I

106TH CONGRESS

2D SESSION H. R. 5549

To amend the Employee Retirement Income Security Act of 1974 to improve

the retirement security of American families.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 25, 2000

Mr. ANDREWS (for himself, Mr. CLAY, Mr. KILDEE, Mr. OWENS, Mr. PAYNE,

Mrs. MINK of Hawaii, Ms. WOOLSEY, Mr. ROMERO-BARCELO ́

, Mr.

FATTAH, Mr. TIERNEY, Mr. KIND, Ms. SANCHEZ, Mr. FORD, Mr.

KUCINICH, and Mr. HOLT) introduced the following bill; which was referred to the Committee on Education and the Workforce, and in addition

to the Committees on Armed Services, and Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Employee Retirement Income Security Act

of 1974 to improve the retirement security of American

families.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Retirement Enhancement Act of 2000’’.
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1 (b) TABLE OF CONTENTS.—The table of contents is

2 as follows:

Sec. 1. Short title and table of contents.

TITLE I—IMPROVED PARTICIPATION AND VESTING

Sec. 101. Minimum coverage requirements.

Sec. 102. Minimum participation requirements.

Sec. 103. Faster vesting of benefits under defined contribution plans.

Sec. 104. Model small employer group pension plan.

Sec. 105. Enforcement under ERISA of requirements for simplified employee

pensions.

TITLE II—IMPROVED PENSION PROTECTIONS FOR WOMEN

Sec. 201. Elimination of integration with workers’ compensation and similar

benefits.

Sec. 202. Spousal consent required for distributions from defined contribution

plans.

Sec. 203. Modifications of joint and survivor annuity requirements.

Sec. 204. Division of pension benefits upon divorce.

Sec. 205. Periods of family and medical leave treated as hours of service for

pension participation and vesting.

Sec. 206. Right of spouse to know distribution information.

Sec. 207. Repeal of reduction in military survivor benefit plan annuities at age

62.

Sec. 208. Survivor annuities for widows, widowers, and former spouses of Federal employees who die before attaining age for deferred annuity under Civil Service Retirement System.

Sec. 209. Order of precedence for disposition of amounts remaining in the

thrift savings account of a Federal employee (or former employee) who dies before making an effective election controlling

such disposition.

Sec. 210. Interest on amounts paid to make up for certain civil service annuity

benefits wrongfully denied.

Sec. 211. Amendments relating to effective date provision of the Civil Service

Retirement Spouse Equity Act of 1984.

TITLE III—SIMPLIFIED INVESTMENT STANDARDS

Sec. 301. Exemption from prohibited transaction rules for emergent transactions.

Sec. 302. Alternative method for publishing the pendency of prohibited transaction exemptions.

Sec. 303. Employer protection from liability for the provision of investment advice.

Sec. 304. Participation of participants in trusteeship of defined contribution

plans.

Sec. 305. Removal of $500,000 cap on bonding requirement.

Sec. 306. Disclosure regarding investments and voting of proxies.

Sec. 307. Diversification in defined contribution plan investments.

Sec. 308. Diversification of investments under employee stock ownership plans

by participants and beneficiaries over 55 years of age.
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TITLE IV—IMPROVEMENTS IN PENSION INFORMATION AND

ENFORCEMENT

Sec. 401. Periodic pension benefit statements.

Sec. 402. Benefit Statements required to include information on investment

performance.

Sec. 403. Disclosures to Secretary of Labor relating to plan termination and relating to plan sponsors after acquisition or merger of plans.

Sec. 404. Disclosure of operating income of employers adjusted so as to exclude

certain components mandated in FASB rules governing accounting for defined benefit pension plans.

Sec. 405. Specific information regarding multiemployer plans included in annual report.

Sec. 406. Limited scope audits.

Sec. 407. Reporting and enforcement requirements for employee benefit plans.

Sec. 408. Study of pension trends and characteristics.

Sec. 409. Early resolution program for pension benefit claims.

Sec. 410. De novo review of benefit determinations.

Sec. 411. Allowable relief.

Sec. 412. Civil penalty for breach of fiduciary responsibility.

Sec. 413. Assessment by Secretary of Labor of penalties for failures to meet

disclosure requirements.

Sec. 414. Missing participants.

Sec. 415. Increase in guaranteed benefit level for multiemployer plans.

