[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3922 Introduced in House (IH)]

<DOC>






114th CONGRESS
  1st Session
                                H. R. 3922

To amend the Internal Revenue Code of 1986 and the Employee Retirement 
Income and Security Act of 1974 to provide for a best interest standard 
            for advice fiduciaries, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 4, 2015

 Mr. Kelly of Pennsylvania (for himself and Mr. Sam Johnson of Texas) 
 introduced the following bill; which was referred to the Committee on 
 Education and the Workforce, and in addition to the Committee on Ways 
 and Means, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 and the Employee Retirement 
Income and Security Act of 1974 to provide for a best interest standard 
            for advice fiduciaries, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Retirement Choice Protection Act of 
2015''.

SEC. 2. TRANSFER TO SECRETARY OF THE TREASURY OF AUTHORITIES REGARDING 
              INDIVIDUAL RETIREMENT PLANS.

    (a) In General.--Section 102 of Reorganization Plan No. 4 of 1978 
(ratified and affirmed as law by Public Law 98-532 (98 Stat. 2705)) is 
amended--
            (1) in subsection (a)--
                    (A) by striking ``and'' at the end of clause (ii);
                    (B) by striking ``and'' at the end of clause (iii); 
                and
                    (C) by inserting after clause (iii) the following:
                            ``(iv) regulations, rulings, opinions, and 
                        exemptions relating to individual retirement 
                        accounts described in section 408(a) of the 
                        Code and individual retirement annuities 
                        described in section 408(b) of the Code, 
                        including simplified employee pensions under 
                        section 408(k) of the Code and simple 
                        retirement accounts under section 408(p) of the 
                        Code; and
                            ``(v) regulations described in section 
                        103(b) of this Plan;''; and
            (2) by adding at the end the following new flush sentence: 
        ``The Secretary of the Treasury shall consult with the 
        Securities and Exchange Commission in prescribing regulations, 
        rulings, opinions, and exemptions under subsection (a)(iv) that 
        provide guidance of general application as to the professional 
        standards of care (whether involving fiduciary, suitability, or 
        other standards) owed by brokers and investment advisors to 
        owners and account holders of accounts and annuities described 
        in such subsection.''.
    (b) Joint Authority.--Section 103 of such Plan is amended--
            (1) by striking ``In the case of'' and inserting: ``(a) In 
        the case of''; and
            (2) by adding at the end the following:
    ``(b)(1) The Secretary of the Treasury and the Secretary of Labor 
shall have joint authority to issue regulations described in this 
subsection, and any such regulations shall be issued jointly by such 
Secretaries.
    ``(2) A regulation is described in this subsection if (i) the 
regulation is not described in clause (i), (ii), (iii), or (iv) of 
section 102(a) of this Plan and (ii) defines or interprets a term or 
requirement that is included in section 4975 of the Code or section 406 
of ERISA. The determination of whether any regulation is described in 
this subsection shall be made without regard to whether any such term 
or requirement is also used or defined in any other provision of the 
Code or ERISA.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to regulations, rulings, opinions, and exemptions which 
        have not been finalized as of July 8, 2013.
            (2) Transition.--Any final regulation, ruling, opinion, or 
        exemption described in section 102(a)(iv) or 103(b) of 
        Reorganization Plan No. 4 of 1978 (as added by the amendments 
        made by this section) which was issued by the Secretary of 
        Labor before July 9, 2013, shall apply until such time as such 
        regulation, ruling, opinion, or exemption is revoked or 
        modified pursuant to such amendments.

SEC. 3. BEST INTEREST STANDARD FOR ADVICE FIDUCIARIES.

    (a) Amendments to the Internal Revenue Code of 1986.--
            (1) Best interest standard for advice fiduciaries regarding 
        iras and non-erisa plans.--Section 4975(c) of the Internal 
        Revenue Code of 1986 is amended by adding the following new 
        paragraph (7):
            ``(7) Best interest recommendation rule for advice 
        fiduciaries to iras and non-erisa plans.--
                    ``(A) Best interest prohibited transaction.--For 
                purposes of this section and with respect to plans not 
                subject to section 404 of title I, subtitle B of the 
                Employee Retirement Income Security Act of 1974 
                (relating to fiduciary obligations), the term 
                `prohibited transaction' includes the receipt of any 
                consideration for his own personal account by any 
                disqualified person who is a fiduciary by reason of 
                providing investment advice (within the meaning of 
                section 4975(e)(3)(B)) from the plan or any party in 
                connection with a transaction involving the investment 
                of income or assets of the plan resulting from the 
                recommendation of such person, unless such investment 
                advice constitutes a best interest recommendation. This 
                paragraph shall not apply to any transaction unless 
                such transaction is described in subparagraph (E) or 
                (F) of subsection (c)(1) (without regard to any 
                exemption from the prohibitions of subsection (c)).
