[House Report 108-98]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     108-98
======================================================================
 
 PROVIDING FOR CONSIDERATION OF H.R. 1000, PENSION SECURITY ACT OF 2003

                                _______
                                

May 13, 2003.--Referred to the House Calendar and ordered to be printed

                                _______
                                

    Mr. Linder, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 230]

    The Committee on Rules, having had under consideration 
House Resolution 230, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for the consideration of H.R. 1000, 
the Pension Security Act of 2003, under a modified closed rule.
    The rule provides one hour and 20 minutes of debate in the 
House, with 40 minutes equally divided and controlled by the 
chairman and ranking minority member of the Committee on 
Education and the Workforce, and 40 minutes equally divided and 
controlled by the chairman and ranking minority member of the 
Committee on Ways and Means.
    The rule provides that the amendment recommended by the 
Committee on Education and the Workforce now printed in the 
bill shall be considered as adopted. The rule waives all points 
of order against the bill, as amended.
    The rule makes in order the amendment printed in this 
report, if offered by Representative George Miller of 
California or his designee, which shall be considered as read, 
and shall be separately debatable for one hour equally divided 
and controlled by the proponent and an opponent. The rule 
waives all points of order against the amendment printed in 
this report.
    Finally, the rule provides one motion to recommit with or 
without instructions.
    The waiver of all points of order against the bill includes 
a waiver of clause 5(a) of rule XXI (prohibiting the inclusion 
of a tax or tariff in a measure not reported by a committee 
having jurisdiction over such measures), which is necessary 
because the Committee on Ways and Means did not report H.R. 
1000.

                            COMMITTEE VOTES

    Pursuant to clause 3(b) of House rule XIII the results of 
each record vote on an amendment or motion to report, together 
with the names of those voting for and against, are printed 
below:

Rules Committee record vote No. 70

    Date: May 13, 2003.
    Measure: H.R. 1000, Pension Security Act of 2003.
    Motion by: Mrs. Slaughter.
    Summary of motion: To make in order the amendment offered 
by Representative Sanders which requires companies that convert 
to cash balance pension plans to allow workers who are at least 
40 years old or have at least 10 years of service the choice to 
remain in the traditional defined benefit pension plan. 
Requires the Treasury Department to immediately withdraw 
proposed regulations that would allow companies to convert to 
cash balance plans.
    Results: Defeated 4 to 9.
    Vote by Members: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; 
Reynolds--Nay; Frost--Yea; Slaughter--Yea; McGovern--Yea; 
Hastings (FL)--Yea; Dreier--Nay.

Rules Committee record vote No. 71

    Date: May 13, 2003.
    Measure: H.R. 1000, Pension Security Act of 2003.
    Motion by: Mr. McGovern.
    Summary of motion: To make in order the amendment offered 
by Representative Visclosky which increases rights now held by 
workers by expanding their role in the management of their 
pensions. Requires single-employer pension plans to have 
representatives of employees or employee organizations serve as 
joint trustees.
    Results: Defeated 4 to 9.
    Vote by Members: Goss--Nay; Linder--Nay; Pryce--Nay; Diaz-
Balart--Nay; Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; 
Reynolds--Nay; Frost--Yea; Slaughter--Yea; McGovern--Yea; 
Hastings (FL)--Yea; Dreier--Nay.

                 SUMMARY OF THE AMENDMENT MADE IN ORDER

    (Summary derived from information provided by amendment 
sponsor.)
    Miller, George (CA): Amendment in the Nature of a 
Substitute. Requires executive pensions to be subject to the 
same pension rules that apply to other workers. Changes 
provisions that allow special executive pension plans to escape 
taxation, to receive special protection against creditors, and 
to end-run pension laws that require wide employee 
participation at the company. Requires that executive plans be 
subject to the same uniform and fair vesting and contribution 
limits that apply to rank-and-file employees. Requires 
companies changing from traditional pension plans to cash 
balance plans to allow older workers the choice of remaining in 
the old plan or joining the new plan. Requires executive 
compensation packages including pensions to be approved by the 
board of directors, and requires companies to notify 
shareholders and employees of any new executive pensions (in 
plan language), and of any additional benefits to executives 
100 days before their adoption. Requires employers negotiating 
with its employees over wages and benefits to disclose directly 
to employees any changes (or proposed changes) in top executive 
pensions, health, or life insurance, and other substantial job 
perks, with a penalty for failure to disclose. Gives employees 
greater protections when a company declares bankruptcy, and 
denies executives preferential protection against creditors. 
Imposes an excise tax on executive golden parachutes when they 
leave behind companies with plummeting shareholder value or are 
facing bankruptcy proceedings. Prevents firms from deducting 
more than $1 million in executive performance-based 
compensation if it is obtained through manipulation of the 
company's pension funds. Imposes tax penalties on executives 
who sell stock they acquire from stock options if the sale 
would violate restrictions on the sale of corporate stock that 
rank-and-file employees face in their 401(k) plans. (One Hour)

                  TEXT OF THE AMENDMENT MADE IN ORDER

  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Pension 
Fairness Act of 2003''.
  (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.

                   TITLE I--IMPROVEMENTS IN DISCLOSURE

Sec. 101. Pension benefit information.
Sec. 102. Immediate warning of excessive stock holdings.
Sec. 103. Report to participants and beneficiaries of trades in employer 
          securities.
Sec. 104. Enforcement of information and disclosure requirements.

    TITLE II--FREEDOM TO MAKE INVESTMENT DECISIONS WITH PLAN ASSETS.

Sec. 201. Amendments to the Internal Revenue Code of 1986.
Sec. 202. Amendments to the Employee Retirement Income Security Act of 
          1974.
Sec. 203. Recommendations relating to non-publicly traded stock.
Sec. 204. Effective date of title.

                   TITLE III--EMPLOYEE REPRESENTATION

Sec. 301. Participation of participants in trusteeship of individual 
          account plans.

                   TITLE IV--INCREASED ACCOUNTABILITY

Sec. 401. Bonding or insurance adequate to protect interest of 
          participants and beneficiaries.
Sec. 402. Liability for breach of fiduciary duty.
Sec. 403. Preservation of rights or claims.
Sec. 404. Office of pension participant advocacy.
Sec. 405. Study regarding insurance system for individual account plans.
Sec. 406. Excise tax on failure of pension plans to provide notice of 
          transaction restriction periods.

      TITLE V--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

Sec. 501. Independent investment advice.
Sec. 502. Tax treatment of qualified retirement planning services.

                  TITLE VI--PARITY IN EMPLOYEE BENEFITS

Sec. 601. Inclusion in gross income of funded deferred compensation of 
          corporate insiders if corporation funds defined contribution 
          plan with employer stock.
Sec. 602. Performance-based compensation exception to $1,000,000 
          limitation on deductible compensation not to apply in certain 
          cases.

            TITLE VII--PROTECTION OF RETIREMENT EXPECTATIONS

Sec. 701. Protection of participants from conversions to hybrid defined 
          benefit plans.

               TITLE VIII--TREATMENT OF CORPORATE INSIDERS

Sec. 801. Special rules for executive perks and retirement benefits.
Sec. 802. Golden parachute excise tax to apply to deferred compensation 
          paid by corporation after major decline in stock value or 
          corporation declares bankruptcy.
Sec. 803. Adequate disclosure regarding executive compensation packages.

                   TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 901. Corporate deduction for reinvested ESOP dividends subject to 
          deductible limits.
Sec. 902. Credit for elective deferrals and IRA contributions by certain 
          individuals made permanent (saver's tax credit).
Sec. 903. Authority to rescind transfers to plans made for the benefit 
          of highly compensated employees.

                       TITLE X--GENERAL PROVISIONS

Sec. 1001. General effective date.
Sec. 1002. Plan amendments.

                  TITLE I--IMPROVEMENTS IN DISCLOSURE

SEC. 101. 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) is amended--
                  (A) by striking ``shall furnish to any plan 
                participant or beneficiary who so requests in 
                writing,'' and inserting ``shall furnish at 
                least once every 3 years, in the case of a 
                participant in a defined benefit plan who has 
                attained age 35, and annually, in the case of 
                an individual account plan, to each plan 
                participant, and shall furnish to any plan 
                participant or beneficiary who so requests,'', 
                and
                  (B) by adding at the end the following flush 
                sentence:
``Information furnished under the preceding sentence 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.''.
          (2) Model statement.--Section 105 of such Act (29 
        U.S.C. 1025) is amended by adding at the end the 
        following new subsection:
  ``(e)(1) The Secretary of Labor shall develop a model benefit 
statement which shall be used by plan administrators in 
complying with the requirements of subsection (a). Such 
statement shall include--
          ``(A) the amount of nonforfeitable accrued benefits 
        as of the statement date which is payable at normal 
        retirement age under the plan,
          ``(B) the amount of accrued benefits which are 
        forfeitable but which may become nonforfeitable under 
        the terms of the plan,
          ``(C) the amount or percentage of any reduction due 
        to integration of the benefit with the participant's 
        Social Security benefits or similar governmental 
        benefits,
          ``(D) information on early retirement benefit and 
        joint and survivor annuity reductions, and
          ``(E) 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
          ``(F) 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.
  ``(2) The Secretary shall also develop a separate notice, 
which shall be included by the plan administrator with the 
information furnished pursuant to subsection (a), 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.''.
          (3) Rule for multiemployer plans.--Subsection (d) of 
        section 105 of such Act (29 U.S.C. 1025) is amended to 
        read as follows:
  ``(d) Each administrator of a plan to which more than 1 
unaffiliated employer is required to contribute shall furnish 
to any plan participant or beneficiary who so requests in 
writing, a statement described in subsection (a).''.
  (b) Disclosure of Benefit Calculations.--
          (1) In general.--Section 105 of such Act (as amended 
        by subsection (a)) is amended further--
                  (A) by redesignating subsections (b), (c), 
                (d), and (e) as subsections (c), (d), (e), and 
                (f), respectively; and
                  (B) by inserting after subsection (a) the 
                following new subsection:
  ``(b)(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), (b), and (d)''.
                  (B) Section 105(c) of such Act (as 
                redesignated by paragraph (1)(A) of this 
                subsection) is amended by inserting ``or (b)'' 
                after ``subsection (a)''.
                  (C) Section 106(b) of such Act (29 U.S.C. 
                1026(b)) is amended by striking ``sections 
                105(a) and 105(c)'' and inserting ``subsections 
                (a), (b), and (d) of section 105''.
  (c) Amendments to Internal Revenue Code of 1986.--
          (1) In general.--Chapter 43 of the Internal Revenue 
        Code of 1986 (relating to qualified pension, etc., 
        plans) is amended by adding at the end the following 
        new section:

``SEC. 4980G. FAILURE OF APPLICABLE PLANS TO PROVIDE NOTICE OF 
                    GENERALLY ACCEPTED INVESTMENT PRINCIPLES.