TITLE V—IMPROVED PENSION PROTECTIONS FOR THE

CHANGING WORKFORCE

Sec. 501. Loans from retirement plans for health insurance and job training expenses.

Sec. 502. Immediate distributions permitted only if distribution rolled to a

qualified plan.

Sec. 503. Prompt distribution from defined contribution plans upon termination

of participant’s covered employment.

Sec. 504. Extended period for recoupment of overpayments.

TITLE VI—GENERAL PROVISIONS

Sec. 601. General effective date.

Sec. 602. Plan amendments.

1 TITLE I—IMPROVED

2 PARTICIPATION AND VESTING

3 SEC. 101. MINIMUM COVERAGE REQUIREMENTS.

4 (a) IN GENERAL.—Part 2 of subtitle B of title I of

5 the Employee Retirement Income Security Act of 1974

6 (29 U.S.C. 201 et seq.) is amended by inserting after sec7 tion 201 the following new section:
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1 ‘‘MINIMUM COVERAGE REQUIREMENTS

2 ‘‘SEC. 201A. (a) GENERAL RULE.—Each pension

3 plan maintained by an employer shall benefit all employees

4 of the employer.

5 ‘‘(b) EXCLUSION OF CERTAIN EMPLOYEES.—For

6 purposes of this section, there shall be excluded from

7 consideration—

8 ‘‘(1) employees who are included in a unit of

9 employees covered by an agreement which, as deter10 mined in accordance with regulations issued by the

11 Secretary, constitutes a collective bargaining agree12 ment between employee representatives and one or

13 more employers, if there is evidence that retirement

14 benefits were the subject of good faith bargaining

15 between such employee representatives and such em16 ployer or employers,

17 ‘‘(2) in the case of a trust established or main18 tained pursuant to an agreement which, as deter19 mined in accordance with regulations issued by the

20 Secretary, constitutes a collective bargaining agree21 ment between airline pilots represented in accord22 ance with title II of the Railway Labor Act and one

23 or more employers, all employees not covered by

24 such agreement, and
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1 ‘‘(3) employees who are nonresident aliens and

2 who receive no earned income (within the meaning

3 of section 911(d)(2) of the Internal Revenue Code of

4 1986) from the employer which constitutes income

5 from sources within the United States (within the

6 meaning of section 861(a)(3) of such Code).

7 Paragraph (1) shall not apply with respect to coverage of

8 employees under a plan pursuant to an agreement under

9 such paragraph. Paragraph (2) shall not apply in the case

10 of a plan which provides contributions or benefits for em11 ployees whose principal duties are not customarily per12 formed aboard aircraft in flight.

13 ‘‘(c) EXCLUSION OF EMPLOYEES NOT MEETING AGE

14 AND SERVICE REQUIREMENTS.—

15 ‘‘(1) IN GENERAL.—If a plan—

16 ‘‘(A) prescribes, consistent with section

17 202(a), minimum age and service requirements

18 as a condition of participation, and

19 ‘‘(B) excludes all employees not meeting

20 such requirements from participation,

21 then such employees shall be excluded from consider22 ation for purposes of this section.

23 ‘‘(2) REQUIREMENTS MAY BE MET SEPARATELY

24 WITH RESPECT TO EXCLUDED GROUP.—If employees

25 not meeting the minimum age or service require-
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1 ments of section 202(a)(1) (without regard to sub2 paragraph (B) thereof) are covered under a plan of

3 the employer which meets the requirements of sub4 section (a) separately with respect to such employ5 ees, such employees may be excluded from consider6 ation in determining whether any plan of the em7 ployer meets the requirements of subsection (a).

8 ‘‘(3) REQUIREMENTS NOT TREATED AS BEING

9 MET BEFORE ENTRY DATE.—An employee shall not

10 be treated as meeting the age and service require11 ments described in this subsection until the first

12 date on which, under the plan, any employee with

13 the same age and service would be eligible to com14 mence participation in the plan.

15 ‘‘(d) LINE OF BUSINESS EXCEPTION.—

16 ‘‘(1) IN GENERAL.—If, under section 414(r) of

17 the Internal Revenue Code of 1986, an employer is

18 treated as operating separate lines of business for a

19 year, the employer may apply the requirements of

20 this section for such year separately with respect to

21 employees in each separate line of business.

