the fiduciary adviser or
affiliate) in connection with the provision of the
advice.''.
(2) Requirements.--Section 408 of such Act is amended
further by adding at the end the following new subsection:
``(g) Requirements for Exemption From Prohibited Transactions With
Respect to Provision of Investment Advice.--
``(1) In general.--The requirements of this subsection are
met in connection with the provision of qualified investment
advice provided to a participant or beneficiary of an employee
benefit plan by a fiduciary adviser with respect to the plan in
connection with any sale, acquisition, or holding of a security
or other property for purposes of investment of amounts held by
the plan, if the requirements of the following subparagraphs
are met:
``(A) Written disclosures.--At a time
contemporaneous with the provision of the advice in
connection with the sale, acquisition, or holding of
the security or other property, the fiduciary adviser
shall provide to the recipient of the advice a clear
and conspicuous notification, written in a manner to be
reasonably understood by the average plan participant
pursuant to regulations which shall be prescribed by
the Secretary (including mathematical examples), of the
following:
``(i) Interests held by the fiduciary
adviser.--Any interest of the fiduciary adviser
in, or any affiliation or contractual
relationship of the fiduciary adviser (or
affiliates thereof) with any third party having
an interest in, the security or other property.
``(ii) Related fees or compensation in
connection with the provision of the advice.--
All fees or other compensation relating to the
advice (including fees or other compensation
itemized with respect to each security or other
property with respect to which the advice is
provided) that the fiduciary adviser (or any
affiliate thereof) is to receive (including
compensation provided by any third party) in
connection with the provision of the advice or
in connection with the sale, acquisition, or
holding of the security or other property.
``(iii) Ongoing fees or compensation in
connection with the security or property
involved.--All fees or other compensation that
the fiduciary adviser (or any affiliate
thereof) is to receive, on an ongoing basis, in
connection with any security or other property
with respect to which the fiduciary adviser
gives the advice.
``(iv) Applicable limitations on scope of
advice.--Any limitation placed (in accordance
with the requirements of this subsection) on
the scope of the advice to be provided by the
fiduciary adviser with respect to the sale,
acquisition, or holding of the security or
other property.
``(v) Types of services generally
offered.--The types of services offered by the
fiduciary adviser in connection with the
provision of qualified investment advice by the
fiduciary adviser.
``(vi) Fiduciary status of the fiduciary
adviser.--That the fiduciary advisor is a
fiduciary of the plan.
``(B) Disclosure by fiduciary adviser in accordance
with applicable securities laws.--The fiduciary adviser
shall provide appropriate disclosure, in connection
with the sale, acquisition, or holding of the security
or other property, in accordance with all applicable
securities laws.
``(C) Transaction occurring solely at direction of
recipient of advice.--The sale, acquisition, or holding
of the security or other property shall occur solely at
the direction of the recipient of the advice.
``(D) Reasonable compensation.--The compensation
received by the fiduciary adviser and affiliates
thereof in connection with the sale, acquisition, or
holding of the security or other property shall be
reasonable.
``(E) Arm's length transaction.--The terms of the
sale, acquisition, or holding of the security or other
property shall be at least as favorable to the plan as
an arm's length transaction would be.
``(2) Continued availability of information for at least 1
year.--The requirements of paragraph (1)(A) shall be deemed not
to have been met in connection with the initial or any
subsequent provision of advice described in paragraph (1) if,
at any time during the 1-year period following the provision of
the advice, the fiduciary adviser fails to maintain the
information described in clauses (i) through (iv) of
subparagraph (A) in currently accurate form or to make the
information available, upon request and without charge, to the
recipient of the advice.
``(3) Evidence of compliance maintained for at least 6
years.--A fiduciary adviser referred to in paragraph (1) who
has provided advice referred to in such paragraph shall, for a
period of not less than 6 years after the provision of the
advice, maintain any records necessary for determining whether
the requirements of the preceding provisions of this subsection
and of subsection (b)(14) have been met. A transaction
prohibited under section 406 shall not be considered to have
occurred solely because the records are lost or destroyed prior
to the end of the 6-year period due to circumstances beyond the
control of the fiduciary adviser.
``(4) Model disclosure forms.--The Secretary shall
prescribe regulations setting forth model disclosure forms to
assist fiduciary advisers in complying with the disclosure
requirements of this subsection.
``(5) Exemption for employers contracting for qualified
investment advice.--
``(A) Reliance on contractual arrangements.--
Subject to subparagraph (B), a plan sponsor or other
person who is a fiduciary (other than a fiduciary
adviser) shall not be treated as failing to meet the
requirements of this part solely by reason of the
provision of qualified investment advice (or solely by
reason of contracting for or otherwise arranging for
the provision of the investment advice), if--
``(i) the advice is provided by a fiduciary
adviser pursuant to an arrangement between the
plan sponsor or other fiduciary and the
fiduciary adviser for the provision by the
fiduciary adviser of qualified investment
advice, and
``(ii) the terms of the arrangement require
compliance by the fiduciary adviser with the
requirements of this subsection.
``(B) Continued duty for employer to prudently
select and review fiduciary advisers.--Nothing in
subparagraph (A) shall be construed to exempt a plan
sponsor or other person who is a fiduciary from any
requirement of this part for the prudent selection and
periodic review of a fiduciary adviser with whom the
plan sponsor or other person enters into an arrangement
for the provision of qualified investment advice. The
plan sponsor or other person who is a fiduciary shall
not be liable under this part with respect to the
specific qualified investment advice given by the
fiduciary adviser to any particular recipient of the
advice. Pursuant to regulations which shall be
prescribed by the Secretary, the fiduciary adviser
shall provide appropriate disclosures to the plan
sponsor to enable the plan sponsor to fulfill its
fiduciary responsibilities under this part. In
connection with the provision of the advice by a
fiduciary adviser on an ongoing basis, such regulations
shall provide for such disclosures on at least an
annual basis.
``(C) Plan assets may be used to pay reasonable
expenses.--Nothing in this part shall be construed to
preclude the use of plan assets to pay for reasonable
expenses in providing qualified investment advice.
``(6) Annual reviews by the secretary.--The Secretary shall
conduct annual reviews of randomly selected fiduciary advisers
providing qualified investment advice to participants and
beneficiaries. In the case of each review, the Secretary shall
review the following:
``(A) Compliance by advice computer models with
generally accepted investment management principles.--
The extent to which advice computer models employed by
the fiduciary adviser comply with generally accepted
investment management principles.
``(B) Compliance with disclosure requirements.--The
extent to which disclosures provided by the fiduciary
adviser have complied with the requirements of this
subsection.
``(C) Extent of violations.--The extent to which
any violations of fiduciary duties have occurred in
connection with the provision of the advice.
``(D) Extent of reported complaints.--The extent to
which complaints to relevant agencies have been made in
connection with the provision of the advice.
Any proprietary information obtained by the Secretary shall be
treated as confidential.
``(7) Duty of conflicted fiduciary adviser to provide for
alternative independent advice.--
``(A) In general.--In connection with any qualified
investment advice provided by a fiduciary adviser to a
participant or beneficiary regarding any security or
other property, if the fiduciary adviser--
``(i) has an interest in the security or
other property, or
``(ii) has an affiliation or contractual
relationship with any third party that has an
interest in the security or other property,
the requirements of paragraph (1) shall be treated as
not met in connection with the advice unless the
fiduciary adviser has arranged, as an alternative to
the advice that would otherwise be provided by the
fiduciary advisor, for qualified investment advice with
respect to the security or other property provided by
at least one alternative investment adviser meeting the
requirements of subparagraph (B).
``(B) Independence and qualifications of
alternative investment adviser.--Any alternative
investment adviser whose qualified investment advice is
arranged for by a fiduciary adviser pursuant to
subparagraph (A)--
``(i) shall have no material interest in,
and no material affiliation or contractual
relationship with any third party having a
material interest in, the security or other
property with respect to which the investment
adviser is providing the advice, and
``(ii) shall meet the requirements of a
fiduciary adviser under paragraph (8)(A),
except that an alternative investment adviser
may not be a fiduciary of the plan other than
in connection with the provision of the advice.
``(C) Scope and fees of alternative investment
advice.--Any qualified investment advice provided
pursuant to this paragraph by an alternative investment
adviser shall be of the same type and scope, and
provided under the same terms and conditions (including
no additional charge to the participant or
beneficiary), as apply with respect to the qualified
investment advice to be provided by the fiduciary
adviser.
``(8) Fiduciary adviser defined.--For purposes of this
subsection and subsection (b)(14)--
``(A) In general.--The term `fiduciary adviser'
means, with respect to a plan, a person who--
``(i) is a fiduciary of the plan by reason
of the provision of qualified investment advice
by such person to a participant or beneficiary,
``(ii) meets the qualifications of
subparagraph (B), and
``(iii) meets the additional requirements
of subparagraph (C).
``(B) Qualifications.--A person meets the
qualifications of this subparagraph if such person--
``(i) is registered as an investment
adviser under the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.),
``(ii) if not registered as an investment
adviser under such Act by reason of section
203A(a)(1) of such Act (15 U.S.C. 80b-
3a(a)(1)), is registered under the laws of the
State in which the fiduciary maintains its
principal office and place of business, and, at
the time the fiduciary last filed the
registration form most recently filed by the
fiduciary with such State in order to maintain
the fiduciary's registration under the laws of
such State, also filed a copy of such form with
the Secretary,
``(iii) is registered as a broker or dealer
under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.),
``(iv) is a bank or similar financial
institution referred to in section 408(b)(4),
``(v) is an insurance company qualified to
do business under the laws of a State, or
``(vi) is any other comparable entity which
satisfies such criteria as the Secretary
determines appropriate.