                    ``(B) Best interest recommendation.--
                            ``(i) For purposes of this paragraph, the 
                        term `best interest recommendation' means a 
                        recommendation provided by a person acting with 
                        the care, skill, prudence, and diligence under 
                        the circumstances then prevailing that a 
                        prudent person would exercise based on the 
                        information obtained through the reasonable 
                        diligence of the person regarding factors such 
                        as the advice recipient's age, and any other 
                        information that the advice recipient discloses 
                        to the person in connection with receiving such 
                        recommendation, where the person does not 
                        subordinate the interests of the plan or advice 
                        recipient, as applicable, to its own.
                            ``(ii) Best interest recommendations may 
                        include, without limitation, recommendations 
                        that--
                                    ``(I) are based on a limited range 
                                of products, providers or offerings 
                                (including recommendations that 
                                include, or are limited only to, 
                                proprietary products and providers), 
                                where such limits are clearly disclosed 
                                to the advice recipient at any time 
                                prior to a transaction based on the 
                                recommendation, or
                                    ``(II) may result in variable 
                                compensation to the person (or its 
                                affiliate), such as transaction, 
                                services, placement, or other types of 
                                compensation that differ by product or 
                                service, where the receipt of such 
                                compensation is clearly disclosed to 
                                the advice recipient.
                            ``(iii) For purposes of this paragraph, 
                        clear disclosure of variable compensation means 
                        notification at any time prior to a transaction 
                        based on the person's recommendation, in a 
                        manner calculated to be understood by the 
                        average individual, of the following 
                        information, which can be provided in one or 
                        more statements or documents:
                                    ``(I) The person (or its affiliate) 
                                may receive varying amounts of fees or 
                                other compensation or consideration 
                                with respect to recommended 
                                transactions.
                                    ``(II) The amount of any fee or 
                                other compensation or consideration 
                                that is directly payable to the person 
                                (or its affiliate) from the plan or 
                                advice recipient with respect to 
                                recommended transactions, provided that 
                                any such amount may be expressed in 
                                terms of a monetary amount, formula, 
                                percentage of assets, per capita 
                                charge, or estimate or range of such 
                                compensation or consideration.
                                    ``(III) A description of the types 
                                and ranges of indirect compensation 
                                that may be paid to the person (or its 
                                affiliate) by any third party in 
                                connection with recommended 
                                transactions, provided that any such 
                                ranges may be expressed in terms of a 
                                monetary amount, formula, percentage of 
                                assets, per capita charge, or estimate 
                                of such compensation or consideration.
                                    ``(IV) Upon the advice recipient's 
                                request prior to the transaction, a 
                                disclosure of the specific amounts of 
                                compensation described in subclause 
                                (II) or (III) that the person will 
                                receive in connection with the 
                                particular transaction, provided that 
                                any such amounts may be expressed in 
                                terms of a monetary amount, formula, 
                                percentage of assets, per capita 
                                charge, or estimate of such 
                                compensation or consideration.
                        No recommendation will fail to be a best 
                        interest recommendation solely because the 
                        person, acting in good faith and with 
                        reasonable diligence, makes an error or 
                        omission in disclosing the information 
                        specified in this subparagraph, provided that 
                        the person discloses the correct information to 
                        the advice recipient as soon as practicable, 
                        but not later than 30 days from the date on 
                        which the person knows of such error or 
                        omission.
                    ``(C) Correction.--For purposes of this section and 
                notwithstanding subsection (f)(5) to the contrary, the 
                terms `correction' and `correct' mean, with respect to 
                this prohibited transaction only, the payment to, or 
                reimbursement of, actual damages of the plan resulting 
                directly from the plan's reliance on such investment 
                advice, if any, that have not otherwise been paid or 
                reimbursed to the plan, including payments and 
                reimbursements made pursuant to subsection (f)(5). Any 
                such damages shall be determined in a manner consistent 
                with the damages that would be payable with respect to 
                such prohibited transaction under the Employee 
                Retirement Income Security Act of 1974.
                    ``(D) Calculation of amount involved.--For purposes 
                of this section and notwithstanding subsection (f)(4) 
                to the contrary, the term `amount involved' means, with 
                respect to this prohibited transaction only, the amount 
                of such consideration received by the disqualified 
                person with respect to the transaction that has not 
                otherwise been paid or reimbursed to the plan, 
                including payments and reimbursements made pursuant to 
                subsection (f)(5).''.
            (2) Modification of existing statutory exemptions to apply 
        the best interest standard to advice fiduciaries of iras and 
        non-erisa plans through section 4975(c)(7).--Section 4975(d) of 
        such Code is amended by deleting the language preceding 
        paragraph (1) and replacing it with the following:
    ``(d) Exemptions.--Except as provided in subsection (f)(6), the 
prohibitions provided in subsection (c)(1) shall not apply to--''.