22 ‘‘(2) PLAN MUST BE NONDISCRIMINATORY.—

23 Paragraph (1) shall not apply with respect to any

24 plan maintained by an employer unless such plan

25 benefits such employees as qualify under a classifica-
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1 tion set up by the employer and found by the Sec2 retary of the Treasury not to be discriminatory in

3 favor of highly compensated employees.

4 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur5 poses of this section—

6 ‘‘(1) HIGHLY COMPENSATED EMPLOYEE.—The

7 term ‘highly compensated employee’ has the mean8 ing given such term by section 414(q) of the Inter9 nal Revenue Code of 1986.

10 ‘‘(2) AGGREGATION RULES.—An employer may

11 elect to designate—

12 ‘‘(A) 2 or more trusts,

13 ‘‘(B) 1 or more trusts and 1 or more annu14 ity plans, or

15 ‘‘(C) 2 or more annuity plans,

16 as part of 1 plan to determine whether the require17 ments of this section are met with respect to such

18 plan.

19 ‘‘(3) SPECIAL RULES FOR CERTAIN DISPOSI20 TIONS OR ACQUISITIONS.—

21 ‘‘(A) IN GENERAL.—If a person becomes,

22 or ceases to be, a member of a group described

23 in subsection (b), (c), (m), or (o) of section 414

24 of such Code, then the requirements of this sec25 tion shall be treated as having been met during
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1 the transition period with respect to any plan

2 covering employees of such person or any other

3 member of such group if—

4 ‘‘(i) such requirements were met im5 mediately before each such change, and

6 ‘‘(ii) the coverage under such plan is

7 not significantly changed during the transi8 tion period (other than by reason of the

9 change in members of a group) or such

10 plan meets such other requirements as the

11 Secretary of the Treasury may prescribe

12 by regulation.

13 ‘‘(B) TRANSITION PERIOD.—For purposes

14 of subparagraph (A), the term ‘transition pe15 riod’ means the period—

16 ‘‘(i) beginning on the date of the

17 change in members of a group, and

18 ‘‘(ii) ending on the last day of the 1st

19 plan year beginning after the date of such

20 change.

21 ‘‘(4) ELIGIBILITY TO CONTRIBUTE.—In the

22 case of contributions which are subject to section

23 401(k) or 401(m) of the Internal Revenue Code of

24 1986, employees who are eligible to contribute (or
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1 elect to have contributions made on their behalf)

2 shall be treated as benefiting under the plan.

3 ‘‘(5) REGULATIONS.—The Secretary of the

4 Treasury shall prescribe such regulations as may be

5 necessary or appropriate to carry out the purposes

6 of this section.’’

7 (b) EMPLOYER MAY NOT REQUEST EMPLOYEE TO

8 WAIVE RIGHTS.—Section 203 of such Act (29 U.S.C.

9 1053) is amended by adding at the end the following new

10 subsection:

11 ‘‘(f) An employer may not request an employee to

12 waive any right of coverage under, or participation in, any

13 pension plan which is granted by this title.’’

14 SEC. 102. MINIMUM PARTICIPATION REQUIREMENTS.

15 (a) IN GENERAL.—Sections 202(a)(3), 203(b)(2),

16 and 204(b)(4) of the Employee Retirement Income Secu17 rity Act of 1974 (29 U.S.C. 1052(a)(3), 1053(b)(2), and

18 1054(b)(4)) are each amended by striking ‘‘1,000 hours’’

19 each place it appears and inserting ‘‘750 hours’’.

20 (b) CONFORMING AMENDMENTS.—

21 (1) Sections 202(a)(3)(D), 203(b)(2)(D), and

22 204(b)(4)(E) (29 U.S.C. 1052(a)(3)(D),

23 1053(b)(2)(D), and 1054(b)(4)(E)) are each amend24 ed by striking ‘‘125 days’’ and inserting ‘‘94 days’’.
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1 (2) Sections 202(b)(5)(B) and 203(b)(3)(E)(ii)

2 (29 U.S.C. 1052(b)(5)(B) and 1053(b)(3)(E)(ii))

3 are each amended by striking ‘‘501 hours’’ and in4 serting ‘‘376 hours’’.

5 (3) Section 203(b)(3)(A) (29 U.S.C.

6 1053(b)(3)(A)) is amended by striking ‘‘500 hours’’

7 and inserting ‘‘375 hours’’.