``(C) Additional requirements with respect to
certain employees or other agents of certain
advisers.--A person meets the additional requirements
of this subparagraph if every individual who is
employed (or otherwise compensated) by such person and
whose scope of duties includes the provision of
qualified investment advice on behalf of such person to
any participant or beneficiary is--
``(i) a registered representative of such
person,
``(ii) an individual described in subclause
(I), (II), or (III) of subparagraph (A)(ii), or
``(iii) such other comparable qualified
individual as may be designated in regulations
of the Secretary.
``(9) Additional definitions.--For purposes of this
subsection and subsection (b)(14)--
``(A) Qualified investment advice.--The term
`qualified investment advice' means, in connection with
a participant or beneficiary, investment advice
referred to in section 3(21)(A)(ii) which--
``(i) consists of an individualized
recommendation to the participant or
beneficiary with respect to the purchase, sale,
or retention of securities or other property
for the individual account of the participant
or beneficiary, in accordance with generally
accepted investment management principles, and
``(ii) takes into account all investment
options under the plan.
``(B) Affiliate.--The term `affiliate' of another
entity means an affiliated person of such entity (as
defined in section 2(a)(3) of the Investment Company
Act of 1940 (15 U.S.C. 80a-2(a)(3))).
``(C) Registered representative.--The term
`registered representative' of another entity means a
person described in section 3(a)(18) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(18))
(substituting such entity for the broker or dealer
referred to in such section) or a person described in
section 202(a)(17) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(17)) (substituting such entity
for the investment adviser referred to in such
section).''.
(b) Enforcement.--
(1) Liability for breach.--
(A) Liability in connection with individual account
plans.--Section 409 of such Act (29 U.S.C. 1109) is
amended by adding at the end the following new
subsection:
``(c)(1) In any case in which the provision by a fiduciary adviser
of qualified investment advice to a participant or beneficiary
regarding any security or other property consists of a breach described
in subsection (a), the fiduciary adviser shall be personally liable to
make good to the individual account of the participant or beneficiary
any losses to the individual account resulting from the breach, and to
restore to the individual account any profits of the fiduciary adviser
which have been made through use of assets of the individual account
by--
``(A) the fiduciary adviser, or
``(B) any other party with respect to whom a material
affiliation or contractual relationship of the fiduciary
adviser resulted in a violation of section 408(g)(1)(A) in
connection with the advice.
``(2) In the case of any action under this title by a participant
or beneficiary against a fiduciary adviser for relief under this
subsection in connection with the provision of any qualified investment
advice--
``(A) if the participant or beneficiary shows that the
fiduciary adviser had any interest in, or had any affiliation
or contractual relationship with a third party having an
interest in, the security or other property, there shall be a
presumption (rebuttable by a preponderance of the evidence)
that the fiduciary adviser failed to meet the requirements of
subparagraphs (A) and (B) of section 404(a)(1) in connection
with the provision of the advice, and
``(B) the dispute may be settled by arbitration, but only
pursuant to terms and conditions established by agreement
entered into voluntarily by both parties after the commencement
of the dispute.
``(3) For purposes of this subsection, the terms `fiduciary
adviser' and `qualified investment advice' shall have the meanings
provided such terms in subparagraphs (A) and (B), respectively, of
section 406(g)(7).''.
(B) Limitation on exemption from liability.--
Section 403(c) of such Act (29 U.S.C. 1104(c)) is
amended--
(i) by redesignating paragraph (2) as
paragraph (3) (and by adjusting the margination
of such paragraph to full measure and adjusting
the margination of subparagraphs (A) through
(B) thereof accordingly); and
(ii) by inserting after paragraph (1) the
following new paragraph:
``(2)(A) In any case in which--
``(i) a participant or beneficiary exercises control over
the assets in his or her account by means of a sale,
acquisition, or holding of a security or other property with
regard to which qualified investment advice was provided by a
fiduciary adviser, and
``(ii) any transaction in connection with the exercise of
such control is not a prohibited transaction solely by reason
of section 408(b)(14), paragraph (1) shall not apply with
respect to the fiduciary adviser in connection with the
provision of the advice.
``(B) For purposes of this subsection, the terms `fiduciary
adviser' and `qualified investment advice' shall have the meanings
provided such terms in subparagraphs (A) and (B), respectively, of
section 408(g)(7).''.
(2) Attorney's fees.--Section 502(g) of such Act (29 U.S.C.
1132(g)) is amended--
(A) in paragraph (1), by inserting ``or (3)'' after
``paragraph (2)''; and
(B) by adding at the end the following new
paragraph:
``(3) In any action under this title by the participant or
beneficiary against a fiduciary adviser for relief under section 409(c)
in which the plaintiff prevails, the court shall allow a reasonable
attorney's fee and costs of action to the prevailing plaintiff.''.
(3) Applicability of state fraud laws.--Section 514(b) of
such Act (29 U.S.C. 1144(b)) is amended--
(A) by redesignating paragraph (9) as paragraph
(10); and
(B) by inserting after paragraph (8) the following
new paragraph:
``(9) Nothing in this title shall be construed to supersede any
State action for fraud against a fiduciary adviser for any act or
failure to act by the fiduciary adviser constituting a violation of
section 409(c).''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to advice referred to in section 3(21)(A)(ii) of the
Employee Retirement Income Security Act of 1974 provided on or after
January 1, 2006.
SEC. 303. PARTICIPATION OF PARTICIPANTS IN TRUSTEESHIP OF SINGLE-
EMPLOYER PLANS PROVIDING FOR EMPLOYEE CONTRIBUTIONS.
(a) In General.--Section 403(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1103(a)) is amended--
(1) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively;
(2) by inserting ``(1)'' after ``(a)''; and
(3) by adding at the end the following new paragraph:
``(2)(A) Subject to subparagraph (B), the assets of a pension plan
which is a single-employer plan and under which some or all of the
assets are derived from employee contributions shall be held in trust
by a joint board of trustees, which shall consist of two or more
trustees representing on an equal basis the interests of the employer
or employers maintaining the plan and the interests of the participants
and their beneficiaries.
``(B) This paragraph shall apply for any plan year only if a
majority of the participants of the plan indicates to the plan
administrator, in such form and manner as shall be prescribed in
regulations of the Secretary, its intention to have this paragraph so
apply.
``(C)(i) Except as provided in clause (ii), in any case in which
the plan is maintained pursuant to one or more collective bargaining
agreements between one or more employee organizations and one or more
employers, the trustees representing the interests of the participants
and their beneficiaries shall be designated by such employee
organizations.
``(ii) Clause (i) shall not apply with respect to a plan described
in such clause if the employee organization (or all employee
organizations, if more than one) referred to in such clause file with
the Secretary, in such form and manner as shall be prescribed in
regulations of the Secretary, a written waiver of their rights under
clause (i).
``(iii) In any case in which clause (i) does not apply with respect
to a single-employer plan because the plan is not described in clause
(i) or because of a waiver filed pursuant to clause (ii), the trustee
or trustees representing the interests of the participants and their
beneficiaries shall be selected in accordance with regulations of the
Secretary. Such regulations may provide for selection of trustees by
the employer, but only from individuals who have been demonstrated to
be independent and to have no conflict of interest. An individual shall
not be treated as ineligible for selection as trustee solely because
such individual is an employee of the plan sponsor, except that the
employee so selected may not be a highly compensated employee (as
defined in section 414(q) of the Internal Revenue Code of 1986).
``(iv) The Secretary shall provide by regulation for the
appointment of a neutral, in accordance with the procedures under
section 203(f) of the Labor Management Relations Act, 1947 (29 U.S.C.
173(f)), to cast votes as necessary to resolve tie votes by the
trustees.''.
(b) Regulations.--The Secretary of Labor shall prescribe the
initial regulations necessary to carry out the provisions of such
amendments not later than 90 days after the date of the enactment of
this Act.
SEC. 304. DIVERSIFICATION OF INVESTMENT OF ACCOUNT ASSETS HELD UNDER
INDIVIDUAL ACCOUNT PLANS.
(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) Diversification of Investment of Account Assets Held Under
Individual Account Plans.--
``(1) In general.--In the case of an individual account
plan under which a participant or beneficiary is permitted to
exercise control over assets in his or her account, with
respect to the assets in the account to which the participant
or beneficiary has a nonforfeitable right and which consist of
employer securities which are readily tradable on an
established securities market, the plan shall meet the
requirements of paragraphs (2), (3), (4), (5), (6), and (7).
``(2) Assets attributable to employee contributions.--In
the case of any portion of the account assets described in
paragraph (1) which is attributable to employee contributions,
there shall be no restrictions on the right of a participant or
beneficiary to allocate the assets in such portion to any
investment option provided under the plan.
``(3) Elective deferrals invested in employer securities.--
``(A) In general.--In the case of the portion of
the account assets described in paragraph (1) which is
attributable to elective deferrals and is invested in
employer securities, a plan meets the requirements of
this paragraph if each applicable individual in such
plan may elect to direct the plan to divest any portion
of such securities in the individual's account and to
reinvest an equivalent amount in other investment
options which meet the requirements of paragraph (5).