            (3) Definition of investment advice.--Subparagraph (B) of 
        subsection 4975(e)(3) of such Code is amended to read as 
        follows:
                    ``(B) renders investment advice for a fee or other 
                compensation, direct or indirect, with respect to 
                moneys or other property of such plan, or has any 
                authority or responsibility to do so. Investment advice 
                means a recommendation--
                            ``(i) as to the advisability of acquiring, 
                        holding, disposing, or exchanging securities or 
                        other investment property, including a 
                        recommendation to take a distribution of 
                        benefits or a recommendation as to the 
                        investment of securities or other property to 
                        be rolled over or otherwise distributed from 
                        the plan;
                            ``(ii) as to the management of securities 
                        or other property, including recommendations as 
                        to the management of securities or other 
                        property to be rolled over or otherwise 
                        distributed from the plan; or
                            ``(iii) of a person who is also going to 
                        receive a fee or other compensation for 
                        providing any of the types of advice described 
                        in clause (i) or (ii);
                 Provided that, such recommendation is rendered 
                pursuant to a mutual agreement, arrangement, or 
                understanding between such person and the plan, plan 
                fiduciary, or advice recipient that such advice is 
                individualized to the plan and such plan, fiduciary, or 
                advice recipient intends to materially rely on such 
                recommendation in making investment or management 
                decisions with respect to moneys, securities, or other 
                investment property of the plan. A person shall not be 
                considered to be providing investment advice if such 
                recommendation is provided in conjunction with full and 
                fair disclosure to the recipient, which can be written 
                or verbal, that the person is providing or making the 
                recommendation of services or property in its 
                marketing, sales, or educational capacity, and that the 
                person is not undertaking to provide impartial 
                investment advice or to give advice as a fiduciary 
                (within the meaning of this subparagraph). In addition, 
                a person shall not be a fiduciary under this 
                subparagraph with respect to the terms and conditions 
                of engagement of the person, including the scope of the 
                obligation to provide advice, the products or services 
                with respect to which advice is provided and the 
                compensation payable to the person, provided the 
                recipient has consented to the terms and conditions of 
                the engagement after disclosure of all material aspects 
                of such terms and conditions, including fee disclosure 
                that satisfies subclauses (I), (II), and (III) of 
                paragraph (7)(B)(i). Except as otherwise provided in 
                subparagraph (D) and notwithstanding subparagraph (E), 
                investment advice shall include a recommendation under 
                this subparagraph provided pursuant to a written 
                acknowledgment of fiduciary status with respect to the 
                provision of such recommendation. For purposes of this 
                subparagraph, `property' means moneys and investment 
                property, and `management of securities' means 
                exercising rights or obligations with respect to 
                securities or other property,''.
            (4) Definition of investment advice.--Section 4975(e)(3) of 
        such Code is amended by striking the period at the end of 
        subparagraph (C) and inserting a comma and by adding the 
        following new subparagraphs (D) and (E):
                    ``(D) The extent of a fiduciary's obligations as 
                such can be defined and limited pursuant to a mutual 
                agreement, arrangement, or understanding between the 
                person and the party engaging the person as a fiduciary 
                to the plan. Such limitations can include limits on 
                scope, timing, and responsibility to provide ongoing 
                monitoring or advice services.
                    ``(E) A person shall not be deemed to be a 
                fiduciary on account of section 4975(e)(3)(B) if such 
                person meets one or more of the following:
                            ``(i) Counterparties and services 
                        providers.--In such person's capacity as a 
                        counterparty, service provider, or 
                        representative thereof, the person provides 
                        advice to a plan fiduciary who is independent 
                        of such person and who is independent of the 
                        plan sponsor, with respect to an arm's-length 
                        service arrangement, sale, purchase, loan, or 
                        bilateral contract between the plan and person, 
                        each a `transaction' for purposes of this 
                        subclause, if, prior to entering into the 
                        transaction, the plan fiduciary represents that 
                        it understands that the person has a financial 
                        interest in the matter, and that the person is 
                        not undertaking to provide impartial financial 
                        advice or to give advice as a fiduciary (within 
                        the meaning of this paragraph); provided such 
                        person has not acknowledged in writing that it 
                        is acting as a fiduciary (within the meaning of 
                        this paragraph) with respect to the 
                        transaction.
