[House Report 118-224]
[From the U.S. Government Publishing Office]


118th Congress }                                          { REPORT 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-224

======================================================================
 
              PROVIDING COMPLETE INFORMATION TO RETIREMENT 
                             INVESTORS ACT

                                _______
                                

 September 26, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Ms. Foxx, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 5340]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 5340) to amend the Employee Retirement 
Income Security Act of 1974 to ensure that pension plans 
provide notice to participants and beneficiaries on risks 
associated with certain investments, and for other purposes, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Providing Complete Information to 
Retirement Investors Act''.

SEC. 2. BROKERAGE WINDOW DISCLOSURES.

  (a) In General.--Section 404(c) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104(c)) is amended by adding at the 
end the following new paragraph:
          ``(7) Notice requirements for brokerage windows.--
                  ``(A) In general.--In the case of a pension plan 
                which provides for individual accounts and which 
                provides a participant or beneficiary the opportunity 
                to choose from designated investment alternatives, a 
                participant or beneficiary shall not be treated as 
                exercising control over assets in the account of the 
                participant or beneficiary unless, with respect to any 
                investment arrangement that is not a designated 
                investment alternative, each time before such a 
                participant or beneficiary directs an investment into, 
                out of, or within such investment arrangement, such 
                participant is notified of, and acknowledges, each 
                element of the notice described under paragraph (B).
                  ``(B) Notice.--The notice described under this 
                paragraph is a four part information that is 
                substantially similar to the following information:


``1. Your retirement plan offers designated investment alternatives prudently selected and monitored by
 fiduciaries for the purpose of enabling you to construct an appropriate retirement savings portfolio. In
 selecting and monitoring designated investment alternatives, your plan's fiduciary considers the risk of loss
 and the opportunity for gain (or other return) compared with reasonably available investment alternatives.
2. The investments available through this investment arrangement are not designated investment alternatives, and
 have not been prudently selected and are not monitored by a plan fiduciary.
3. Depending on the investments you select through this investment arrangement, you may experience diminished
 returns, higher fees, and higher risk than if you select from the plan's designated investment alternatives.
4. The following is a hypothetical illustration of the impact of return at 4 percent, 6 percent, and 8 percent
 on your account balance projected to age 67.
 


                  ``(C) Illustration.--The notice described under 
                paragraph (B) shall also include a graph displaying the 
                projected retirement balances of such participant or 
                beneficiary at age 67 if the account of such individual 
                were to achieve an annual return equal to each of the 
                following:
                          ``(i) 4 percent.
                          ``(ii) 6 percent.
                          ``(iii) 8 percent.''.
  (b) Designated Investment Alternative Defined.--Section 3 of such Act 
(29 U.S.C. 1002) is amended by adding at the end the following new 
paragraph:
          ``(46) Designated investment alternative.--
                  ``(A) In general.--The term `designated investment 
                alternative' means any investment alternative 
                designated by a responsible fiduciary of an individual 
                account plan described in subsection 404(c) into which 
                participants and beneficiaries may direct the 
                investment of assets held in, or contributed to, their 
                individual accounts.
                  ``(B) Exception.--The term `designated investment 
                alternative' does not include brokerage windows, self-
                directed brokerage accounts, or similar plan 
                arrangements that enable participants and beneficiaries 
                to select investments beyond those designated by a 
                responsible plan fiduciary.''.
  (c) Effective Date.--The amendment made by subsection (a) shall take 
effect on January 1, 2025.

                                Purpose

    Employee benefit plans have one purpose: to provide 
employee benefits. Employee benefit plan assets have one 
purpose: to fund those benefits. The Employee Retirement Income 
Security Act of 1974 (ERISA) was designed to ensure that the 
financial interests of participants and beneficiaries in their 
benefits do not take a back seat to advancing political and 
social interests. Some plan sponsors have added brokerage 
windows to self-directed individual retirement accounts covered 
by ERISA in order to allow participants to direct their 
investments in products not offered by the plan, including 
investments made for their environmental, social, and 
governance (ESG) benefits that could sacrifice return on 
investment or increase the risk associated with investment. 
H.R. 5340 requires plans to remind participants of the impact 
that differences in return on their retirement savings can make 
on their standard of living during retirement.

                            Committee Action


                             117TH CONGRESS

Second Session--Hearings

    On February 26, 2022, the Committee on Education and Labor, 
Subcommittee on Health, Employment, Labor, and Pensions, held a 
hearing titled ``Improving Retirement Security and Access to 
Mental Health Benefits,'' which discussed the Biden 
administration's attempt to put its radical environmental and 
social agendas above the financial interests of retirees by 
prioritizing ESG factors when investing retirement plan assets. 
Testifying before the Subcommittee were Dr. Andrew Biggs, 
Resident Scholar, American Enterprise Institute, Washington, 
D.C.; Karen Handorf, Senior Counsel, Berger Montague, 
Washington, D.C.; Amy Matsui, Director of Income Security and 
Senior Counsel, National Women's Law Center, Washington, D.C.; 
and Aron Szapiro, Head of Retirement Studies and Public Policy, 
Morningstar Investment Management, Washington, D.C.
    On June 14, 2022, the Committee on Education and Labor held 
a hearing titled ``Examining the Policies and Priorities of the 
U.S. Department of Labor'' to review the Fiscal Year (FY) 2023 
budget priorities of the U.S. Department of Labor (DOL). 
Testifying before the Committee was the Honorable Martin J. 
Walsh, Secretary, Department of Labor, Washington D.C. At this 
hearing, concerns were discussed regarding DOL's proposed rule 
titled ``Prudence and Loyalty in Selecting Plan Investments and 
Exercising Shareholder Rights,'' including the Biden 
administration's efforts to undermine an investment fiduciary's 
duties of prudence and loyalty when selecting and monitoring 
investments for ERISA plans, and the administration's view on 
incorporating ESG into the administration of ERISA plans.

Second Session--Legislative Action

    On March 18, 2022, Rep. Andy Barr (R-KY) introduced the 
Ensuring Sound Guidance Act (H.R. 7151) with Rep. Rick Allen 
(R-GA) as an original co-sponsor. The bill was referred to the 
Committee on Education and Labor and the Committee on Financial 
Services.

                             118TH CONGRESS

First Session--Hearings

    On June 7, 2023, the Committee on Education and the 
Workforce held a hearing on ``Examining the Policies and 
Priorities of the U.S. Department of Labor'' to review the FY 
2023 budget priorities of DOL. Testifying before the Committee 
was the Honorable Julie Su, Acting Secretary, DOL, Washington, 
D.C. At this hearing, DOL's December 1, 2022, rule titled 
``Prudence and Loyalty in Selecting Plan Investments and 
Exercising Shareholder Rights'' was discussed, including 
concerns regarding the Biden administration's efforts to 
undermine an investment fiduciary's duties of prudence and 
loyalty when selecting and monitoring investments for ERISA 
plans and the administration's support for incorporating ESG 
into the administration of ERISA plans.

First Session--Legislative Action

    On February 7, 2023, Rep. Barr introduced a joint 
resolution of disapproval (H.J. Res. 30) under the 
Congressional Review Act (CRA) to nullify the Biden 
administration's DOL rule titled ``Prudence and Loyalty in 
Selecting Plan Investments and Exercising Shareholder Rights.'' 
The resolution rescinds the rule and would have the effect of 
reinstating the Trump administration's November 13, 2020, rule 
on ESG investing for ERISA plans titled ``Financial Factors in 
Selecting Plan Investments.'' On February 28, 2023, the House 
of Representatives passed H.J. Res. 30 by a vote of 219-210, 
with Senate passage on March 1 by a vote of 50-46. On March 20, 
the President vetoed the measure. On March 23, the House failed 
to override the veto by a vote of 219-200.
    On June 21, 2023, Rep. Barr introduced the Ensuring Sound 
Guidance Act (H.R. 4237) with Reps. Allen and Bill Huizenga (R-
MI) as original co-sponsors.
    On September 5, 2023, Rep. Jim Banks (R-IN) introduced the 
Providing Complete Information to Retirement Investors Act 
(H.R. 5340). The bill was referred to the Committee on 
Education and the Workforce. On September 14, 2023, the 
Committee considered H.R. 5340 in legislative session and 
reported it favorably, as amended, to the House of 
Representatives by a recorded vote of 23 to 19. The Committee 
adopted an Amendment in the Nature of a Substitute (ANS) 
offered by Rep. Banks that made minor technical changes.

                            Committee Views


                              INTRODUCTION

    H.R. 5340, the Providing Complete Information to Retirement 
Investors Act, affects participant-directed ERISA individual 
account plans that allow participants to select investments 
from a menu of designated investment alternatives and through 
brokerage windows. The bill requires these plans to give 
critically important information, by means of an online notice 
at the time investments are directed, to participants before 
investing through a brokerage window. H.R. 5340 protects the 
retirement savings of the U.S. workforce, which is the purpose 
of ERISA.

          THE DUTY OF PRUDENCE AND LOYALTY UNDER EXISTING LAW

    Under ERISA, an investment fiduciary must act solely in the 
interest of participants and beneficiates and for the exclusive 
purpose of providing benefits to participants and their 
beneficiaries and defraying reasonable expenses of 
administering the plan (the ``exclusive purpose rule'').\1\ 
Courts have held that ERISA's exclusive purpose rule requires 
fiduciaries to act with ``complete and undivided loyalty to the 
beneficiaries''\2\ and to make decisions ``with an eye single 
to the interests of participants and beneficiaries.''\3\
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    \1\ERISA Sec. Sec. 403(c), 404(a); 29 U.S.C. Sec. Sec. 1103(c), 
1104(a). Hereinafter, this fiduciary duty is referred to as the 
``exclusive purpose rule.''
    \2\Donavan v. Mazzola, 716 F.2d 1226, 1238 (9th Cir. 1983) 
(citation omitted).
    \3\Donavan v. Bierwirth, 680 F.2d 263, 271 (2nd Cir. 1982).
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    In 2014, the U.S. Supreme Court unanimously rejected non-
pecuniary public policy goals as a basis for relaxing ERISA's 
fiduciary standards.\4\ The Court held that ERISA's duty of 
prudence does not vary depending on a non-pecuniary goal, even 
if that goal is set out in the plan document.\5\ The Court 
stated,

    \4\Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014) 
(rejecting a ``presumption of prudence'' for acquisition and holding of 
employer stock based on the non-pecuniary benefit of employee stock 
ownership).
    \5\Id. at 420 (``We cannot accept the claim . . . that the content 
of ERISA's duty of prudence varies depending on the specific 
nonpecuniary goal set our in an ERISA plan.'')

          Read in the context of ERISA as a whole, the term 
        `benefits' . . . must be understood to refer to the 
        sort of financial benefits (such as retirement income) 
        that trustees who manage investments typically seek to 
        secure for the trust's beneficiaries. . . . The term 
        does not cover nonpecuniary benefits like those 
        supposed to arise from employee ownership of employer 
        stock.\6\
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    \6\Id. at 421.

    The Court's holding applies to all non-pecuniary benefits. 
Thus, under ERISA, there is no room for advancing collateral 
goals such as ESG, even in a tiebreaker situation in which 
there are two economically equal investments. Fiduciaries who 
offer participant-directed investing through brokerage windows 
allow participants to exercise their investing preferences 
(including ESG preferences) through the brokerage window to 
purchase investments that might not have passed muster under 
ERISA's duties of prudence and loyalty.
    ERISA also requires a fiduciary to act ``with the care, 
skill, prudence, and diligence under the circumstances then 
prevailing that a prudent man acting in a like capacity and 
familiar with such matters would use in the conduct of an 
enterprise of like character.''\7\ Thus, fiduciaries are held 
to an expert prudence standard. Courts have held that the duty 
of prudence requires an ERISA fiduciary to monitor the 
appropriateness of investments continually.\8\ However, for the 
last 30 years, there have been attempts to erode ERISA's 
principles of prudence and loyalty in order to promote benefits 
other than the financial interest of participants and 
beneficiaries (i.e., ``collateral benefits'').
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    \7\ERISA Sec. 404(a)(1)(B), 29 U.S.C. Sec. 1104(a)(1)(B).
    \8\Tibble v. Edison Int'l, 135 S. Ct. 1823, 1828-29 (2015) 
(confirming ERISA fiduciary duty to monitor and remove imprudent trust 
investments).
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   BROKERAGE WINDOWS IN PARTICIPANT-DIRECTED INDIVIDUAL ACCOUNT PLANS

    Under ERISA, individual account plans (also known as 
defined contribution plans) may allow participants to direct 
their investments among designated investment alternatives that 
are prudently selected and monitored by the plan's investment 
fiduciaries.\9\ Some defined contribution plans also offer 
brokerage windows or self-directed brokerage accounts, allowing 
participants to select investments beyond those designated 
investment alternatives. Brokerage windows are a common means 
for ERISA-defined contribution plans to satisfy participant 
demand for ESG-type investments that might not be prudent as a 
designated investment alternative.
---------------------------------------------------------------------------
    \9\29 C.F.R. Sec. 2550.404c-1(d)(2)(iv); 29 C.F.R. Sec. 2550.404a-
5(f).
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    When a participant invests through brokerage windows, the 
participant bypasses an ERISA plan's investment expertise. The 
participant's investment selection is not subject to any 
guardrails on ESG investments, such as the duty of prudence and 
loyalty under ERISA. As a result, participants may experience 
lower risk-adjusted returns and higher fees. An aggregate 
difference of 2 percent in diminished investment returns and 
higher fees over a 40-year savings period can result in a 
retirement balance that is 40 percent lower.