The preceding sentence shall apply to the extent that
the amount attributable to such reinvested portion
exceeds the amount to which a prior election under this
paragraph or section 401(a)(28) of the Internal Revenue
Code of 1986 applies.
``(B) Applicable individual.--For purposes of this
paragraph, the term `applicable individual' means--
``(i) any participant in the plan,
``(ii) any beneficiary who is an alternate
payee (within the meaning of section
206(d)(3)(K)) under an applicable qualified
domestic relations order (within the meaning of
section 206(d)(3)(B)(i)), and
``(iii) any beneficiary of a deceased
participant or alternate payee.
``(4) Other employer contributions.--
``(A) In general.--In the case of the portion of
the account assets described in paragraph (1) which is
attributable to employer contributions (other than
elective deferrals) and is invested in employer
securities, a plan meets the requirements of this
paragraph if each qualified participant in the plan may
elect to direct the plan to divest any portion of such
securities in the participant's account and to reinvest
an equivalent amount in other investment options which
meet the requirements of paragraph (6). The preceding
sentence shall apply to the extent that the amount
attributable to such reinvested portion exceeds the
amount to which a prior election under this paragraph
or section 401(a)(28) of such Code applies.
``(B) Qualified participant.--For purposes of this
paragraph, the term `qualified participant' means--
``(i) any participant in the plan who has
completed at least 3 years of service (as
determined under section 203(a)) under the
plan,
``(ii) any beneficiary who, with respect to
a participant who met the service requirement
in clause (i), is an alternate payee (within
the meaning of section 206(d)(3)(K)) under an
applicable qualified domestic relations order
(within the meaning of section
206(d)(3)(B)(i)), and
``(iii) any beneficiary of a deceased
participant who met the service requirement in
clause (i) or alternate payee described in
clause (ii).
``(5) Investment options.--The requirements of this
paragraph are met if, with respect to the account assets
described in paragraph (1), the plan offers not less than 3
investment options (not inconsistent with regulations
prescribed by the Secretary) other than employer securities.
``(6) Prompt compliance with directions to allocate
investments.--
``(A) In general.--Except as provided in
subparagraph (B), a plan meets the requirements of this
paragraph with respect to plan assets described in
paragraph (1) if the plan provides that, within 5 days
after the date of any election by a participant or
beneficiary allocating any such assets to any
investment option provided under the plan, the plan
administrator shall take such actions as are necessary
to effectuate such allocation.
``(B) Special rule for periodic elections.--In any
case in which the plan provides for elections
periodically during prescribed periods, the 5-day
period described in subparagraph (A) shall commence at
the end of each such prescribed period.
``(7) Notice of rights and of importance of
diversification.--A plan meets the requirements of this
paragraph if the plan provides that, not later than 30 days
prior to the date on which the right of a participant under the
plan to his or her accrued benefit becomes nonforfeitable, the
plan administrator shall provide to such participant and his or
her beneficiaries a written notice--
``(A) setting forth their rights under this section
with respect to the accrued benefit, and
``(B) describing the importance of diversifying the
investment of account assets.
``(8) Preservation of authority of plan to limit
investment.--Nothing in this subsection shall be construed to
limit the authority of a plan to impose limitations on the
portion of plan assets in any account which may be invested in
employer securities.
``(9) Other definitions and rules.--For purposes of this
subsection--
``(A) Employer securities.--The term `employer
securities' shall have the meaning given such term by
section 407(d)(1) of the Employee Retirement Income
Security Act of 1974.
``(B) Elective deferrals.--The term `elective
deferrals' means an employer contribution described in
section 402(g)(3)(A) of such Code and any employee
contribution.
``(C) Election.--Elections under this subsection
shall be not less frequently than quarterly.
``(D) Employee stock ownership plan.--The term
`employee stock ownership plan' shall have the same
meaning given to such term by section 4975(e)(7) of
such Code.''.
(b) Recommendations Relating to Non-Publicly Traded Stock.--Within
1 year after the date of the enactment of this Act, the Secretary of
Labor shall transmit to the Committee on Education and the Workforce of
the House of Representatives and the Committee on Health, Education,
Labor, and Pensions of the Senate the Secretary's recommendations
regarding legislative changes relating to treatment, under section
404(e) of the Employee Retirement Income Security Act of 1974 (added by
this section), of individual account plans under which a participant or
beneficiary is permitted to exercise control over assets in his or her
account, in cases in which such assets do not include employer
securities which are readily tradable under an established securities
market.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply with respect to
plan years beginning after December 31, 2005.
(2) Exception.--The amendments made by this section shall
not apply to employer securities held by an employee stock
ownership plan which are not subject to section 401(a)(28) of
the Internal Revenue Code of 1986 by reason of section
1175(a)(2) of the Tax Reform Act of 1986 (100 Stat. 2519).
(3) Delayed effective date of existing holdings.--In any
case in which a portion of the nonforfeitable accrued benefit
of a participant or beneficiary is held in the form of employer
securities (as defined in section 407(d)(1) of the Employee
Retirement Income Security Act of 1974) immediately before the
first date of the first plan year to which the amendments made
by this section apply, such portion shall be taken into account
only with respect to plan years beginning on or after January
1, 2007.
SEC. 305. REMOVAL OF $500,000 CAP ON BONDING REQUIREMENT.
Section 412(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1112(a)) is amended, in the matter following paragraph
(2), by striking ``nor more than $500,000'' and all that follows
through ``preceding sentence''.
SEC. 306. DISCLOSURE REGARDING INVESTMENTS AND VOTING OF PROXIES.
(a) In General.--Section 101 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021) is amended by inserting after
subsection (e) the following new subsection:
``(f) Disclosure Regarding Investments and Voting of Proxies.--
``(1) In general.--Within 30 days after receipt by the plan
administrator of a written request by a participant or
beneficiary for relevant and specific information regarding--
``(A) the nature or extent of any particular
investment of plan assets occurring on a particular
date specified in the request, or
``(B) the manner in which any right to vote in
connection with such investment has been exercised by
or under the plan,
the plan administrator shall furnish such information in
writing to such participant or beneficiary. The administrator
may make a reasonable charge to cover the cost of furnishing
such information.
``(2) Standards and review.--The Secretary shall by
regulation prescribe--
``(A) standards which must be met by requests made
pursuant to this subsection, including standards
relating to relevancy and specificity of the
information requested, the specificity by which the
investment must be identified in the request, and the
reasonableness of charges made for furnishing the
information, and
``(B) procedures by which plan administrators may
rely on such standards in declining requests for
information which fail to meet such standards,
including methods for obtaining timely and binding
determinations by the Secretary regarding whether such
standards are being met by particular requests.''.
(b) Conforming Amendment.--Section 101(h)(1) of such Act (29 U.S.C.
1021(h)(1)) is amended by inserting ``or subsection (f)'' after ``this
subsection''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to written requests received after December 31,
2005.
SEC. 307. IMMEDIATE WARNING OF EXCESSIVE STOCK HOLDINGS.
Section 105 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1025) is amended by adding at the end the following new
subsection:
``(e)(1) Upon receipt of information by the plan administrator of
an individual account plan indicating that the individual account of
any participant which had not been excessively invested in employer
securities is excessively invested in such securities (or that such
account, as initially invested, is excessively invested in employer
securities), the plan administrator shall immediately provide to the
participant a separate, written statement--
``(A) indicating that the participant's account has become
excessively invested in employer securities,
``(B) setting forth the notice described in subsection
(e)(7), and
``(C) referring the participant to investment education
materials and investment advice which shall be made available
by or under the plan.
In any case in which such a separate, written statement is required to
be provided to a participant under this paragraph, each statement
issued to such participant pursuant to subsection (a) thereafter shall
also contain such separate, written statement until the plan
administrator is made aware that such participant's account has ceased
to be excessively invested in employer securities or the employee, in
writing, waives the receipt of the notice and acknowledges
understanding the importance of diversification.
``(2) Each notice required under this subsection shall be provided
in a form and manner which shall be prescribed in regulations of the
Secretary. Such regulations shall provide for inclusion in the notice a
prominent reference to the risks of large losses in assets available
for retirement from excessive investment in employer securities.
``(3) For purposes of paragraph (1), a participant's account is
`excessively invested' in employer securities if more than 10 percent
of the balance in such account is invested in employer securities (as
defined in section 407(d)(1)).''.
SEC. 308. REPORT TO PARTICIPANTS AND BENEFICIARIES OF TRADES IN
EMPLOYER SECURITIES.
(a) In General.--Section 104 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1024) is amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following new
subsection:
``(d)(1) In any case in which assets in the individual account of a
participant or beneficiary under an individual account plan include
employer securities, if any person engages in a transaction
constituting a direct or indirect purchase or sale of employer
securities and--
``(A) such transaction is required under section 16 of the
Securities Exchange Act of 1934 to be reported by such person
to the Securities and Exchange Commission, or
``(B) such person is a named fiduciary of the plan,
such person shall comply with the requirements of paragraph (2).
``(2) A person described in paragraph (1) complies with the
requirements of this paragraph in connection with a transaction
described in paragraph (1) if such person provides to the plan
administrator of the plan a written notification of the transaction not
later than 1 business day after the date of the transaction.