  ``(a) Imposition of Tax.--There is hereby imposed a tax on 
the failure of any applicable pension plan to meet the 
requirements of subsection (e) with respect to any applicable 
individual.
  ``(b) Amount of Tax.--The amount of the tax imposed by 
subsection (a) on any failure with respect to any applicable 
individual shall be $100 for each day in the noncompliance 
period with respect to such failure.
  ``(c) Limitations on Amount of Tax.--
          ``(1) Tax not to apply to failures corrected within 
        30 days.--No tax shall be imposed by subsection (a) on 
        any failure if--
                  ``(A) any person subject to liability for the 
                tax under subsection (d) exercised reasonable 
                diligence to meet the requirements of 
                subsection (e), and
                  ``(B) such person provides the notice 
                described in subsection (e) during the 30-day 
                period beginning on the first date such person 
                knew, or exercising reasonable diligence should 
                have known, that such failure existed.
          ``(2) Overall limitation for unintentional 
        failures.--
                  ``(A) In general.--If the person subject to 
                liability for tax under subsection (d) 
                exercised reasonable diligence to meet the 
                requirements of subsection (e) and paragraph 
                (1) is not otherwise applicable, the tax 
                imposed by subsection (a) for failures during 
                the taxable year of the employer (or, in the 
                case of a multiemployer plan, the taxable year 
                of the trust forming part of the plan) shall 
                not exceed $500,000. For purposes of the 
                preceding sentence, all multiemployer plans of 
                which the same trust forms a part shall be 
                treated as 1 plan.
                  ``(B) Taxable years in the case of certain 
                controlled groups.--For purposes of this 
                paragraph, if all persons who are treated as a 
                single employer for purposes of this section do 
                not have the same taxable year, the taxable 
                years taken into account shall be determined 
                under principles similar to the principles of 
                section 1561.
          ``(3) Waiver by secretary.--In the case of a failure 
        which is due to reasonable cause and not to willful 
        neglect, the Secretary may waive part or all of the tax 
        imposed by subsection (a) to the extent that the 
        payment of such tax would be excessive or otherwise 
        inequitable relative to the failure involved.
  ``(d) Liability for Tax.--The following shall be liable for 
the tax imposed by subsection (a):
          ``(1) In the case of a plan other than a 
        multiemployer plan, the employer.
          ``(2) In the case of a multiemployer plan, the plan.
  ``(e) Notice of Generally Accepted Investment Principles.--
          ``(1) In general.--The plan administrator of an 
        applicable pension plan shall provide notice of 
        generally accepted investment principles, including 
        principles of risk management and diversification, to 
        each applicable individual.
          ``(2) Notice.--The notice required by paragraph (1) 
        shall be written in a manner calculated to be 
        understood by the average plan participant and shall 
        provide sufficient information (as determined in 
        accordance with rules or other guidance adopted by the 
        Secretary) to allow applicable individuals to 
        understand generally accepted investment principles, 
        including principles of risk management and 
        diversification.
          ``(3) Timing of notice.--The notice required by 
        paragraph (1) shall be provided upon enrollment of the 
        applicable individual in such plan and at least once 
        per plan year thereafter.
          ``(4) Form and manner of notice.--The notice required 
        by paragraph (1) shall be in writing, except that such 
        notice may be in electronic or other form to the extent 
        that such form is reasonably accessible to the 
        applicable individual.
  ``(f ) Definitions and Special Rules.--For purposes of this 
section--
          ``(1) Applicable individual.--The term `applicable 
        individual' means with respect to an applicable pension 
        plan--
                  ``(A) any participant in the applicable 
                pension plan,
                  ``(B) any beneficiary who is an alternate 
                payee (within the meaning of section 414(p)(8)) 
                under an applicable qualified domestic 
                relations order (within the meaning of section 
                414(p)(1)(A)), and
                  ``(C) any beneficiary of a deceased 
                participant or alternate payee described in 
                subparagraph (A) or (B), as the case may be,
        who has an accrued benefit under the plan and who is 
        entitled to direct the investment (or hypothetical 
        investment) of some or all of such accrued benefit.
          ``(2) Applicable pension plan.--The term `applicable 
        pension plan' means--
                  ``(A) a plan described in section 
                219(g)(5)(A) (other than in clause (iii) 
                thereof), and
                  ``(B) an eligible deferred compensation plan 
                (as defined in section 457(b)) of an eligible 
                employer described in section 457(e)(1)(A),
        which permits any participant to direct the investment 
        of some or all of his account in the plan or under 
        which the accrued benefit of any participant depends in 
        whole or in part on hypothetical investments directed 
        by the participant.''.
          (1) Clerical amendment.--The table of sections for 
        chapter 43 of such Code is amended by adding at the end 
        the following new item:

         ``Sec. 4980G. Failure of applicable plans to provide notice of 
                  generally accepted investment principles.''.

          (3) Effective date.--
                  (A) In general.--The amendments made by this 
                subsection 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.
                  (B) Model investment principles.--For 
                purposes of subparagraph (A), not later than 
                120 days after the date of the enactment of 
                this Act, the Secretary of the Treasury, in 
                consultation with the Secretary of Labor, shall 
                issue rules or other guidance and a model 
                notice which meets the requirements of section 
                4980G of the Internal Revenue Code of 1986 (as 
                added by this section).

SEC. 102. IMMEDIATE WARNING OF EXCESSIVE STOCK HOLDINGS.

  Section 105 of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1025) (as amended by section 101 of this Act) 
is amended further by adding at the end the following new 
subsection:
  ``(g)(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. 103. 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.

SEC. 104. ENFORCEMENT OF INFORMATION AND 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--
          (1) by redesignating paragraph (7) as paragraph (8); 
        and
          (2) by inserting after paragraph (6) the following 
        new paragraph:
  ``(7) The Secretary may assess a civil penalty against any 
person required to provide any notification under the 
provisions of section 104(d), any statement under the 
provisions of subsection (a), (d), or (f) of section 105, any 
information under the provisions of section 404(c)(4), or any 
notice under the provisions of section 404(e)(1) of up to 
$1,000 a day from the date of any failure by such person to 
provide such notification, statement, information, or notice in 
accordance with such provisions.''.
  (b) Conforming Amendment.--Section 502(a)(6) of such Act (29 
U.S.C. 1132(a)(6)) (as amended by section 102(b)) is amended 
further by striking ``(5), or (6)'' and inserting ``(5), (6), 
or (7)''.