BROKERAGE WINDOWS DISTINGUISHED FROM DESIGNATED INVESTMENT ALTERNATIVES

    DOL guidance distinguishes between brokerage windows and a 
``designated investment alternative.'' DOL generally defines a 
``designated investment alternative'' as ``any investment 
alternative designated by the covered plan into which 
participants and beneficiaries may direct the investment of 
assets held in, or contributed to, their individual accounts.'' 
A designated investment alternative ``does not include 
brokerage windows, self-directed brokerage accounts, or similar 
arrangements that enable participants and beneficiaries to 
select investments beyond those designated by the plan.''\10\
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    \10\Fiduciary Requirements for Disclosure in Participant-Directed 
Individual Account Plans, 75 Fed. Reg. 65,910 (Oct. 20, 2010) (adding 
29 C.F.R. Sec. 2550.404a-5 ``Fiduciary requirements for disclosure in 
participant-directed individual account plans'').
---------------------------------------------------------------------------
    An ERISA fiduciary is clearly subject to the duties of 
prudence and loyalty when selecting and monitoring designated 
investment alternatives into which participants and 
beneficiaries may direct the investment of assets held in or 
contributed to their accounts.\11\ On the other hand, guidance 
on fiduciary duty with respect to the selection and monitoring 
of brokerage windows is limited. One view is that a fiduciary 
is subject to the duties of prudence and loyalty when selecting 
and monitoring a brokerage window as an investment vehicle with 
respect to the service provider and the fees charged to 
participants but is not responsible for a participant's 
investment directions that are made through a brokerage window. 
However, it is not clear that implementing the brokerage window 
itself as an investment vehicle available to participants under 
an ERISA plan is subject to the duty of prudence and 
loyalty.\12\
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    \11\29 C.F.R. Sec. 2550.404c-1(d)(2)(iv); 29 C.F.R. Sec. 2550.404a-
5(f).
    \12\Id. 29 C.F.R. Sec. 2550.404a-5(h)(4) (providing that a 
brokerage window is not itself a designated investment alternative 
because it is not an investment specifically identified as available 
under the plan by the plan fiduciary). But see ERISA Advisory Council, 
Report to the Honorable Martin Walsh, United States Secretary of Labor: 
Understanding Brokerage Windows in Self-Directed Retirement Plans (Dec. 
2021) (referred to herein as the ``2021 EAC Report'') (reporting that 
plan sponsor representatives may decline to offer self-directed 
brokerage windows as being unsuitable for that particular employer's 
population (p.12); reporting ERISA fiduciary testimony that the 
decision to add a brokerage window is a fiduciary decision (p.15); 
reporting the testimony that the decision to implement a brokerage 
window is a fiduciary decision even if it is hardwired in the plan 
document (p. 26, p. 28); reporting testimony that even if a brokerage 
account is hardwired in the plan document, Dudenhoeffer suggests that 
the duty of prudence trumps (p. 28)).
---------------------------------------------------------------------------
    Case law on brokerage windows in individual account plans 
is also sparse.\13\ In Moitoso v. FMR LLC, 451 F. Supp.3d 189 
(D. Mass. 2020), the court stated, ``[I]n sum, there is a 
significant lack of clarity regarding the duties a fiduciary 
owes with respect to funds within a brokerage window.'' 
Existing case law suggests that an investment vehicle labeled 
by a plan as a brokerage window may nonetheless be subject to 
the same duties of prudence and loyalty to the extent that a 
plan fiduciary has significantly limited the selection of funds 
available through the window, causing such selections, in 
essence, to become designated investment alternatives.\14\
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    \13\Few cases have analyzed the extent of an ERISA fiduciary's 
duties with respect to a brokerage window. See Moitoso v. FMR LLC, 451 
F. Supp. 3d 189, 208 (D. Mass. 2020) (reviewing limited authority and 
stating ``there is a significant lack of clarity regarding the duties a 
fiduciary owes with respect to funds within a brokerage window); see 
also Larson v. Allina Health, 350 F. Supp. 3d 780, 799 (D. Colo. 2020) 
(refusing to dismiss claims against a fiduciary for failing to monitor 
funds offered through a mutual fund window limiting selections to 300 
mutual fund options). Other court decisions have stated without 
analysis that investments offered within brokerage windows were not 
monitored. See, e.g., Ramos v. Banner Health, 467 F. Supp. 3d 1067, 
1083 (D. Colo. 2020) (finding ``[Plan fiduciaries] did not monitor 
investments available through BrokerageLink nor were they required to 
do so.'').
    \14\Moitoso v. FMR LLC, 451 F. Supp. 3d at 208-210 (holding that a 
brokerage window limiting investments to Fidelity's proprietary mutual 
fund menu was not itself a ``brokerage window'' and therefore Fidelity 
could face liability for failing to monitor funds offered through that 
window); Larson v. Allina Health, 350 F. Supp. 3d 780, 799 (D. Colo. 
2020) (refusing to dismiss claims against a fiduciary for failing to 
monitor funds offered through a mutual fund window limiting selections 
to 300 mutual fund options).
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    H.R. 5340 does not seek to disturb or change the duties of 
prudence and loyalty associated with brokerage windows (or 
designated investment alternatives) but only to remind 
participants and beneficiaries, when investing through true 
brokerage windows, their individual selections are not being 
selected or monitored by a fiduciary bound by ERISA's duties of 
prudence and loyalty. In that regard, however, ERISA implicitly 
affirms the prevailing view that under a true brokerage window, 
a participant's investment selections are not substantially 
winnowed, nor are they monitored by a fiduciary.

                            2021 EAC REPORT

    In 2021, the Advisory Council on Employee Welfare and 
Pension Benefit Plans (EAC) published the first comprehensive 
study on brokerage windows in ERISA plans (2021 EAC 
Report).\15\ The Study was informed by testimony from industry 
experts and provides an insight into the prevalence of 
brokerage windows and why plan sponsors are choosing to offer 
brokerage windows, including to provide opportunities for ESG 
investing. The study also raised concerns about whether all 
participants using brokerage windows understand the difference 
between investing through a brokerage window and investing 
through a plan's designated investment alternatives.
---------------------------------------------------------------------------
    \15\EAC, Report to the Honorable Martin Walsh, United States 
Secretary of Labor: Understanding Brokerage Windows in Self-Directed 
Retirement Plans (Dec. 2021) (hereinafter 2021 EAC Report).
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    According to the Plan Sponsor Council of America, just over 
23 percent of all ERISA individual account plans offer a 
brokerage window.\16\ However, only 1.5 percent of ERISA assets 
are invested through brokerage windows.\17\ Testimony before 
the EAC from recordkeepers indicated that 46 percent of plans 
that use Alight as a recordkeeper offer a brokerage window; 23 
percent of plans that use Fidelity as their recordkeeper offer 
a brokerage window, and 20 percent of plans that use Vanguard 
as their recordkeeper offer a brokerage window.\18\ Data 
presented to EAC demonstrated ``an uptick in Millennials 
investing through brokerage windows,''\19\ although 
recordkeepers reported low utilization overall (e.g., 3 percent 
for Fidelity\20\ and \1/2\ percent for Vanguard\21\).
---------------------------------------------------------------------------
    \16\Id. at 13 (citing the Plan Sponsor Council of America's 63rd 
Annual Survey of Profit Sharing and 401(k) Plans).
    \17\2021 EAC Report, supra note 15.
    \18\Id. at 16.
    \19\Id. at 44.
    \20\Id. at 32.
    \21\Id. at 35.
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    According to plan sponsor representatives interviewed for 
the 2021 EAC Report, brokerage windows allow participants to 
customize their portfolios outside of the designated investment 
options, including investing for collateral goals associated 
with ESG.\22\ Recordkeepers similarly told EAC that plan 
sponsors add brokerage windows to their plans in response to 
participant requests for broader investment opportunities, 
including ESG funds, religion-compliant funds, and other 
investment options.\23\ A representative of brokerage service 
providers explained that plan sponsors often add brokerage 
windows to accommodate participants who want to customize their 
investment portfolio beyond the designated investment 
alternatives, such as investing in a ``green'' fund.\24\ A 
representative from a large trade group with investment 
fiduciary members also stated that brokerage windows were 
offered in plans managed by their investment fiduciary members 
to ``keep participants with specialized investment needs or 
preferences in the plan, such as faith-based limitations on 
investments and social policy preferences.''\25\
---------------------------------------------------------------------------
    \22\Id. at 11 (``All plan sponsor representatives testified that 
the self-directed brokerage window afforded plan sponsors the 
opportunity to allow participants to customize their portfolios in was 
that the standard investment options would not afford. For example, if 
participants sought to invest in options that supported specific policy 
goals, such as [ESG] or Sharia investing, those participants would have 
a greater chance of finding those investment opportunities in the self-
directed brokerage window because such investment options would be 
available, even if few participants elected to invest in them.'').
    \23\Id. at 16.
    \24\Id. at 21.
    \25\Id. at 23.
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    One issue raised several times in the 2021 EAC Report was a 
participant's ability to distinguish between investments that 
are designated investment alternatives and brokerage windows. 
One professional investment fiduciary recognized ``the 
challenges of ensuring participants understand the difference 
in the fiduciary's role with respect to the designated 
investment alternatives within the core investment menu in 
contrast with the limited role over a brokerage window.'' 
According to the report, the professional investment fiduciary 
``thinks it should be clear to participants that there is no 
endorsement from the fiduciary of investments within a 
brokerage window, and this may be an area where . . . further 
guidance [is needed] on what is expected from plan fiduciaries 
in relation to brokerage windows.''\26\ According to the 
report, Mr. Kevin Mahoney, a retirement consultant, also raised 
concerns that it ``is important for participants to understand 
the additional risks associated with [brokerage windows.]''\27\ 
A preeminent attorney specializing in ERISA fiduciary duties 
suggested to EAC that participants be educated that there is no 
monitoring and no prudent selection of the investments 
available through a brokerage window and that there is a risk 
the participant could make an investment mistake.\28\ An 
attorney representing the American Benefits Council 
acknowledged that ``the retirement community'' understands that 
designated investment alternatives are ``blessed'' by the 
employer but that investments through brokerage windows are 
not.\29\ H.R. 5340 seeks to extend that understanding to the 
participants and beneficiaries who choose to invest through a 
brokerage window.
---------------------------------------------------------------------------
    \26\Id. at 13 (quoting Kathleen Kelly from Compass Financial 
Partners).
    \27\Id. at 14.
    \28\Id. at 27 (quoting Fred Reisch).
    \29\Id. at 25.
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    The 2021 EAC Report noted broad consensus among the 
recordkeepers interviewed that ``investment-specific 
disclosures for brokerage accounts would not be feasible, given 
the open-ended investment environment'' and existing disclosure 
requirements suffice.\30\ An attorney specializing in ERISA and 
representing the American Benefits Council testified that 
investment-specific disclosures would be unworkable for most 
plan sponsors.\31\
---------------------------------------------------------------------------
    \30\Id. at 20.
    \31\Id. at 24.
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    While the 2021 EAC Report did not recommend mandating 
additional disclosures through a brokerage window, H.R. 5340 
does not impose investment-specific disclosure requirements, 
nor does it duplicate existing disclosure requirements. The 
notice required under H.R. 5340 distinguishes between fiduciary 
oversight associated with a plan's designated investment 
alternatives and a brokerage window option. This type of notice 
does not seem to have been considered by EAC in its report.

         IMPACT ON THE RETIREMENT SAVINGS OF AMERICA'S WORKERS

    A participant's decision to bypass designated investment 
alternatives may not be harmless. The decision to self-select 
investments through a brokerage window may result in increased 
risk and lower return on retirement savings. This is imprudent 
when a participant has a choice to invest through 
professionally selected and monitored designated investment 
alternatives. The cumulative harm, over a lifetime of 
retirement saving, could have a substantial adverse impact on a 
participant's lifestyle and welfare during his or her 
retirement years.

 H.R. 5340, PROVIDING COMPLETE INFORMATION TO RETIREMENT INVESTORS ACT

    H.R. 5340 protects the retirement savings and other ERISA-
covered benefits of the U.S. workforce while preserving access 
to brokerage windows offered in self-directed individual 
account plans. The bill requires plans to inform participants 
of any designated investment alternatives and the significance 
of those alternatives for retirement savings. The bill also 
quantifies for participants the impact that a reduction in 
income on their retirement savings will have over a lifetime of 
saving.

                               CONCLUSION

    To protect the financial interests of participants and 
beneficiaries in their benefits, and to reinforce ERISA's 
existing duties of prudence and loyalty, H.R. 5340 ensures that 
participants who self-direct their retirement savings through 
brokerage windows and who have access to designated investment 
alternatives under their plans will be informed of the 
significant differences of investing through a self-directed 
brokerage account as compared to a designated investment 
alternative and the potential long-range impact on their 
retirement savings.