``(3)(A) If the plan administrator is made aware, on the basis of
notifications received pursuant to paragraph (2) or otherwise, that the
proceeds from any transaction described in paragraph (1), constituting
direct or indirect sales of employer securities by any person described
in paragraph (1), exceed $100,000, the plan administrator of the plan
shall provide to each participant and beneficiary a notification of
such transaction. Such notification shall be in writing, except that
such notification may be in electronic or other form to the extent that
such form is reasonably accessible to the participant or beneficiary.
``(B) In any case in which the proceeds from any transaction
described in paragraph (1) (with respect to which a notification has
not been provided pursuant to this paragraph), together with the
proceeds from any other such transaction or transactions described in
paragraph (1) occurring during the preceding one-year period,
constituting direct or indirect sales of employer securities by any
person described in paragraph (1), exceed (in the aggregate) $100,000,
such series of transactions by such person shall be treated as a
transaction described in subparagraph (A) by such person.
``(C) Each notification required under this paragraph shall be
provided as soon as practicable, but not later than 3 business days
after receipt of the written notification or notifications indicating
that the transaction (or series of transactions) requiring such notice
has occurred.
``(4) Each notification required under paragraph (2) or (3) shall
be made in such form and manner as may be prescribed in regulations of
the Secretary and shall include the number of shares involved in each
transaction and the price per share, and the notification required
under paragraph (3) shall be written in language designed to be
understood by the average plan participant. The Secretary may provide
by regulation, in consultation with the Securities and Exchange
Commission, for exemptions from the requirements of this subsection
with respect to specified types of transactions to the extent that such
exemptions are consistent with the best interests of plan participants
and beneficiaries. Such exemptions may relate to transactions involving
reinvestment plans, stock splits, stock dividends, qualified domestic
relations orders, and similar matters.
``(5) For purposes of this subsection, the term `employer security'
has the meaning provided in section 407(d)(1).''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to transactions occurring after 90 days after the
date of the enactment of this Act.
TITLE IV--IMPROVEMENTS IN PENSION INFORMATION AND ENFORCEMENT
SEC. 401. PENSION BENEFIT INFORMATION.
(a) Pension Benefit Statements Required on Periodic Basis.--
(1) In general.--Subsection (a) of section 105 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1025(a)) is amended----
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and by
inserting ``(1)'' after ``(a)'';
(B) by striking ``shall furnish to any plan
participant or beneficiary who so requests in writing,
a statement'' and inserting ``shall, as provided in
paragraph (2), provide to plan participants and
beneficiaries statements''; and
(C) by adding at the end the following new
paragraphs:
``(2)(A) The statements described in paragraph (1) shall be
furnished----
``(i) in the case of a defined benefit plan, at
last once every 3 years to participants who have
attained age 35,
``(ii) in the case of an individual account plan,
at least annually to each participant, and
``(iii) to any participant or beneficiary who so
requests in writing.
``(B) Subparagraph (A)(i) shall not apply to a plan to
which more than 1 unaffiliated employer is required to
contribute.
``(3) Information furnished under paragraph (1) to a
participant in a defined benefit plan (other than at the
request of the participant) may be based on reasonable
estimates determined under regulations prescribed by the
Secretary.
``(4)(A) The Secretary of Labor shall develop a model
benefit statement which shall be used by plan administrators in
complying with the requirements of paragraph (1). Such
statement shall include--
``(i) the amount of nonforfeitable accrued benefits
as of the statement date which is payable at normal
retirement age under the plan,
``(ii) the amount of accrued benefits which are
forfeitable but which may become nonforfeitable under
the terms of the plan,
``(iii) the amount or percentage of any reduction
due to integration of the benefit with the
participant's Social Security benefits or similar
governmental benefits,
``(iv) information on early retirement benefit and
joint and survivor annuity reductions,
``(v) in the case of an individual account plan,
the percentage of the net return on investment of plan
assets for the preceding plan year (or, with respect to
investments directed by the participant, the net return
on investment of plan assets for such year so
directed), itemized with respect to each type of
investment, and, stated separately, the administrative
and transaction fees incurred in connection with each
such type of investment, and
``(vi) in the case of an individual account plan,
the amount and percentage of assets in the individual
account that consists of employer securities and
employer real property (as defined in paragraphs (1)
and (2), respectively, of section 407(d)), as
determined as of the most recent valuation date of the
plan.
``(B) The Secretary shall also develop a separate notice,
which shall be included by the plan administrator with the
information furnished pursuant to paragraph (1), which advises
participants and beneficiaries of generally accepted investment
principles, including principles of risk management and
diversification for long-term retirement security and the risks
of holding substantial assets in a single asset such as
employer securities.''.
(2) Conforming amendment.--Subsection (d) of section 105 of
such Act (29 U.S.C. 1025(d)) is repealed.
(b) Disclosure of Benefit Calculations.--
(1) In general.--Section 105 of such Act (as amended by the
preceding provisions of this section) is amended further--
(A) by redesignating subsection (c) as subsection
(d); and
(B) by inserting after subsection (b) the following
new subsection:
``(c)(1) In the case of a participant or beneficiary who is
entitled to a distribution of a benefit under an employee pension
benefit plan, the administrator of such plan shall provide to the
participant or beneficiary the information described in paragraph (2)
upon the written request of the participant or beneficiary.
``(2) The information described in this paragraph includes--
``(A) a worksheet explaining how the amount of the
distribution was calculated and stating the assumptions used
for such calculation,
``(B) upon written request of the participant or
beneficiary, any documents relating to the calculation (if
available), and
``(C) such other information as the Secretary may
prescribe.
Any information provided under this paragraph shall be in a form
calculated to be understood by the average plan participant.''.
(2) Conforming amendments.--
(A) Section 101(a)(2) of such Act (29 U.S.C.
1021(a)(2)) is amended by striking ``105(a) and (c)''
and inserting ``105(a), (c), and (d)''.
(B) Section 106(b) of such Act (29 U.S.C. 1026(b))
is amended by striking ``sections 105(a) and 105(c)''
and inserting ``section 105''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
take effect 60 days after the adoption of rules or other
guidance to carry out the amendments made by this subsection,
which shall include a model notice of generally accepted
investment principles, including principles of risk management
and diversification.
(2) Model investment principles.--For purposes of paragraph
(1), not later than 120 days after the date of the enactment of
this Act, the Secretary of Labor shall issue rules or other
guidance and a model notice which meets the requirements of
section 105 of the Employee Retirement Income Security Act of
1974 added by this section.
SEC. 402. DISCLOSURES TO SECRETARY OF LABOR RELATING TO PLAN
TERMINATION AND RELATING TO PLAN SPONSORS AFTER
ACQUISITION OR MERGER OF PLANS.
(a) In General.--Section 104 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1024) is amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following new
subsection:
``(d)(1) The administrator of any employee benefit plan subject to
this part shall file with the Secretary a written notice of--
``(A) the termination of the plan, or
``(B) in connection with any plan that is acquired by or
merged with another plan, the name and address of the sponsor
of the acquired or merged plan.
``(2) The notice required under paragraph (1) shall be filed with
the Secretary not later than 60 days after the effective date of the
termination, acquisition, or merger.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to terminations, acquisitions, and mergers occurring
after December 31, 2005.
SEC. 403. DISCLOSURE OF OPERATING INCOME OF EMPLOYERS ADJUSTED SO AS TO
EXCLUDE CERTAIN COMPONENTS MANDATED IN FASB RULES
GOVERNING ACCOUNTING FOR DEFINED BENEFIT PENSION PLANS.
(a) Matters to Be Included in Annual Report.--Section 103(c) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1023(c)) is
amended--
(1) by redesignating paragraph (5) as paragraph (6); and
(2) by inserting after paragraph (4) the following new
paragraph:
``(5) In the case of a pension plan that is a defined
benefit plan, the amount of the annual operating income of each
employer maintaining the plan, as shown on the employer's most
recent annual financial statement, together with such amount as
adjusted by excluding all components of net benefit cost other
than the service cost component.''.
(b) Information to Be Provided Annually to Participants and
Beneficiaries.--Section 104(b)(3) of such Act (29 U.S.C. 1024(b)(3)) is
amended by adding at the end the following new sentence: ``In the case
of a defined benefit plan, such other material shall include the
information described in paragraph (5) of section 103(c), together with
an explanation, written in a manner calculated to be understood by the
average plan participant, of such information, of the service cost
component included in the adjusted amount of annual operating income
reported pursuant to such paragraph, and of each component excluded
from such adjusted amount of annual operating income.''.
SEC. 404. SPECIFIC INFORMATION REGARDING MULTIEMPLOYER PLANS INCLUDED
IN ANNUAL REPORT.
Section 103 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1023) is amended by adding at the end the following new
subsection:
``(f) With respect to a pension plan that is a multiemployer plan,
an annual report under this section shall include the following
information regarding each contributing employer:
``(1) the employer's name,
``(2) the employer's taxpayer identification number,
``(3) the contract period relating to the plan, and
``(4) the amount contributed by the employer for the
year.''.
SEC. 405. LIMITED SCOPE AUDITS.
