[House Report 119-448]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 119-448
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RETIRE THROUGH OWNERSHIP ACT
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January 14, 2026.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
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Mr. Walberg, from the Committee on Education and Workforce,
submitted the following
R E P O R T
[To accompany H.R. 5169]
The Committee on Education and Workforce, to whom was
referred the bill (H.R. 5169) to amend the Employee Retirement
Income Security Act of 1974 to provide a clear definition of
adequate consideration for certain closely held stock, 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 ``Retire through Ownership Act''.
SEC. 2. AMENDING ADEQUATE CONSIDERATION DEFINITION.
(a) In General.--Section 3(18) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(18)) is amended--
(1) in subparagraph (A), by redesignating clauses (i) and
(ii) as subclauses (I) and (II), respectively;
(2) by redesignating subparagraphs (A) and (B) as clauses (i)
and (ii), respectively;
(3) by inserting ``(A)'' before ``The term''; and
(4) by adding at the end the following:
``(B)(i) For purposes of clause (ii) of subparagraph (A), a fiduciary
of an employee stock ownership plan (as defined in section 407(d)(6))
may in good faith rely upon a valuation provided by an independent
valuation expert or business appraiser if such expert or appraiser
relied upon the principles and methodologies set forth in Internal
Revenue Service Revenue Ruling 59-60 (as amplified, clarified,
distinguished, or modified from time to time) in determining the fair
market value of the asset.
``(ii) Clause (i) shall not be interpreted to--
``(I) preclude the Secretary from promulgating, in accordance
with section 553 of title 5, United States Code, any regulation
interpreting such clause;
``(II) expand the regulatory authority of the Secretary with
respect to the term `adequate consideration' beyond the
authority of the Secretary with respect to such term on the day
before the date of enactment of the Retire through Ownership
Act; or
``(III) modify a fiduciary's obligations under section
404.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to determinations described in section 3(18)(B) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002(18)(B)) (as added by such subsection) that are made on or after
the date of enactment of this Act.
Purpose
H.R. 5169, the Retire through Ownership Act, amends the
Employee Retirement Income Security Act of 1974 (ERISA) to
provide a clear definition of adequate consideration for
certain closely held stock. The bill prescribes the use of
Treasury Revenue Ruling 59-60 (and any and all subsequent
revenue rulings amplifying or modifying this ruling) for
employee stock ownership plan (ESOP) valuation purposes.
Committee Action
113TH CONGRESS
Second Session--Hearing
On March 26, 2014, the Committee on Education and the
Workforce held a hearing entitled ``Reviewing the President's
Fiscal Year 2015 Budget Proposal for the Department of Labor,''
which examined the budget priorities of the U.S. Department of
Labor (DOL), including DOL's regulatory activity relating to
ESOPs. The witness was the Honorable Thomas E. Perez, Secretary
of Labor, Washington, DC.
114TH CONGRESS
First Session--Hearing
On March 18, 2015, the Committee on Education and the
Workforce held a hearing entitled ``Reviewing the President's
Fiscal Year 2016 Budget Proposal for the Department of Labor,''
which examined the budget priorities of DOL, including DOL's
regulatory activity relating to ESOPs. The witness was the
Honorable Thomas E. Perez, Secretary of Labor, Washington, DC.
Second Session--Hearing
On March 16, 2016, the Committee on Education and the
Workforce held a hearing entitled ``Examining the Policies and
Priorities of the U.S. Department of Labor,'' which outlined
DOL's upcoming priorities and agenda, including DOL's
regulatory activity relating to ESOPs. The witness was the
Honorable Thomas E. Perez, Secretary of Labor, Washington, DC.
115TH CONGRESS
First Session--Hearing
On November 15, 2017, the Committee on Education and the
Workforce held a hearing entitled ``Examining the Policies and
Priorities of the U.S. Department of Labor,'' which examined
DOL's recent achievements and outlined its upcoming priorities
and agenda, including DOL's regulatory activity relating to
ESOPs. The witness was the Honorable R. Alexander Acosta,
Secretary of Labor, Washington, DC.
116TH CONGRESS
First Session--Hearing
On May 1, 2019, the Committee on Education and Labor held a
hearing entitled ``Examining the Policies and Priorities of the
U.S. Department of Labor,'' which reviewed the Fiscal Year 2020
budget priorities of DOL, including DOL's regulatory activity
relating to ESOPs. The witness was the Honorable R. Alexander
Acosta, Secretary of Labor, Washington, DC.