                                Summary


                  H.R. 5340 SECTION-BY-SECTION SUMMARY

Section 1. Short title

           Names the bill as the ``Providing Complete 
        Information to Retirement Investors Act''

Section 2. Employee Retirement Income Security Act of 1974 Amendment

    Section 2(a) amends ERISA Section 404(c) by adding a new 
paragraph ``Notice Requirements for Brokerage Windows'' with 
the provisions discussed below.
           A notice requirement must be met for certain 
        plans to qualify for relief under ERISA Section 
        404(c)(1) with respect to any investment that is not a 
        designated investment alternative.
           The notice applies to a pension plan that 
        provides individual accounts and provides a participant 
        or beneficiary the opportunity to choose from 
        designated investment alternatives.
           The notice applies to any participant or 
        beneficiary directing an investment into, out of, or 
        within an investment that is not a designated 
        investment alternative each time that the participant 
        or beneficiary makes such a direction.
           The participant or beneficiary is required, 
        as part of the notice process, to acknowledge each 
        element of the notice.
           The notice is to be given sequentially in 
        four separate parts, and the participant must 
        acknowledge each part. The notice may be tailored to 
        the plan's situation as long as it is substantially 
        similar to the wording in the statute.
           The four parts of the notice are as follows:
                  1. Your retirement plan offers designated 
                investment alternatives prudently selected and 
                monitored by fiduciaries for the purpose of 
                enabling you to construct an appropriate 
                retirement savings portfolio. In selecting and 
                monitoring designated investment alternatives, 
                your plan's fiduciary considers the risk of 
                loss and the opportunity for gain (or other 
                return) compared with reasonably available 
                alternative investments.
                  2. The investments available through this 
                investment arrangement are not designated 
                investment alternatives, and have not been 
                prudently selected, and are not monitored by a 
                plan fiduciary.
                  3. Depending on the investments you select 
                through the investment arrangement, you may 
                experience diminished returns, higher fees, and 
                higher risk than if you select from the plan's 
                designated investment alternatives.
                  4. The following is a hypothetical 
                illustration of the impact of return at 4 
                percent, 6 percent, and 8 percent on your 
                retirement balance projected to age 67.
           The bill requires a graph to be displayed 
        along with the fourth element of the notice to display 
        the projected retirement balance (using the latest 
        available account balance) at age 67 based on an annual 
        return of 4 percent, 6 percent, and 8 percent.
    Section 2(b) amends ERISA by adding a definition of 
``designated investment alternative'' as ``any investment 
alternative designated by a responsible fiduciary of an 
individual account plan described in section 404(c) into which 
participants and beneficiaries may direct the investment of 
assets held in, or contributed to, their individual accounts,'' 
but this does not include brokerage windows, self-directed 
brokerage accounts, or similar plan arrangements that enable 
participants and beneficiaries to select investments beyond 
those designated by a responsible plan fiduciary.
    Section 2(b) also provides that the amendments made by the 
bill under subsection (a) (the notice requirements) take effect 
on January 1, 2025.

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)3 of Public Law 104-1 requires a description 
of the application of this bill to the legislative branch. H.R. 
5340 takes important steps to protect the interests of the 
workforce in their benefits provided under ERISA plans with 
respect to brokerage windows. H.R. 5340 is applicable only to 
investments subject to ERISA and therefore does not affect the 
legislative branch.

                       Unfunded Mandate Statement

    Pursuant to Section 423 of the Congressional Budget and 
Impoundment Control Act of 1974, Pub. L. No. 93-344 (as amended 
by Section 101(a)(2) of the Unfunded Mandates Reform Act of 
1995, Pub. L. No. 104-4), the Committee adopts as its own the 
cost estimate prepared by the Director of the Congressional 
Budget Office (CBO) pursuant to section 402 of the 
Congressional Budget and Impoundment Control Act of 1974.

                           Earmark Statement

    H.R. 5340 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI of the Rules of the House of 
Representatives.

                            Roll Call Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.


         Statement of General Performance Goals and Objectives

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.R. 5340 is to protect the interests of the workforce 
in their benefits provided under ERISA plans with respect to 
brokerage windows.

                    Duplication of Federal Programs

    No provision of H.R. 5340 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the committee's oversight findings and recommendations are 
reflected in the body of this report.

            Required Committee Hearing and Related Hearings

    In compliance with clause 3(c)(6) of rule XIII of the Rules 
of the House of Representatives, the following hearing held 
during the 118th Congress was used to develop or consider H.R. 
5340: ``Examining the Policies and Priorities of the U.S. 
Department of Labor''.

               New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following estimate for H.R. 5340 from the Director of the 
Congressional Budget Office:




    Bill summaries: On September 14, 2023, the Committee on 
Education and the Workforce ordered to be reported four bills 
related to the investments of retirement plans. This document 
provides estimates for each piece of legislation.
    Generally, the bills would:
           Change the standards that the fiduciaries of 
        private pension plans must use when making investment 
        decisions, including decisions on whether and how to 
        vote proxies and decisions about selecting plan 
        employees.
           Require plans to provide information to 
        participants investing in brokerage windows, which 
        allow participants to select from a broad variety of 
        investments.
    Background: Under the Employee Retirement Income Security 
Act of 1974 (ERISA), fiduciaries of private pension plans must 
act in the interest of plan participants, including when making 
investment decisions. The rule ``Financial Factors in Selecting 
Plan Investments,'' issued on November 13, 2020, required 
fiduciaries to make investment decisions based solely on 
``pecuniary factors.'' That rule included a ``tiebreaker'' 
standard, under which fiduciaries could consider other benefits 
when ``alternative investment options are economically 
indistinguishable.'' A related rule, ``Fiduciary Duties 
Regarding Proxy Voting and Shareholder Rights,'' issued on 
December 16, 2020, guided whether and how fiduciaries were to 
exercise proxy votes. That rule stated that fiduciaries must 
make such decisions ``for the exclusive purpose of providing 
benefits to participants.''
    On December 1, 2022, the Department of Labor (DOL) issued a 
new rule, ``Prudence and Loyalty in Selecting Plan Investments 
and Exercising Shareholder Rights,'' which clarified how plan 
fiduciaries may consider climate change and other 
environmental, social, or governance (commonly referred to as 
ESG) factors when making investment decisions. Under the new 
regulation, fiduciaries may consider ``the economic effects of 
climate change and other environmental, social, or governance 
factors,'' but investment decisions ``may not subordinate the 
interests of the participants and beneficiaries in their 
retirement income or financial benefits under the plan to other 
objectives, and may not sacrifice investment return or take on 
additional investment risk.''
    For additional background, see CBO's estimate of H.J. Res. 
30, which disapproved the 2022 rule. The resolution was 
approved by the Congress but vetoed by the President, so that 
rule remains in effect.
    Estimated Federal cost: The costs of the legislation fall 
within budget function 600 (income security).
    Basis of estimate: CBO and the staff of the Joint Committee 
on Taxation (JCT) estimate that none of the bills would affect 
expected revenues or net direct spending. CBO estimates that 
implementing each of the bills would affect spending subject to 
appropriation. This cost estimate does not include any effects 
of interaction among the bills. If all four bills were combined 
and enacted as a single piece of legislation, CBO expects that 
the net difference in estimated costs would be insignificant.
    H.R. 5337, the Retirement Proxy Protection Act, would 
specify plans' obligations relating to proxy voting. It would 
reinstate many of the provisions included in the December 2020 
rule ``Fiduciary Duties Regarding Proxy Voting and Shareholder 
Rights.''
    H.R. 5338, the No Discrimination in My Benefits Act, would 
require that any selection of plan employees or service 
providers be made ``without regard to race, color, religion, 
sex, or national origin.''
    H.R. 5339, the RETIRE Act, would reinstate many of the 
provisions in the November 2020 rule ``Financial Factors in 
Selecting Plan Investments.''
    H.R. 5340, the Providing Complete Information to Retirement 
Investors Act, would require the provision of additional 
information to plan participants before they select nonstandard 
investments. In self-directed pension plans, such as 401(k)s, 
participants generally select from a menu of designated 
investment alternatives offered by the plan. Some plans also 
offer ``brokerage windows,'' which allow participants access to 
a broad variety of investments.
    Direct spending and revenues: Enacting H.R. 5337, H.R. 
5338, or H.R. 5339 could affect federal revenues if the amount 
that individuals or employers contribute to tax-preferred plans 
changed. Additionally, premiums (which are recorded as 
offsetting receipts and reduce direct spending) received by the 
Pension Benefit Guaranty Corporation could be affected because 
those premiums are based in part on the amount of plan assets.
    However, because fiduciaries must maximize investment 
performance, CBO and JCT do not expect H.R. 5337, H.R. 5338, or 
H.R. 5339 to substantially affect investment outcomes. 
Projections of investment returns are inherently uncertain, but 
we expect an equally likely chance of small increases or small 
decreases in federal revenues and outlays stemming from this 
resolution. The new rule may induce individual employers and 
workers to raise or lower their pension contributions, but CBO 
and JCT project that total contributions will not change and 
thus there would be no effect on expected revenues and net 
direct spending.
    Under H.R. 5340, plans would be required to warn 
participants in brokerage windows about the extra potential 
risk associated with those investments. CBO and JCT do not 
expect H.R. 5340 to significantly change participants' 
investment choices, and to the extent that they do change, we 
expect an equally likely chance of small increases or small 
decreases in federal revenues and outlays.
    Spending subject to appropriation: CBO estimates that each 
of the bills would increase spending subject to appropriation 
by insignificant amounts, less than $500,000 over the 2023-2028 
period. The administrative burden on DOL to issue the 
regulations associated with the legislation would be minimal. 
Based on experience with similar changes, CBO estimates that 
administrative costs would be insignificant. Any such spending 
would be subject to the availability of appropriated funds.
    Pay-as-you-go considerations: None.
    Increase in long-term net direct spending and deficits: 
None.
    Mandates: H.R. 5337 would impose a private-sector mandate 
as defined in the Unfunded Mandates Reform Act (UMRA) by 
prohibiting ERISA plan fiduciaries from prioritizing a non-
pecuniary objective when exercising shareholder rights. CBO 
estimates that the cost of the mandate would not exceed the 
private-sector threshold established in UMRA ($198 million in 
2023, adjusted annually for inflation). The bill would not 
impose any intergovernmental mandates.
    CBO has not reviewed H.R. 5338 for intergovernmental or 
private-sector mandates. Section 4 of UMRA excludes from the 
application of that act any legislative provisions that would 
establish or enforce statutory rights prohibiting 
discrimination. CBO has determined that this legislation falls 
within that exclusion because it would prohibit discrimination 
in hiring or retaining personnel based on race, color, 
religion, sex, or national origin.
    H.R. 5339 would not impose any private-sector or 
intergovernmental mandates as defined in UMRA.
    H.R. 5340 would impose a private-sector mandate as defined 
in UMRA by requiring pension plans that offer brokerage windows 
to warn participants of potential risk associated with 
alternative investments. Because of the small burden associated 
with providing an additional warning, CBO estimates that the 
cost of the mandate would not exceed the private-sector 
threshold established in UMRA ($198 million in 2023, adjusted 
annually for inflation). The bill would not impose any 
intergovernmental mandates.
    Estimate prepared by: Federal costs: Noah Meyerson; Federal 
revenues: Staff of the Joint Committee on Taxation; Mandates: 
Staff of the Joint Committee on Taxation and Andrew Laughlin.
    Estimate reviewed by: Justin Humphrey, Chief, Finance, 
Housing, and Education Cost Estimates Unit; Kathleen 
FitzGerald, Chief, Public and Private Mandates Unit; H. Samuel 
Papenfuss, Deputy Director of Budget Analysis.
    Estimate approved by: Phillip L. Swagel, Director, 
Congressional Budget Office.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 5340. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when, as with the present report, 
the committee adopts as its own the cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974




           *       *       *       *       *       *       *
             TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS


Subtitle A--General Provisions

           *       *       *       *       *       *       *



                              DEFINITIONS

  Sec. 3. For purposes of this title:
  (1) The terms ``employee welfare benefit plan'' and ``welfare 
plan'' mean any plan, fund, or program which was heretofore or 
is hereafter established or maintained by an employer or by an 
employee organization, or by both, to the extent that such 
plan, fund, or program was established or is maintained for the 
purpose of providing for its participants or their 
beneficiaries, through the purchase of insurance or otherwise, 
(A) medical, surgical, or hospital care or benefits, or 
benefits in the event of sickness, accident, disability, death 
or unemployment, or vacation benefits, apprenticeship or other 
training programs, or day care centers, scholarship funds, or 
prepaid legal services, or (B) any benefit described in section 
302(c) of the Labor Management Relations Act, 1947 (other than 
pensions on retirement or death, and insurance to provide such 
pensions).
  (2)(A) Except as provided in subparagraph (B), the terms 
``employee pension benefit plan'' and ``pension plan'' mean any 
plan, fund, or program which was heretofore or is hereafter 
established or maintained by an employer or by an employee 
organization, or by both, to the extent that by its express 
terms or as a result of surrounding circumstances such plan, 
fund, or program--
          (i) provides retirement income to employees, or
          (ii) results in a deferral of income by employees for 
        periods extending to the termination of covered 
        employment or beyond,
regardless of the method of calculating the contributions made 
to the plan, the method of calculating the benefits under the 
plan or the method of distributing benefits from the plan. A 
distribution from a plan, fund, or program shall not be treated 
as made in a form other than retirement income or as a 
distribution prior to termination of covered employment solely 
because such distribution is made to an employee who has 
attained age 62 and who is not separated from employment at the 
time of such distribution.
  (B) The Secretary may by regulation prescribe rules 
consistent with the standards and purposes of this Act 
providing one or more exempt categories under which--
          (i) severance pay arrangements, and
          (ii) supplemental retirement income payments, under 
        which the pension benefits of retirees or their 
        beneficiaries are supplemented to take into account 
        some portion or all of the increases in the cost of 
        living (as determined by the Secretary of Labor) since 
        retirement,
shall, for purposes of this title, be treated as welfare plans 
rather than pension plans. In the case of any arrangement or 
payment a principal effect of which is the evasion of the 
standards or purposes of this Act applicable to pension plans, 
such arrangement or payment shall be treated as a pension plan. 
An applicable voluntary early retirement incentive plan (as 
defined in section 457(e)(11)(D)(ii) of the Internal Revenue 
Code of 1986) making payments or supplements described in 
section 457(e)(11)(D)(i) of such Code, and an applicable 
employment retention plan (as defined in section 457(f)(4)(C) 
of such Code) making payments of benefits described in section 
457(f)(4)(A) of such Code, shall, for purposes of this title, 
be treated as a welfare plan (and not a pension plan) with 
respect to such payments and supplements.
          (C) A pooled employer plan shall be treated as--
                  (i) a single employee pension benefit plan or 
                single pension plan; and
                  (ii) a plan to which section 210(a) applies.
  (3) The term ``employee benefit plan'' or ``plan'' means an 
employee welfare benefit plan or an employee pension benefit 
plan or a plan which is both an employee welfare benefit plan 
and an employee pension benefit plan.
  (4) The term ``employee organization'' means any labor union 
or any organization of any kind, or any agency or employee 
representation committee, association, group, or plan, in which 
employees participate and which exists for the purpose, in 
whole or in part, of dealing with employers concerning an 
employee benefit plan, or other matters incidental to 
employment relationships; or any employees' beneficiary 
association organized for the purpose in whole or in part, of 
establishing such a plan.
  (5) The term ``employer'' means any person acting directly as 
an employer, or indirectly in the interest of an employer, in 
relation to an employee benefit plan; and includes a group or 
association of employers acting for an employer in such 
capacity.
  (6) The term ``employee'' means any individual employed by an 
employer.
  (7) The term ``participant'' means any employee or former 
employee of an employer, or any member or former member of an 
employee organization, who is or may become eligible to receive 
a benefit of any type from an employee benefit plan which 
covers employees of such employer or members of such 
organization, or whose beneficiaries may be eligible to receive 
any such benefit.
  (8) The term ``beneficiary'' means a person designated by a 
participant, or by the terms of an employee benefit plan, who 
is or may become entitled to a benefit thereunder.
  (9) The term ``person'' means an individual, partnership, 
joint venture, corporation, mutual company, joint-stock 
company, trust, estate, unincorporated organization, 
association, or employee organization.
  (10) The term ``State'' includes any State of the United 
States, the District of Columbia, Puerto Rico, the Virgin 
Islands, American Samoa, Guam, Wake Island, and the Canal Zone. 
The term ``United States'' when used in the geographic sense 
means the States and the Outer Continental Shelf lands defined 
in the Outer Continental Shelf Lands Act (43 U.S.C. 1331-1343).
  (11) The term ``commerce'' means trade, traffic, commerce, 
transportation, or communication between any State and any 
place outside thereof.
  (12) The term ``industry or activity affecting commerce'' 
means any activity, business, or industry in commerce or in 
which a labor dispute would hinder or obstruct commerce or the 
free flow of commerce, and includes any activity or industry 
``affecting commerce'' within the meaning of the Labor 
Management Relations Act, 1947, or the Railway Labor Act.
  (13) The term ``Secretary'' means the Secretary of Labor.
  (14) The term ``party in interest'' means, as to an employee 
benefit plan--
          (A) any fiduciary (including, but not limited to, any 
        administrator, officer, trustee, or custodian), 
        counsel, or employee of such employee benefit plan;
          (B) a person providing services to such plan;
          (C) an employer any of whose employees are covered by 
        such plan;
          (D) an employee organization any of whose members are 
        covered by such plan;
          (E) an owner, direct or indirect, of 50 percent or 
        more of--
                  (i) the combined voting power of all classes 
                of stock entitled to vote or the total value of 
                shares of all classes of stock of a 
                corporation,
                  (ii) the capital interest or the profits 
                interest of a partnership, or
                  (iii) the beneficial interest of a trust or 
                unincorporated enterprise,
        which is an employer or an employee organization 
        described in subparagraph (C) or (D);
          (F) a relative (as defined in paragraph (15)) of any 
        individual described in subparagraph (A), (B), (C), or 
        (E);
          (G) a corporation, partnership, or trust or estate of 
        which (or in which) 50 percent or more of--
                  (i) the combined voting power of all classes 
                of stock entitled to vote or the total value of 
                shares of all classes of stock of such 
                corporation,
                  (ii) the capital interest or profits interest 
                of such partnership, or
                  (iii) the beneficial interest of such trust 
                or estate,
        is owned directly or indirectly, or held by persons 
        described in subparagraph (A), (B), (C), (D), or (E);
          (H) an employee, officer, director (or an individual 
        having powers or responsibilities similar to those of 
        officers or directors), or a 10 percent or more 
        shareholder directly or indirectly, of a person 
        described in subparagraph (B), (C), (D), (E), or (G), 
        or of the employee benefit plan; or
          (I) a 10 percent or more (directly or indirectly in 
        capital or profits) partner or joint venturer of a 
        person described in subparagraph (B), (C), (D), (E), or 
        (G).
The Secretary, after consultation and coordination with the 
Secretary of the Treasury, may by regulation prescribe a 
percentage lower than 50 percent for subparagraph (E) and (G) 
and lower than 10 percent for subparagraph (H) or (I). The 
Secretary may prescribe regulations for determining the 
ownership (direct or indirect) of profits and beneficial 
interests, and the manner in which indirect stockholdings are 
taken into account. Any person who is a party in interest with 
respect to a plan to which a trust described in section 
501(c)(22) of the Internal Revenue Code of 1986 is permitted to 
make payments under section 4223 shall be treated as a party in 
interest with respect to such trust.
  (15) The term ``relative'' means a spouse, ancestor, lineal 
descendant, or spouse of a lineal descendant.
  (16)(A) The term ``administrator'' means--
          (i) the person specifically so designated by the 
        terms of the instrument under which the plan is 
        operated;
          (ii) if an administrator is not so designated, the 
        plan sponsor; or
          (iii) in the case of a plan for which an 
        administrator is not designated and a plan sponsor 
        cannot be identified, such other person as the 
        Secretary may by regulation prescribe.
  (B) The term ``plan sponsor'' means (i) the employer in the 
case of an employee benefit plan established or maintained by a 
single employer, (ii) the employee organization in the case of 
a plan established or maintained by an employee organization, 
(iii) in the case of a plan established or maintained by two or 
more employers or jointly by one or more employers and one or 
more employee organizations, the association, committee, joint 
board of trustees, or other similar group of representatives of 
the parties who establish or maintain the plan, or (iv) in the 
case of a pooled employer plan, the pooled plan provider.
  (17) The term ``separate account'' means an account 
established or maintained by an insurance company under which 
income, gains, and losses, whether or not realized, from assets 
allocated to such account, are, in accordance with the 
applicable contract, credited to or charged against such 
account without regard to other income, gains, or losses of the 
insurance company.
  (18) The term ``adequate consideration'' when used in part 4 
of subtitle B means (A) in the case of a security for which 
there is a generally recognized market, either (i) the price of 
the security prevailing on a national securities exchange which 
is registered under section 6 of the Securities Exchange Act of 
1934, or (ii) if the security is not traded on such a national 
securities exchange, a price not less favorable to the plan 
than the offering price for the security as established by the 
current bid and asked prices quoted by persons independent of 
the issuer and of any party in interest; and (B) in the case of 
an asset other than a security for which there is a generally 
recognized market, the fair market value of the asset as 
determined in good faith by the trustee or named fiduciary 
pursuant to the terms of the plan and in accordance with 
regulations promulgated by the Secretary.
  (19) The term ``nonforfeitable'' when used with respect to a 
pension benefit or right means a claim obtained by a 
participant or his beneficiary to that part of an immediate or 
deferred benefit under a pension plan which arises from the 
participant's service, which is unconditional, and which is 
legally enforceable against the plan. For purposes of this 
paragraph, a right to an accrued benefit derived from employer 
contributions shall not be treated as forfeitable merely 
because the plan contains a provision described in section 
203(a)(3).
  (20) The term ``security'' has the same meaning as such term 
has under section 2(1) of the Securities Act of 1933 (15 U.S.C. 
77b(1)).
  (21)(A) Except as otherwise provided in subparagraph (B), a 
person is a fiduciary with respect to a plan to the extent (i) 
he exercises any discretionary authority or discretionary 
control respecting management of such plan or exercises any 
authority or control respecting management or disposition of 
its assets, (ii) he renders investment advice for a fee or 
other compensation, direct or indirect, with respect to any 
moneys or other property of such plan, or has any authority or 
responsibility to do so, or (iii) he has any discretionary 
authority or discretionary responsibility in the administration 
of such plan. Such term includes any person designated under 
section 405(c)(1)(B).
  (B) If any money or other property of an employee benefit 
plan is invested in securities issued by an investment company 
registered under the Investment Company Act of 1940, such 
investment shall not by itself cause such investment company or 
such investment company's investment adviser or principal 
underwriter to be deemed to be a fiduciary or a party in 
interest as those terms are defined in this title, except 
insofar as such investment company or its investment adviser or 
principal underwriter acts in connection with an employee 
benefit plan covering employees of the investment company, the 
investment adviser, or its principal underwriter. Nothing 
contained in this subparagraph shall limit the duties imposed 
on such investment company, investment adviser, or principal 
underwriter by any other law.
  (22) The term ``normal retirement benefit'' means the greater 
of the early retirement benefit under the plan, or the benefit 
under the plan commencing at normal retirement age. The normal 
retirement benefit shall be determined without regard to--
          (A) medical benefits, and
          (B) disability benefits not in excess of the 
        qualified disability benefit.
For purposes of this paragraph, a qualified disability benefit 
is a disability benefit provided by a plan which does not 
exceed the benefit which would be provided for the participant 
if he separated from the service at normal retirement age. For 
purposes of this paragraph, the early retirement benefit under 
a plan shall be determined without regard to any benefit under 
the plan which the Secretary of the Treasury finds to be a 
benefit described in section 204(b)(1)(G).
  (23) The term ``accrued benefit'' means--
          (A) in the case of a defined benefit plan, the 
        individual's accrued benefit determined under the plan 
        and, except as provided in section 204(c)(3), expressed 
        in the form of an annual benefit commencing at normal 
        retirement age, or
          (B) in the case of a plan which is an individual 
        account plan, the balance of the individual's account.
The accrued benefit of an employee shall not be less than the 
amount determined under section 204(c)(2)(B) with respect to 
the employee's accumulated contribution.
  (24) The term ``normal retirement age'' means the earlier 
of--
          (A) the time a plan participant attains normal 
        retirement age under the plan, or
          (B) the later of--
                  (i) the time a plan participant attains age 
                65, or
                  (ii) the 5th anniversary of the time a plan 
                participant commenced participation in the 
                plan.
  (25) The term ``vested liabilities'' means the present value 
of the immediate or deferred benefits available at normal 
retirement age for participants and their beneficiaries which 
are nonforfeitable.
  (26) The term ``current value'' means fair market value where 
available and otherwise the fair value as determined in good 
faith by a trustee or a named fiduciary (as defined in section 
402(a)(2)) pursuant to the terms of the plan and in accordance 
with regulations of the Secretary, assuming an orderly 
liquidation at the time of such determination.
  (27) The term ``present value'', with respect to a liability, 
means the value adjusted to reflect anticipated events. Such 
adjustments shall conform to such regulations as the Secretary 
of the Treasury may prescribe.
  (28) The term ``normal service cost'' or ``normal cost'' 
means the annual cost of future pension benefits and 
administrative expenses assigned, under an actuarial cost 
method, to years subsequent to a particular valuation date of a 
pension plan. The Secretary of the Treasury may prescribe 
regulations to carry out this paragraph.
  (29) The term ``accrued liability'' means the excess of the 
present value, as of a particular valuation date of a pension 
plan, of the projected future benefit costs and administrative 
expenses for all plan participants and beneficiaries over the 
present value of future contributions for the normal cost of 
all applicable plan participants and beneficiaries. The 
Secretary of the Treasury may prescribe regulations to carry 
out this paragraph.
  (30) The term ``unfunded accrued liability'' means the excess 
of the accrued liability, under an actuarial cost method which 
so provides, over the present value of the assets of a pension 
plan. The Secretary of the Treasury may prescribe regulations 
to carry out this paragraph.
  (31) The term ``advance funding actuarial cost method'' or 
``actuarial cost method'' means a recognized actuarial 
technique utilized for establishing the amount and incidence of 
the annual actuarial cost of pension plan benefits and 
expenses. Acceptable actuarial cost methods shall include the 
accrued benefit cost method (unit credit method), the entry age 
normal cost method, the individual level premium cost method, 
the aggregate cost method, the attained age normal cost method, 
and the frozen initial liability cost method. The terminal 
funding cost method and the current funding (pay-as-you-go) 
cost method are not acceptable actuarial cost methods. The 
Secretary of the Treasury shall issue regulations to further 
define acceptable actuarial cost methods.
  (32) The term ``governmental plan'' means a plan established 
or maintained for its employees by the Government of the United 
States, by the government of any State or political subdivision 
thereof, or by any agency or instrumentality of any of the 
foregoing. The term ``governmental plan'' also includes any 
plan to which the Railroad Retirement Act of 1935 or 1937 
applies, and which is financed by contributions required under 
that Act and any plan of an international organization which is 
exempt from taxation under the provisions of the International 
Organizations Immunities Act (59 Stat. 669). The term 
``governmental plan'' includes a plan which is established and 
maintained by an Indian tribal government (as defined in 
section 7701(a)(40) of the Internal Revenue Code of 1986), a 
subdivision of an Indian tribal government (determined in 
accordance with section 7871(d) of such Code), or an agency or 
instrumentality of either, and all of the participants of which 
are employees of such entity substantially all of whose 
services as such an employee are in the performance of 
essential governmental functions but not in the performance of 
commercial activities (whether or not an essential government 