                            ``(ii) Swap transactions.--The person is a 
                        counterparty, service provider or 
                        representative thereof in connection with a 
                        swap or security-based swap, as defined in 
                        section 1(a) of the Commodity Exchange Act (7 
                        U.S.C. 1(a)) and section 3(a) of the Securities 
                        Exchange Act (15 U.S.C. 78c(a)), if: the plan 
                        is represented by a fiduciary independent of 
                        the person; the person is a swap clearing firm 
                        or other service provider in relation to a 
                        swap, swap dealer, security-based swap dealer, 
                        major swap participant, or major security-based 
                        swap participant; the person (if a swap dealer, 
                        security-based swap dealer, clearing firm, or 
                        other similar service provider) is not acting 
                        as an advisor to the plan (within the meaning 
                        of section 4s(h) of the Commodity Exchange Act 
                        or section 15F(h) of the Securities Exchange 
                        Act of 1934) in connection with the 
                        transaction; and in advance of providing any 
                        recommendations with respect to the 
                        transaction, the person obtains a written 
                        representation from the independent plan 
                        fiduciary, that the fiduciary will not rely on 
                        recommendations provided by the person.
                            ``(iii) Employees.--In his or her capacity 
                        as an employee of any employer or employee 
                        organization sponsoring the plan or an 
                        affiliate of such plan sponsor, the person 
                        provides the advice (directly or indirectly) to 
                        the plan, plan fiduciary, participant, or 
                        beneficiary, and he or she receives no fee or 
                        other compensation, direct or indirect, in 
                        connection with the advice beyond the 
                        employee's normal compensation for work 
                        performed for the employer or employee 
                        organization or an affiliate. In such cases, 
                        such an employee is not rendering investment 
                        advice for a fee or other compensation. No 
                        inference is intended with respect to whether 
                        any other person shall be treated as rendering 
                        investment advice for a fee or other 
                        compensation.
                            ``(iv) Platform providers.--The person 
                        merely markets and makes available to a plan 
                        (including its participants, beneficiaries, and 
                        fiduciaries (which includes an owner of an 
                        individual retirement plan (as defined in 
                        section 7701(a)(37)))), without regard to the 
                        individualized needs of the plan, its 
                        participants, or beneficiaries, securities or 
                        other property through a platform or similar 
                        mechanism (which may consist of or include one 
                        or more annuity contracts) from which a plan 
                        fiduciary may select or monitor investment 
                        alternatives, including qualified default 
                        investment alternatives, into which plan 
                        participants or beneficiaries may direct the 
                        investment of assets held in, or contributed 
                        to, their individual accounts, if the person 
                        discloses in writing to the plan fiduciary that 
                        the person is not undertaking to provide 
                        impartial investment advice or to give advice 
                        as a fiduciary (within the meaning of this 
                        paragraph) when establishing or maintaining the 
                        platform.
                            ``(v) Selection and monitoring 
                        assistance.--The person merely identifies 
                        investment alternatives that meet objective 
                        criteria specified by the plan fiduciary 
                        (including an owner of an individual retirement 
                        plan (as defined in section 7701(a)(37))), 
                        participant, or beneficiary (e.g., stated 
                        parameters concerning expense ratios, size of 
                        fund, type of asset, or credit quality); or 
                        merely provides objective financial data and 
                        comparisons with independent benchmarks to the 
                        plan fiduciary, participant or beneficiary.
                            ``(vi) Financial reports and valuations.--
                        The person provides or reports valuation 
                        information, but does not represent in writing 
                        that it is undertaking to provide such 
                        valuation information as a fiduciary (within 
                        the meaning of this subsection).
                            ``(vii) Education.--The person provides the 
                        information--
                                    ``(I) described in Department of 
                                Labor Interpretive Bulletin 96-1 (29 
                                C.F.R. 2509.96-1, as in effect on 
                                January 1, 2015);
                                    ``(II) described in Department of 
                                Labor Interpretive Bulletin 96-1 (29 
                                C.F.R. 2509.96-1, as in effect on 
                                January 1, 2015) but for the fact that 
                                such education is provided to a plan or 
                                plan fiduciary;
                                    ``(III) described in Department of 
                                Labor Interpretive Bulletin 96-1 (29 
                                C.F.R. 2509.96-1, as in effect on 
                                January 1, 2015) but for the fact that 
                                such education is provided to an owner 
                                of an individual retirement plan (as 
                                defined in section 7701(a)(37));
                                    ``(IV) to participants and 
                                beneficiaries regarding the factors to 
                                consider in deciding whether to elect 
                                to receive a distribution from a plan 
                                or an individual retirement plan (as 
                                defined in section 7701(a)(37)) and 
                                whether to roll over such distribution 
                                to a plan or an individual retirement 
                                plan (as defined in section 
                                7701(a)(37)); such education can 
                                include examples of different 
                                distribution and rollover alternatives, 
                                so long as all material facts and 
                                assumptions on which the examples are 
                                based accompany the examples; or
                                    ``(V) any additional information 
                                treated as education by the Secretary 
                                of Labor.''.