8 SEC. 103. FASTER VESTING OF BENEFITS UNDER DEFINED

9 CONTRIBUTION PLANS.

10 Paragraph (2) of section 203(a) of the Employee Re11 tirement Income Security Act of 1974 (29 U.S.C.

12 1053(a)) is amended by striking subparagraphs (A) and

13 (B) and inserting the following:

14 ‘‘(A) A plan satisfies the requirements of

15 this subparagraph if an employee has a non16 forfeitable right to 100 percent of the employ17 ee’s accrued benefit derived from employer

18 contributions—

19 ‘‘(i) in the case of a defined benefit

20 plan, as of completion by the employee of

21 at least 5 years of service, or

22 ‘‘(ii) in the case of a defined contribu23 tion plan, as of completion by the employee

24 of at least 3 years of service.
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1 ‘‘(B) A plan satisfies the requirements of

2 this subparagraph if an employee has a non3 forfeitable right to a percentage of the employ4 ee’s accrued benefit derived from employer con5 tributions determined under the applicable table

6 set forth in clause (i) or (ii).

7 ‘‘(i) In the case of a defined benefit

8 plan, the applicable table is the following:

The nonforfeitable

‘‘Years of service: percentage is:

3 ....................................................................................... 20

4 ....................................................................................... 40

5 ....................................................................................... 60

6 ....................................................................................... 80

7 or more .......................................................................... 100

9 ‘‘(ii) In the case of a defined contribu10 tion plan, the applicable table is the fol11 lowing:

The nonforfeitable

‘‘Years of service: percentage is:

1 ....................................................................................... 20

2 ....................................................................................... 40

3 ....................................................................................... 60

4 ....................................................................................... 80

5 or more .......................................................................... 100’’.

12 SEC. 104. MODEL SMALL EMPLOYER GROUP PENSION

13 PLAN.

14 (a) IN GENERAL.—Section 206 of the Employee Re15 tirement Income Security Act of 1974 (29 U.S.C. 1056)

16 is amended by adding at the end the following new sub17 section:

18 ‘‘(g) MODEL SIMPLIFIED PENSION PLANS.—
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1 ‘‘(1) ESTABLISHMENT OF MODEL PLAN.—The

2 Secretary, in consultation with the Secretary of the

3 Treasury, shall prescribe by regulations one or more

4 model simplified pension plans which would—

5 ‘‘(A) provide simplicity and minimal ad6 ministrative responsibilities to employers and

7 provide adequate retirement benefits to employ8 ees upon adoption by an employer, including

9 models which could be established by a group of

10 small employers, an employee association, an

11 employer association, or a financial institution,

12 ‘‘(B) cover all employees of the employer,

13 ‘‘(C) provide for a joint and survivor op14 tion, and

15 ‘‘(D) accept contributions from successive

16 employers,

17 ‘‘(E) readily permit and accept rollovers to

18 and from other qualified plans (as defined in

19 section 203(e)(2)), and

20 ‘‘(F) constitute a plan meeting the require21 ments of this Act and Internal Revenue Code of

22 1986.

23 In devising a model pension plan, the Secretary shall

24 consider the adequacy of existing simplified em25 ployee pension plan alternatives and may make rec-
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1 ommendations to adopt such plans as model sim2 plified plans.

3 ‘‘(2) ADVERTISEMENT OF MODEL PLAN.—The

4 Secretary, in consultation with the Secretary of the

5 Treasury and the Administrator of the Small Busi6 ness Administration, shall advertise the model plans

7 developed pursuant to paragraph (1), including

8 through contracts (to the extent provided in appro9 priation Acts) with applicable organizations, to en10 sure that small employers and their employees are

11 apprised of the availability of administratively simple

12 single and group pension plans.’’.

13 (b) INITIAL REGULATIONS.—Regulations under sec14 tion 206(g) of the Employee Retirement Income Security

15 Act of 1974 (added by this section) for the first model

16 simplified pension plans shall be issued within 12 months

17 of the date of the enactment of this Act.