function)
  (33)(A) The term ``church plan'' means a plan established and 
maintained (to the extent required in clause (ii) of 
subparagraph (B)) for its employees (or their beneficiaries) by 
a church or by a convention or association of churches which is 
exempt from tax under section 501 of the Internal Revenue Code 
of 1986.
  (B) The term ``church plan'' does not include a plan--
          (i) which is established and maintained primarily for 
        the benefit of employees (or their beneficiaries) of 
        such church or convention or association of churches 
        who are employed in connection with one or more 
        unrelated trades or businesses (within the meaning of 
        section 513 of the Internal Revenue Code of 1986), or
          (ii) if less than substantially all of the 
        individuals included in the plan are individuals 
        described in subparagraph (A) or in clause (ii) of 
        subparagraph (C) (or their beneficiaries).
  (C) For purposes of this paragraph--
          (i) A plan established and maintained for its 
        employees (or their beneficiaries) by a church or by a 
        convention or association of churches includes a plan 
        maintained by an organization, whether a civil law 
        corporation or otherwise, the principal purpose or 
        function of which is the administration or funding of a 
        plan or program for the provision of retirement 
        benefits or welfare benefits, or both, for the 
        employees of a church or a convention or association of 
        churches, if such organization is controlled by or 
        associated with a church or a convention or association 
        of churches.
          (ii) The term employee of a church or a convention or 
        association of churches includes--
                  (I) a duly ordained, commissioned, or 
                licensed minister of a church in the exercise 
                of his ministry, regardless of the source of 
                his compensation;
                  (II) an employee of an organization, whether 
                a civil law corporation or otherwise, which is 
                exempt from tax under section 501 of the 
                Internal Revenue Code of 1986 and which is 
                controlled by or associated with a church or a 
                convention or association of churches; and
                  (III) an individual described in clause (v).
          (iii) A church or a convention or association of 
        churches which is exempt from tax under section 501 of 
        the Internal Revenue Code of 1986 shall be deemed the 
        employer of any individual included as an employee 
        under clause (ii).
          (iv) An organization, whether a civil law corporation 
        or otherwise, is associated with a church or a 
        convention or association of churches if it shares 
        common religious bonds and convictions with that church 
        or convention or association of churches.
          (v) If an employee who is included in a church plan 
        separates from the service of a church or a convention 
        or association of churches or an organization, whether 
        a civil law corporation or otherwise, which is exempt 
        from tax under section 501 of the Internal Revenue Code 
        of 1986 and which is controlled by or associated with a 
        church or a convention or association of churches, the 
        church plan shall not fail to meet the requirements of 
        this paragraph merely because the plan--
                  (I) retains the employee's accrued benefit or 
                account for the payment of benefits to the 
                employee or his beneficiaries pursuant to the 
                terms of the plan; or
                  (II) receives contributions on the employee's 
                behalf after the employee's separation from 
                such service, but only for a period of 5 years 
                after such separation, unless the employee is 
                disabled (within the meaning of the disability 
                provisions of the church plan or, if there are 
                no such provisions in the church plan, within 
                the meaning of section 72(m)(7) of the Internal 
                Revenue Code of 1986) at the time of such 
                separation from service.
  (D)(i) If a plan established and maintained for its employees 
(or their beneficiaries) by a church or by a convention or 
association of churches which is exempt from tax under section 
501 of the Internal Revenue Code of 1986 fails to meet one or 
more of the requirements of this paragraph and corrects its 
failure to meet such requirements within the correction period, 
the plan shall be deemed to meet the requirements of this 
paragraph for the year in which the correction was made and for 
all prior years.
  (ii) If a correction is not made within the correction 
period, the plan shall be deemed not to meet the requirements 
of this paragraph beginning with the date on which the earliest 
failure to meet one or more of such requirements occurred.
  (iii) For purposes of this subparagraph, the term 
``correction period'' means--
          (I) the period ending 270 days after the date of 
        mailing by the Secretary of the Treasury of a notice of 
        default with respect to the plan's failure to meet one 
        or more of the requirements of this paragraph; or
          (II) any period set by a court of competent 
        jurisdiction after a final determination that the plan 
        fails to meet such requirements, or, if the court does 
        not specify such period, any reasonable period 
        determined by the Secretary of the Treasury on the 
        basis of all the facts and circumstances, but in any 
        event not less than 270 days after the determination 
        has become final; or
          (III) any additional period which the Secretary of 
        the Treasury determines is reasonable or necessary for 
        the correction of the default,
whichever has the latest ending date.
  (34) The term ``individual account plan'' or ``defined 
contribution plan'' means a pension plan which provides for an 
individual account for each participant and for benefits based 
solely upon the amount contributed to the participant's 
account, and any income, expenses, gains and losses, and any 
forfeitures of accounts of other participants which may be 
allocated to such participant's account.
  (35) The term ``defined benefit plan'' means a pension plan 
other than an individual account plan; except that a pension 
plan which is not an individual account plan and which provides 
a benefit derived from employer contributions which is based 
partly on the balance of the separate account of a 
participant--
          (A) for the purposes of section 202, shall be treated 
        as an individual account plan, and
          (B) for the purposes of paragraph (23) of this 
        section and section 204, shall be treated as an 
        individual account plan to the extent benefits are 
        based upon the separate account of a participant and as 
        a defined benefit plan with respect to the remaining 
        portion of benefits under the plan.
  (36) The term ``excess benefit plan'' means a plan maintained 
by an employer solely for the purpose of providing benefits for 
certain employees in excess of the limitations on contributions 
and benefits imposed by section 415 of the Internal Revenue 
Code of 1986 on plans to which that section applies, without 
regard to whether the plan is funded. To the extent that a 
separable part of a plan (as determined by the Secretary of 
Labor) maintained by an employer is maintained for such 
purpose, that part shall be treated as a separate plan which is 
an excess benefit plan.
  (37)(A) The term ``multiemployer plan'' means a plan--
          (i) to which more than one employer is required to 
        contribute,
          (ii) which is maintained pursuant to one or more 
        collective bargaining agreements between one or more 
        employee organizations and more than one employer, and
          (iii) which satisfies such other requirements as the 
        Secretary may prescribe by regulation.
  (B) For purposes of this paragraph, all trades or businesses 
(whether or not incorporated) which are under common control 
within the meaning of section 4001(b)(1) are considered a 
single employer.
  (C) Notwithstanding subparagraph (A), a plan is a 
multiemployer plan on and after its termination date if the 
plan was a multiemployer plan under this paragraph for the plan 
year preceding its termination date.
  (D) For purposes of this title, notwithstanding the preceding 
provisions of this paragraph, for any plan year which began 
before the date of the enactment of the Multiemployer Pension 
Plan Amendments Act of 1980, the term ``multiemployer plan'' 
means a plan described in section 3(37) of this Act as in 
effect immediately before such date.
  (E) Within one year after the date of the enactment of the 
Multiemployer Pension Plan Amendments Act of 1980, a 
multiemployer plan may irrevocably elect, pursuant to 
procedures established by the corporation and subject to the 
provisions of sections 4403(b) and (c), that the plan shall not 
be treated as a multiemployer plan for all purposes under this 
Act or the Internal Revenue Code of 1954 if for each of the 
last 3 plan years ending prior to the effective date of the 
Multiemployer Pension Plan Amendments Act of 1980--
          (i) the plan was not a multiemployer plan because the 
        plan was not a plan described in section 3(37)(A)(iii) 
        of this Act and section 414(f)(1)(C) of the Internal 
        Revenue Code of 1954 (as such provisions were in effect 
        on the day before the date of the enactment of the 
        Multiemployer Pension Plan Amendments Act of 1980 ); 
        and
          (ii) the plan had been identified as a plan that was 
        not a multiemployer plan in substantially all its 
        filings with the corporation, the Secretary of Labor 
        and the Secretary of the Treasury.
  (F)(i) For purposes of this title a qualified football 
coaches plan--
          (I) shall be treated as a multiemployer plan to the 
        extent not inconsistent with the purposes of this 
        subparagraph; and
          (II) notwithstanding section 401(k)(4)(B) of the 
        Internal Revenue Code of 1986, may include a qualified 
        cash and deferred arrangement.
  (ii) For purposes of this subparagraph, the term ``qualified 
football coaches plan'' means any defined contribution plan 
which is established and maintained by an organization--
          (I) which is described in section 501(c) of such 
        Code;
          (II) the membership of which consists entirely of 
        individuals who primarily coach football as full-time 
        employees of 4-year colleges or universities described 
        in section 170(b)(1)(A)(ii) of such Code; and
          (III) which was in existence on September 18, 1986.
          (G)(i) Within 1 year after the enactment of the 
        Pension Protection Act of 2006--
                  (I) an election under subparagraph (E) may be 
                revoked, pursuant to procedures prescribed by 
                the Pension Benefit Guaranty Corporation, if, 
                for each of the 3 plan years prior to the date 
                of the enactment of that Act, the plan would 
                have been a multiemployer plan but for the 
                election under subparagraph (E), and
                  (II) a plan that meets the criteria in 
                clauses (i) and (ii) of subparagraph (A) of 
                this paragraph or that is described in clause 
                (vi) may, pursuant to procedures prescribed by 
                the Pension Benefit Guaranty Corporation, elect 
                to be a multiemployer plan, if--
                          (aa) for each of the 3 plan years 
                        immediately preceding the first plan 
                        year for which the election under this 
                        paragraph is effective with respect to 
                        the plan, the plan has met those 
                        criteria or is so described,
                          (bb) substantially all of the plan's 
                        employer contributions for each of 
                        those plan years were made or required 
                        to be made by organizations that were 
                        exempt from tax under section 501 of 
                        the Internal Revenue Code of 1986, and
                          (cc) the plan was established prior 
                        to September 2, 1974.
          (ii) An election under this subparagraph shall be 
        effective for all purposes under this Act and under the 
        Internal Revenue Code of 1986, starting with any plan 
        year beginning on or after January 1, 1999, and ending 
        before January 1, 2008, as designated by the plan in 
        the election made under clause (i)(II).
          (iii) Once made, an election under this subparagraph 
        shall be irrevocable, except that a plan described in 
        clause (i)(II) shall cease to be a multiemployer plan 
        as of the plan year beginning immediately after the 
        first plan year for which the majority of its employer 
        contributions were made or required to be made by 
        organizations that were not exempt from tax under 
        section 501 of the Internal Revenue Code of 1986.
          (iv) The fact that a plan makes an election under 
        clause (i)(II) does not imply that the plan was not a 
        multiemployer plan prior to the date of the election or 
        would not be a multiemployer plan without regard to the 
        election.
          (v)(I) No later than 30 days before an election is 
        made under this subparagraph, the plan administrator 
        shall provide notice of the pending election to each 
        plan participant and beneficiary, each labor 
        organization representing such participants or 
        beneficiaries, and each employer that has an obligation 
        to contribute to the plan, describing the principal 
        differences between the guarantee programs under title 
        IV and the benefit restrictions under this title for 
        single employer and multiemployer plans, along with 
        such other information as the plan administrator 
        chooses to include.
          (II) Within 180 days after the date of enactment of 
        the Pension Protection Act of 2006, the Secretary shall 
        prescribe a model notice under this clause.
          (III) A plan administrator's failure to provide the 
        notice required under this subparagraph shall be 
        treated for purposes of section 502(c)(2) as a failure 
        or refusal by the plan administrator to file the annual 
        report required to be filed with the Secretary under 
        section 101(b)(1).
          (vi) A plan is described in this clause if it is a 
        plan sponsored by an organization which is described in 
        section 501(c)(5) of the Internal Revenue Code of 1986 
        and exempt from tax under section 501(a) of such Code 
        and which was established in Chicago, Illinois, on 
        August 12, 1881.
  (vii) For purposes of this Act and the Internal Revenue Code 
of 1986, a plan making an election under this subparagraph 
shall be treated as maintained pursuant to a collective 
bargaining agreement if a collective bargaining agreement, 
expressly or otherwise, provides for or permits employer 
contributions to the plan by one or more employers that are 
signatory to such agreement, or participation in the plan by 
one or more employees of an employer that is signatory to such 
agreement, regardless of whether the plan was created, 
established, or maintained for such employees by virtue of 
another document that is not a collective bargaining agreement.
  (38) The term ``investment manager'' means any fiduciary 
(other than a trustee or named fiduciary, as defined in section 
402(a)(2))--
          (A) who has the power to manage, acquire, or dispose 
        of any asset of a plan;
          (B) who (i) is registered as an investment adviser 
        under the Investment Advisers Act of 1940; (ii) is not 
        registered as an investment adviser under such Act by 
        reason of paragraph (1) of section 203A(a) of such Act, 
        is registered as an investment adviser under the laws 
        of the State (referred to in such paragraph (1)) in 
        which it 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 a bank, 
        as defined in that Act; or (iv) is an insurance company 
        qualified to perform services described in subparagraph 
        (A) under the laws of more than one State; and
          (C) has acknowledged in writing that he is a 
        fiduciary with respect to the plan.
  (39) The terms ``plan year'' and ``fiscal year of the plan'' 
mean, with respect to a plan, the calendar, policy, or fiscal 
year on which the records of the plan are kept.
  (40)(A) The term ``multiple employer welfare arrangement'' 
means an employee welfare benefit plan, or any other 
arrangement (other than an employee welfare benefit plan), 
which is established or maintained for the purpose of offering 
or providing any benefit described in paragraph (1) to the 
employees of two or more employers (including one or more self-
employed individuals), or to their beneficiaries, except that 
such term does not include any such plan or other arrangement 
which is established or maintained--
          (i) under or pursuant to one or more agreements which 
        the Secretary finds to be collective bargaining 
        agreements,
          (ii) by a rural electric cooperative, or
          (iii) by a rural telephone cooperative association.
  (B) For purposes of this paragraph--
          (i) two or more trades or businesses, whether or not 
        incorporated, shall be deemed a single employer if such 
        trades or businesses are within the same control group,
          (ii) the term ``control group'' means a group of 
        trades or businesses under common control,
          (iii) the determination of whether a trade or 
        business is under ``common control'' with another trade 
        or business shall be determined under regulations of 
        the Secretary applying principles similar to the 
        principles applied in determining whether employees of 
        two or more trades or businesses are treated as 
        employed by a single employer under section 4001(b), 
        except that, for purposes of this paragraph, common 
        control shall not be based on an interest of less than 
        25 percent,
          (iv) the term ``rural electric cooperative'' means--
                  (I) any organization which is exempt from tax 
                under section 501(a) of the Internal Revenue 
                Code of 1986 and which is engaged primarily in 
                providing electric service on a mutual or 
                cooperative basis, and
                  (II) any organization described in paragraph 
                (4) or (6) of section 501(c) of the Internal 
                Revenue Code of 1986 which is exempt from tax 
                under section 501(a) of such Code and at least 
                80 percent of the members of which are 
                organizations described in subclause (I), and
          (v) the term ``rural telephone cooperative 
        association'' means an organization described in 
        paragraph (4) or (6) of section 501(c) of the Internal 
        Revenue Code of 1986 which is exempt from tax under 
        section 501(a) of such Code and at least 80 percent of 
        the members of which are organizations engaged 