Subparagraph (C) of section 103(a)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1023(a)(3)(C)) is amended to
read as follows:
``(C)(i) Subject to clause (ii), the opinion required by
subparagraph (A) need not be expressed as to any statements required by
subsection (b)(3)(G) prepared by a bank or similar institution or
insurance carrier regulated and supervised and subject to periodic
examination by a State or Federal agency if no less than 95 percent of
the plan's assets have a readily ascertainable market value at the end
of the plan year for which the opinion is being offered, and if such
statements--
``(I) are certified by the bank, similar
institution, or insurance carrier as complete and
accurate,
``(II) certify the current value of each asset,
``(III) include a representation that, within the
18-month month period preceding the date of its
certification, an independent, qualified public
accountant who has satisfied the requirements of
subsection (D), has issued a report, in accordance with
generally accepted auditing standards, to the bank or
similar institution or insurance carrier, stating that
its internal controls and procedures or the internal
controls and procedures of any affiliated entity, as
they pertain to the execution, maintenance of
accountability, recording and processing of
transactions related to plan or participant
recordkeeping, are adequate, and
``(IV) are made a part of the annual report.
``(ii) To the extent that the processing of transactions
related to plan or participant recordkeeping is performed by an
entity unaffiliated with the bank or similar institution or
insurance carrier, clause (i) shall not apply unless the plan
has obtained a representation from the entity that, within the
18-month period preceding the date of the opinion, an
independent, qualified public accountant who has satisfied the
requirements of subparagraph (D), has issued a report, in
accordance with generally accepted auditing standards, to the
entity stating that its internal controls and procedures, as
they pertain to the execution, maintenance of accountability,
recording, and processing of transactions related to plan or
participant recordkeeping, are adequate.
``(iii) For purposes of clause (i), the term `readily
ascertainable market value' means a value that can be readily
determined on an established securities market or in accordance
with regulations promulgated by the Secretary.''.
SEC. 406. REPORTING AND ENFORCEMENT REQUIREMENTS FOR EMPLOYEE BENEFIT
PLANS.
(a) In General.--Part 1 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021 et seq.) is
amended--
(1) by redesignating section 111 as section 112, and
(2) inserting after section 110 the following new section:
``direct reporting of certain events
``Sec. 111. (a) Required Notifications.--
``(1) Notifications by plan administrator.--The
administrator of an employee benefit plan, within 5 business
days after the administrator determines that there is evidence
(or after the administrator is notified under paragraph (2))
that an irregularity may have occurred with respect to the
plan, shall--
``(A) notify the Secretary of the irregularity in
writing; and
``(B) furnish a copy of such notification to the
accountant who is currently engaged under section
103(a)(3)(A).
``(2) Notifications by accountant.--
``(A) In general.--An accountant engaged by the
administrator of an employee benefit plan under section
103(a)(3)(A), within 5 business days after the
accountant in connection with such engagement
determines that there is evidence that an irregularity
may have occurred with respect to the plan, shall--
``(i) notify the plan administrator of the
irregularity in writing, or
``(ii) if the accountant determines that
there is evidence that the irregularity may
have involved an individual who is the plan
administrator or who is a senior official of
the plan administrator, notify the Secretary of
the irregularity in writing.
``(B) Notification upon failure of plan
administrator to notify.--If an accountant who has
provided notification to the plan administrator
pursuant to subparagraph (A)(i) does not receive a copy
of the administrator's notification to the Secretary
required under paragraph (1)(B) within the 5-business-
day period specified therein, the accountant shall
furnish to the Secretary a copy of the accountant's
notification made to the plan administrator on the next
business day following such period.
``(3) Irregularity defined.--
``(A) For purposes of this subsection, the term
'irregularity' means--
``(i) a theft, embezzlement, or a violation
of section 664 of title 18, United States Code
(relating to theft or embezzlement from an
employee benefit plan);
``(ii) an extortion or a violation of
section 1951 of title 18, United States Code
(relating to interference with commerce by
threats or violence);
``(iii) a bribery, a kickback, or a
violation of section 1954 of title 18, United
States Code (relating to offer, acceptance, or
solicitation to influence operations of an
employee benefit plan);
``(iv) a violation of section 1027 of title
18, United States Code (relating to false
statements and concealment of facts in relation
to employer benefit plan records); or
``(v) a violation of section 411, 501, or
511 of this title (relating to criminal
violations).
``(B) The term 'irregularity' does not include any
act or omission described in this paragraph involving
less than $1,000 unless there is reason to believe that
the act or omission may bear on the integrity of plan
management.
``(b) Notification Upon Termination of Engagement of Accountant.--
``(1) Notification by plan administrator.--Within 5
business days after the termination of an engagement under
section 103(a)(3)(A) with respect to an employee benefit plan,
the administrator of such plan shall--
``(A) notify the Secretary in writing of such
termination, giving the reasons for such termination,
and
``(B) furnish the accountant whose engagement was
terminated with a copy of the notification sent to the
Secretary.
``(2) Notification by accountant.--If the accountant
referred to in paragraph (1)(B) has not received a copy of the
administrator's notification to the Secretary as required under
paragraph (1)(B), or if the accountant disagrees with the
reasons given in the notification of termination of the
engagement for auditing services, the accountant shall notify
the Secretary in writing of the termination, giving the reasons
for the termination, within 10 business days after the
termination of the engagement.
``(c) Determination of Periods Required for Notification.--In
determining whether a notification required under this section with
respect to any act or omission has been made within the required number
of business days--
``(1) the day on which such act or omission begins shall
not be included; and
``(2) Saturdays, Sundays, and legal holidays shall not be
included.
For purposes of this subsection, the term 'legal holiday' means any
Federal legal holiday and any other day appointed as a holiday by the
State in which the person responsible for making the notification
principally conducts business.
``(d) Immunity for Good Faith Notification.--Except as provided in
this Act, no accountant or plan administrator shall be liable to any
person for any finding, conclusion, or statement made in any
notification made pursuant to subsections (a)(2) or (b)(2), or pursuant
to any regulations issued under those subsections, if the finding,
conclusion, or statement is made in good faith.''.
(b) Clerical Amendments.--
(1) Section 514(d)(29 U.S.C. 114(d)) is amended by striking
``111'' and inserting ``112''.
(2) The table of contents in section 1 is amended by
striking the item relating to section 111 and inserting the
following new items:
``Sec. 111. Direct reporting of certain events.
``Sec. 112. Repeal and effective date.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to any irregularity or termination of engagement
described in the amendments, but only if the 5-day period described in
the amendments in connection with the irregularity or termination
commences at least 90 days after the date of the enactment of this Act.
SEC. 407. STUDY OF PENSION TRENDS AND CHARACTERISTICS.
(a) In General.--Section 513 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1143) is amended by adding at the end
the following new subsection:
``(d) Pension Surveys.--
``(1) In general.--The Secretary shall submit to each House
of the Congress, before the close of the second session of each
Congress, a report, based on a study of current statistical and
survey data, which describes dominant and emerging trends and
characteristics of the private pension system, so as to ensure
that the Congress is provided with periodic and timely
information regarding such system.
``(2) Included information.--Each report submitted pursuant
to paragraph (1) shall include, but not be limited to,
information relating to existing pension plans regarding--
``(A) the types of such plans,
``(B) the level of employer and employee
contributions,
``(C) vesting status,
``(D) accrued benefits,
``(E) benefit receipt, and
``(F) form of benefit payments.
Such information shall be presented by category in connection
with cohorts defined on the basis of appropriate attributes of
the participants involved, including gender, age, race, and
income.
``(3) Identification of barriers to pension receipt.--Each
report submitted pursuant to paragraph (1) shall also include
information which summarizes the types of problems that plan
participants and beneficiaries experience in connection with
the receipt of promised retirement benefits.''.
(b) Initial Report.--The initial report submitted pursuant to
section 513(d) of the Employee Retirement Income Security Act of 1974
shall be submitted not later than December 31, 2005.
SEC. 408. EARLY RESOLUTION PROGRAM FOR PENSION BENEFIT CLAIMS.
(a) In General.--Section 503 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1133) is amended--
(1) by adding at the end of the heading the following:
``and early resolution of pension claims'';
(2) by inserting ``(a) In General.--'' after ``Sec. 503.'';
and
(3) by adding at the end the following new subsection:
``(b) Early Resolution Program for Pension Benefit Claims.--
``(1) In general.--The Secretary shall establish, in
consultation with national bar and arbitration associations and
other interested organizations, an early resolution program for
mediation of disputes regarding claims for benefits which have
been denied under pension plans.
``(2) Mediators.--The program shall provide for recruitment
of mediators to serve under the program from individuals who
have the requisite expertise for such service. The program
shall provide for ongoing training for all mediators in
employee benefits law as determined necessary. Upon submission
of a claim to mediation proceedings under this subsection, the
program shall provide for appointment of a mediator, from the
roster of mediators serving under the program, to act as the
mediator with regard to the claim. Such appointment shall be
through a random selection procedure which shall be prescribed
in regulations.
``(3) Fees.--The Secretary shall assess fees as necessary
from each party to cover the costs of participation in the
program. The Secretary may reduce or waive a fee on the basis
of inability to pay.
``(4) Initiation of proceedings.--A claimant with a dispute
which is eligible under the program for submission to mediation
thereunder may elect to commence proceedings under the program
by means of filing under the program an election for mediation
of the dispute. An election to commence mediation proceedings
under the program shall be in such form and manner as the
Secretary may prescribe. Any such election shall in all cases
be voluntary, and any provision of the plan or other
arrangement which has the effect of providing for the
commencement of such proceedings other than by means of
voluntary election by the claimant shall be null and void as a
matter of law.