18 (c) STUDY.—Not later than 3 years after the date

19 of the enactment of this Act, the Secretary of Labor and

20 the Secretary of the Treasury shall conduct a joint study

21 to determine the feasibility of permitting non-highly com22 pensated employees whose employer does not cover them

23 under a pension plan, and other non-covered individuals,

24 to seek an automatic payroll deduction or other deferral

25 mechanism to make contributions to a model plan similar
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1 to one developed pursuant to section 206(g) of the Em2 ployee Retirement Income Security Act of 1974. Such Sec3 retaries shall submit a joint report to the Congress de4 scribing the results of such study and making such rec5 ommendations as the Secretaries determine necessary or

6 appropriate.

7 SEC. 105. ENFORCEMENT UNDER ERISA OF REQUIREMENTS

8 FOR SIMPLIFIED EMPLOYEE PENSIONS.

9 Subtitle A of title III of the Employee Retirement

10 Income Security Act of 1974 is amended by adding after

11 section 3004 (29 U.S.C. 1204) the following new section:

12 ‘‘TREATMENT OF SIMPLIFIED EMPLOYEE PENSIONS

13 ‘‘SEC. 3005. For purposes of part 5 of subtitle B of

14 title I, the requirements of section 408(k) of the Internal

15 Revenue Code of 1986 relating to simplified employee pen16 sions (as defined in section 408(k)(1) of such Code) shall

17 be treated as requirements of title I applicable to employee

18 pension benefit plans (as defined in section 3(2)) which

19 are such simplified employee pensions.’’.

20 TITLE II—IMPROVED PENSION

21 PROTECTIONS FOR WOMEN

22 SEC. 201. ELIMINATION OF INTEGRATION WITH WORKERS’

23 COMPENSATION AND SIMILAR BENEFITS.

24 Section 206 of the Employee Retirement Income Se25 curity Act of 1974 (29 U.S.C. 1056) is amended by adding

26 at the end the following new subsection:
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1 ‘‘(g) INTEGRATION WITH WORKERS’ COMPENSATION

2 AND SIMILAR BENEFITS PRECLUDED.—Benefits under an

3 employee pension benefit plan may not vary based on the

4 amount of benefits received by a participant or beneficiary

5 under an applicable worker’s compensation law, unemploy6 ment compensation law, or disability insurance law, or on

7 whether the participant or beneficiary is entitled to such

8 benefits.’’.

9 SEC. 202. SPOUSAL CONSENT REQUIRED FOR DISTRIBU10 TIONS FROM DEFINED CONTRIBUTION

11 PLANS.

12 (a) IN GENERAL.—Section 205(b) of the Employee

13 Retirement Income Security Act of 1974 (29 U.S.C.

14 1055(b)) is amended to read as follows:

15 ‘‘(b)(1) This section shall apply to any defined benefit

16 plan and to any individual account plan.

17 ‘‘(2) This section shall not apply to a plan which the

18 Secretary of the Treasury or his delegate has determined

19 is a plan described in section 404(c) of the Internal Rev20 enue Code of 1986 (or a continuation thereof) in which

21 participation is substantially limited to individuals who,

22 before January 1, 1976, ceased employment covered by

23 the plan.’’
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1 (b) HARDSHIP DISTRIBUTION.—Section 205 of such

2 Act (29 U.S.C. 1055) is amended by adding at the end

3 the following new subsection:

4 ‘‘(m) This section shall not apply to a hardship dis5 tribution under section 401(k)(2)(B)(i)(IV) of the Internal

6 Revenue Code of 1986.’’

7 (c) SPECIAL RULE FOR CASH-OUTS.—Section 205(g)

8 of such Act (29 U.S.C. 1055(g)) is amended by adding

9 at the end the following new paragraph:

10 ‘‘(4) SPECIAL RULE FOR DEFINED CONTRIBU11 TION PLANS.—

12 ‘‘(A) IN GENERAL.—In the case of an indi13 vidual account plan, notwithstanding paragraph

14 (2), if the present value of the qualified joint

15 and survivor annuity or the qualified preretire16 ment survivor annuity exceeds $10,000, the

17 plan may immediately distribute 50 percent of

18 the present value of such annuity to each

19 spouse, subject to the requirements of section

20 203(f) as if each spouse were a participant.

21 ‘‘(B) EXCEPTION.—The plan may dis22 tribute a different percentage of the present

23 value of an annuity to each spouse if a court

24 order or contractual agreement between the

25 spouses provides for such different percentage.’’
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1 SEC. 203. MODIFICATIONS OF JOINT AND SURVIVOR ANNU2 ITY REQUIREMENTS.