    TITLE II--FREEDOM TO MAKE INVESTMENT DECISIONS WITH PLAN ASSETS

SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

  (a) In General.--Subsection (a) of section 401 of the 
Internal Revenue Code of 1986 (relating to requirements for 
qualification) is amended by adding at the end the following 
new paragraph:
          ``(35) Diversification requirements for defined 
        contribution plans that hold employer securities.--
                  ``(A) In general.--In the case of a defined 
                contribution plan described in this subsection 
                that includes a trust which is exempt from tax 
                under section 501(a) and which holds employer 
                securities that are readily tradable on an 
                established securities market, such trust shall 
                not constitute a qualified trust under this 
                section unless such plan meets the requirements 
                of subparagraphs (B) and (C).
                  ``(B) Elective deferrals invested in employer 
                securities.--
                          ``(i) In general.--In the case of the 
                        portion of the account attributable to 
                        elective deferrals which is invested in 
                        employer securities, a plan meets the 
                        requirements of this subparagraph 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 
                        subparagraph (D). The preceding 
                        sentence shall apply to the extent that 
                        the amount attributable to reinvested 
                        portion exceeds the amount to which a 
                        prior election under this subparagraph 
                        or paragraph (28) applies.
                          ``(ii) Applicable individual.--For 
                        purposes of this subparagraph, the term 
                        `applicable individual' means--
                                  ``(I) any participant in the 
                                plan,
                                  ``(II) any beneficiary who is 
                                an alternate payee (within the 
                                meaning of section 414(p)(8)) 
                                under an applicable qualified 
                                domestic relations order 
                                (within the meaning of section 
                                414(p)(1)(A)), and
                                  ``(III) any beneficiary of a 
                                deceased participant or 
                                alternate payee.
                  ``(C) Other employer contributions.--
                          ``(i) In general.--In the case of the 
                        portion of the account attributable to 
                        employer contributions (other than 
                        elective deferrals) which is invested 
                        in employer securities, a plan meets 
                        the requirements of this subparagraph 
                        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 subparagraph (E). 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 subparagraph or paragraph (28) 
                        applies.
                          ``(ii) Qualified participant.--For 
                        purposes of this subparagraph, the term 
                        `qualified participant' means--
                                  ``(I) any participant in the 
                                plan who has completed at least 
                                3 years of service (as 
                                determined under section 
                                411(a)) under the plan,
                                  ``(II) any beneficiary who, 
                                with respect to a participant 
                                who met the service requirement 
                                in subclause (I), is an 
                                alternate payee (within the 
                                meaning of section 414(p)(8)) 
                                under an applicable qualified 
                                domestic relations order 
                                (within the meaning of section 
                                414(p)(1)(A)), and
                                  ``(III) any beneficiary of a 
                                deceased participant who met 
                                the service requirement in 
                                subclause (I) or alternate 
                                payee described in subclause 
                                (II).
                  ``(D) Investment options.--The requirements 
                of this subparagraph are met if the plan offers 
                not less than 3 investment options (not 
                inconsistent with regulations prescribed by the 
                Secretary) other than employer securities.
                  ``(E) Preservation of authority of plan to 
                limit investment.--Nothing in this paragraph 
                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.
                  ``(F) Other definitions and rules.--For 
                purposes of this paragraph--
                          ``(i) 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.
                          ``(ii) Elective deferrals.--For 
                        purposes of this subparagraph, the term 
                        `elective deferrals' means an employer 
                        contribution described in section 
                        402(g)(3)(A) and any employee 
                        contribution.
                          ``(iii) Election.--Elections under 
                        this paragraph shall be not less 
                        frequently than quarterly.
                          ``(iv) Employee stock ownership 
                        plan.--The term `employee stock 
                        ownership plan' shall have the same 
                        meaning given to such term by section 
                        4975(e)(7).''.
  (b) Conforming Amendments.--
          (1) Section 401(a)(28) of such Code is amended by 
        adding at the end the following new subparagraph:
                  ``(D) Application.--This paragraph shall not 
                apply with respect to employer securities which 
                are readily tradable on an established 
                securities market.''.
          (2) Section 409(h)(7) of such Code is amended by 
        inserting at the end ``or subparagraph (B) or (C) of 
        section 401(a)(35)''.
          (3) Section 4975(e)(7) of such Code is amended by 
        adding at the end the following new sentence: ``A plan 
        shall not fail to be treated as an employee stock 
        ownership plan merely because the plan meets the 
        requirements of section 401(a)(35) (or provides greater 
        diversification rights) or because participants in such 
        plan exercise diversification rights under such section 
        (or greater diversification rights available under the 
        plan).''.
          (4) Section 4980(c)(3)(A) of such Code is amended by 
        striking ``if--'' and all that follows and inserting 
        ``if the requirements of subparagraphs (B) and (C) are 
        met.''.
          (5) Section 407 of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1107) is amended by 
        adding at the end the following new subsection:
  ``(g) Notwithstanding section 408(e) or any other provision 
of this title, an individual account plan may not include 
provisions that do not meet the requirements of section 
401(a)(35)(B) of the Internal Revenue Code of 1986.''.

SEC. 202. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                    1974.

  (a) Amendments to the Employee Retirement Income Security Act 
of 1974.--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 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.

SEC. 203. RECOMMENDATIONS RELATING TO NON-PUBLICLY TRADED STOCK.

  Within 1 year after the date of the enactment of this Act, 
the Secretary of Labor and the Secretary of the Treasury shall 
jointly transmit to the Committee on Education and the 
Workforce and the Committee on Ways and Means of the House of 
Representatives and the Committee on Health, Education, Labor, 
and Pensions and the Committee on Finance of the Senate their 
recommendations regarding legislative changes relating to 
treatment, under section 404(e) of the Employee Retirement 
Income Security Act of 1974 and section 401(a)(35) of the 
Internal Revenue Code of 1986 (as added by this title), 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.

SEC. 204. EFFECTIVE DATE OF TITLE.

  (a) In General.--Except as provided in subsection (b), the 
amendments made by this title shall apply with respect to plan 
years beginning after December 31, 2003.
  (b) 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).
  (c) 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 title apply, such portion shall be taken into account 
only with respect to plan years beginning on or after January 
1, 2005.

                   TITLE III--EMPLOYEE REPRESENTATION

SEC. 301. PARTICIPATION OF PARTICIPANTS IN TRUSTEESHIP OF INDIVIDUAL 
                    ACCOUNT PLANS.

  (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) The assets of a single-employer plan which is an 
individual account 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 and 
having equal voting rights.
  ``(B)(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 by the plan participants in accordance with 
regulations of the Secretary.
  ``(C) 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).
  ``(D) The Secretary shall provide by regulation for the 
appointment of a neutral individual, 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 
the amendments made by this section not later than 90 days 
after the date of the enactment of this Act.

                   TITLE IV--INCREASED ACCOUNTABILITY

SEC. 401. BONDING OR INSURANCE ADEQUATE TO PROTECT INTEREST OF 
                    PARTICIPANTS AND BENEFICIARIES.

  Section 412 of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1112) is amended by adding at the end the 
following new subsection:
  ``(f) Notwithstanding the preceding provisions of this 
section, each fiduciary of an individual account plan shall be 
bonded or insured, in accordance with regulations which shall 
be prescribed by the Secretary, in an amount sufficient to 
ensure coverage by the bond or insurance of financial losses 
due to any failure to meet the requirements of this part.''.

SEC. 402. LIABILITY FOR BREACH OF FIDUCIARY DUTY.

  (a) Additional Equitable or Remedial Relief.--Section 409 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1109) is amended--
          (1) by redesignating subsection (b) as subsection 
        (c);
          (2) in subsection (a), by striking ``, including 
        removal of such fiduciary''; and
          (3) by inserting after subsection (a) the following 
        new subsection:
  ``(b) The equitable or remedial relief referred to in 
subsection (a) may include (but is not limited to) a court 
order removing the fiduciary from the plan referred to in 
subsection (a) and a court order prohibiting, conditionally or 
unconditionally, and permanently or for such period of time as 
the court shall determine, the fiduciary from serving--
          ``(1) as an administrator, fiduciary, officer, 
        trustee, custodian, counsel, agent, employee, or 
        representative in any capacity of any employee benefit 
        plan,
          ``(2) as a consultant or adviser to an employee 
        benefit plan, including but not limited to any entity 
        whose activities are in whole or substantial part 
        devoted to providing goods or services to any employee 
        benefit plan, or
          ``(3) in any capacity that involves decisionmaking 
        authority or custody or control of the moneys, funds, 
        assets, or property of any employee benefit plan.''.
  (b) Liability for Participating In or Concealing Fiduciary 
Breach in Connection with Individual Account Plans.--
          (1) Application to participants and beneficiaries of 
        401(k) plans.--
                  (A) In general.--Part 4 of subtitle B of 
                title I of the Employee Retirement Income 
                Security Act of 1974 (29 U.S.C. 1101 et seq.) 
                is amended by adding after section 409 the 
                following new section:

``SEC. 409A. LIABILITY FOR BREACH OF FIDUCIARY DUTY IN 401(K) PLANS.

  ``(a) Any person who is a fiduciary with respect to an 
individual account plan that includes a qualified cash or 
deferred arrangement under section 401(k) of the Internal 
Revenue Code of 1986 who breaches any of the responsibilities, 
obligations, or duties imposed upon fiduciaries by this title 
shall be personally liable to make good to each participant and 
beneficiary of the plan any losses to such participant or 
beneficiary resulting from each such breach, and to restore to 
such participant or beneficiary any profits of such fiduciary 
which have been made through use of assets of the plan by the 
fiduciary, and shall be subject to such other equitable or 
remedial relief as the court may deem appropriate, including 
removal of such fiduciary. A fiduciary may also be removed for 
a violation of section 411 of this Act.
  ``(b) The right of participants and beneficiaries under 
subsection (a) to sue for breach of fiduciary duty with respect 
to an individual account plan that includes a qualified cash or 
deferred arrangement under section 401(k) of such Code shall be 
in addition to all existing rights that participants and 
beneficiaries have under section 409, section 502, and any 
other provision of this title, and shall not be construed to 
give rise to any inference that such rights do not already 
exist under section 409, section 502, or any other provision of 
this title.
  ``(c) No fiduciary shall be liable with respect to a breach 
of fiduciary duty under this title if such breach was committed 
before he or she became a fiduciary or after he or she ceased 
to be a fiduciary.''
                  (B) Conforming amendment.--The table of 
                contents for part 4 of subtitle B of title I of 
                such Act is amended by inserting the following 
                new item after the item relating to section 
                409:

        ``Sec. 409A. Liability for breach of fiduciary duty in 401(k) 
                  plans.''

          (2) Insider liability.--
                  (A) In general.--Section 409 of the Employee 
                Retirement Income Security Act of 1974 (29 
                U.S.C. 1109) is amended by redesignating 
                subsection (b) as subsection (c) and by 
                inserting after subsection (a) the following 
                new subsection:
  ``(b)(1)(A) If an insider with respect to the plan sponsor of 
an individual account plan that holds employer securities that 
are readily tradable on an established securities market--
          ``(i) knowingly participates in a breach of fiduciary 
        responsibility to which subsection (a) applies, or
          ``(ii) knowingly undertakes to conceal such a breach,
such insider shall be personally liable under this subsection 
for such breach in the same manner as the fiduciary who commits 
such breach.
  ``(B) For purposes of subparagraph (A), the term `insider' 
means, with respect to any plan sponsor of a plan to which 
subparagraph (A) applies--
          ``(i) any officer or director with respect to the 
        plan sponsor, or
          ``(ii) any independent qualified public accountant of 
        the plan or of the plan sponsor.
  ``(3) Any relief provided under this subsection or section 
409A--
          ``(A) if provided to an individual account plan, 
        shall inure to the individual accounts of the affected 
        participants or beneficiaries, and
          ``(B) if provided to a participant or beneficiary, 
        shall be payable to the individual account plan on 
        behalf of such participant or beneficiary unless such 
        plan has been terminated.''
                  (B) Conforming amendment.--Section 409(c) of 
                such Act (29 U.S.C. 1109(c)), as redesignated 
                by subparagraph (A), is amended by inserting 
                before the period the following: ``, unless 
                such liability arises under subsection (b)''.
  (c) Maintenance of Fiduciary Liability.--Section 404(c)(1)(B) 
of such Act (29 U.S.C. 1104(c)(1)(B)) is amended by inserting 
before the period the following: ``, except that this 
subparagraph shall not be construed to exempt any fiduciary 
from liability for any violation of subsection (e)''.
  (d) Effective Date.--The amendments made by this section 
shall apply with respect to breaches occurring on or after the 
date of the enactment of this Act.