        primarily in providing telephone service to rural areas 
        of the United States on a mutual, cooperative, or other 
        basis.
  (41) Single-employer plan.--The term ``single-employer plan'' 
means an employee benefit plan other than a multiemployer plan.
  (42) the term ``plan assets'' means plan assets as defined by 
such regulations as the Secretary may prescribe, except that 
under such regulations the assets of any entity shall not be 
treated as plan assets if, immediately after the most recent 
acquisition of any equity interest in the entity, less than 25 
percent of the total value of each class of equity interest in 
the entity is held by benefit plan investors. For purposes of 
determinations pursuant to this paragraph, the value of any 
equity interest held by a person (other than such a benefit 
plan investor) who has discretionary authority or control with 
respect to the assets of the entity or any person who provides 
investment advice for a fee (direct or indirect) with respect 
to such assets, or any affiliate of such a person, shall be 
disregarded for purposes of calculating the 25 percent 
threshold. An entity shall be considered to hold plan assets 
only to the extent of the percentage of the equity interest 
held by benefit plan investors. For purposes of this paragraph, 
the term ``benefit plan investor'' means an employee benefit 
plan subject to part 4, any plan to which section 4975 of the 
Internal Revenue Code of 1986 applies, and any entity whose 
underlying assets include plan assets by reason of a plan's 
investment in such entity.
          (43) Pooled employer plan.--
                  (A) In general.--The term ``pooled employer 
                plan'' means a plan--
                          (i) which is an individual account 
                        plan established or maintained for the 
                        purpose of providing benefits to the 
                        employees of 2 or more employers;
                          (ii) which is a plan described in 
                        section 401(a) of the Internal Revenue 
                        Code of 1986 which includes a trust 
                        exempt from tax under section 501(a) of 
                        such Code, a plan that consists of 
                        annuity contracts described in section 
                        403(b) of such Code, or a plan that 
                        consists of individual retirement 
                        accounts described in section 408 of 
                        such Code (including by reason of 
                        subsection (c) thereof); and
                          (iii) the terms of which meet the 
                        requirements of subparagraph (B).
                Such term shall not include a plan maintained 
                by employers which have a common interest other 
                than having adopted the plan, but such term 
                shall include any plan (other than a plan 
                excepted from the application of this title by 
                section 4(b)(2)) maintained for the benefit of 
                the employees of more than 1 employer that 
                consists of annuity contracts described in 
                section 403(b) of such Code and that meets the 
                requirements of subparagraph (B) of section 
                413(e)(1) of such Code.
                  (B) Requirements for plan terms.--The 
                requirements of this subparagraph are met with 
                respect to any plan if the terms of the plan--
                          (i) designate a pooled plan provider 
                        and provide that the pooled plan 
                        provider is a named fiduciary of the 
                        plan;
                          (ii) designate a named fiduciary 
                        (other than an employer in the plan) to 
                        be responsible for collecting 
                        contributions to the plan and require 
                        such fiduciary to implement written 
                        contribution collection procedures that 
                        are reasonable, diligent, and 
                        systematic;
                          (iii) provide that each employer in 
                        the plan retains fiduciary 
                        responsibility for--
                                  (I) the selection and 
                                monitoring in accordance with 
                                section 404(a) of the person 
                                designated as the pooled plan 
                                provider and any other person 
                                who, in addition to the pooled 
                                plan provider, is designated as 
                                a named fiduciary of the plan; 
                                and
                                  (II) to the extent not 
                                otherwise delegated to another 
                                fiduciary by the pooled plan 
                                provider and subject to the 
                                provisions of section 404(c), 
                                the investment and management 
                                of the portion of the plan's 
                                assets attributable to the 
                                employees of the employer (or 
                                beneficiaries of such 
                                employees);
                          (iv) provide that employers in the 
                        plan, and participants and 
                        beneficiaries, are not subject to 
                        unreasonable restrictions, fees, or 
                        penalties with regard to ceasing 
                        participation, receipt of 
                        distributions, or otherwise 
                        transferring assets of the plan in 
                        accordance with section 208 or 
                        paragraph (44)(C)(i)(II);
                          (v) require--
                                  (I) the pooled plan provider 
                                to provide to employers in the 
                                plan any disclosures or other 
                                information which the Secretary 
                                may require, including any 
                                disclosures or other 
                                information to facilitate the 
                                selection or any monitoring of 
                                the pooled plan provider by 
                                employers in the plan; and
                                  (II) each employer in the 
                                plan to take such actions as 
                                the Secretary or the pooled 
                                plan provider determines are 
                                necessary to administer the 
                                plan or for the plan to meet 
                                any requirement applicable 
                                under this Act or the Internal 
                                Revenue Code of 1986 to a plan 
                                described in section 401(a) of 
                                such Code, a plan that consists 
                                of annuity contracts described 
                                in section 403(b) of such Code, 
                                or to a plan that consists of 
                                individual retirement accounts 
                                described in section 408 of 
                                such Code (including by reason 
                                of subsection (c) thereof), 
                                whichever is applicable, 
                                including providing any 
                                disclosures or other 
                                information which the Secretary 
                                may require or which the pooled 
                                plan provider otherwise 
                                determines are necessary to 
                                administer the plan or to allow 
                                the plan to meet such 
                                requirements; and
                          (vi) provide that any disclosure or 
                        other information required to be 
                        provided under clause (v) may be 
                        provided in electronic form and will be 
                        designed to ensure only reasonable 
                        costs are imposed on pooled plan 
                        providers and employers in the plan.
                  (C) Exceptions.--The term ``pooled employer 
                plan'' does not include--
                          (i) a multiemployer plan; or
                          (ii) a plan established before the 
                        date of the enactment of the Setting 
                        Every Community Up for Retirement 
                        Enhancement Act of 2019 unless the plan 
                        administrator elects that the plan will 
                        be treated as a pooled employer plan 
                        and the plan meets the requirements of 
                        this title applicable to a pooled 
                        employer plan established on or after 
                        such date.
                  (D) Treatment of employers as plan 
                sponsors.--Except with respect to the 
                administrative duties of the pooled plan 
                provider described in paragraph (44)(A)(i), 
                each employer in a pooled employer plan shall 
                be treated as the plan sponsor with respect to 
                the portion of the plan attributable to 
                employees of such employer (or beneficiaries of 
                such employees).
          (44) Pooled plan provider.--
                  (A) In general.--The term ``pooled plan 
                provider'' means a person who--
                          (i) is designated by the terms of a 
                        pooled employer plan as a named 
                        fiduciary, as the plan administrator, 
                        and as the person responsible for the 
                        performance of all administrative 
                        duties (including conducting proper 
                        testing with respect to the plan and 
                        the employees of each employer in the 
                        plan) which are reasonably necessary to 
                        ensure that--
                                  (I) the plan meets any 
                                requirement applicable under 
                                this Act or the Internal 
                                Revenue Code of 1986 to a plan 
                                described in section 401(a) of 
                                such Code, a plan that consists 
                                of annuity contracts described 
                                in section 403(b) of such Code, 
                                or to a plan that consists of 
                                individual retirement accounts 
                                described in section 408 of 
                                such Code (including by reason 
                                of subsection (c) thereof), 
                                whichever is applicable; and
                                  (II) each employer in the 
                                plan takes such actions as the 
                                Secretary or pooled plan 
                                provider determines are 
                                necessary for the plan to meet 
                                the requirements described in 
                                subclause (I), including 
                                providing the disclosures and 
                                information described in 
                                paragraph (43)(B)(v)(II);
                          (ii) registers as a pooled plan 
                        provider with the Secretary, and 
                        provides to the Secretary such other 
                        information as the Secretary may 
                        require, before beginning operations as 
                        a pooled plan provider;
                          (iii) acknowledges in writing that 
                        such person is a named fiduciary, and 
                        the plan administrator, with respect to 
                        the pooled employer plan; and
                          (iv) is responsible for ensuring that 
                        all persons who handle assets of, or 
                        who are fiduciaries of, the pooled 
                        employer plan are bonded in accordance 
                        with section 412.
                  (B) Audits, examinations and 
                investigations.--The Secretary may perform 
                audits, examinations, and investigations of 
                pooled plan providers as may be necessary to 
                enforce and carry out the purposes of this 
                paragraph and paragraph (43).
                  (C) Guidance.--The Secretary shall issue such 
                guidance as the Secretary determines 
                appropriate to carry out this paragraph and 
                paragraph (43), including guidance--
                          (i) to identify the administrative 
                        duties and other actions required to be 
                        performed by a pooled plan provider 
                        under either such paragraph; and
                          (ii) which requires in appropriate 
                        cases that if an employer in the plan 
                        fails to take the actions required 
                        under subparagraph (A)(i)(II)--
                                  (I) the assets of the plan 
                                attributable to employees of 
                                such employer (or beneficiaries 
                                of such employees) are 
                                transferred to a plan 
                                maintained only by such 
                                employer (or its successor), to 
                                an eligible retirement plan as 
                                defined in section 402(c)(8)(B) 
                                of the Internal Revenue Code of 
                                1986 for each individual whose 
                                account is transferred, or to 
                                any other arrangement that the 
                                Secretary determines is 
                                appropriate in such guidance; 
                                and
                                  (II) such employer (and not 
                                the plan with respect to which 
                                the failure occurred or any 
                                other employer in such plan) 
                                shall, except to the extent 
                                provided in such guidance, be 
                                liable for any liabilities with 
                                respect to such plan 
                                attributable to employees of 
                                such employer (or beneficiaries 
                                of such employees).
                        The Secretary shall take into account 
                        under clause (ii) whether the failure 
                        of an employer or pooled plan provider 
                        to provide any disclosures or other 
                        information, or to take any other 
                        action, necessary to administer a plan 
                        or to allow a plan to meet requirements 
                        described in subparagraph (A)(i)(II) 
                        has continued over a period of time 
                        that demonstrates a lack of commitment 
                        to compliance. The Secretary may waive 
                        the requirements of subclause (ii)(I) 
                        in appropriate circumstances if the 
                        Secretary determines it is in the best 
                        interests of the employees of the 
                        employer referred to in such clause 
                        (and the beneficiaries of such 
                        employees) to retain the assets in the 
                        plan with respect to which the 
                        employer's failure occurred.
                  (D) Good faith compliance with law before 
                guidance.--An employer or pooled plan provider 
                shall not be treated as failing to meet a 
                requirement of guidance issued by the Secretary 
                under subparagraph (C) if, before the issuance 
                of such guidance, the employer or pooled plan 
                provider complies in good faith with a 
                reasonable interpretation of the provisions of 
                this paragraph, or paragraph (43), to which 
                such guidance relates.
                  (E) Aggregation rules.--For purposes of this 
                paragraph, in determining whether a person 
                meets the requirements of this paragraph to be 
                a pooled plan provider with respect to any 
                plan, all persons who perform services for the 
                plan and who are treated as a single employer 
                under subsection (b), (c), (m), or (o) of 
                section 414 of the Internal Revenue Code of 
                1986 shall be treated as one person.
          (45) Pension-linked emergency savings account.--The 
        term ``pension-linked emergency savings account'' means 
        a short-term savings account established and maintained 
        as part of an individual account plan, in accordance 
        with section 801, on behalf of an eligible participant 
        (as such term is defined in section 801(b)) that--
                  (A) is a designated Roth account (within the 
                meaning of section 402A of the Internal Revenue 
                Code of 1986) and accepts only participant 
                contributions, as described in section 
                801(d)(1)(A), which are designated Roth 
                contributions subject to the rules of section 
                402A(e) of such Code; and
                  (B) meets the requirements of part 8 of 
                subtitle B.
          (46) Designated investment alternative.--
                  (A) In general.--The term ``designated 
                investment alternative'' means any investment 
                alternative designated by a responsible 
                fiduciary of an individual account plan 
                described in subsection 404(c) into which 
                participants and beneficiaries may direct the 
                investment of assets held in, or contributed 
                to, their individual accounts.
                  (B) Exception.--The term ``designated 
                investment alternative'' does not include 
                brokerage windows, self-directed brokerage 
                accounts, or similar plan arrangements that 
                enable participants and beneficiaries to select 
                investments beyond those designated by a 
                responsible plan fiduciary.