``(5) Participation in proceedings.--Upon receipt of the
election to commence proceedings, the program shall provide for
participation by all relevant parties. Each such party shall
participate, and cooperate fully, in the proceedings. The plan
administrator shall ensure that a copy of the written record of
any claims procedure completed by the plan pursuant to
subsection (a) and all relevant plan documents are presented to
the mediator within 30 days after commencement of the
proceedings. The program shall provide for appropriate
confidentiality of the proceedings.
``(6) Time limit for proceedings.--The mediation
proceedings under the program with respect to the claim in
dispute shall be completed within 30 days after compilation of
all relevant plan documents relating to the claim has been
achieved.
``(7) Process nonbinding.--Findings and conclusions made in
the mediation proceedings under the program shall be treated as
advisory in nature and nonbinding. Except as provided in
paragraph (8), the rights of the parties under this title shall
not be affected by participation in the mediation proceedings
under the program.
``(8) Resolution through settlement agreement.--If a case
is settled through participation in the mediation proceedings
under the program, the mediator shall assist the parties in
drawing up an agreement which shall constitute, upon signature
of the parties, a binding contract between the parties, which
shall be enforceable under section 502 as if the terms of such
agreement were terms of the plan.
``(9) Oversight.--The Secretary shall provide for ongoing
oversight of the program so as to ensure that proceedings are
conducted equitably and that mediators meet prescribed
standards of performance. The Secretary shall monitor and
record the results of mediation proceedings conducted under the
program so as to enable comprehensive evaluation of the
effectiveness of the program as a means of alternative dispute
resolution.
``(10) Notice.--The Secretary shall--
``(A) notify individuals of the program or other
sources of assistance in resolving benefits claim
disputes, and
``(B) provide model information with respect to the
program to be included in all summary plan descriptions
and benefit determinations.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to claims arising on or after December 31, 2005.
SEC. 409. REVIEW OF BENEFIT DETERMINATIONS.
(a) De Novo Review.--
(1) Internal review.--Section 503 of the Employee
Retirement Income Security Act of 1974 (as amended by section
408) is amended further--
(A) by redesignating subsection (b) as subsection
(c); and
(B) by inserting after subsection (a) the following
new subsection:
``(b) Review Requirements.--Any review required under subsection
(a)(2)--
``(1) shall be de novo, and
``(2) shall be conducted by an individual who did not make the
initial decision denying the claim and who is authorized to approve
payment of the claim.''.
(2) Court review.--Section 502(e) of such Act (29 U.S.C.
1132(e)) is amended by adding at the end the following new
paragraph:
``(3) Notwithstanding any provision by the plan for the exercise by
a fiduciary of discretionary authority with respect to any benefit
determination, in any action under paragraph (1)(B) or (3) of
subsection (a) or in any other action under this section to review a
final benefit determination under the plan, the review by the court
shall be de novo, and the court may review all evidence presented.''.
(b) Application of Common Law Principles of Contract
Interpretation.--Section 502(e) of such Act (as amended by subsection
(a)(2)) is amended further by adding at the end the following new
paragraph:
``(4) In interpreting the terms of an employee benefit plan under
this section, the court shall employ such common law principles of
contract interpretation as are determined appropriate by the court.
Nothing in this title shall preclude the Federal courts from developing
and applying Federal common law for purposes of this paragraph which is
consistent with the provisions of this title.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to causes of action arising after December 31, 2005.
SEC. 410. ALLOWABLE RELIEF.
(a) Pre-Judgment Interest, Attorney Fees, and Costs of Action.--
(1) Pre-judgment interest on unpaid benefits.--Section
502(a)(1)(B) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1132(a)(1)(B)) is amended by inserting
``(together with reasonable pre-judgment interest on unpaid
pension plan benefits)'' after ``to recover benefits due to him
under the terms of his plan''.
(2) Attorney fees and costs of action.--Section 502(g) of
such Act (29 U.S.C. 1132(g)) is amended--
(A) in paragraph (1), by inserting ``or (3)'' after
``paragraph (2)''; and
(B) by adding at the end the following new
paragraph:
``(3) In any action or settlement proceeding under this title with
respect to an employee pension benefit plan brought by a participant or
beneficiary under such plan in which the participant or beneficiary
prevails or substantially prevails, the participant or beneficiary
shall be entitled to reasonable attorney's fees, reasonable expert
witness fees, and other reasonable costs relating to the action.''.
(b) Allowance for Legal Relief.--Section 502(a) of such Act (29
U.S.C. 1132(a)) is amended, in paragraphs (3)(B), (5)(B), and (8)(B),
by inserting ``legal or'' before ``equitable'' each place it appears.
(c) Effective Date.--The amendments made by this section shall
apply with respect to causes of action arising after December 31, 2005.
SEC. 411. ASSESSMENT BY SECRETARY OF LABOR OF PENALTIES FOR FAILURES TO
MEET DISCLOSURE REQUIREMENTS.
(a) In General.--Section 502(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132(c)) is amended to read as follows:
``(c)(1) The Secretary may assess a civil penalty against any
person of up to $1,000 a day from the date of any failure or refusal by
such person described in paragraph (2).
``(2) A failure or refusal described in this paragraph is any of
the following:
``(A) A failure or refusal by a plan administrator to
comply with a request for any information which such
administrator is required by this title to furnish to a
participant or beneficiary by mailing the material requested to
the last known address of the requesting participant or
beneficiary within 30 days after such request.
``(B) A failure or refusal by a plan administrator to file
the annual report required to be filed with the Secretary under
section 101(b)(4). For purposes of this subparagraph, an annual
report that has been rejected under section 104(a)(4) for
failure to provide material information shall not be treated as
having been filed with the Secretary.
``(C) A failure or refusal by an employer maintaining a
plan to meet the notice requirement of section 101(d) with
respect to any participant or beneficiary.
``(D) A failure or refusal by a plan administrator to meet
the requirements of section 101(e)(1) with respect to a
participant or beneficiary.
``(E) A failure or refusal by an employer maintaining a
plan to meet the requirements of section 101(e)(2) with respect
to any person.
``(F) A failure or refusal by any person to meet the
requirements of section 101(f)(1).
``(G) A failure or refusal by any person to file the
information required to be filed by such person with the
Secretary under regulations prescribed pursuant to section
101(g).
``(H) A failure or refusal by a plan administrator to
provide notice to participants and beneficiaries in accordance
with section 101(i).
``(I) A failure or refusal by a plan administrator to
furnish documents to the Secretary, as requested by the
Secretary under section 104(a)(6), within 30 days after such a
request.
``(J) A failure or refusal by a plan administrator to meet
the requirements of paragraph (1) or (4) of section 606.
``(3) For purposes of this subsection, each violation described in
subparagraph (A), (C), (D), (E), (F), (H), or (J) of paragraph (2) with
respect to any single participant, beneficiary, or other person shall
be treated as a separate violation.
``(4) In the case of any failure or refusal described in paragraph
subparagraph (A), (C), or (J) of paragraph (2) by any administrator or
employer with respect to any participant, beneficiary, or other person,
such administrator or employer may, in the court's discretion, be
liable to such participant, beneficiary, or other person in the amount
of up to $1,000 a day from the date of such failure or refusal. Any
liability under this paragraph shall be in addition to any liability
imposed under paragraph (1).
``(5)(A) The Secretary may assess a civil penalty of up to $50,000
against any administrator who fails to provide the Secretary with any
notification as required under section 111.
``(B) The Secretary may assess a civil penalty of up to $50,000
against any accountant who knowingly and willfully fails to provide the
Secretary with any notification as required under section 111.
``(6) In addition to any liability imposed under paragraph (1),
(4), or (5), the court may in its discretion order such other relief as
it deems proper.
``(7) No liability may be imposed on any person under this
subsection for any failure resulting from matters reasonably beyond the
control of such person.
``(8) The Secretary and the Secretary of Health and Human Services
shall maintain such ongoing consultation as may be necessary and
appropriate to coordinate enforcement under this subsection with
enforcement under section 1144(c)(8) of the Social Security Act.''.
(b) Conforming Amendment.--Section 502(a)(6) of such Act (29 U.S.C.
1132(a)(6)) is amended by striking ``under paragraph (2), (4), (5),
(6), or (7) of subsection (c) or under subsection (i) or (l)'' and
inserting ``under subsection (c), (i), or (l)''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to failures and refusals occurring after December
31, 2005.
SEC. 412. MISSING PARTICIPANTS AND UNCLAIMED BENEFITS.
(a) Treatment of Missing Participants of Multiemployer Plans and
Certain Plans not Otherwise Covered.--Section 4050 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1350) is amended--
(1) by redesignating subsections (b) and (c) as subsections
(f) and (g), respectively; and
(2) by inserting after subsection (a) the following new
subsections:
``(b) Multiemployer Plans.--The corporation shall prescribe rules
similar to the rules in subsection (a) for multiemployer plans covered
by this title that terminate under section 4041A.
``(c) Elective Transfer of Missing Participant's Benefits to the
Corporation by Certain Other Plans Upon Termination.--
``(1) In general.--The plan administrator of a plan
described in paragraph (4) may elect to transfer a missing
participant's benefits to the corporation upon termination of
the plan.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (4) shall, upon termination of the plan,
provide the corporation information with respect to the
benefits of a missing participant if the plan transfers such
benefits--
``(A) to the corporation, or
``(B) to an entity other than the corporation or a
plan described in paragraph (4)(B)(ii).