SEC. 403. PRESERVATION OF 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)(1) The rights under this title (including the right to 
maintain a civil action) may not be waived, deferred, or lost 
pursuant to any agreement not authorized under this title with 
specific reference to this subsection.
  ``(2) Paragraph (1) shall not apply to an agreement providing 
for arbitration or participation in any other nonjudicial 
procedure to resolve a dispute if the agreement is entered into 
knowingly and voluntarily by the parties involved after the 
dispute has arisen or is pursuant to the terms of a collective 
bargaining agreement.''.

SEC. 404. OFFICE OF PENSION PARTICIPANT ADVOCACY.

  (a) In General.--Subtitle A of title III of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 3001 et seq.) 
is amended by inserting after section 3004 the following new 
section:

                ``OFFICE OF PENSION PARTICIPANT ADVOCACY

  ``Sec. 3005. (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) 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,
          ``(2) 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,
          ``(3) advocating for the full attainment of the 
        rights of pension plan participants, including by 
        making pension plan sponsors and fiduciaries aware of 
        their responsibilities,
          ``(4) giving priority to the special needs of low and 
        moderate income participants,
          ``(5) developing needed information with respect to 
        pension plans, including information on the types of 
        existing pension plans, levels of employer and employee 
        contributions, vesting status, accumulated benefits, 
        benefits received, and forms of benefits, and
          ``(6) pursuing claims on behalf of participants and 
        beneficiaries and providing appropriate assistance in 
        the resolution of disputes between participants and 
        beneficiaries and pension plans, including assistance 
        in obtaining settlement agreements.
  ``(c) Reports.--
          ``(1) Annual report.--Not later than December 31 of 
        each calendar year, the Pension Participant Advocate 
        shall report to the Committee on Education and the 
        Workforce and the Committee on Ways and Means of the 
        House of Representatives and the Committee on Health, 
        Education, Labor, and Pensions and the Committee on 
        Finance of the Senate 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 in section 1 
of such Act is amended by inserting after the item relating to 
section 3004 the following new item:

``Sec. 3051. Office of Pension Participant Advocacy.''.

  (c) Effective Date.--The amendment made by this section shall 
take effect on January 1, 2004.

SEC. 405. STUDY REGARDING INSURANCE SYSTEM FOR INDIVIDUAL ACCOUNT 
                    PLANS.

  (a) Study.--As soon as practicable after the date of the 
enactment of this Act, the Pension Benefit Guaranty Corporation 
shall contract to carry out a study relating to the 
establishment of an insurance system for individual account 
plans. In conducting such study, the Corporation shall 
consider--
          (1) the feasibility and impact of such a system, and
          (2) options for developing such a system.
  (b) Report.--Not later than 3 years after the date of the 
enactment of this Act, the Corporation shall report the results 
of its study, together with any recommendations for legislative 
changes, to the Committee on Education and the Workforce and 
the Committee on Ways and Means of the House of Representatives 
and the Committee on Health, Education, Labor, and Pensions and 
the Committee on Finance of the Senate.

SEC. 406. EXCISE TAX ON FAILURE OF PENSION PLANS TO PROVIDE NOTICE OF 
                    TRANSACTION RESTRICTION PERIODS.

  (a) In General.--Chapter 43 of the Internal Revenue Code of 
1986 (relating to qualified pension, etc., plans) is amended by 
adding at the end the following new section:

``SEC. 4980H. FAILURE OF APPLICABLE PLANS TO PROVIDE NOTICE OF 
                    TRANSACTION RESTRICTION PERIODS.

  ``(a) Imposition of Tax.--There is hereby imposed a tax on 
the failure of any applicable pension plan to meet the 
requirements of subsection (e) with respect to any applicable 
individual.
  ``(b) Amount of Tax.--The amount of the tax imposed by 
subsection (a) on any failure with respect to any applicable 
individual shall be $100 for each day in the noncompliance 
period with respect to such failure.
  ``(c) Limitations on Amount of Tax.--
          ``(1) Tax not to apply to failures corrected as soon 
        as reasonably practicable.--No tax shall be imposed by 
        subsection (a) on any failure if--
                  ``(A) any person subject to liability for the 
                tax under subsection (d) exercised reasonable 
                diligence to meet the requirements of 
                subsection (e), and
                  ``(B) such person provides the notice 
                described in subsection (e) as soon as 
                reasonably practicable after the first date 
                such person knew, or exercising reasonable 
                diligence should have known, that such failure 
                existed.
          ``(2) Overall limitation for unintentional 
        failures.--
                  ``(A) In general.--If the person subject to 
                liability for tax under subsection (d) 
                exercised reasonable diligence to meet the 
                requirements of subsection (e) and paragraph 
                (1) is not otherwise applicable, the tax 
                imposed by subsection (a) for failures during 
                the taxable year of the employer (or, in the 
                case of a multiemployer plan, the taxable year 
                of the trust forming part of the plan) shall 
                not exceed $500,000. For purposes of the 
                preceding sentence, all multiemployer plans of 
                which the same trust forms a part shall be 
                treated as 1 plan.
                  ``(B) Taxable years in the case of certain 
                controlled groups.--For purposes of this 
                paragraph, if all persons who are treated as a 
                single employer for purposes of this section do 
                not have the same taxable year, the taxable 
                years taken into account shall be determined 
                under principles similar to the principles of 
                section 1561.
          ``(3) Waiver by secretary.--In the case of a failure 
        which is due to reasonable cause and not to willful 
        neglect, the Secretary may waive part or all of the tax 
        imposed by subsection (a) to the extent that the 
        payment of such tax would be excessive or otherwise 
        inequitable relative to the failure involved.
  ``(d) Liability for Tax.--The following shall be liable for 
the tax imposed by subsection (a):
          ``(1) In the case of a plan other than a 
        multiemployer plan, the employer.
          ``(2) In the case of a multiemployer plan, the plan.
  ``(e) Notice of Transaction Restriction Periods.--
          ``(1) Duties of plan administrator.--In advance of 
        the commencement of any transaction restriction period 
        with respect to an applicable pension plan, the plan 
        administrator shall notify the plan participants and 
        beneficiaries who are affected by such action in 
        accordance with this subsection.
          ``(2) Notice requirements.--
                  ``(A) In general.--The notices described in 
                paragraph (1) shall be written in a manner 
                calculated to be understood by the average plan 
                participant and shall include--
                          ``(i) the reasons for the transaction 
                        restriction period,
                          ``(ii) an identification of the 
                        investments and other rights affected,
                          ``(iii) the expected beginning date 
                        and length of the transaction 
                        restriction period,
                          ``(iv) in the case of investments 
                        affected, a statement that the 
                        applicable individual should evaluate 
                        the appropriateness of their current 
                        investment decisions in light of their 
                        inability to direct or diversify assets 
                        credited to their accounts during the 
                        transaction restriction period, and
                          ``(v) such other matters as the 
                        Secretary may require by regulation.
                  ``(B) Notice to participants and 
                beneficiaries.--Except as otherwise provided in 
                this subsection, notices described in paragraph 
                (1) shall be furnished to all participants and 
                beneficiaries under the plan to whom the 
                transaction restriction period applies at least 
                30 days in advance of the transaction 
                restriction period.
                  ``(C) Exception to 30-day notice 
                requirement.--In any case in which--
                          ``(i) a deferral of the transaction 
                        restriction period would violate the 
                        requirements of subparagraph (A) or (B) 
                        of section 404(a)(1) of the Employee 
                        Retirement Income Security Act of 1974, 
                        and a fiduciary (within the meaning of 
                        section 3(21) of such Act) of the plan 
                        reasonably so determines in writing, or
                          ``(ii) the inability to provide the 
                        30-day advance notice is due to events 
                        that were unforeseeable or 
                        circumstances beyond the reasonable 
                        control of the plan administrator, and 
                        a fiduciary of the plan reasonably so 
                        determines in writing,
                subparagraph (B) shall not apply, and the 
                notice shall be furnished to all participants 
                and beneficiaries under the plan to whom the 
                transaction restriction period applies as soon 
                as reasonably possible under the circumstances 
                unless such a notice in advance of the 
                termination of the transaction restriction 
                period is impracticable.
                  ``(D) Written notice.--The notice required to 
                be provided under this subsection shall be in 
                writing, except that such notice may be in 
                electronic or other form to the extent that 
                such form is reasonably accessible to the 
                recipient.
                  ``(E) Notice to issuers of employer 
                securities subject to transaction restriction 
                period.--In the case of any transaction 
                restriction period in connection with an 
                applicable pension plan, the plan administrator 
                shall provide timely notice of such transaction 
                restriction period to the issuer of any 
                employer securities subject to such transaction 
                restriction period.
          ``(3) Exception for transaction restriction periods 
        with limited applicability.--In any case in which the 
        transaction restriction period applies to 1 or more 
        participants or beneficiaries in connection with a 
        merger, acquisition, divestiture, or similar 
        transaction involving the plan or plan sponsor and 
        occurs solely in connection with becoming or ceasing to 
        be an applicable individual under the plan by reason of 
        such merger, acquisition, divestiture, or transaction, 
        the requirement of this subsection that the notice be 
        provided to all participants and beneficiaries shall be 
        treated as met if the notice required under paragraph 
        (1) is provided to such participants or beneficiaries 
        to whom the transaction restriction period applies as 
        soon as reasonably practicable.
          ``(4) Changes in length of transaction restriction 
        period.--If, following the furnishing of the notice 
        pursuant to this subsection, there is a change in the 
        beginning date or length of the transaction restriction 
        period (specified in such notice pursuant to paragraph 
        (2)(A)(iii)), the administrator shall provide affected 
        participants and beneficiaries notice of the change as 
        soon as reasonably practicable. In relation to the 
        extended transaction restriction period, such notice 
        shall meet the requirements of paragraph (2)(D) and 
        shall specify any material change in the matters 
        referred to in clauses (i) through (v) of paragraph 
        (2)(A).
          ``(5) Regulatory exceptions.--The Secretary may 
        provide by regulation for additional exceptions to the 
        requirements of this subsection which the Secretary 
        determines are in the interests of participants and 
        beneficiaries.
          ``(6) Guidance and model notices.--The Secretary 
        shall issue guidance and model notices which meet the 
        requirements of this subsection.
          ``(7) Transaction restriction period.--For purposes 
        of this subsection--
                  ``(A) In general.--The term `transaction 
                restriction period' means, in connection with 
                an applicable pension plan, any period for 
                which any ability of participants or 
                beneficiaries under the plan, which is 
                otherwise available under the terms of such 
                plan, to direct or diversify assets credited to 
                their accounts, to obtain loans from the plan, 
                or to obtain distributions from the plan is 
                temporarily suspended, limited, or restricted, 
                if such suspension, limitation, or restriction 
                is for any period of more than 3 consecutive 
                business days.
                  ``(B) Exclusions.--The term `transaction 
                restriction period' does not include a 
                suspension, limitation, or restriction--
                          ``(i) which occurs by reason of the 
                        application of the securities laws (as 
                        defined in section 3(a)(47) of the 
                        Securities Exchange Act of 1934),
                          ``(ii) which is a change to the plan 
                        which provides for a regularly 
                        scheduled suspension, limitation, or 
                        restriction which is disclosed to 
                        participants or beneficiaries through 
                        any summary of material modifications, 
                        any materials describing specific 
                        investment alternatives under the plan, 
                        or any changes thereto, or
                          ``(iii) which applies to 1 or more 
                        individuals, each of whom is the 
                        participant, an alternate payee (as 
                        defined in section 414(p)(8)), or any 
                        other beneficiary pursuant to a 
                        qualified domestic relations order (as 
                        defined in section 414(p)(1)).
          ``(8) Applicable individual.--For purposes of this 
        section, the term `applicable individual' means--
                  ``(A) any participant in the applicable 
                pension plan,
                  ``(B) any beneficiary who is an alternate 
                payee (within the meaning of section 414(p)(8)) 
                under an applicable qualified domestic 
                relations order (within the meaning of section 
                414(p)(1)(A)), and
                  ``(C) any beneficiary of a deceased 
                participant or alternate payee,
        who has an accrued benefit under the plan and who is 
        entitled to direct the investment (or hypothetical 
        investment) of some or all of such accrued benefit.
          ``(9) Applicable pension plan.--For purposes of this 
        subsection, the term `applicable pension plan' means--
                  ``(A) a plan described in section 
                219(g)(5)(A) (other than in clause (iii) 
                thereof), and
                  ``(B) an eligible deferred compensation plan 
                (as defined in section 457(b)) of an eligible 
                employer described in section 457(e)(1)(A),
        which permits any participant to direct the investment 
        of some or all of his account in the plan or under 
        which the accrued benefit of any participant depends in 
        whole or in part on hypothetical investments directed 
        by the participant.''.
  (b) Clerical Amendment.--The table of sections for chapter 43 
of such Code is amended by adding at the end the following new 
item:

         ``Sec. 4980H. Failure of applicable plans to provide notice of 
                  transaction restriction periods.''.

  (c) Effective Date and Related Rules.--
          (1) Effective date.--The amendments made by this 
        section shall take effect 180 days after the date of 
        the enactment of this Act. Good faith compliance with 
        the requirements of such amendments in advance of the 
        issuance of applicable regulations thereunder shall be 
        treated as compliance with such provisions.
          (2) Issuance of initial guidance and model notice.--
        The Secretary of the Treasury shall, in consultation 
        with the Secretary of Labor, issue initial guidance and 
        a model notice pursuant to section 4980H(e)(6) of the 
        Internal Revenue Code of 1986 (as added by this 
        section) not later than January 1, 2005. Not later than 
        75 days after the date of the enactment of this Act, 
        the Secretary shall promulgate interim final rules 
        necessary to carry out the amendments made by this 
        section.
          (3) Plan amendments.--If any amendment made by this 
        section 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 the effective 
        date of this section, if--
                  (A) during the period after such amendment 
                made by this section takes effect and before 
                such first plan year, the plan is operated in 
                good faith compliance with the requirements of 
                such amendment made by this section, and
                  (B) such plan amendment applies retroactively 
                to the period after such amendment made by this 
                section takes effect and before such first plan 
                year.

     TITLE V--INVESTMENT ADVICE FOR PARTICIPANTS AND BENEFICIARIES

SEC. 501. INDEPENDENT INVESTMENT ADVICE.

  (a) In General.--Section 404(c)(1) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1104(c)(1)) (as amended 
by section 102(c)) is amended further--
          (1) by redesignating subparagraphs (A) and (B) as 
        clauses (i) and (ii), respectively, and by inserting 
        ``(A)'' after ``(c)(1)''; and
          (2) by adding at the end the following new 
        subparagraphs:
  ``(B)(i) In the case of a pension plan described in 
subparagraph (A) which provides investment in employer 
securities as at least one option for investment of plan assets 
at the direction of the participant or beneficiary, such plan 
shall make available to the participant or beneficiary the 
services of a qualified fiduciary adviser for purposes of 
providing investment advice described in section 3(21)(A)(ii) 
regarding investment in such securities.
  ``(ii) No person who is otherwise a fiduciary shall be liable 
by reason of any investment advice provided by a qualified 
fiduciary adviser pursuant to a request under clause (i) if--
          ``(I) the plan provides for selection and monitoring 
        of such adviser in a prudent and effective manner,
          ``(II) such adviser is a named fiduciary under the 
        plan in connection with the provision of such advice, 
        and
          ``(III) in the provision of the advice, such adviser 
        is not conflicted in connection with the provision of 
        the advice, in accordance with subparagraph (C).
  ``(C) A qualified fiduciary adviser is not conflicted in the 
provision of investment advice if, with respect to any product 
taken into account in determining the asset allocation with 
respect to which such advice is provided--
          ``(i) the adviser has no material interest in such 
        product, or
          ``(ii) the adviser discloses any material interest 
        the adviser has in such product to the recipient of the 
        advice and refers the recipient to an alternative 
        qualified fiduciary adviser made available by the plan 
        under subparagraph (B)(i) who has no material interest 
        in any product taken into account in the recommended 
        asset allocation.
  ``(D) For purposes of subparagraph (B)--
          ``(i) The term `qualified 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) has no material interest in, and no 
                material affiliation or contractual 
                relationship with any third party having a 
                material interest in, the employer (other than 
                such person's relationship with the employer in 
                the capacity of a qualified fiduciary adviser),
                  ``(III) meets the independence requirements 
                of clause (ii) in connection with investment 
                advice provided by such person pursuant to 
                services rendered pursuant to clause (i),
                  ``(IV) meets the qualifications of clause 
                (iii), and
                  ``(V) meets the additional requirements of 
                clause (iv).
          ``(ii) A person meets the independence requirements 
        of this clause if--
                  ``(I) the amount of compensation payable to 
                any entity in connection with the provision of 
                the advice is not dependent on any particular 
                product with respect to which the advice is 
                rendered or the value of any such product,
                  ``(II) no recordkeeping is maintained by such 
                person, the plan, the plan sponsor, or any 
                other fiduciary with respect to the plan with 
                respect to which products are recommended by 
                such person,
                  ``(III) such person has no material interest 
                in, and no material affiliation or contractual 
                relationship with any third party having a 
                material interest in, any other person whose 
                analysis, with respect to any security or other 
                property with respect to which the advice is 
                being provided, is employed in developing 
                recommendations included in such advice, and
                  ``(IV) the plan provides for prompt 
                disclosure of material interests and for the 
                services of alternative qualified fiduciary 
                advisers, sufficient to meet the requirements 
                of subparagraph (C).
          ``(iii) 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.
          ``(iv) A person meets the additional requirements of 
        this clause 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 clause (i), or
                  ``(III) such other comparable qualified 
                individual as may be designated in regulations 
                of the Secretary.''.
  (b) Maintenance of Fiduciary Liability.--Section 404(c)(1)(B) 
of such Act (29 U.S.C. 1104(c)(1)(B)) is amended by inserting 
before the period the following: ``, except that this 
subparagraph shall not be construed to exempt any fiduciary 
from liability for any violation of this section''.

SEC. 502. TAX TREATMENT OF QUALIFIED RETIREMENT PLANNING SERVICES.