117TH CONGRESS
Second Session--Hearing
On March 1, 2022, the Subcommittee on Health, Employment,
Labor, and Pensions (HELP Subcommittee) held a hearing entitled
``Improving Retirement Security and Access to Mental Health
Benefits,'' which examined numerous retirement policies
including ESOPs. Witnesses were Dr. Andrew Biggs, Senior
Fellow, American Enterprise Institute, Washington, DC; Ms.
Karen Handorf, Senior Counsel, Berger Montague, Washington, DC;
Ms. Amy Matsui, Director of Income Security and Senior Counsel,
National Women's Law Center, Washington, DC; and Mr. Aron
Szapiro, Head of Retirement Studies and Public Policy,
Morningstar Investment Management, Washington, DC.
118TH CONGRESS
Second Session--Hearing
On June 27, 2024, the HELP Subcommittee held a hearing
entitled ``Examining the Policies and Priorities of the
Employee Benefits Security Administration,'' which examined
operations, enforcement, and regulatory policies of DOL's
Employee Benefits Security Administration (EBSA), including
regulation of ESOPs. The witness was the Honorable Lisa M.
Gomez, Assistant Secretary, EBSA, Washington, DC.
119TH CONGRESS
First Session--Hearing
On July 22, 2025, the HELP Subcommittee held a hearing
entitled ``Restoring Trust: Enhancing Transparency and
Oversight at EBSA,'' which examined EBSA's investigation and
litigation practices, including with respect to ESOPs.
Witnesses were Mr. Lars Golumbic, Principal, Groom Law,
Washington, DC; Mr. Andy Banducci, Senior Vice President,
Retirement and Compensation Policy, ERISA Industry Committee
(ERIC), Washington, DC; Mr. James Bonham, President and CEO,
ESOP Association, Washington, DC; and Mr. Ali Khawar, Founder
and President, FCP, LLC, Washington, DC.
Legislative Action
On September 8, 2025, Representative Rick Allen (R-GA)
introduced H.R. 5169, the Retire through Ownership Act. The
bill was referred to the Committee on Education and Workforce.
On September 17, 2025, the Committee considered H.R. 5169 in
legislative session and reported it favorably, as amended, to
the House of Representatives by a recorded vote of 35-0. By
voice vote, the Committee adopted an amendment in the nature of
a substitute offered by Representative Allen that made three
clarifications: (1) the Secretary of Labor may promulgate
regulations interpreting the new statutory provision in H.R.
5169 regarding stock valuation; (2) the new statutory provision
in the bill does not expand the Secretary of Labor's regulatory
authority; and (3) H.R. 5169 does not modify a fiduciary's
obligation under ERISA section 404, which contains fiduciary
obligations of prudence and loyalty.
Committee Views
INTRODUCTION
An ESOP is a retirement plan designed to invest primarily
in the stock of the sponsoring employer or an affiliate
(``employer stock''). ESOPs can provide important retirement
benefits for workers as well as an equity stake in the company.
To establish an ESOP, the employee benefit plan must purchase
employer stock. ERISA provides that ESOPs cannot pay more than
``adequate consideration'' for the employer stock they purchase
for the plan.\1\ When ERISA was enacted in 1974, Congress
instructed DOL to issue regulations for determining adequate
consideration in the event the employer stock did not have a
generally recognized market.\2\ However, 50 years later, the
ESOP community still does not have a regulatory standard for
valuing employer stock.
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\1\ An ESOP's acquisition of employer stock may violate ERISA's
prohibited transaction rules. 29 U.S.C. Sec. 1106(a)(1), ERISA Sec.
406(a)(1). However, a prohibited transaction exemption under ERISA
section 408(e) provides relief if certain conditions are satisfied. One
of the conditions is that the acquisition must be at fair market value.
This is known as ``adequate consideration,'' which is defined in ERISA
section 3(18)(B). 29 U.S.C. Sec. Sec. 1108(e)(1), 1102(18); ERISA
Sec. Sec. 408(e)(1), 3(18). In the case of an asset without a
generally recognized market, the term ``adequate consideration'' means
the fair market value of an asset as determined in good faith by the
trustee or named fiduciary pursuant to the plan's terms and in
accordance with DOL regulations. 29 U.S.C. Sec. 1102(18); ERISA Sec.
3(18).
\2\This instruction is implicit in ERISA's definition of ``adequate
consideration'' at ERISA section 3(18), which provides that ``in the
case of an asset other than a security for which there is a generally
recognized market, the fair 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
[of Labor].'' 29 U.S.C. Sec. 1102(18); ERISA Sec. 3(18) (emphasis
added).