           *       *       *       *       *       *       *


Subtitle B--Regulatory Provisions

           *       *       *       *       *       *       *



Part 4--Fiduciary Responsibility

           *       *       *       *       *       *       *



                            FIDUCIARY DUTIES

  Sec. 404. (a)(1) Subject to sections 403(c) and (d), 4042, 
and 4044, a fiduciary shall discharge his duties with respect 
to a plan solely in the interest of the participants and 
beneficiaries and--
          (A) for the exclusive purpose of:
                  (i) providing benefits to participants and 
                their beneficiaries; and
                  (ii) defraying reasonable expenses of 
                administering the plan;
          (B) with the care, skill, prudence, and diligence 
        under the circumstances then prevailing that a prudent 
        man acting in a like capacity and familiar with such 
        matters would use in the conduct of an enterprise of a 
        like character and with like aims;
          (C) by diversifying the investments of the plan so as 
        to minimize the risk of large losses, unless under the 
        circumstances it is clearly prudent not to do so; and
          (D) in accordance with the documents and instruments 
        governing the plan insofar as such documents and 
        instruments are consistent with the provisions of this 
        title and title IV.
  (2) In the case of an eligible individual account plan (as 
defined in section 407(d)(3)), the diversification requirement 
of paragraph (1)(C) and the prudence requirement (only to the 
extent that it requires diversification) of paragraph (1)(B) is 
not violated by acquisition or holding of qualifying employer 
real property or qualifying employer securities (as defined in 
section 407(d)(4) and (5)).
  (b) Except as authorized by the Secretary by regulation, no 
fiduciary may maintain the indicia of ownership of any assets 
of a plan outside the jurisdiction of the district courts of 
the United States.
  (c)(1)(A) In the case of a pension plan which provides for 
individual accounts and permits a participant or beneficiary to 
exercise control over assets in his account, if a participant 
or beneficiary exercises control over the assets in his account 
(as determined under regulations of the Secretary)--
          (i) such participant or beneficiary shall not be 
        deemed to be a fiduciary by reason of such exercise, 
        and
          (ii) no person who is otherwise a fiduciary shall be 
        liable under this part for any loss, or by reason of 
        any breach, which results from such participant's or 
        beneficiary's exercise of control, except that this 
        clause shall not apply in connection with such 
        participant or beneficiary for any blackout period 
        during which the ability of such participant or 
        beneficiary to direct the investment of the assets in 
        his or her account is suspended by a plan sponsor or 
        fiduciary.
  (B) If a person referred to in subparagraph (A)(ii) meets the 
requirements of this title in connection with authorizing and 
implementing the blackout period, any person who is otherwise a 
fiduciary shall not be liable under this title for any loss 
occurring during such period.
  (C) For purposes of this paragraph, the term ``blackout 
period'' has the meaning given such term by section 101(i)(7).
          (2) In the case of a simple retirement account 
        established pursuant to a qualified salary reduction 
        arrangement under section 408(p) of the Internal 
        Revenue Code of 1986, a participant or beneficiary 
        shall, for purposes of paragraph (1), be treated as 
        exercising control over the assets in the account upon 
        the earliest of--
                  (A) an affirmative election among investment 
                options with respect to the initial investment 
                of any contribution,
                  (B) a rollover to any other simple retirement 
                account or individual retirement plan, or
                  (C) one year after the simple retirement 
                account is established.
        No reports, other than those required under section 
        101(g), shall be required with respect to a simple 
        retirement account established pursuant to such a 
        qualified salary reduction arrangement.
          (3) In the case of a pension plan which makes a 
        transfer to an individual retirement account or annuity 
        of a designated trustee or issuer under section 
        401(a)(31)(B) of the Internal Revenue Code of 1986, the 
        participant or beneficiary shall, for purposes of 
        paragraph (1), be treated as exercising control over 
        the assets in the account or annuity upon--
                  (A) the earlier of--
                          (i) a rollover of all or a portion of 
                        the amount to another individual 
                        retirement account or annuity; or
                          (ii) one year after the transfer is 
                        made; or
                  (B) a transfer that is made in a manner 
                consistent with guidance provided by the 
                Secretary.
          (4)(A) In any case in which a qualified change in 
        investment options occurs in connection with an 
        individual account plan, a participant or beneficiary 
        shall not be treated for purposes of paragraph (1) as 
        not exercising control over the assets in his account 
        in connection with such change if the requirements of 
        subparagraph (C) are met in connection with such 
        change.
          (B) For purposes of subparagraph (A), the term 
        ``qualified change in investment options'' means, in 
        connection with an individual account plan, a change in 
        the investment options offered to the participant or 
        beneficiary under the terms of the plan, under which--
                  (i) the account of the participant or 
                beneficiary is reallocated among one or more 
                remaining or new investment options which are 
                offered in lieu of one or more investment 
                options offered immediately prior to the 
                effective date of the change, and
                  (ii) the stated characteristics of the 
                remaining or new investment options provided 
                under clause (i), including characteristics 
                relating to risk and rate of return, are, as of 
                immediately after the change, reasonably 
                similar to those of the existing investment 
                options as of immediately before the change.
          (C) The requirements of this subparagraph are met in 
        connection with a qualified change in investment 
        options if--
                  (i) at least 30 days and no more than 60 days 
                prior to the effective date of the change, the 
                plan administrator furnishes written notice of 
                the change to the participants and 
                beneficiaries, including information comparing 
                the existing and new investment options and an 
                explanation that, in the absence of affirmative 
                investment instructions from the participant or 
                beneficiary to the contrary, the account of the 
                participant or beneficiary will be invested in 
                the manner described in subparagraph (B),
                  (ii) the participant or beneficiary has not 
                provided to the plan administrator, in advance 
                of the effective date of the change, 
                affirmative investment instructions contrary to 
                the change, and
                  (iii) the investments under the plan of the 
                participant or beneficiary as in effect 
                immediately prior to the effective date of the 
                change were the product of the exercise by such 
                participant or beneficiary of control over the 
                assets of the account within the meaning of 
                paragraph (1).
          (5) Default investment arrangements.--
                  (A) In general.--For purposes of paragraph 
                (1), a participant or beneficiary in an 
                individual account plan meeting the notice 
                requirements of subparagraph (B) shall be 
                treated as exercising control over the assets 
                in the account with respect to the amount of 
                contributions and earnings which, in the 
                absence of an investment election by the 
                participant or beneficiary, are invested by the 
                plan in accordance with regulations prescribed 
                by the Secretary. The regulations under this 
                subparagraph shall provide guidance on the 
                appropriateness of designating default 
                investments that include a mix of asset classes 
                consistent with capital preservation or long-
                term capital appreciation, or a blend of both.
                  (B) Notice requirements.--
                          (i) In general.--The requirements of 
                        this subparagraph are met if each 
                        participant or beneficiary--
                                  (I) receives, within a 
                                reasonable period of time 
                                before each plan year, a notice 
                                explaining the employee's right 
                                under the plan to designate how 
                                contributions and earnings will 
                                be invested and explaining how, 
                                in the absence of any 
                                investment election by the 
                                participant or beneficiary, 
                                such contributions and earnings 
                                will be invested, and
                                  (II) has a reasonable period 
                                of time after receipt of such 
                                notice and before the beginning 
                                of the plan year to make such 
                                designation.
                          (ii) Form of notice.--The 
                        requirements of clauses (i) and (ii) of 
                        section 401(k)(12)(D) of the Internal 
                        Revenue Code of 1986 shall apply with 
                        respect to the notices described in 
                        this subparagraph.
          (6) Default investment arrangements for a pension-
        linked emergency savings account.--For purposes of 
        paragraph (1), a participant in a pension-linked 
        emergency savings account shall be treated as 
        exercising control over the assets in the account with 
        respect to the amount of contributions and earnings 
        which are invested in accordance with section 
        801(c)(1)(A)(iii).
          (7) Notice requirements for brokerage windows.--
                  (A) In general.--In the case of a pension 
                plan which provides for individual accounts and 
                which provides a participant or beneficiary the 
                opportunity to choose from designated 
                investment alternatives, a participant or 
                beneficiary shall not be treated as exercising 
                control over assets in the account of the 
                participant or beneficiary unless, with respect 
                to any investment arrangement that is not a 
                designated investment alternative, each time 
                before such a participant or beneficiary 
                directs an investment into, out of, or within 
                such investment arrangement, such participant 
                is notified of, and acknowledges, each element 
                of the notice described under paragraph (B).
                  (B) Notice.--The notice described under this 
                paragraph is a four part information that is 
                substantially similar to the following 
                information:

 
1. Your retirement plan offers designated investment alternatives prudently selected and monitored by
 fiduciaries for the purpose of enabling you to construct an appropriate retirement savings portfolio. In
 selecting and monitoring designated investment alternatives, your plan's fiduciary considers the risk of loss
 and the opportunity for gain (or other return) compared with reasonably available investment alternatives.
2. The investments available through this investment arrangement are not designated investment alternatives, and
 have not been prudently selected and are not monitored by a plan fiduciary.
3. Depending on the investments you select through this investment arrangement, you may experience diminished
 returns, higher fees, and higher risk than if you select from the plan's designated investment alternatives.
4. The following is a hypothetical illustration of the impact of return at 4 percent, 6 percent, and 8 percent
 on your account balance projected to age 67.