            (5) Exemption to preserve investor choice.--Section 4975(d) 
        of such Code is amended by adding at the end thereof the 
        following new paragraph:
            ``(24) with respect to transactions described in section 
        4975(c)(1) (A)-(F), any transaction or service in connection 
        with the provision of investment advice described in section 
        4975(e)(3)(B) if the conditions under subparagraphs (A), (B), 
        and (C) are satisfied:
                    ``(A) The provision of investment advice with 
                respect to the transaction is subject to subsection 
                (c)(7) or section 404 of title I, subtitle B of the 
                Employee Retirement Income Security Act of 1974 
                (relating to fiduciary obligations).
                    ``(B) The conditions of section 4975(d)(2) are 
                satisfied when otherwise applicable.
                    ``(C) With respect to plans subject to section 404 
                of title I, subtitle B of the Employee Retirement 
                Income Security Act of 1974, the investment advice may 
                include recommendations that--
                            ``(i) are based on a limited range of 
                        products, providers, or offerings (including 
                        recommendations that include, or are limited 
                        only to, proprietary products and providers), 
                        where such limits are clearly disclosed to the 
                        advice recipient at any time prior to a 
                        transaction based on the recommendation, or
                            ``(ii) may result in variable compensation 
                        to the person (or its affiliate), such as 
                        transaction, services, placement, or other 
                        types of compensation that differ by product or 
                        service, where the receipt of such compensation 
                        is clearly disclosed to the advice recipient.
                    ``(D) For purposes of this paragraph, clear 
                disclosure of variable compensation means notification 
                at any time prior to a transaction based on the 
                person's recommendation, in a manner calculated to be 
                understood by the average individual, of the following 
                information, which can be provided in one or more 
                statements or documents:
                            ``(i) The person (or its affiliate) may 
                        receive varying amounts of fees or other 
                        compensation or consideration with respect to 
                        recommended transactions.
                            ``(ii) The amount of any fee or other 
                        compensation or consideration that is directly 
                        payable to the person (or its affiliate) from 
                        the plan or advice recipient with respect to 
                        recommended transactions, provided that any 
                        such amount may be expressed in terms of a 
                        monetary amount, formula, percentage of assets, 
                        per capita charge, or estimate or range of such 
                        compensation or consideration.
                            ``(iii) A description of the types and 
                        ranges of indirect compensation that may be 
                        paid to the person (or its affiliate) by any 
                        third party in connection with the recommended 
                        transaction, provided that any such range may 
                        be expressed in terms of a monetary amount, 
                        formula, percentage of assets, per capita 
                        charge or estimate of such compensation or 
                        consideration.
                            ``(iv) Upon the advice recipient's request 
                        prior to the transaction, a disclosure of the 
                        specific amounts of compensation described in 
                        clause (ii) or (iii) that the person will 
                        receive in connection with the particular 
                        transaction, provided that any such amounts may 
                        be expressed in terms of a monetary amount, 
                        formula, percentage of assets, per capita 
                        charge, or estimate of such compensation or 
                        consideration.
                The disclosure requirements described in this 
                subparagraph will not fail to be met solely because the 
                person, acting in good faith and with reasonable 
                diligence, makes an error or omission in disclosing the 
                information specified in this subsection, provided that 
                the person discloses the correct information to the 
                advice recipient as soon as practicable, but not later 
                than 30 days from the date on which the person knows of 
                such error or omission.''.
            (6) Effective date.--The amendments made by this subsection 
        shall apply on or after the 1st day of the 36th month after the 
        date of the enactment of this Act, but the exemption added 
        under section 4975(d)(24) of such Code shall be available 
        immediately upon enactment of this Act for persons meeting its 
        conditions (including the conditions of a best interest 
        recommendation which may not be effective at such time). The 
        Secretary of Labor is prohibited from amending any rules or 
        administrative positions promulgated under section 3(21) of 
        ERISA or section 4975(e)(3) of such Code (including Department 
        of Labor Interpretive Bulletin 96-1 (29 C.F.R. 2509.96-1) and 
        Department of Labor Advisory Opinion 2005-23A) prior to the 
        effective date of this Act, and no such rules or positions 
        promulgated by the Secretary of Labor prior to the date of the 
        enactment of this Act, but not yet effective or applicable, may 
        become effective prior to the effective date of this Act.
            (7) Grandfathered transactions and services.--The 
        amendments made to section 4975(e)(3)(B) of such Code by this 
        Act shall not apply to any services if such services--
                    (A) were rendered prior to the effective date of 
                this Act,
                    (B) relate to a transaction entered into prior to 
                the effective date of this Act,
                    (C) were paid for prior to the effective date of 
                this Act, or
                    (D) are not described in subparagraph (A), (B), or 
                (C) but the person performing the services does not 
                receive more compensation (either as a fixed dollar 
                amount or as a percentage of assets) as a result of the 
                services than the person is contractually eligible to 
                receive for such services prior to the effective date 
                of this Act.