  (a) In General.--Subsection (m) of section 132 of the 
Internal Revenue Code of 1986 (defining qualified retirement 
services) is amended by adding at the end the following new 
paragraph:
          ``(4) No constructive receipt.--No amount shall be 
        included in the gross income of any employee solely 
        because the employee may choose between any qualified 
        retirement planning services provided by a qualified 
        investment advisor and compensation which would 
        otherwise be includible in the gross income of such 
        employee. The preceding sentence shall apply to highly 
        compensated employees only if the choice described in 
        such sentence is available on substantially the same 
        terms to each member of the group of employees normally 
        provided education and information regarding the 
        employer's qualified employer plan.''.
  (b) Conforming Amendments.--
          (1) Section 403(b)(3)(B) of such Code is amended by 
        inserting ``132(m)(4),'' after ``132(f)(4),''.
          (2) Section 414(s)(2) of such Code is amended by 
        inserting ``132(m)(4),'' after ``132(f)(4),''.
          (3) Section 415(c)(3)(D)(ii) of such Code is amended 
        by inserting ``132(m)(4),'' after ``132(f)(4),''.
  (c) Effective Date.--The amendment made by this section shall 
apply to taxable years beginning after December 31, 2003.

                 TITLE VI--PARITY IN EMPLOYEE BENEFITS

SEC. 601. INCLUSION IN GROSS INCOME OF FUNDED DEFERRED COMPENSATION OF 
                    CORPORATE INSIDERS IF CORPORATION FUNDS DEFINED 
                    CONTRIBUTION PLAN WITH EMPLOYER STOCK.

  (a) In General.--Subpart A of part I of subchapter D of 
chapter 1 of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section:

``SEC. 409A. DENIAL OF DEFERRAL FOR FUNDED DEFERRED COMPENSATION OF 
                    CORPORATE INSIDERS IF CORPORATION FUNDS DEFINED 
                    CONTRIBUTION PLAN WITH EMPLOYER STOCK.

  ``(a) In General.--If an employer maintains a defined 
contribution plan to which employer contributions are made in 
the form of employer stock and such employer maintains a funded 
deferred compensation plan--
          ``(1) compensation of any corporate insider which is 
        deferred under such funded deferred compensation plan 
        shall be included in the gross income of the insider or 
        beneficiary for the 1st taxable year in which there is 
        no substantial risk of forfeiture of the rights to such 
        compensation, and
          ``(2) the tax treatment of any amount made available 
        under the plan to a corporate insider or beneficiary 
        shall be determined under section 72 (relating to 
        annuities, etc.).
  ``(b) Funded Deferred Compensation Plan.--For purposes of 
this section--
          ``(1) In general.--The term `funded deferred 
        compensation plan' means any plan providing for the 
        deferral of compensation unless--
                  ``(A) the employee's rights to the 
                compensation deferred under the plan are no 
                greater than the rights of a general creditor 
                of the employer, and
                  ``(B) all amounts set aside (directly or 
                indirectly) for purposes of paying the deferred 
                compensation, and all income attributable to 
                such amounts, remain (until made available to 
                the participant or other beneficiary) solely 
                the property of the employer (without being 
                restricted to the provision of benefits under 
                the plan), and
                  ``(C) the amounts referred to in subparagraph 
                (B) are available to satisfy the claims of the 
                employer's general creditors at all times (not 
                merely after bankruptcy or insolvency).
        Such term shall not include a qualified employer plan.
          ``(2) Special rules.--
                  ``(A) Employee's rights.--A plan shall be 
                treated as failing to meet the requirements of 
                paragraph (1)(A) unless, under the written 
                terms of the plan--
                          ``(i) the compensation deferred under 
                        the plan is paid only upon separation 
                        from service, death, or at a specified 
                        time (or pursuant to a fixed schedule), 
                        and
                          ``(ii) the plan does not permit the 
                        acceleration of the time such deferred 
                        compensation is paid by reason of any 
                        event.
                If the employer and employee agree to a 
                modification of the plan that accelerates the 
                time for payment of any deferred compensation, 
                then all compensation previously deferred under 
                the plan shall be includible in gross income 
                for the taxable year during which such 
                modification takes effect and the taxpayer 
                shall pay interest at the underpayment rate on 
                the underpayments that would have occurred had 
                the deferred compensation been includible in 
                gross income in the taxable years deferred.
                  ``(B) Creditor's rights.--A plan shall be 
                treated as failing to meet the requirements of 
                paragraph (1)(B) with respect to amounts set 
                aside in a trust unless--
                          ``(i) the employee has no beneficial 
                        interest in the trust,
                          ``(ii) assets in the trust are 
                        available to satisfy claims of general 
                        creditors at all times (not merely 
                        after bankruptcy or insolvency), and
                          ``(iii) there is no factor (such as 
                        the location of the trust outside the 
                        United States) that would make it more 
                        difficult for general creditors to 
                        reach the assets in the trust than it 
                        would be if the trust assets were held 
                        directly by the employer in the United 
                        States.
  ``(c) Corporate Insider.--For purposes of this section, the 
term `corporate insider' means, with respect to a corporation, 
any individual who is subject to the requirements of section 
16(a) of the Securities Exchange Act of 1934 with respect to 
such corporation.
  ``(d) Other definitions.--For purposes of this section--
          ``(1) Plan includes arrangements, etc.--The term 
        `plan' includes any agreement or arrangement.
          ``(2) Substantial risk of forfeiture.--The rights of 
        a person to compensation are subject to a substantial 
        risk of forfeiture if such person's rights to such 
        compensation are conditioned upon the future 
        performance of substantial services by any 
        individual.''
  (b) Clerical Amendment.--The table of sections for such 
subpart A is amended by adding at the end the following new 
item:

        ``Sec. 409A. Denial of deferral for funded deferred compensation 
                  of corporate insiders if corporation funds defined 
                  contribution plan with employer stock.''

  (c) Effective Date.--The amendments made by this section 
shall apply to amounts deferred after the date of the enactment 
of this Act.

SEC. 602. PERFORMANCE-BASED COMPENSATION EXCEPTION TO $1,000,000 
                    LIMITATION ON DEDUCTIBLE COMPENSATION NOT TO APPLY 
                    IN CERTAIN CASES.

  (a) In General.--Paragraph (4) of section 162(m) of the 
Internal Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph:
                  ``(G) Certain factors not permitted to be 
                taken into account in determining whether 
                performance goals are met.--Subparagraph (C) 
                shall not apply if, in determining whether the 
                performance goals are met, any of the following 
                are taken into account:
                          ``(i) Cost savings as a result of 
                        changes to any qualified employer plan 
                        (as defined in section 4972(d)).
                          ``(ii) Excess assets of such a plan 
                        or earnings thereon.
                          ``(iii) Any excess of the amount 
                        assumed to be the return on the assets 
                        of such a plan over the actual return 
                        on such assets.''
  (b) Effective Date.--The amendment made by this section shall 
apply to taxable years beginning after the date of the 
enactment of this Act.

            TITLE VII--PROTECTION OF RETIREMENT EXPECTATIONS

SEC. 701. PROTECTION OF PARTICIPANTS FROM CONVERSIONS TO HYBRID DEFINED 
                    BENEFIT PLANS.