3 (a) AMOUNT OF ANNUITY.—

4 (1) IN GENERAL.—Paragraph (1) of section

5 205(a) of the Employee Retirement Income Security

6 Act of 1974 (29 U.S.C. 1055(a)) is amended by in7 serting ‘‘or, at the election of the participant, shall

8 be provided in the form of a qualified joint and 75

9 percent survivor annuity’’ after ‘‘survivor annuity,’’.

10 (2) DEFINITION.—Subsection (d) of section 205

11 of such Act (29 U.S.C. 1055) is amended—

12 (A) by redesignating paragraphs (1) and

13 (2) as subparagraphs (A) and (B), respectively,

14 (B) by inserting ‘‘(1)’’ after ‘‘(d)’’, and

15 (C) by adding, after subparagraph B, the

16 following new paragraph:

17 ‘‘(2) For purposes of this section, the term ‘qualified

18 joint and 75 percent survivor annuity’ means a joint and

19 survivor annuity under which the survivor annuity for the

20 life of the surviving spouse is equal to at least 75 percent

21 of the amount of the annuity which is payable during the

22 joint lives of the participant and spouse.’’

23 (3) CONFORMING AMENDMENTS.—

24 (A) Paragraph (1) of section 205(c) of

25 such Act (29 U.S.C. 1055) is amended by in26 serting ‘‘or qualified joint and 75 percent sur-
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1 vivor annuity’’ after ‘‘qualified joint and sur2 vivor annuity’’.

3 (B) Subsection (e)(1) of such Act is

4 amended by inserting ‘‘or, if the participant has

5 so elected, a qualified joint and 75 percent sur6 vivor annuity’’ after ‘‘qualified joint and sur7 vivor annuity’’ each time it appears.

8 (b) ILLUSTRATION REQUIREMENT.—Clause (i) of

9 section 205(c)(3)(A) of such Act (29 U.S.C.

10 1055(c)(3)(A)) is amended to read as follows:

11 ‘‘(i) the terms and conditions of each qualified

12 joint and survivor annuity and qualified joint and 75

13 percent survivor annuity offered, accompanied by an

14 illustration of the benefits under each such annuity

15 for the particular participant and spouse and an ac16 knowledgement form to be signed by the participant

17 and the spouse that they have read and considered

18 the illustration before any form of retirement benefit

19 is chosen.’’.

20 SEC. 204. DIVISION OF PENSION BENEFITS UPON DIVORCE.

21 (a) IN GENERAL.—Section 206(d)(3) of the Em22 ployee Retirement Income Security Act of 1974 (29

23 U.S.C. 1056(d)(3)) is amended by redesignating subpara24 graph (N) as subparagraph (O) and by inserting after

25 subparagraph (M) the following new subparagraph:
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1 ‘‘(N) SPECIAL RULES AND PROCEDURES

2 FOR DOMESTIC RELATIONS ORDERS NOT SPECI3 FYING DIVISION OF PENSION BENEFITS.—

4 ‘‘(i) IN GENERAL.—In any case in

5 which—

6 ‘‘(I) a domestic relations order

7 (including an annulment or other

8 order of marital dissolution) relates to

9 provision of marital property with re10 spect to a marriage of at least 5 years

11 duration between an individual who is

12 a participant in a pension plan and

13 such individual’s former spouse,

14 ‘‘(II) such order, and all prior or15 ders (if any) described in subclause

16 (I) relating to such marriage, do not

17 specifically provide that pension bene18 fits were considered by the parties

19 and that no division of such benefits

20 is intended,

21 ‘‘(III) such order is not a quali22 fied domestic relations order (as de23 termined without regard to this sub24 paragraph) and there is no other prior

25 qualified domestic relations order
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1 issued in connection with the dissolu2 tion of the marriage to which such

3 order relates, and

4 ‘‘(IV) the former spouse notifies

5 the plan within the period prescribed

6 under clause (vii) that the former

7 spouse is entitled to benefits under

8 the plan in accordance with the provi9 sions of this subparagraph,

10 such domestic relations order shall be

11 treated as a qualified domestic relations

12 order for purposes of this paragraph.

13 ‘‘(ii) AMOUNT OF BENEFIT.—Any do14 mestic relations order treated as a quali15 fied domestic relations order under clause

16 (i) shall be treated as specifying that the

17 former spouse is entitled to the applicable

18 percentage of the marital share of the par19 ticipant’s accrued benefit.

