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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4293 Introduced in House (IH)]

<DOC>

114th CONGRESS
  1st Session
                                H. R. 4293

To amend the Employee Retirement Income Security Act of 1974 to ensure 
 that retirement investors receive advice in their best interests, and 
                          for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           December 18, 2015

Mr. Roe of Tennessee (for himself, Mr. Neal, Mr. Roskam, Mr. Larson of 
  Connecticut, Mr. Carter of Georgia, and Mr. David Scott of Georgia) 
 introduced the following bill; which was referred to the Committee on 
                      Education and the Workforce

_______________________________________________________________________

                                 A BILL

 
To amend the Employee Retirement Income Security Act of 1974 to ensure 
 that retirement investors receive advice in their best interests, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Affordable Retirement Advice 
Protection Act''.

SEC. 2. PURPOSE.

    The purpose of this Act is to provide that advisors who--
            (1) provide advice that is impermissible under the 
        prohibited transaction provisions under section 406 of the 
        Employee Retirement Income Security Act of 1974, or
            (2) breach the best interest standard for the provision of 
        investment advice,
are subject to liability under the Employee Retirement Income Security 
Act of 1974.

SEC. 3. RULES RELATING TO THE PROVISION OF INVESTMENT ADVICE.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Definition of investment advice.--Section 3(21) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(21)) is amended by adding at the end the following:
    ``(C)(i) For purposes of clause (ii) of subparagraph (A), the term 
`investment advice' means a recommendation that--
            ``(I) relates to--
                    ``(aa) the advisability of acquiring, holding, 
                disposing, or exchanging any moneys or other property 
                of a plan by the plan, plan participants, or plan 
                beneficiaries, including any recommendation whether to 
                take a distribution of benefits from such plan or any 
                recommendation relating to the investment of any moneys 
                or other property of such plan to be rolled over or 
                otherwise distributed from such plan;
                    ``(bb) the management of moneys or other property 
                of such plan, including recommendations relating to the 
                management of moneys or other property to be rolled 
                over or otherwise distributed from such plan; or
                    ``(cc) the advisability of retaining or ceasing to 
                retain a person who would receive a fee or other 
                compensation for providing any of the types of advice 
                described in this subclause; and
            ``(II) is rendered pursuant to--
                    ``(aa) a written acknowledgment of the obligation 
                of the advisor to comply with section 404 with respect 
                to the provision of such recommendation; or
                    ``(bb) a mutual agreement, arrangement, or 
                understanding, which may include limitations on scope, 
                timing, and responsibility to provide ongoing 
                monitoring or advice services, between the person 
                making such recommendation and the plan that such 
                recommendation is individualized to the plan and such 
                plan intends to materially rely on such recommendation 
                in making investment or management decisions with 
                respect to any moneys or other property of such plan.
    ``(ii) For purposes of clause (i)(II)(bb), any disclaimer of a 
mutual agreement, arrangement, or understanding shall only state the 
following: `This information is not individualized to you, and there is 
no intent for you to materially rely on this information in making 
investment or management decisions.'. Such disclaimer shall not be 
effective unless such disclaimer is in writing and is communicated in a 
clear and prominent manner and an objective person would reasonably 
conclude that, based on all the facts and circumstances, there was not 
a mutual agreement, arrangement, or understanding.
    ``(iii) For purposes of clause (i)(II)(bb), information shall not 
be considered to be a recommendation made pursuant to a mutual 
agreement, arrangement, or understanding, and such information shall 
contain the disclaimer required by clause (ii), if--
            ``(I) it is provided in conjunction with full and fair 
        disclosure in writing to a plan, plan participant, or 
        beneficiary that the person providing the information is doing 
        so in its marketing or sales capacity, including any 
        information regarding the terms and conditions of the 
        engagement of the person providing the information, and that 
        the person is not intending to provide investment advice within 
        the meaning of this subparagraph or to otherwise act within and 
        under the obligations of the best interest standard as 
        described in this subparagraph;
            ``(II) the person providing the information is a 
        counterparty or service provider to the plan in connection with 
        any transaction based on the information (including a service 
        arrangement, sale, purchase, loan, bilateral contract, swap (as 
        defined in section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a)), or security-based swap (as defined in section 3(a) of the 
        Securities Exchange Act (15 U.S.C. 78c(a)))), but only if--