    (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Definition of investment advice.--Subparagraph (A) of 
        section 3(21) of the Employee Retirement Security Act of 1974 
        is amended by amending clause (ii) to read as follows:
                            ``(ii) renders investment advice for a fee 
                        or other compensation, direct or indirect, with 
                        respect to moneys or other property of such 
                        plan, or has any authority or responsibility to 
                        do so. Investment advice means a 
                        recommendation--
                                    ``(I) as to the advisability of 
                                acquiring, holding, disposing, or 
                                exchanging securities or other 
                                investment property, including a 
                                recommendation to take a distribution 
                                of benefits or a recommendation as to 
                                the investment of securities or other 
                                property to be rolled over or otherwise 
                                distributed from the plan;
                                    ``(II) as to the management of 
                                securities or other property, including 
                                recommendations as to the management of 
                                securities or other property to be 
                                rolled over or otherwise distributed 
                                from the plan; or
                                    ``(III) of a person who is also 
                                going to receive a fee or other 
                                compensation for providing any of the 
                                types of advice described in subclause 
                                (I) or (II);
                         Provided that, such recommendation is rendered 
                        pursuant to a mutual agreement, arrangement, or 
                        understanding between such person and the plan, 
                        plan fiduciary, or advice recipient that such 
                        advice is individualized to the plan and such 
                        plan, fiduciary, or advice recipient intends to 
                        materially rely on such recommendation in 
                        making investment or management decisions with 
                        respect to moneys, securities, or other 
                        investment property of the plan. A person shall 
                        not be considered to be providing investment 
                        advice if such recommendation is provided in 
                        conjunction with full and fair disclosure to 
                        the recipient, which can be written or verbal, 
                        that the person is providing or making the 
                        recommendation of services or property in its 
                        marketing, sales, or educational capacity, and 
                        that the person is not undertaking to provide 
                        impartial investment advice or to give advice 
                        as a fiduciary (within the meaning of this 
                        subparagraph). In addition, a person shall not 
                        be a fiduciary under this subparagraph with 
                        respect to the terms and conditions of 
                        engagement of the person, including the scope 
                        of the obligation to provide advice, the 
                        products or services with respect to which 
                        advice is provided and the compensation payable 
                        to the person, provided the recipient has 
                        consented to the terms and conditions of the 
                        engagement after disclosure of all material 
                        aspects of such terms and conditions, including 
                        fee disclosure that satisfies clauses (i), 
                        (ii), and (iii) of section 408(b)(21)(C). 
                        Except as otherwise provided in subparagraph 
                        (C) and notwithstanding subparagraph (D), 
                        investment advice shall include a 
                        recommendation under this subparagraph provided 
                        pursuant to a written acknowledgment of 
                        fiduciary status with respect to the provision 
                        of such recommendation. For purposes of this 
                        clause, `property' means moneys and investment 
                        property, and `management of securities' means 
                        exercising rights or obligations with respect 
                        to securities or other property.''.
            (2) Definition of investment advice.--Subsection 3(21) of 
        such Act is amended by adding the following new subparagraphs 
        (C) and (D):
                    ``(C) The extent of a fiduciary's obligations as 
                such can be defined and limited pursuant to a mutual 
                agreement, arrangement, or understanding between the 
                person and the party engaging the person as a fiduciary 
                to the plan. Such limitations can include limits on 
                scope, timing, and responsibility to provide ongoing 
                monitoring or advice services.
                    ``(D) A person shall not be deemed to be a 
                fiduciary on account of subparagraph (A)(ii) if such 
                person meets one or more of the following:
                            ``(i) Counterparties and services 
                        providers.--In such person's capacity as a 
                        counterparty, service provider, or 
                        representative thereof, the person provides 
                        advice to a plan fiduciary who is independent 
                        of such person and who is independent of the 
                        plan sponsor, with respect to an arm's-length 
                        service arrangement, sale, purchase, loan, or 
                        bilateral contract between the plan and person, 
                        each a `transaction' for purposes of this 
                        clause if, prior to entering into the 
                        transaction, the plan fiduciary represents that 
                        it understands that the person has a financial 
                        interest in the matter, and that the person is 
                        not undertaking to provide impartial financial 
                        advice or to give advice as a fiduciary (within 
                        the meaning of this subsection); provided such 
                        person has not acknowledged in writing that it 
                        is acting as a fiduciary (within the meaning of 
                        this subsection) with respect to the 
                        transaction.