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VALUATION STANDARDS FOR ESOPS
ERISA requires ESOPs to pay no more than ``adequate
consideration'' for the employer stock they purchase for the
plan.\3\ When ERISA was enacted in 1974, Congress instructed
DOL to issue regulations for determining adequate consideration
in the event the employer stock did not have a generally
recognized market.\4\ DOL proposed a regulation in 1988, but
final regulations were never issued.\5\
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\3\See supra note 1.
\4\See supra note 2.
\5\Proposed Regulation Relating to Definition of Adequate
Consideration, 53 Fed. Reg. 17,632 (May 17, 1988).
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In 2022, in SECURE 2.0,\6\ Congress mandated that the
Secretary of Labor issue guidance for valuing employer stock in
ESOP transactions.\7\ The Biden Administration issued proposed
regulations on January 16, 2025, but those regulations were not
published in the Federal Register prior to the end of the
administration.\8\ On January 20, 2025, President Trump issued
a freeze on all rules transmitted to the Federal Register that
were not yet published.\9\ EBSA intends to issue another
proposed rule on adequate consideration in 2026.\10\
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\6\Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, div.
T (2022).
\7\SECURE 2.0 Act section 346(c)(4)(B) mandated that the Secretary
of Labor issue formal guidance on the standards and procedures that are
acceptable when establishing good faith fair market value for shares of
a business to be acquired by an ESOP. Id.
\8\See EBSA, Fact Sheet: Notice of Proposed Rulemaking Relating to
Application of the Definition of Consideration (Jan. 16, 2022).
\9\On January 20, 2025, President Trump issued a memorandum titled
``Regulatory Freeze Pending Review'' which directed all executive
agencies to immediately withdraw any rules or proposals that were sent
to the Federal Register but not yet published. https://
www.whitehouse.gov/presidential-actions/2025/01/regulatory-freeze-
pending-review/.
\10\https://www.reginfo.gov/public/do/
eAgendaViewRule?publd=202504&RIN=1210=AC20.
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After five decades without regulatory guidance, many
believe legislation is needed to prescribe guidelines for the
valuation of employer stock and to conform those valuation
guidelines to longstanding guidelines issued by the Department
of the Treasury (Treasury), which has a body of valuation
guidance that stems from Revenue Ruling 59-60 on valuing
securities that are not readily tradable. That ruling has been
amplified and modified by subsequent rulings. The body of
rulings constitutes guidance on valuing securities that are not
readily tradable for tax purposes. H.R. 5169 would adopt those
principles for valuation purposes of an ESOP transaction under
ERISA.
SUPPORT FOR USING REVENUE RULING 59-60 VALUATION PRINCIPLES
H.R. 5169 is supported by The ESOP Association, the
Employee-Owned S Corporations of America, and the ERISA
Industry Committee (ERIC) because the legislation provides
certainty to ESOP fiduciaries on stock valuation. Such
certainty may help encourage the establishment of ESOPs and
expand employee ownership.
CONCLUSION
Since ERISA was enacted more than 50 years ago, ESOP
fiduciaries have been waiting for guidance on how to value the
employer stock they purchase for their plan. H.R. 5169 provides
clear valuation guidelines by prescribing the use of Treasury
Revenue Ruling 59-60 (and any and all subsequent revenue
rulings amplifying or modifying this ruling) for ESOP valuation
purposes.
H.R. 5961 Section-by-Section Summary
BILL SUMMARY AS PASSED OUT OF COMMITTEE
Section 1. Short title
Section 1 provides that the short title is ``Retire through
Ownership Act.''
Section 2(a). Amending adequate consideration definition
Section 2(a) amends the definition of ``adequate
consideration'' in section 3(18) of subtitle A of Title I
(``section 3(18)'') of ERISA. Section 3(18) provides the
definition of ``adequate consideration'' when used in part 4 of
subtitle B of ERISA.
Section 2(a) adds new subparagraphs (B)(i) and (B)(ii) to
the ERISA section 3(18) definition of adequate consideration.
New subparagraph (B)(i) applies valuation guidance for employer
securities for which there is not a generally recognized
market. In that case, an ESOP fiduciary may rely in good faith
upon a valuation provided by an independent valuation expert or
business appraiser if that valuation is based on the principles
and methodologies set forth in IRS Revenue Ruling 59-60 (as
modified from time to time). This provision in section 2(a) of
the bill incorporates the tried-and-true IRS valuation
principles for determining the value of employer stock for
which there is not a generally recognized market. Under this
provision, an ESOP fiduciary fulfills his or her duties with
respect to determining adequate consideration if he or she
relies in good faith upon such a valuation.
Section 2(a) also includes three rules of interpretation.