20 ‘‘(iii) MARITAL SHARE.—For purposes

21 of clause (ii), the marital share of a par22 ticipant’s accrued benefit is an amount

23 equal to the product of—

24 ‘‘(I) such benefit as of the date

25 of the first payment under the plan
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1 (to the extent such accrued benefit is

2 vested on the date of the dissolution

3 of the marriage or any later date),

4 and

5 ‘‘(II) a fraction, the numerator of

6 which is the period of participation by

7 the participant under the plan start8 ing with the date of marriage and

9 ending with the date of dissolution of

10 marriage, and the denominator of

11 which is the total period of participa12 tion by the participant under the plan.

13 ‘‘(iv) APPLICABLE PERCENTAGE.—

14 For purposes of clause (ii), the applicable

15 percentage is—

16 ‘‘(I) except as provided in sub17 clause (II), 50 percent, and

18 ‘‘(II) in the case of a participant

19 who fails to provide the plan with no20 tice of a domestic relations order

21 within the time prescribed under

22 clause (v), 67 percent.

23 ‘‘(v) NOTICE BY PARTICIPANT.—Each

24 participant in a pension plan shall, within
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1 60 days after the dissolution of the mar2 riage of the participant—

3 ‘‘(I) notify the plan administrator

4 of the plan of such dissolution, and

5 ‘‘(II) provide to the plan adminis6 trator a copy of the domestic relations

7 order (including an annulment or

8 other order of marital dissolution)

9 providing for such dissolution and the

10 last known address of the partici11 pant’s former spouse.

12 ‘‘(vi) NOTICE BY PLAN ADMINIS13 TRATOR.—Each plan administrator receiv14 ing notice under clause (v) shall promptly

15 notify the former spouse of a participant of

16 such spouse’s rights under this subpara17 graph, including the time period within

18 which such spouse is required to notify the

19 plan of the spouse’s intention to claim

20 rights under this subparagraph.

21 ‘‘(vii) NOTICE BY FORMER SPOUSE.—

22 A former spouse may notify the plan ad23 ministrator of such spouse’s intent to claim

24 rights under this subparagraph at any time
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1 before the last day of the 1-year period fol2 lowing receipt of notice under clause (vi).

3 ‘‘(viii) COORDINATION WITH PLAN

4 PROCEDURES.—The determination under

5 subparagraph (G)(i)(II) with respect to a

6 domestic relations order to which this sub7 paragraph applies shall be made within a

8 reasonable period of time after the plan

9 administrator receives the notice described

10 in clause (vii).

11 ‘‘(ix) INTERPRETATION AS QUALIFIED

12 DOMESTIC RELATIONS ORDER.—Each plan

13 shall establish reasonable rules for deter14 mining how any such deemed domestic re15 lations order is to be interpreted under the

16 plan so as to constitute a qualified domes17 tic relations order that satisfies subpara18 graphs (C) through (E) (and a copy of

19 such rules shall be provided to such former

20 spouse promptly after delivery of the di21 vorce decree). Such rules—

22 ‘‘(I) may delay the effect of such

23 an order until the earlier of the date

24 the participant is fully vested or has

25 terminated employment,
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1 ‘‘(II) may allow the former

2 spouse to be distributed immediately,

3 ‘‘(III) shall permit the former

4 spouse to be paid not later than the

5 earliest retirement age under the plan

6 or the participant’s death,

7 ‘‘(IV) may require the submitter

8 of the divorce decree to present a

9 marriage certificate or other evidence

10 of the marriage date to assist in ben11 efit calculations, and

12 ‘‘(V) may conform to the rules

13 applicable to qualified domestic rela14 tions orders regarding form or type of

15 benefit.’’

16 (b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply with respect to notifications made

18 by former spouses pursuant to section 206(d)(3)(N)(vii)

19 of the Employee Retirement Income Security Act of 1974

20 after December 31, 2000.