                            ``(ii) Swap transactions.--The person is a 
                        counterparty, service provider or 
                        representative thereof in connection with a 
                        swap or security-based swap, as defined in 
                        section 1(a) of the Commodity Exchange Act (7 
                        U.S.C. 1(a)) and section 3(a) of the Securities 
                        Exchange Act (15 U.S.C. 78c(a)), if: the plan 
                        is represented by a fiduciary independent of 
                        the person; the person is a swap clearing firm 
                        or other service provider in relation to a 
                        swap, swap dealer, security-based swap dealer, 
                        major swap participant, or major security-based 
                        swap participant; the person (if a swap dealer, 
                        security-based swap dealer, clearing firm, or 
                        other similar service provider) is not acting 
                        as an advisor to the plan (within the meaning 
                        of section 4s(h) of the Commodity Exchange Act 
                        or section 15F(h) of the Securities Exchange 
                        Act of 1934) in connection with the 
                        transaction; and in advance of providing any 
                        recommendations with respect to the 
                        transaction, the person obtains a written 
                        representation from the independent plan 
                        fiduciary, that the fiduciary will not rely on 
                        recommendations provided by the person.
                            ``(iii) Employees.--In his or her capacity 
                        as an employee of any employer or employee 
                        organization sponsoring the plan or an 
                        affiliate of such plan sponsor, the person 
                        provides the advice (directly or indirectly) to 
                        the plan, plan fiduciary, participant, or 
                        beneficiary, and he or she receives no fee or 
                        other compensation, direct or indirect, in 
                        connection with the advice beyond the 
                        employee's normal compensation for work 
                        performed for the employer or employee 
                        organization or an affiliate. In such cases, 
                        such an employee is not rendering investment 
                        advice for a fee or other compensation. No 
                        inference is intended with respect to whether 
                        any other person shall be treated as rendering 
                        investment advice for a fee or other 
                        compensation.
                            ``(iv) Platform providers.--The person 
                        merely markets and makes available to a plan 
                        (including its participants, beneficiaries, and 
                        fiduciaries), without regard to the 
                        individualized needs of the plan, its 
                        participants, or beneficiaries, securities or 
                        other property through a platform or similar 
                        mechanism (which may consist of or include one 
                        or more annuity contracts) from which a plan 
                        fiduciary may select or monitor investment 
                        alternatives, including qualified default 
                        investment alternatives, into which plan 
                        participants or beneficiaries may direct the 
                        investment of assets held in, or contributed 
                        to, their individual accounts, if the person 
                        discloses in writing to the plan fiduciary that 
                        the person is not undertaking to provide 
                        impartial investment advice or to give advice 
                        as a fiduciary (within the meaning of this 
                        subsection) when establishing or maintaining 
                        the platform.
                            ``(v) Selection and monitoring 
                        assistance.--The person merely identifies 
                        investment alternatives that meet objective 
                        criteria specified by the plan fiduciary, 
                        participant, or beneficiary (e.g., stated 
                        parameters concerning expense ratios, size of 
                        fund, type of asset, or credit quality); or 
                        merely provides objective financial data and 
                        comparisons with independent benchmarks to the 
                        plan fiduciary, participant or beneficiary.
                            ``(vi) Financial reports and valuations.--
                        The person provides or reports valuation 
                        information, but does not represent in writing 
                        that it is undertaking to provide such 
                        valuation information as a fiduciary (within 
                        the meaning of this subsection).
                            ``(vii) Education.--The person provides the 
                        information--
                                    ``(I) described in Department of 
                                Labor Interpretive Bulletin 96-1 (29 
                                C.F.R. 2509.96-1, as in effect on 
                                January 1, 2015);
                                    ``(II) described in Department of 
                                Labor Interpretive Bulletin 96-1 (29 
                                C.F.R. 2509.96-1, as in effect on 
                                January 1, 2015) but for the fact that 
                                such education is provided to a plan or 
                                plan fiduciary;
                                    ``(III) to participants and 
                                beneficiaries regarding the factors to 
                                consider in deciding whether to elect 
                                to receive a distribution from a plan 
                                or an individual retirement plan (as 
                                defined in section 7701(a)(37) of the 
                                Internal Revenue Code of 1986) and 
                                whether to roll over such distribution 
                                to a plan or an individual retirement 
                                plan (as defined in section 7701(a)(37) 
                                of the Internal Revenue Code of 1986); 
                                such education can include examples of 
                                different distribution and rollover 
                                alternatives, so long as all material 
                                facts and assumptions on which the 
                                examples are based accompany the 
                                examples; or
                                    ``(IV) any additional information 
                                treated as education by the 
                                Secretary.''.