``(3) Payment by the corporation.--If benefits of a missing
participant were transferred to the corporation under paragraph
(1), the corporation shall, upon location of the participant or
beneficiary, pay to the participant or beneficiary the amount
transferred (or the appropriate survivor benefit) either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in
regulations of the corporation.
``(4) Plans described.--A plan is described in this
paragraph if--
``(A) the plan is a pension plan (within the
meaning of section 3(2))--
``(i) to which the provisions of this
section do not apply (without regard to this
subsection), and
``(ii) which is not a plan described in
paragraphs (2) through (11) of section 4021(b),
and
``(B) at the time the assets are to be distributed
upon termination, the plan--
``(i) has missing participants, and
``(ii) has not provided for the transfer of
assets to pay the benefits of all missing
participants to another pension plan (within
the meaning of section 3(2)).
``(5) Certain provisions not to apply.--Subsections
(a)(1) and (a)(3) shall not apply to a plan described
in paragraph (4).''.
(b) Treatment of Unclaimed Benefits in Cases not Involving
Termination or in Cases of Certain Plans.--
(1) In general.--Section 4050 of such Act (as amended by
subsection (a)) is amended further by inserting after
subsection (c) the following new subsection:
``(d) Treatment of Unclaimed Benefits in Cases not Involving
Termination or in Cases of Certain Plans.--
``(1) Elective transfer of unclaimed benefits to the
corporation.--The plan administrator of a plan described in
paragraph (6) may elect to transfer unclaimed benefits to the
corporation.
``(2) Information to the corporation.--The corporation may
impose such conditions on transfers of unclaimed benefits to
the corporation as the corporation determines are necessary to
facilitate administration of this subsection and are not
inconsistent with the purposes of this subsection. Such
conditions may include requirements that the transferring plan
provide to the corporation specified information and
documentation.
``(3) Payment to the corporation.--With respect to any
participant, any transfer of an unclaimed benefit to the
corporation shall--
``(A) in the case of a defined benefit plan, be a
transfer of the participant's designated benefit, or
``(B) in the case of an individual account plan, be
a transfer of the participant's vested account balance
under the plan.
``(4) Payment by the corporation.--Subject to such
reasonable restrictions as may be prescribed in regulations of
the corporation (relating to investment limitations and
otherwise)--
``(A) unclaimed benefits of a participant or
beneficiary which are transferred to the corporation
pursuant to this subsection shall be distributed by the
corporation to the participant or beneficiary not later
than upon application filed by the participant or
beneficiary with the corporation in such form and
manner as may be prescribed in regulations of the
corporation, and
``(B) such benefits shall--
``(i) in the case of an individual account
plan, be paid in a single sum (plus interest)
or in such other form as is specified in
regulations of the corporation, or
``(ii) in the case of a defined benefit
plan, be paid--
``(I) in an amount based on the
designated benefit and the assumptions
prescribed by the corporation at the
time that the corporation received the
benefit, and
``(II) in a form determined under
regulations of the corporation.
``(5) Notice.--Any transfer of unclaimed benefits of a
participant or beneficiary to the corporation pursuant to this
subsection may occur only after reasonable advance notice of
such transfer is provided by the plan administrator to the
participant or beneficiary. The plan administrator shall also
provide to the participant or beneficiary notice of any such
transfer not later than 30 days after the date of the transfer.
Notice mailed to the last known address of the participant or
beneficiary shall be treated as a notice to the participant or
beneficiary for purposes of this paragraph. Any such notice
shall include information regarding procedures for obtaining
the distribution of benefits from the corporation in accordance
with paragraph (4).
``(6) Plans described.--A plan is described in this
paragraph if the plan is a pension plan (within the meaning of
section 3(2)--
``(A)(i) which has neither terminated nor is in the
process of terminating, or
``(ii) in the case of an unclaimed benefit to which
section 401(a)(31)(B) of the Internal Revenue Code of
1986 applies (other than an unclaimed benefit of a
missing participant), which has terminated or is in the
process of terminating, and
``(B) which is not a plan described in paragraphs
(2) through (11) of section 4021(b).
``(7) Certain provisions not to apply.--Subsection (a)
shall not apply to a plan described in paragraph (6).''.
(2) Unclaimed benefit defined.--Subsection (f) of section
4050 of such Act (as redesignated by subsection (a)(1)) is
amended by adding at the end the following paragraph:
``(3) Unclaimed benefit.--The term `unclaimed benefit'
means--
``(A) any benefit of a participant or beneficiary
which is distributable under the terms of the plan to
the participant or beneficiary, if the distribution of
the benefit has not commenced within 1 year after the
later of the date on which the benefit first became so
distributable or the participant's severance from
employment;
``(B) any benefit or other amount of a participant
or beneficiary which is distributable under the terms
of the plan with respect to a missing participant, or
``(C) any benefit to which section 401(a)(31)(B) of
the Internal Revenue Code of 1986 applies or would
apply if subclause (I) of section 401(a)(31)(B)(i) of
such Code did not require the distribution to exceed
$1,000.
A benefit otherwise described in subparagraph (A) shall not be
treated as an unclaimed benefit under subparagraph (A) if the
participant or beneficiary elects not to have such treatment
apply. Any such participant or beneficiary shall be given
reasonable notice of the opportunity to make such an election.
If the participant or beneficiary fails to make such an
election within a reasonable period specified in the notice,
any subsequent election shall not be given effect and the
benefit shall be treated as an unclaimed benefit. A notice
mailed to the last known address of the participant or
beneficiary shall be treated as a notice to the participant or
beneficiary for purposes of this paragraph.''.
(3) Conforming amendment.--Section 4021(b) of such Act (29
U.S.C. 1321(b)(1)) is amended by striking ``This'' and
inserting ``Except to the extent provided in subsections (c)
and (d) of section 4050, this''.
(c) Treatment of Transferred Assets.--Section 4050 of such Act (as
amended by the preceding provisions of this section) is amended
further--
(1) in subsection (a), by striking paragraph (2) and
redesignating paragraph (3) as paragraph (2); and
(2) by inserting after subsection (d) the following new
subsection:
``(e) Treatment of Transferred Assets.--A transfer to the
corporation under this section shall be treated as a transfer of assets
from a terminated plan to the corporation as trustee, and shall be held
with assets of terminated plans for which the corporation is trustee
under section 4042, subject to the rules set forth in that section.''.
(d) Escheat Laws Superseded.--Section 514(b) of such Act (29 U.S.C.
1144(b)) is amended--
(1) by redesignating paragraph (9) as paragraph (10), and
(2) by inserting after paragraph (8) the following new
paragraph:
``(9) Any escheat or similar law of any State shall be
superseded to the extent inconsistent with any transfer or
other treatment of unclaimed benefits (as defined in section
4050(e)(3)) permitted under section 4050(d).''.
(e) Effective Dates and Related Rules.--
(1) In general.--The amendments made by subsection (a)
shall apply to terminations occurring after December 31, 2005.
the amendments made by subsections (b) and (c) shall apply with
respect to transfers occurring after such date. The amendments
made by subsection (d) shall apply with respect to transfers or
treatment of unclaimed benefits occurring after such date.
(2) Regulations.--The Pension Benefit Guaranty Corporation
shall issue regulations necessary to carry out the amendments
made by this section not later than December 31, 2005.
SEC. 413. FIDUCIARY DUTIES WITH RESPECT TO CHANGES IN INVESTMENT
OPTIONS.
(a) In General.--Section 404(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(c)) is amended--
(1) by adjusting the margination of paragraphs (2) and (3)
so as to align them with paragraph (1); and
(2) by adding at the end the following new paragraph:
``(4) For purposes of paragraph (1), in the case of any pension
plan amendment changing investment options under the plan, the plan
shall not be treated as permitting a participant or beneficiary to
exercise control over assets in his or her account unless, under the
terms of such amendment, the participant or beneficiary is permitted to
retain any existing investment option with respect to any assets in his
or her account invested pursuant to such option until such assets are
otherwise invested by the participant or beneficiary.''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to plan amendments adopted after the date of the enactment
of this Act.
SEC. 414. OFFICE OF PENSION PARTICIPANT ADVOCACY.
(a) In General.--Title III of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 3001 et seq.) is amended by adding at
the end the following:
``Subtitle D--Office of Pension Participant Advocacy
``SEC. 3051. OFFICE OF PENSION PARTICIPANT ADVOCACY.
``(a) Establishment.--
``(1) In general.--There is established in the Department
of Labor an office to be known as the `Office of Pension
Participant Advocacy'.
``(2) 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--
``(A) have demonstrated experience in the area of
pension participant assistance, and
``(B) 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.
``(b) Functions of Office.--It shall be the function of the Office
of Pension Participant Advocacy to--
``(1) assist participants and beneficiaries in
understanding their rights to benefits under employee benefit
plans, and, to the extent feasible, assist participants in
obtaining such benefits,
``(2) 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--
``(A) 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,
``(B) identifying significant problems for pension
plan participants and the capabilities of the Federal
Government, business, and such organizations to address
such problems, and
``(C) developing proposals for changes in such
policies and activities to correct such problems, and
communicating such changes to the appropriate
officials,
``(3) 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--
``(A) enlisting the cooperation of the public and
private sectors in disseminating information, and
``(B) forming private-public partnerships and other
efforts to assist pension plan participants in
receiving their benefits,
``(4) advocate for the full attainment of the rights of
pension plan participants, including by making pension plan
sponsors and fiduciaries aware of their responsibilities,
``(5) give priority to the special needs of low and
moderate income participants, and
``(6) develop 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.