                    ``(aa) the plan is represented, in connection with 
                such transaction, by a plan fiduciary who is 
                independent of the person providing the information, 
                and, except in the case of a swap or security-based 
                swap, independent of the plan sponsor; and
                    ``(bb) prior to such transaction, the independent 
                plan fiduciary represents in writing to the person 
                providing the information that it is aware that the 
                person has a financial interest in the transaction and 
                that it has determined that the person is not intending 
                to provide investment advice within the meaning of this 
                subparagraph or to otherwise act as a fiduciary to the 
                plan subject to section 404;
            ``(III) the person providing the information is an employee 
        of any sponsoring employer or employee organization who 
        provides the information to the plan for no fee or other 
        compensation other than the employee's normal compensation;
            ``(IV) the person providing the information discloses in 
        writing to the plan fiduciary that the person is not 
        undertaking to provide investment advice as a fiduciary to the 
        plan subject to section 404 and the information consists solely 
        of--
                    ``(aa) making available to the plan, without regard 
                to the individualized needs of the plan, securities or 
                other property through a platform or similar mechanism 
                from which a plan fiduciary may select or monitor 
                investment alternatives, including qualified default 
                investment alternatives, into which plan participants 
                or beneficiaries may direct the investment of assets 
                held in, or contributed to, their individual accounts; 
                or
                    ``(bb) in connection with a platform or similar 
                mechanism described in item (aa)--
                            ``(AA) identifying investment alternatives 
                        that meet objective criteria specified by the 
                        plan, such as criteria concerning expense 
                        ratios, fund sizes, types of asset, or credit 
                        quality; or
                            ``(BB) providing objective financial data 
                        and comparisons with independent benchmarks to 
                        the plan;
            ``(V) the information consists solely of valuation 
        information; or
            ``(VI) the information consists solely of--
                    ``(aa) information described in Department of Labor 
                Interpretive Bulletin 96-1 (29 C.F.R. 2509.96-1, as in 
                effect on January 1, 2015), regardless of whether such 
                education is provided to a plan or plan fiduciary or a 
                participant or beneficiary;
                    ``(bb) information provided to participants or 
                beneficiaries regarding the factors to consider in 
                deciding whether to elect to receive a distribution 
                from a plan or an individual retirement plan (as 
                defined in section 7701(a)(37) of the Internal Revenue 
                Code of 1986) and whether to roll over such 
                distribution to a plan or an individual retirement plan 
                (as defined in section 7701(a)(37) of the Internal 
                Revenue Code of 1986), so long as any examples of 
                different distribution and rollover alternatives are 
                accompanied by all material facts and assumptions on 
                which the examples are based; or
                    ``(cc) any additional information treated as 
                education by the Secretary.''.
            (2) Exemption relating to investment advice.--Section 
        408(b) of the Employee Retirement Income Security Act of 1974 
        is amended by adding at the end the following:
            ``(21)(A) Any transaction, including a contract for 
        service, between a person providing investment advice described 
        in section 3(21)(A)(ii) and the advice recipient in connection 
        with such investment advice, and any transaction consisting of 
        the provision of such investment advice, if the following 
        conditions are satisfied:
                    ``(i) No more than reasonable compensation is paid 
                (as determined under section 408(b)(2)) for such 
                investment advice.
                    ``(ii) If the investment advice is based on a 
                limited range of investment options (which may consist, 
                in whole or in part, of proprietary products), such 
                limitations, including a clearly-stated notice that the 
                same or similar investments may be available at a 
                different cost (greater or lesser) from other sources, 
                shall be clearly disclosed to the advice recipient 
                prior to any transaction based on the investment 
                advice. The notice shall only state the following: `The 
                same or similar investments may be available at a 
                different cost (greater or lesser) from other 
                sources.'.
                    ``(iii) If the investment advice may result in 
                variable compensation to the person providing the 
                investment advice (or any affiliate of such person), 
                the receipt of such compensation, including a clearly-
                stated notice that the same or similar investments may 