            (3) Exemption to preserve investor choice.--Section 408(b) 
        of such Act is amended by adding at the end thereof the 
        following new paragraph:
            ``(21) with respect to transactions described in sections 
        406(a) and 406(b), any transaction or service in connection 
        with the provision of investment advice described in section 
        3(21)(A)(ii) if the conditions under subparagraphs (A), (B), 
        and (C) are satisfied:
                    ``(A) The provision of investment advice with 
                respect to the transaction is subject to section 404.
                    ``(B) The conditions of section 408(b)(2) are 
                satisfied when otherwise applicable.
                    ``(C) The investment advice may include 
                recommendations that--
                            ``(i) are based on a limited range of 
                        products, providers, or offerings (including 
                        recommendations that include, or are limited 
                        only to, proprietary products and providers), 
                        where such limits are clearly disclosed to the 
                        advice recipient at any time prior to a 
                        transaction based on the recommendation, or
                            ``(ii) may result in variable compensation 
                        to the person (or its affiliate), such as 
                        transaction, services, placement, or other 
                        types of compensation that differ by product or 
                        service, where the receipt of such compensation 
                        is clearly disclosed to the advice recipient.
                    ``(D) For purposes of this paragraph, clear 
                disclosure of variable compensation means notification 
                at any time prior to a transaction based on the 
                person's recommendation, in a manner calculated to be 
                understood by the average individual, of the following 
                information, which can be provided in one or more 
                statements or documents:
                            ``(i) The person (or its affiliate) may 
                        receive varying amounts of fees or other 
                        compensation or consideration with respect to 
                        recommended transactions.
                            ``(ii) The amount of any fee or other 
                        compensation or consideration that is directly 
                        payable to the person (or its affiliate) from 
                        the plan or advice recipient with respect to 
                        recommended transactions, provided that any 
                        such amount may be expressed in terms of a 
                        monetary amount, formula, percentage of assets, 
                        per capita charge, or estimate or range of such 
                        compensation or consideration.
                            ``(iii) A description of the types and 
                        ranges of indirect compensation that may be 
                        paid to the person (or its affiliate) by any 
                        third party in connection with the recommended 
                        transaction, provided that any such ranges may 
                        be expressed in terms of a monetary amount, 
                        formula, percentage of assets, per capita 
                        charge or estimate of such compensation or 
                        consideration.
                            ``(iv) Upon the advice recipient's request 
                        prior to the transaction, a disclosure of the 
                        specific amounts of compensation described in 
                        clauses (ii) and (iii) that the person will 
                        receive in connection with the particular 
                        transaction, provided that any such amounts may 
                        be expressed in terms of a monetary amount, 
                        formula, percentage of assets, per capita 
                        charge, or estimate of such compensation or 
                        consideration.
                The disclosure requirements described in this paragraph 
                will not fail to be met solely because the person, 
                acting in good faith and with reasonable diligence, 
                makes an error or omission in disclosing the 
                information specified in this subsection, provided that 
                the person discloses the correct information to the 
                advice recipient as soon as practicable, but not later 
                than 30 days from the date on which the person knows of 
                such error or omission.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply on or after the 1st day of the 36th month after the 
        date of the enactment of this Act, but the exemption added 
        under section 408(b)(21) of the Employee Retirement Security 
        Act of 1974 shall be available immediately upon enactment of 
        this Act for persons meeting its conditions (including the 
        conditions of a best interest recommendation which may not be 
        effective at such time). The Secretary of Labor is prohibited 
        from amending any rules or administrative positions promulgated 
        under section 3(21) of ERISA or section 4975(e)(3) of the 
        Internal Revenue Code of 1986 (including Department of Labor 
        Interpretive Bulletin 96-1 (29 C.F.R. 2509.96-1) and Department 
        of Labor Advisory Opinion 2005-23A) prior to the effective date 
        of this Act, and no such rules or positions promulgated by the 
        Secretary of Labor prior to the date of the enactment of this 
        Act, but not yet effective or applicable, may become effective 
        prior to the effective date of this Act.
            (5) Grandfathered transactions and services.--The 
        amendments made to section 3(21)(A)(ii) by this Act shall not 
        apply to any services if such services--
                    (A) were rendered prior to the effective date of 
                this Act,
                    (B) relate to a transaction entered into prior to 
                the effective date of this Act,
                    (C) were paid for prior to the effective date of 
                this Act, or
                    (D) are not described in subparagraph (A), (B), or 
                (C) but the person performing the services does not 
                receive more compensation (either as a fixed dollar 
                amount or as a percentage of assets) as a result of the 
                services than the person is contractually eligible to 
                receive for such services prior to the effective date 
                of this Act.

SEC. 4. REGULATIONS.

    The Secretary of the Treasury and the Secretary of Labor shall make 
rules, in accordance with subchapter II of chapter 5 of title 5, United 
States Code, to carry out this Act and the amendments made by this Act.
                                 <all>