  (a) Amendments to the Employee Retirement Income Security Act 
of 1974.--
          (1) Election to maintain rate of accrual in effect 
        before plan amendment.--Section 204(b)(1) of the 
        Employee Retirement Income Security Act of 1974 (29 
        U.S.C. 1054(b)(1)) is amended by adding at the end the 
        following new subparagraph:
  ``(I)(i) Notwithstanding the preceding subparagraphs, in the 
case of a plan amendment to a defined benefit plan--
          ``(I) which has the effect of converting the plan to 
        a plan under which the accrued benefit is expressed to 
        participants and beneficiaries as an amount other than 
        an annual benefit commencing at normal retirement age 
        (or which has a similar effect as determined under 
        regulations issued under clause (iii)), and
          ``(II) which has the effect of reducing the rate of 
        future benefit accrual of 1 or more participants,
such plan shall be treated as not satisfying the requirements 
of this paragraph unless such plan meets the requirements of 
clause (ii).
  ``(ii) A plan meets the requirements of this clause if the 
plan provides each participant who has attained 10 years of 
service (as determined under section 203) under the plan at the 
time such amendment takes effect with--
          ``(I) notice of the plan amendment indicating that it 
        has such effect, including a comparison of the present 
        and projected values of the accrued benefit determined 
        both with and without regard to the plan amendment, and
          ``(II) an election, on the date of the conversion, to 
        either receive benefits under the terms of the plan as 
        in effect on or after the effective date of such plan 
        amendment or to receive benefits under the terms of the 
        plan as in effect immediately before the effective date 
        of such plan amendment (taking into account all benefit 
        accruals under such terms since such date).
  ``(iii) The Secretary shall issue regulations under which any 
plan amendment which has an effect similar to the effect 
described in clause (i)(I) shall be treated as a plan amendment 
described in clause (i)(I). Such regulations may provide that 
if a plan sponsor represents in communications to participants 
and beneficiaries that a plan amendment has an effect described 
in the preceding sentence, such plan amendment shall be treated 
as a plan amendment described in clause (i)(I).''.
          (2) Early retirement subsidy taken into account for 
        purposes of opening balance of hybrid defined benefit 
        plan.--Section 204(g) of such Act (29 U.S.C. 1054(g)) 
        is amended by adding at the end the following new 
        paragraph:
  ``(6) In the case of a plan amendment to a defined benefit 
plan which has the effect of converting the plan to a plan 
under which the accrued benefit is expressed to participants 
and beneficiaries as an amount other than an annual benefit 
commencing at normal retirement age (or a plan amendment to 
such plan having a similar effect as determined under 
regulations issued under subsection (b)(1)(I)(iii)), such 
amendment shall not be treated as reducing accrued benefits 
merely because under such amendment any early retirement 
benefit or retirement-type subsidy (within the meaning of 
paragraph (2)(A)) is taken into account for purposes of the 
opening balance of the amended plan.''.
          (3) Interest rate for determinations relating to plan 
        conversions.--Section 204(g) of such Act (as amended by 
        paragraph (2)) is amended further by adding at the end 
        the following new paragraph:
  ``(7) Interest rate.--For purposes of this paragraph--
          ``(A) in the case of an amendment described in 
        paragraph (1) which takes effect on or after the 
        enactment of this paragraph, the interest rate and 
        mortality tables to be used in determining the present 
        value of the accrued benefit under such amendment shall 
        be the applicable rate and tables under section 
        417(e)(3) of the Internal Revenue Code of 1986 as of 
        the date on which such amendment takes effect, and
          ``(B) in the case of amendments described in 
        paragraph (1) which took effect before the enactment of 
        this paragraph, the interest rate and mortality tables 
        to be used in determining the present value of the 
        accrued benefit under such amendments shall be the 
        applicable rate and tables which were in effect under 
        section 412(l) of the Internal Revenue Code of 1986 as 
        of the effective date of the respective amendment.''.
  (b) Amendments to the Internal Revenue Code of 1986.--
          (1) Election to maintain rate of accrual in effect 
        before plan amendment.--Section 411(b)(1) of the 
        Internal Revenue Code of 1986 (relating to accrued 
        benefit requirements for defined benefit plans) is 
        amended by adding at the end the following new 
        subparagraph:
                  ``(I) Election to maintain rate of accrual in 
                effect before certain plan amendments.--
                          ``(i) In general.--Notwithstanding 
                        the preceding subparagraphs, in the 
                        case of a plan amendment to a defined 
                        benefit plan--
                                  ``(I) which has the effect of 
                                converting the plan to a plan 
                                under which the accrued benefit 
                                is expressed to participants 
                                and beneficiaries as an amount 
                                other than an annual benefit 
                                commencing at normal retirement 
                                age (or which has a similar 
                                effect as determined under 
                                regulations issued under clause 
                                (iii)), and
                                  ``(II) which has the effect 
                                of reducing the rate of future 
                                benefit accrual of 1 or more 
                                participants,
                        such plan shall be treated as not 
                        satisfying the requirements of this 
                        paragraph unless such plan meets the 
                        requirements of clause (ii).
                          ``(ii) Requirements.--A plan meets 
                        the requirements of this clause if the 
                        plan provides each participant who has 
                        attained 10 years of service (as 
                        determined under section 203) under the 
                        plan at the time such amendment takes 
                        effect with--
                                  ``(I) notice of the plan 
                                amendment indicating that it 
                                has such effect, including a 
                                comparison of the present and 
                                projected values of the accrued 
                                benefit determined both with 
                                and without regard to the plan 
                                amendment, and
                                  ``(II) an election, on the 
                                date of the conversion, to 
                                either receive benefits under 
                                the terms of the plan as in 
                                effect on or after the 
                                effective date of such plan 
                                amendment or to receive 
                                benefits under the terms of the 
                                plan as in effect immediately 
                                before the effective date of 
                                such plan amendment (taking 
                                into account all benefit 
                                accruals under such terms since 
                                such date).
                          ``(iii) Regulations.--The Secretary 
                        shall issue regulations under which any 
                        plan amendment which has an effect 
                        similar to the effect described in 
                        clause (i)(I) shall be treated as a 
                        plan amendment described in clause 
                        (i)(I). Such regulations may provide 
                        that if a plan sponsor represents in 
                        communications to participants and 
                        beneficiaries that a plan amendment has 
                        an effect described in the preceding 
                        sentence, such plan amendment shall be 
                        treated as a plan amendment described 
                        in clause (i)(I).''.
          (2) Early retirement subsidy taken into account for 
        purposes of opening balance of hybrid defined benefit 
        plan.--Paragraph (6) of section 411(d) (relating to 
        accrued benefit not to be decreased by amendment) is 
        amended by adding at the end the following new 
        subparagraph:
                  ``(F) Early retirement subsidy taken into 
                account for purposes of opening balance of 
                hybrid defined benefit plan.--In the case of a 
                plan amendment to a defined benefit plan which 
                has the effect of converting the plan to a plan 
                under which the accrued benefit is expressed to 
                participants and beneficiaries as an amount 
                other than an annual benefit commencing at 
                normal retirement age (or a plan amendment to 
                such plan having a similar effect as determined 
                under regulations issued under subsection 
                (b)(1)(I)(iii)), such amendment shall not be 
                treated as reducing accrued benefits merely 
                because under such amendment any early 
                retirement benefit or retirement-type subsidy 
                (within the meaning of section subparagraph 
                (B)(i)) is taken into account for purposes of 
                the opening balance of the amended plan.''.
          (3) Interest rate for determinations relating to plan 
        conversions.--
  Paragraph (6) of section 411(d) of such Code (as amended by 
paragraph (2)) is amended further by adding at the end the 
following new subparagraph:
                  ``(G) Interest rate.--For purposes of this 
                paragraph--
                          ``(i) in the case of an amendment 
                        described in subparagraph (A) which 
                        takes effect on or after the enactment 
                        of this subparagraph, the interest rate 
                        and mortality tables to be used in 
                        determining the present value of the 
                        accrued benefit under such amendment 
                        shall be the applicable rate and tables 
                        under section 417(e)(3) as of the date 
                        on which such amendment takes effect, 
                        and
                          ``(ii) in the case of amendments 
                        described in subparagraph (A) which 
                        took effect before the enactment of 
                        this subparagraph, the interest rate 
                        and mortality tables to be used in 
                        determining the present value of the 
                        accrued benefit under such amendments 
                        shall be the applicable rate and tables 
                        which were in effect under section 
                        412(l) as of the effective date of the 
                        respective amendment.''.
  (b) Effective Date and Related Rules.--
          (1) In general.--The amendments made by this section 
        shall apply to plan amendments taking effect after the 
        date of the enactment of this Act.
          (2) Plan amendments subject to litigation.--The 
        amendments made by this section also shall apply to any 
        plan amendment taking effect on or before such date 
        if--
                  (A) no determination letter is issued on or 
                before such date by the Internal Revenue 
                Service which has the effect of approving the 
                plan amendment, and
                  (B) such plan amendment is, on April 8, 2003, 
                subject to a court action based on age 
                discrimination.
          (3) Special rule.--In the case of a plan amendment 
        taking effect before 90 days after the date of the 
        enactment of this Act, the requirements of section 
        204(b)(1)(I) of the Employee Retirement Income Security 
        Act of 1974 (as added by this section) and section 
        411(b)(1)(I) of the Internal Revenue Code of 1986 (as 
        added by this section) shall be treated as satisfied in 
        connection with such plan amendment, in the case of any 
        participant described in such sections 204(b)(1)(I) and 
        411(b)(1)(I) in connection with such plan amendment, 
        if, as of the end of such 90-day period--
                  (A) the notice described in clause (i)(I) of 
                such section 204(b)(1)(I) and clause (i)(I) of 
                such section 411(b)(1)(I) in connection with 
                such plan amendment has been provided to such 
                participant, and
                  (B) the plan provides for the election 
                described in clause (i)(II) of such section 
                204(b)(1)(I) and clause (i)(II) of such section 
                411(b)(1)(I) in connection with such 
                participant's retirement under the plan.

              TITLE VIII--TREATMENT OF CORPORATE INSIDERS

SEC. 801. SPECIAL RULES FOR EXECUTIVE PERKS AND RETIREMENT BENEFITS.

  (a) In General.--Part I of subchapter D of chapter 1 of the 
Internal Revenue Code of 1986 (relating to pension, profit-
sharing, stock bonus plans, etc.) is amended by adding at the 
end the following new subpart:

 ``SUBPART F--SPECIAL RULES FOR EXECUTIVE PERKS AND RETIREMENT BENEFITS

        ``Sec. 420A. Holding period requirement for stock acquired 
                  through exercise of option.
        ``Sec. 420B. Additional tax on nondisclosed retirement perks.
        ``Sec. 420C. Definitions and special rule.

``SEC. 420A. HOLDING PERIOD REQUIREMENT FOR STOCK ACQUIRED THROUGH 
                    EXERCISE OF OPTION.

  ``(a) In General.--In the case of a corporate insider with 
respect to a corporation, the tax imposed by this chapter on a 
corporate insider for any taxable year shall be increased by 50 
percent of the amount realized by such insider from the 
disqualified disposition during such year of stock acquired by 
the corporate insider upon the exercise of a stock option 
granted by the corporation with respect to which such 
individual is a corporate insider.
  ``(b) Disqualified Disposition of Stock.--
          ``(1) In general.--For purposes of subsection (a), 
        the term `disqualified disposition of stock' means any 
        sale, exchange, or other disposition of stock which, if 
        such stock were employer securities held in a qualified 
        cash or deferred arrangement (as defined in section 
        401(k)(2)), would violate any restriction imposed on 
        the sale or other disposition of such securities by the 
        plan of which such arrangement is a part.
          ``(2) Special rule for 2 or more cash or deferred 
        arrangements.--If a corporation has more than 1 
        qualified cash or deferred arrangement (as so defined), 
        the restrictions which apply for purposes of paragraph 
        (1) shall be the most restrictive provisions relating 
        to the disposition of employer securities held pursuant 
        to any such arrangements.

``SEC. 420B. ADDITIONAL TAX ON NONDISCLOSED RETIREMENT PERKS.