The revised subparagraph (B)(ii) of ERISA section 3(18) states
that subparagraph (B)(i) ``shall not be interpreted'' to do any
of the following:
preclude the Secretary of Labor from
promulgating any regulation interpreting subparagraph
(B)(i) relating to stock valuation;
expand the regulatory authority of the
Secretary with respect to the term ``adequate
consideration'' beyond the authority of the Secretary
with respect to such term on the day before the date of
enactment of H.R. 5169; or,
modify a fiduciary's obligations under ERISA
section 404.
The purpose of these rules of interpretation is to clarify
that the incorporation of valuation principles from IRS Revenue
Ruling 59-60 does not preclude the Secretary of Labor from
issuing regulations interpreting the clause, nor does it expand
the Secretary's regulatory authority over IRS Ruling 59-60.
These rules of interpretation also clarify that a fiduciary's
duty of prudence and loyalty under ERISA section 404 are not
amended.
Section 2(b). Effective date
Section 2(b) provides that the bill's provisions apply with
respect to adequate consideration determinations made on or
after the date of enactment of H.R. 5169.
Explanation of Amendments
The amendment in the nature of a substitute is 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, as the bill pertains to conditions of employment. H.R.
5169 amends ERISA to provide a clear definition of adequate
consideration for certain closely held stock, for ESOP
valuation purposes. Legislative branch employers do not have
the ability to form ESOPs and therefore, the bill does not
apply to 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 traditionally 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.
The Committee reports that because this cost estimate was not
timely submitted to the Committee before the filing of this
report, the Committee is not in a position to make a cost
estimate for H.R. 5169.
Earmark Statement
H.R. 5169 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of House rule XXI.
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.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of General Performance Goals and Objectives
In accordance with clause (3)(c) of House of
Representatives rule XIII, the goal of H.R. 5169, the Retire
through Ownership Act, is to amend ERISA to provide a clear
definition of adequate consideration for certain closely held
stock for ESOP valuation purposes. The bill prescribes the use
of Treasury Revenue Ruling 59-60 (and any and all subsequent
revenue rulings amplifying or modifying this ruling) for ESOP
valuation purposes.
Duplication of Federal Programs
No provision of H.R. 5169 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
In compliance with clause 3(c)(6) of rule XIII of the Rules
of the House of Representatives the following hearing held
during the 119th Congress was used to develop or consider H.R.
5169: On July 22, 2025, the Subcommittee on Health, Employment,
Labor, and Pensions held a hearing on ``Restoring Trust:
Enhancing Transparency and Oversight at EBSA.''
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, a cost estimate was not made
available to the Committee in time for the filing of this
report. The Chairman of the Committee shall cause such estimate
to be printed in the Congressional Record upon its receipt by
the Committee.
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. 5169. The
estimate prepared by the Joint Committee on Taxation (JCT) is
included below. The staff of the Joint Committee on Taxation
estimates the bill to have the following effect on Federal
fiscal year budget receipts for the period 2026 through 2035.
Fiscal Years
[Millions of dollars]
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Item 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2026-29 2026-35
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Total................................... -25 -13 -29 -72 -142 -291 -497 -739 -1,092 -1,531 -139 -4,431
On-Budget............................... -23 -12 -27 -67 -132 -272 -464 -684 -1,006 -1,400 -129 -4,086
Off-Budget.............................. -1 -2 -2 -5 -10 -19 -34 -55 -86 -131 -10 -345
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NOTE: Details may not add to totals due to rounding.
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 (existing law
proposed to be omitted is enclosed in black brackets, 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)(A) The term ``adequate consideration'' when used in part
4 of subtitle B means [(A)] (i) in the case of a security for
which there is a generally recognized market, either [(i)] (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)] (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)] (ii) 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.
(B)(i) For purposes of clause (ii) of subparagraph (A), a
fiduciary of an employee stock ownership plan (as defined in
section 407(d)(6)) may in good faith rely upon a valuation
provided by an independent valuation expert or business
appraiser if such expert or appraiser relied upon the
principles and methodologies set forth in Internal Revenue
Service Revenue Ruling 59-60 (as amplified, clarified,
distinguished, or modified from time to time) in determining
the fair market value of the asset.
(ii) Clause (i) shall not be interpreted to--
(I) preclude the Secretary from promulgating, in
accordance with section 553 of title 5, United States
Code, any regulation interpreting such clause;
(II) expand the regulatory authority of the Secretary
with respect to the term ``adequate consideration''
beyond the authority of the Secretary with respect to
such term on the day before the date of enactment of
the Retire through Ownership Act; or
(III) modify a fiduciary's obligations under section
404.
(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.
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