                be available at a different cost (greater or lesser) 
                from other sources, shall be clearly disclosed to the 
                advice recipient. The notice shall only state the 
                following: `The same or similar investments may be 
                available at a different cost (greater or lesser) from 
                other sources.' For purposes of this subparagraph, 
                clear disclosure of variable compensation means 
                notification prior to any transaction based on the 
                recommendation, in a manner calculated to be understood 
                by the average individual, of the following:
                            ``(I) A notice that the person providing 
                        the recommendation (or its affiliate) may 
                        receive varying amounts of fees or other 
                        compensation with respect to such transaction.
                            ``(II) A description of any fee or other 
                        compensation that is directly payable to the 
                        person (or its affiliate) from the advice 
                        recipient with respect to such transaction 
                        (expressed as an amount, formula, percentage of 
                        assets, per capita charge, or estimate or range 
                        of such compensation).
                            ``(III) A description of the types and 
                        ranges of any indirect compensation that may be 
                        paid to the person (or its affiliate) by any 
                        third party in connection with such transaction 
                        (expressed as an amount, formula, percentage of 
                        assets, per capita charge, or estimate of such 
                        ranges of compensation).
                            ``(IV) Upon request of the advice 
                        recipient, a disclosure of the specific amounts 
                        of compensation described in clause (iii) that 
                        the person will receive in connection with the 
                        particular transaction (expressed as an amount, 
                        formula, percentage of assets, per capita 
                        charge, or estimate of such compensation).
            ``(B) No recommendation will fail to satisfy the conditions 
        described in clauses (i) through (iii) of subparagraph (A) 
        solely because the person, acting in good faith and with 
        reasonable diligence, makes an error or omission in disclosing 
        the information specified in such clauses, provided that the 
        person discloses the correct information to the advice 
        recipient as soon as practicable, but not later than 30 days 
        from the date on which the person knows of such error or 
        omission.
            ``(C) For purposes of this paragraph, the term `affiliate' 
        has the meaning given in subsection (g)(11)(B).''.
    (b) Effective Date.--
            (1) Modification of certain rules, and rules and 
        administrative positions promulgated before enactment but not 
        effective on january 1, 2015, prohibited.--The Department of 
        Labor is prohibited from amending any rules or administrative 
        positions promulgated under, or applicable for purposes of, 
        section 3(21) of the Employee Retirement Income Security Act of 
        1974 (including Department of Labor Interpretive Bulletin 96-1 
        (29 C.F.R. 2509.96-1) and Department of Labor Advisory Opinion 
        2005-23A), and no such rule or administrative position 
        promulgated by the Department of Labor prior to the date of the 
        enactment of this Act but not effective on January 1, 2015, may 
        become effective unless a bill or joint resolution referred to 
        in paragraph (3) is enacted as described in such paragraph not 
        later than 60 days after the date of the enactment of this Act.
            (2) General effective date of amendments.--Except as 
        provided in paragraph (3), the amendments made by subsection 
        (a) of this section shall take effect on the 61st day after the 
        date of the enactment of this Act and shall apply with respect 
        to information provided or recommendations made on or after 2 
        years after the date of the enactment of this Act.
            (3) Exception.--If a bill or joint resolution is enacted 
        prior to the 61st day after the date of the enactment of this 
        Act that specifically approves any rules or administrative 
        positions promulgated under, or applicable for purposes of, 
        section 3(21) of the Employee Retirement Income Security Act of 
        1974 that is not in effect on January 1, 2015, the amendments 
        made by subsection (a) of this section shall not take effect.
    (c) Grandfathered Transactions and Services.--The amendments made 
by subsection (a) shall not apply to any service or transaction 
rendered, entered into, or for which a person has been compensated 
prior to the date on which the amendments made by subsection (a) of 
this Act become effective under subsection (b)(2).
    (d) Transition.--If the amendments made by subsection (a) of this 
section take effect, then nothing in this section shall be construed to 
prohibit the issuance of guidance to carry out such amendments so long 
as such guidance is necessary to implement such amendments. Until such 
time as regulations or other guidance are issued to carry out such 
amendments, a plan and a fiduciary shall be treated as meeting the 
requirements of such amendments if the plan or fiduciary, as the case 
may be, makes a good faith effort to comply with such requirements.
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