                  (C) Illustration.--The notice described under 
                paragraph (B) shall also include a graph 
                displaying the projected retirement balances of 
                such participant or beneficiary at age 67 if 
                the account of such individual were to achieve 
                an annual return equal to each of the 
                following:
                          (i) 4 percent.
                          (ii) 6 percent.
                          (iii) 8 percent.
  (d)(1) If, in connection with the termination of a pension 
plan which is a single-employer plan, there is an election to 
establish or maintain a qualified replacement plan, or to 
increase benefits, as provided under section 4980(d) of the 
Internal Revenue Code of 1986, a fiduciary shall discharge the 
fiduciary's duties under this title and title IV in accordance 
with the following requirements:
          (A) In the case of a fiduciary of the terminated 
        plan, any requirement--
                  (i) under section 4980(d)(2)(B) of such Code 
                with respect to the transfer of assets from the 
                terminated plan to a qualified replacement 
                plan, and
                  (ii) under section 4980(d)(2)(B)(ii) or 
                4980(d)(3) of such Code with respect to any 
                increase in benefits under the terminated plan.
          (B) In the case of a fiduciary of a qualified 
        replacement plan, any requirement--
                  (i) under section 4980(d)(2)(A) of such Code 
                with respect to participation in the qualified 
                replacement plan of active participants in the 
                terminated plan,
                  (ii) under section 4980(d)(2)(B) of such Code 
                with respect to the receipt of assets from the 
                terminated plan, and
                  (iii) under section 4980(d)(2)(C) of such 
                Code with respect to the allocation of assets 
                to participants of the qualified replacement 
                plan.
  (2) For purposes of this subsection--
          (A) any term used in this subsection which is also 
        used in section 4980(d) of the Internal Revenue Code of 
        1986 shall have the same meaning as when used in such 
        section, and
          (B) any reference in this subsection to the Internal 
        Revenue Code of 1986 shall be a reference to such Code 
        as in effect immediately after the enactment of the 
        Omnibus Budget Reconciliation Act of 1990.
  (e) Safe Harbor for Annuity Selection.--
          (1) In general.--With respect to the selection of an 
        insurer for a guaranteed retirement income contract, 
        the requirements of subsection (a)(1)(B) will be deemed 
        to be satisfied if a fiduciary--
                  (A) engages in an objective, thorough, and 
                analytical search for the purpose of 
                identifying insurers from which to purchase 
                such contracts;
                  (B) with respect to each insurer identified 
                under subparagraph (A)--
                          (i) considers the financial 
                        capability of such insurer to satisfy 
                        its obligations under the guaranteed 
                        retirement income contract; and
                          (ii) considers the cost (including 
                        fees and commissions) of the guaranteed 
                        retirement income contract offered by 
                        the insurer in relation to the benefits 
                        and product features of the contract 
                        and administrative services to be 
                        provided under such contract; and
                  (C) on the basis of such consideration, 
                concludes that--
                          (i) at the time of the selection, the 
                        insurer is financially capable of 
                        satisfying its obligations under the 
                        guaranteed retirement income contract; 
                        and
                          (ii) the relative cost of the 
                        selected guaranteed retirement income 
                        contract as described in subparagraph 
                        (B)(ii) is reasonable.
          (2) Financial capability of the insurer.--A fiduciary 
        will be deemed to satisfy the requirements of 
        paragraphs (1)(B)(i) and (1)(C)(i) if--
                  (A) the fiduciary obtains written 
                representations from the insurer that--
                          (i) the insurer is licensed to offer 
                        guaranteed retirement income contracts;
                          (ii) the insurer, at the time of 
                        selection and for each of the 
                        immediately preceding 7 plan years--
                                  (I) operates under a 
                                certificate of authority from 
                                the insurance commissioner of 
                                its domiciliary State which has 
                                not been revoked or suspended;
                                  (II) has filed audited 
                                financial statements in 
                                accordance with the laws of its 
                                domiciliary State under 
                                applicable statutory accounting 
                                principles;
                                  (III) maintains (and has 
                                maintained) reserves which 
                                satisfies all the statutory 
                                requirements of all States 
                                where the insurer does 
                                business; and
                                  (IV) is not operating under 
                                an order of supervision, 
                                rehabilitation, or liquidation;
                          (iii) the insurer undergoes, at least 
                        every 5 years, a financial examination 
                        (within the meaning of the law of its 
                        domiciliary State) by the insurance 
                        commissioner of the domiciliary State 
                        (or representative, designee, or other 
                        party approved by such commissioner); 
                        and
                          (iv) the insurer will notify the 
                        fiduciary of any change in 
                        circumstances occurring after the 
                        provision of the representations in 
                        clauses (i), (ii), and (iii) which 
                        would preclude the insurer from making 
                        such representations at the time of 
                        issuance of the guaranteed retirement 
                        income contract; and
                  (B) after receiving such representations and 
                as of the time of selection, the fiduciary has 
                not received any notice described in 
                subparagraph (A)(iv) and is in possession of no 
                other information which would cause the 
                fiduciary to question the representations 
                provided.
          (3) No requirement to select lowest cost.--Nothing in 
        this subsection shall be construed to require a 
        fiduciary to select the lowest cost contract. A 
        fiduciary may consider the value of a contract, 
        including features and benefits of the contract and 
        attributes of the insurer (including, without 
        limitation, the insurer's financial strength) in 
        conjunction with the cost of the contract.
          (4) Time of selection.--
                  (A) In general.--For purposes of this 
                subsection, the time of selection is--
                          (i) the time that the insurer and the 
                        contract are selected for distribution 
                        of benefits to a specific participant 
                        or beneficiary; or
                          (ii) if the fiduciary periodically 
                        reviews the continuing appropriateness 
                        of the conclusion described in 
                        paragraph (1)(C) with respect to a 
                        selected insurer, taking into account 
                        the considerations described in such 
                        paragraph, the time that the insurer 
                        and the contract are selected to 
                        provide benefits at future dates to 
                        participants or beneficiaries under the 
                        plan.
                Nothing in the preceding sentence shall be 
                construed to require the fiduciary to review 
                the appropriateness of a selection after the 
                purchase of a contract for a participant or 
                beneficiary.
                  (B) Periodic review.--A fiduciary will be 
                deemed to have conducted the periodic review 
                described in subparagraph (A)(ii) if the 
                fiduciary obtains the written representations 
                described in clauses (i), (ii), and (iii) of 
                paragraph (2)(A) from the insurer on an annual 
                basis, unless the fiduciary receives any notice 
                described in paragraph (2)(A)(iv) or otherwise 
                becomes aware of facts that would cause the 
                fiduciary to question such representations.
          (5) Limited liability.--A fiduciary which satisfies 
        the requirements of this subsection shall not be liable 
        following the distribution of any benefit, or the 
        investment by or on behalf of a participant or 
        beneficiary pursuant to the selected guaranteed 
        retirement income contract, for any losses that may 
        result to the participant or beneficiary due to an 
        insurer's inability to satisfy its financial 
        obligations under the terms of such contract.
          (6) Definitions.--For purposes of this subsection--
                  (A) Insurer.--The term ``insurer'' means an 
                insurance company, insurance service, or 
                insurance organization, including affiliates of 
                such companies.
                  (B) Guaranteed retirement income contract.--
                The term ``guaranteed retirement income 
                contract'' means an annuity contract for a 
                fixed term or a contract (or provision or 
                feature thereof) which provides guaranteed 
                benefits annually (or more frequently) for at 
                least the remainder of the life of the 
                participant or the joint lives of the 
                participant and the participant's designated 
                beneficiary as part of an individual account 
                plan.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

                              INTRODUCTION

    H.R. 5340, the Providing Complete Information to Retirement 
Investors Act, amends the Employee Retirement Income Security 
Act of 1974 (ERISA) to require a notice be sent to retirement 
plan participants when they make certain investments. In 
general, Committee Democrats strongly support ensuring workers 
receive appropriate notices and disclosures regarding their 
retirement savings, particularly with respect to fees on 
investments. However, H.R. 5340 is not focused on that 
worthwhile goal. Lacking a policy rationale, the bill exists 
only to perpetuate House Republicans' curious and misguided 
agenda against environmental, social, and governance (ESG) 
investing. H.R. 5340 is opposed by organizations such as the 
AFL-CIO, Americans for Financial Reform, and US SIF: The Forum 
for Sustainable and Responsible Investment (US SIF).

             H.R. 5340 IS A SOLUTION IN SEARCH OF A PROBLEM

    A brokerage window is a feature of defined contribution 
(DC) plans, such as 401(k)s, that allows retirement plan 
participants to invest in a broader array of investments than 
the designated investment alternative options selected by the 
plan fiduciaries. A range of investment products can be offered 
in the brokerage window. Such products can include mutual 
funds, exchange-traded funds (ETF), and, in some cases, 
individual stocks and bonds. Of the mutual funds that may be 
offered, some may be ESG-themed funds--which is the clear 
target of H.R. 5340--but other themed investment funds, such as 
religious-based funds, could be implicated. Fewer than one-
third of plans offer a brokerage window, and roughly two 
percent of plan participants with access to one chose to use 
it.\1\ The average brokerage window account balance exceeds 
$334,000--which is far greater than what many Americans have 
saved in their DC plans.\2\
---------------------------------------------------------------------------
    \1\Advisory Council on Employee Welfare & Pension Benefit Plan, 
Report to the Hon. Secretary Walsh, United States Sec. of Labor, 
Understanding Brokerage Windows in Self-Directed Retirement Plans, 
[hereinafter ``Council Report'']. https://www.dol.gov/sites/dolgov/
files/EBSA/about-ebsa/about-us/erisa-advisory-council/2021-
understanding-brokerage-windows-in-self-directed-
retirement-plans.pdf.
    \2\Id. at 23.
---------------------------------------------------------------------------
    Committee Democrats are currently not aware of any recent 
Department of Labor (DOL) enforcement actions targeting 
brokerage windows. Enforcement actions might have evidenced the 
need for greater transparency around brokerage window 
investments or additional protections for participants who use 
them. Moreover, in 2021, the Advisory Council on Employee 
Welfare and Pension Benefit Plans, which is usually referred to 
as the ERISA Advisory Council (Council), examined brokerage 
windows.\3\ The purpose of this examination was to ``gain a 
better understanding of their prevalence usages, and 
implementation.''\4\ The Council ``considered and debated at 
length'' whether additional disclosures were warranted for 
participants who invest through a brokerage window.\5\ Most 
Council members ``concluded that, on balance, the limited 
marginal benefits that might be obtained by requiring 
disclosures would be outweighed by associated costs.''\6\
---------------------------------------------------------------------------
    \3\The ERISA Advisory Council was established under Section 512 of 
the Employee Retirement Income Security Act to advise the Secretary of 
Labor on matters related to welfare and pension benefit plans.
    \4\Council Report, supra note 1 at 4.
    \5\Council Report, supra note 1 at 46.
    \6\Council Report, supra note 1 at 47.
---------------------------------------------------------------------------

  H.R.5340 IS POORLY DRAFTED AND THE PRODUCT OF A FLAWED LEGISLATIVE 
                                PROCESS

    In addition to there being no policy basis for H.R. 5340, 
the bill's required notice is designed to discourage 
participants from using the brokerage window. Specifically, 
H.R. 5340 requires that a notice be sent to participants or 
beneficiaries each time they invest in to, out of, or within an 
investment that is not a designated investment by the plan. The 
notice is defined in the bill as a ``four part information'' 
substantially like the following:

          1. Your retirement plan offers designated investment 
        alternatives prudently selected and monitored by 
        fiduciaries for the purpose of enabling you to 
        construct an appropriate retirement savings portfolio. 
        In selecting and monitoring designated investment 
        alternatives, your plan's fiduciary considers the risk 
        of loss and the opportunity for gain (or other return) 
        compared with reasonably available investment 
        alternatives.
          2. The investments available through this investment 
        arrangement are not designated investment alternatives 
        and have not been prudently selected and are not 
        monitored by a plan fiduciary.
          3. Depending on the investments you select through 
        this investment arrangement, you may experience 
        diminished returns, higher fees, and higher risk than 
        if you select from the plan's designated investment 
        alternatives.
          4. The following is a hypothetical illustration of 
        the impact of return at 4 percent, 6 percent, and 8 
        percent on your retirement balance projected to age 67.

The bill also requires the notice to include a graph displaying 
projected retirement balances if the account of such individual 
were to achieve an annual return of 4 percent, 6 percent, or 8 
percent.
    H.R. 5340's notice represents a significant departure from 
ERISA's primary 401(k) fee disclosure that is objective, 
information-based, and required to be presented in a manner for 
the average participant to understand.\7\ The bill's required 
notice is clearly subjective and intended to discourage 
participants from using the brokerage window. According to the 
Americans for Financial Reform, ``[i]t is unclear why this bill 
would require a graph . . . . . . . The graph would likely be 
confusing and misleading to beneficiaries trying to make 
decisions about their retirement investments, suggesting that 
choosing an investment alternative not chosen by a fiduciary 
would necessarily result in a specific rate of return.''\8\
---------------------------------------------------------------------------
    \7\See 29 C.F.R. Sec. 2550.404a-5.
    \8\See Letter from Americans for Financial Reform to Hon. Virginia 
Foxx and Hon. Bobby Scott (Sept. 13, 2023), https://
ourfinancialsecurity.org/wp-content/uploads/2023/09/9.13.23-Corporate
Governance-Letter-of-Opposition-to-Anti-ESG Bills.pdf, at 6.
---------------------------------------------------------------------------
    If H.R. 5340 became law, participants interested in an ESG-
themed fund or bond, or a religiously themed fund offered in 
their plan's brokerage window may opt not to invest in it due 
to the language of the notice. Or those participants may look 
to make a themed investment via the commercial market outside 
of the ERISA-protected retirement system. Committee Members 
should question whether that potential outcome--driving 
retirement savers out of ERISA--makes sense and is in their 
best interests.
    H.R. 5340 was introduced on September 5, 2023, and the 
Committee on Education and the Workforce rushed to mark it up 
on September 14, 2023 without first convening a legislative 
hearing on the bill. This deprived Committee Members of the 
opportunity to learn more and ask questions about the bill's 
full implications.

   H.R. 5340 IS PART OF COMMITTEE REPUBLICANS' MISGUIDED WAR ON ESG 
                               INVESTING

    While H.R. 5340 would require notices for all brokerage 
window investments not just ESG-themed funds, Committee 
Republicans have tied this bill with their broader anti-ESG 
efforts. For example, the bill's author, Rep. Jim Banks (R-IN), 
said the bill would ``make sure ERISA participants are fully 
aware of the financial risks associated with ESG before they 
choose how to invest their hard-earned savings.''\9\
---------------------------------------------------------------------------
    \9\Press Release, Office of Congressman Jim Banks, Rep. Banks 
Introduces Bill to Protect Pensions from ESG (September 6, 2023), 
https://banks.house.gov/news/documentsingle.aspx?
DocumentID=2199.
---------------------------------------------------------------------------
    Committee Republicans are wrong about ESG. Appropriate 
consideration of ESG factors--such as fossil fuel dependency--
remains central to retirement plan participants' long term 
economic interests. That is why Committee Democrats believe 
retirement plan fiduciaries should be permitted to consider 
ESG-related considerations when evaluating investments. Doing 
so makes sense and serves workers' long-term financial 
interest.
    H.R. 5340 is premised on the Committee Republicans' 
mistaken view that they--not retirement savers and plan 
fiduciaries--know best when it comes to ESG investing. 
Committee Democrats strongly disagree.

                               CONCLUSION

    There is no apparent policy justification for H.R. 5340, or 
the other bills comprising Committee Republicans' baseless and 
unpopular anti-ESG agenda. For the reasons stated above, 
Committee Democrats opposed H.R. 5340 when the Committee on 
Education and the Workforce considered it on September 14, 
2023. We urge the House of Representatives to do the same.

                                   Robert C. ``Bobby'' Scott,
                                           Ranking Member.
                                   Gregorio Kilili Camacho Sablan.
                                   Mark DeSaulnier.
                                   Jahana Hayes.
                                   Haley M. Stevens.

                                  [all]