``(c) Reports.--
``(1) 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--
``(A) identify significant problems the Advocate
has identified,
``(B) include specific legislative and regulatory
changes to address the problems, and
``(C) 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.
``(2) 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.
``(3) Reports to be submitted directly.--The report
required under paragraph (1) shall be provided directly to the
committees of Congress without any prior review or comment by
the Secretary or any other Federal officer or employee.
``(d) Specific Powers.--
``(1) 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 section.
``(2) 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.
``(3) Contracting authority.--In carrying out
responsibilities under subsection (b)(5), the Pension
Participant Advocate may, in addition to any other authority
provided by law--
``(A) contract with any person to acquire
statistical information with respect to pension plan
participants, and
``(B) conduct direct surveys of pension plan
participants.''.
(b) Conforming Amendment.--The table of contents for title III of
such Act is amended by adding at the end the following:
``Subtitle C--Office of Pension Participant Advocacy
``3051. Office of Pension Participant Advocacy.''.
(c) Effective Date and Transition Rules.--
(1) Effective date.--The amendment made by this section
shall take effect on January 1, 2005.
(2) Abolishment of the office of participant assistance and
communications and related transition rules.--Effective January
1, 2005, the Office of Participant Assistance and
Communications in the Department of Labor is abolished, and the
Secretary of Labor shall provide for the transfer, as
appropriate, of the functions and personnel of such Office to
the Office of Pension Participant Advocacy established under
subtitle D of title III of the Employee Retirement Income
Security Act of 1974 (as added by this Act).
SEC. 415. EXCLUSIVITY OF POWERS AND PROCEDURES APPLICABLE TO RIGHTS OR
CLAIMS.
Section 502 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1132) is amended by adding at the end the following new
subsection:
``(n) Notwithstanding any Federal statute of general applicability
that would modify any of the powers and procedures expressly applicable
to a right or claim arising under this title and that is not expressly
incorporated by a provision of this title, such powers and procedures
shall be the exclusive powers and procedures applicable to such right
or such claim unless after such right or such claim arises the claimant
voluntarily enters into an agreement to resolve such right or such
claim through arbitration or another procedure.''.
TITLE V--IMPROVED PENSION PROTECTIONS FOR THE CHANGING WORKFORCE
SEC. 501. LOANS FROM RETIREMENT PLANS FOR HEALTH INSURANCE AND JOB
TRAINING EXPENSES.
(a) In General.--Section 206 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1056) (as amended by sections 105 and
201) is amended further by adding at the end the following new
subsection:
``(i) Loans From Retirement Plans for Health Insurance and Job
Training Expenses.--
``(1) In general.--Notwithstanding any other provision of
this subsection, a pension plan shall provide that a
participant or beneficiary who is involuntarily separated from
employment may, on the date of such separation, obtain a loan
from the plan the proceeds of which are to be used within 6
months after the date of such loan--
``(A) for payments for insurance which constitutes
medical care for the participant and the participant's
spouse and dependents, or
``(B) for job training expenses.
``(2) Qualified loan.--For purposes of this subsection, the
term `qualified loan' means a loan--
``(A) which by its terms requires interest on the
loan to accrue not less frequently than monthly,
``(B) which by its terms requires--
``(i) repayment to begin not later than 18
months after the date of the loan, and
``(ii) repayment in full not later the date
which is 36 months after the date of the loan,
and
``(C) which bears interest from the date of the
loan at a rate not less than 2 percentage points below,
and not more than 2 percentage points above, the rate
for comparable United States Treasury obligations on
such date.
``(3) Limitation on amount of loans.--The aggregate amount
of borrowings for a plan year shall not exceed the sum of the
amount of accruals (other than contributions) during the plan
year prior to the plan year in which the loan is made.
``(4) Limitation on number of loans.--Not more than 3 loans
to an individual under this subsection may be outstanding at
any time.
``(5) Delinquencies treated as distribution.--Any amount
required to be paid by a participant or beneficiary under
paragraph (2)(B) during any plan year which is not paid at the
time required to be paid, and any amount remaining unpaid as of
the beginning of the plan year beginning after the period
described in paragraph (2)(B)(ii), shall be treated as
distributed during such plan year to the participant or
beneficiary.''.
(b) Prohibited Transaction Exemption.--Section 408(b) of such Act
(29 U.S.C. 1108(b)) is amended by adding at the end the following new
paragraph:
``(14) Any loan made by the plan to a disqualified person
who is a participant or beneficiary of the plan if such loan--
``(A) is for the payment of health insurance
premiums or job training expenses, and
``(B) meets the requirements of section 206(i).''.
(c) Effective Date.--The amendments made by this section shall
apply to loans made after the effective date specified in section 601.
SEC. 502. AUTOMATIC ROLLOVER UPON MANDATORY DISTRIBUTION IN EXCESS OF
$1,000.
Section 206 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1056) (as amended by sections 105, 201, and 501) is amended
further by adding at the end the following new subsection:
``(j) Direct Transfers of Mandatory Distributions in Excess of
$1,000.--
``(1) In general.--A pension plan shall provide that, if--
``(A) a distribution described in paragraph (2) is
made, and
``(B) the distributee does not elect to have such
distribution paid directly to an eligible retirement
plan and does not elect to receive the distribution
directly,
the plan administrator shall make such transfer to an
individual retirement plan of a designated trustee or issuer
and shall notify the distributee in writing (either separately
or as part of a notice required under section 402(f) of the
Internal Revenue Code of 1986) that the distribution may be
transferred to another individual retirement plan.
``(2) Distribution described.--A distribution from a plan
is described in this paragraph if such distribution is an
immediate distribution of the entire nonforfeitable accrued
benefit of the participant and is in excess of $1,000.
``(3) Definitions.--For purposes of this subsection--
``(A) Eligible retirement plan.--The term `eligible
retirement plan' has the meaning given such term by
section 402(c)(8)(B) of the Internal Revenue Code of
1986, except that a qualified trust under section
401(a) of such Code shall be considered an eligible
retirement plan only if it is a defined contribution
plan, the terms of which permit the acceptance of
rollover distributions.
``(B) Individual retirement plan.--The term
`individual retirement plan' has the meaning given such
term by section 7701(a)(37) of the Internal Revenue
Code of 1986.''.
SEC. 503. PROMPT DISTRIBUTION FROM DEFINED CONTRIBUTION PLANS UPON
TERMINATION OF PARTICIPANT'S COVERED EMPLOYMENT.
Section 206(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1056(a)) is amended--
(1) by redesignating paragraphs (1), (2), and (3) as
subparagraphs (A), (B), and (C), respectively, and by inserting
``(1)'' after ``(a)'';
(2) in the first sentence, by striking ``pension plan'' and
inserting ``defined benefit plan'';
(3) in the second sentence, by striking ``In the case of a
plan'' and inserting ``In the case of a defined benefit plan'';
and
(4) by adding at the end the following new paragraph:
``(2)(A) Except as provided in subparagraph (B), each defined
contribution plan shall provide that, unless the participant otherwise
elects--
``(i) the payment of benefits under the plan to the
participant will begin not later than the 60th day after the
close of the plan year in which occurs the date on which the
participant attains the earlier of age 65 or the normal
retirement age specified under the plan, and
``(ii) in any case in which the participant terminates his
service with the employer prior to the date described in clause
(i), the participant's accrued benefit shall be distributed, in
the form of one or more rollover contributions under section
402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of the
Internal Revenue Code of 1986, not later than the 60th day
after the date of the participant's termination of such
service.
``(B) In any case in which immediate valuation of the participant's
accrued benefit is not practicable, the plan may provide for a period
of more than 60 days in lieu of the 60-day period described in clauses
(i) and (ii) of subparagraph (A), except that any such longer period
provided by the plan may not extend beyond 60 days after the applicable
valuation date under the plan.''.
TITLE VI--GENERAL PROVISIONS
SEC. 601. GENERAL EFFECTIVE DATE.
(a) In General.--Except as otherwise provided in this Act, and
subject to subsection (b), the amendments made by this Act shall apply
with respect to plan years beginning on or after January 1, 2006.
(b) Special Rule for Collectively Bargained Plans.--In the case of
a plan maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more employers
ratified on or before the date of the enactment of this Act, subsection
(a) shall be applied to benefits pursuant to, and individuals covered
by, any such agreement by substituting for ``January 1, 2002'' the date
of the commencement of the first plan year beginning on or after the
earlier of--
(1) the later of--
(A) January 1, 2007, or
(B) the date on which the last of such collective
bargaining agreements terminates (determined without
regard to any extension thereof after the date of the
enactment of this Act), or
(2) January 1, 2008.
SEC. 602. PLAN AMENDMENTS.
If any amendment made by this Act requires an amendment to any
plan, such plan amendment shall not be required to be made before the
first plan year beginning on or after January 1, 2006, if--
(1) during the period after such amendment made by this Act
takes effect and before such first plan year, the plan is
operated in accordance with the requirements of such amendment
made by this Act, and
(2) such plan amendment applies retroactively to the period
after such amendment made by this Act takes effect and such
first plan year.
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