  ``(a) In General.--In the case of a publicly traded 
corporation, the tax imposed by this chapter for the taxable 
year shall be increased by 50 percent of the net cost to the 
corporation for the taxable year of personal perks provided to 
a retired executive of the corporation.
  ``(b) Waiver If Perks Provided Pursuant to Shareholder 
Approval.--Subsection (a) shall not apply with respect to any 
personal perks provided pursuant to a contract if--
          ``(1) all of the material terms of such contract 
        (including a description of the benefits to be provided 
        to the executive and the extent of such benefits) are 
        disclosed to shareholders, and
          ``(2) such contract is approved by a majority of the 
        vote in a separate shareholder vote before any benefits 
        are provided under the contract.
  ``(c) Net Cost of Personal Perks.--
          ``(1) In general.--For purposes of subsection (a), 
        the net cost of personal perks provided to a retired 
        executive is the excess of--
                  ``(A) the cost to the corporation of such 
                perks, over
                  ``(B) the amount paid in cash during the 
                taxable year by the executive to reimburse the 
                corporation for the cost of such perks.
          ``(2) Personal perks.--For purposes of paragraph (1), 
        the term `personal perks' means--
                  ``(A) the use of corporate-owned property,
                  ``(B) travel expenses, including meals and 
                lodging, unless such expenses are directly 
                related to the performance of services by the 
                executive for the corporation and the business 
                relationship of such expenses is substantiated 
                under the requirements of section 274,
                  ``(C) tickets to sporting or other 
                entertainment events,
                  ``(D) amounts paid or incurred for membership 
                in any club organized for business, pleasure, 
                recreation, or other social purpose, and
                  ``(E) other personal services, including 
                services related to maintenance or protection 
                of any personal residence of the executive.
          ``(3) Cost relating to use of corporate-owned 
        property.--For purposes of this subsection--
                  ``(A) In general.--The cost taken into 
                account with respect to the use of corporate-
                owned property shall be the allocable portion 
                of the total cost of operating such property.
                  ``(B) Allocable portion.--For purposes of 
                subparagraph (A), the allocable portion of 
                total cost is--
                          ``(i) the portion of the total cost 
                        (including depreciation) incurred by 
                        the corporation for operating and 
                        maintaining such property during the 
                        corporation's taxable year in which 
                        such use occurred,
                          ``(ii) which is allocable to the use 
                        (determined on the basis of the 
                        relationship of such use to the total 
                        use of the property during the taxable 
                        year).

``SEC. 420C. DEFINITIONS AND SPECIAL RULE.

  ``(a) Definitions.--For purposes of this subpart--
          ``(1) Corporate insider.--The term `corporate 
        insider' means, with respect to a corporation, any 
        individual--
                  ``(A) who is subject to the requirements of 
                section 16(a) of the Securities Exchange Act of 
                1934 with respect to such corporation, or
                  ``(B) who would be subject to such 
                requirements if such corporation were an issuer 
                of equity securities referred to in such 
                section.
          ``(2) Retired executive.--The term `retired 
        executive' means any corporate insider who is no longer 
        performing services on a substantially full time basis 
        in the capacity that resulted in being subject to the 
        requirements of section 16(a) of the Securities 
        Exchange Act of 1934.
          ``(3) Publicly traded corporation.--The term 
        `publicly traded corporation' means any corporation 
        issuing any class of securities required to be 
        registered under section 12 of the Securities Exchange 
        Act of 1934.
          ``(4) Corporate-owned property.--
                  ``(A) In general.--Except as provided in 
                subparagraph (B), the term `corporate-owned 
                property' means any of the following property 
                owned by a corporation--
                          ``(i) planes,
                          ``(ii) apartments or other 
                        residences,
                          ``(iii) vacation, sports, and 
                        entertainment facilities, and
                          ``(iv) cars.
                Such term includes any such property which is 
                leased or chartered by the corporation.
                  ``(B) Exceptions.--Such term does not include 
                any property used directly by the corporation 
                in providing transportation, lodging, or 
                entertainment services to the general public.
  ``(b) Additions to Tax Not Treated As Tax for Certain 
Purposes.--The tax imposed by sections 420A and 420B shall not 
be treated as a tax imposed by this chapter for purposes of 
determining--
          ``(1) the amount of any credit allowable under this 
        chapter, or
          ``(2) the amount of the minimum tax imposed by 
        section 55.''.
  (b) Clerical Amendment.--The table of subparts for part I of 
subchapter D of chapter 1 of such Code is amended by adding at 
the end the following new item:

        ``Subpart F. Special Rules for Executive Perks and Retirement 
                  Benefits.''.

  (c) Effective Date.--The amendments made by this section 
shall take effect as follows:
          (1) Section 420A of the Internal Revenue Code of 1986 
        (as added by this section) shall apply to stock 
        acquired pursuant to the exercise of an option after 
        the date of the enactment of this Act.
          (2)(A) Except as provided by subparagraph (B), 
        section 420B of such Code (as so added) shall apply to 
        perks provided after the date of the enactment of this 
        Act.
          (B) In the case of perks provided pursuant to a 
        contract in existence on the date of the enactment of 
        this Act, such section 420B shall apply to such perks 
        after the date of the first annual shareholders meeting 
        after the date of the enactment of this Act.

SEC. 802. GOLDEN PARACHUTE EXCISE TAX TO APPLY TO DEFERRED COMPENSATION 
                    PAID BY CORPORATION AFTER MAJOR DECLINE IN STOCK 
                    VALUE OR CORPORATION DECLARES BANKRUPTCY.

  (a) In General.--Section 4999 of the Internal Revenue Code of 
1986 (relating to golden parachute payments) is amended by 
redesignating subsection (c) as subsection (d) and by inserting 
after subsection (b) the following new subsection:
  ``(c) Tax To Apply to Deferred Compensation Paid After Major 
Stock Value Decline or Bankruptcy.--
          ``(1) In general.--For purposes of this section, the 
        term `excess parachute payment' includes severance pay, 
        and any other payment of deferred compensation, which 
        is received by a corporate insider after the date that 
        the insider ceases to be employed by the corporation 
        if--
                  ``(A) there is at least a 75-percent decline 
                in the value of the stock in such corporation 
                during the 1-year period ending on such date, 
                or
                  ``(B) such corporation becomes a debtor in a 
                title 11 or similar case (as defined in section 
                368(a)(3)(A)) during the 180-day period 
                beginning 90 days before such date.
        Such term shall not include any payment from a 
        qualified employer plan.
          ``(2) Corporate insider.--For purposes of paragraph 
        (1), the term `corporate insider' means, with respect 
        to a corporation, any individual who is subject to the 
        requirements of section 16(a) of the Securities 
        Exchange Act of 1934 with respect to such 
        corporation.''
  (b) Effective Date.--The amendment made by this section shall 
apply with respect to cessations of employment after the date 
of the enactment of this Act.

SEC. 803. ADEQUATE DISCLOSURE REGARDING EXECUTIVE COMPENSATION 
                    PACKAGES.

  (a) In General.--Section 402 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1102) is amended by 
inserting after subsection (c) the following new subsection:
  ``(d) Disclosure Regarding Executive Compensation Packages.--
          ``(1) In general.--In any case in which an employer 
        takes any action to establish or substantially improve 
        an executive compensation package with respect to any 
        employee, such action may not take effect unless the 
        employer has met the requirements of paragraph (2).
          ``(2) Requirements.--An employer meets the 
        requirements of this paragraph if--
                  ``(A) not less than 100 days prior to the 
                effective date of the action described in 
                paragraph (1), the employer provides written 
                notification of the action to--
                          ``(i) each employee of the employer,
                          ``(ii) each employee organization 
                        representing employees of the employer 
                        (if any), and
                          ``(iii) in the case of an employer 
                        that is a corporation, the board of 
                        directors, and
                  ``(B) in the case of an employer that is a 
                corporation, the board of directors has 
                approved such action.
        Any such written notification shall be written in 
        language calculated to be understood by the average 
        plan participant.
          ``(3) Definitions.--For purposes of this subsection--
                  ``(A) Executive compensation package.--The 
                term `executive compensation package' means a 
                combination of pay, benefits under employee 
                benefit plans, and other forms of compensation 
                provided by an employer primarily for employees 
                who are members of a select group of management 
                or highly compensated employees.
                  ``(B) Substantial improvement.--An executive 
                compensation package is `substantially 
                improved' if the present value of such package 
                is increased by not less than 10 percent.''.
  (b) Effective Date.--The amendment made by this section shall 
apply with respect to actions taken after the date of the 
enactment of this Act.

                   TITLE IX--MISCELLANEOUS PROVISIONS

SEC. 901. CORPORATE DEDUCTION FOR REINVESTED ESOP DIVIDENDS SUBJECT TO 
                    DEDUCTIBLE LIMITS.

  (a) In General.--Subsection (a) of section 404 of the 
Internal Revenue Code of 1986 (relating to general rule) is 
amended by adding at the end the following new paragraph:
          ``(13) Certain dividends reinvested in employee stock 
        ownership plans subject to deductible limits.--For 
        purposes of this subsection, an applicable dividend 
        described in subsection (k)(2)(A)(iii)(I) shall be 
        treated as compensation.''.
  (b) Effective Date.--The amendment made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 902. CREDIT FOR ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS BY 
                    CERTAIN INDIVIDUALS MADE PERMANENT (SAVER'S TAX 
                    CREDIT).

  Section 25B of the Internal Revenue Code of 1986 is amended 
by striking subsection (h) (relating to termination).

SEC. 903. AUTHORITY TO RESCIND TRANSFERS TO PLANS MADE FOR THE BENEFIT 
                    OF HIGHLY COMPENSATED EMPLOYEES.

  Section 403 of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1103) is amended by adding at the end the 
following new subsection:
  ``(e) The plan administrator or any person acting as the plan 
administrator may avoid a transfer of an interest in property 
to any trust or similar arrangement for the benefit of any 
insider or other management employee to fund supplemental 
retirement benefits or other deferred compensation.''.

                      TITLE X--GENERAL PROVISIONS

SEC. 1001. GENERAL EFFECTIVE DATE.

  (a) In General.--Except as otherwise provided in this Act, 
the amendments made by this Act shall apply with respect to 
plan years beginning on or after January 1, 2004.
  (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, 2004'' the date of the 
commencement of the first plan year beginning on or after the 
earlier of--
          (1) the later of--
                  (A) January 1, 2005, 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, 2006.

SEC. 1002. 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 the effective 
date specified in section 601, 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 before such first plan year.

                                