21 SEC. 205. PERIODS OF FAMILY AND MEDICAL LEAVE

22 TREATED AS HOURS OF SERVICE FOR PEN23 SION PARTICIPATION AND VESTING.

24 (a) PARTICIPATION.—
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1 (1) IN GENERAL.—Paragraph (3) of section

2 202(a) of the Employee Retirement Income Security

3 Act of 1974 (relating to minimum participation

4 standards) is amended by adding at the end the fol5 lowing new subparagraph:

6 ‘‘(E)(i) For purposes of this subsection, in the case

7 of an individual who is absent from work on leave required

8 to be given to such individual under the Family and Med9 ical Leave Act of 1993, the plan shall treat as hours of

10 service—

11 ‘‘(I) the hours of service which otherwise would

12 normally have been credited to such individual but

13 for such absence, or

14 ‘‘(II) in any case in which the plan is unable to

15 determine the hours described in subclause (I), 8

16 hours of service per day of absence.

17 ‘‘(ii) The hours described in clause (i) shall be treated

18 as hours of service as provided in this subparagraph—

19 ‘‘(I) only in the year in which the absence from

20 work begins, if section 203(b)(2)(E)(ii)(I) requires

21 hours to be credited to the year in which the absence

22 from work begins, or

23 ‘‘(II) in any other case, in the immediately fol24 lowing year.’’
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1 (2) COORDINATION WITH TREATMENT OF MA2 TERNITY AND PATERNITY ABSENCES UNDER BREAK

3 IN SERVICE RULES.—Subparagraph (A) of section

4 202(b)(5) of such Act is amended by adding at the

5 end of clause (i) the following new sentence: ‘‘The

6 preceding sentence shall apply to an absence from

7 work only if no part of such absence is required to

8 be given under the Family and Medical Leave Act

9 of 1993.’’

10 (b) VESTING.—

11 (1) IN GENERAL.—Paragraph (2) of section

12 203(b) of such Act (relating to minimum vesting

13 standards) is amended by adding at the end the fol14 lowing new subparagraph:

15 ‘‘(E)(i) For purposes of this subsection, in the case

16 of an individual who is absent from work on leave required

17 to be given to such individual under the Family and Med18 ical Leave Act of 1993, the plan shall treat as hours of

19 service—

20 ‘‘(I) the hours of service which otherwise would

21 normally have been credited to such individual but

22 for such absence, or

23 ‘‘(II) in any case in which the plan is unable to

24 determine the hours described in subclause (I), 8

25 hours of service per day of absence.
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1 ‘‘(ii) The hours described in clause (i) shall be treated

2 as hours of service as provided in this subparagraph—

3 ‘‘(I) only in the year in which the absence from

4 work begins, if the participant’s rights in his ac5 crued benefit derived from employer contributions

6 are to any extent not nonforfeitable and the partici7 pant would have a year of service solely because the

8 period of absence is treated as hours of service as

9 provided in clause (i); or

10 ‘‘(II) in any other case, in the immediately fol11 lowing year.’’

12 (2) COORDINATION WITH TREATMENT OF MA13 TERNITY AND PATERNITY ABSENCES UNDER BREAK

14 IN SERVICE RULES.—Clause (i) of section

15 203(b)(3)(E) of such Act is amended by adding at

16 the end of clause (i) the following new sentence:

17 ‘‘The preceding sentence shall apply to an absence

18 from work only if no part of such absence is re19 quired to be given under the Family and Medical

20 Leave Act of 1993.’’

21 (c) APPLICATION TO CURRENT EMPLOYEES.—The

22 amendments made by this section shall not apply to any

23 employee who does not have at least 1 hour of service in

24 any plan year beginning after December 31, 2000.
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1 SEC. 206. RIGHT OF SPOUSE TO KNOW DISTRIBUTION IN2 FORMATION.

3 Paragraph (3) of section 205(c) of the Employee Re4 tirement Income Security Act of 1974 (29 U.S.C.

5 1055(c)(3)) is amended by adding at the end the following

6 new subparagraph:

7 ‘‘(C) EXPLANATION TO SPOUSE.—At the

8 time a plan provides a participant with a writ9 ten explanation under subparagraph (A) or (B),

10 such plan shall provide a copy of such expla11 nation to such participant’s spouse. If the last

12 known address of the spouse is the same as the

13 last known address of the participant, the re14 quirement of the preceding sentence shall be

15 treated as met if the copy referred to in the

16 preceding sentence is included in a single mail17 ing made to such address and addressed to both

18 such participant and spouse.’’.

19 SEC. 207. REPEAL OF REDUCTION IN MILITARY SURVIVOR

20 BENEFIT PLAN ANNUITIES AT AGE 62.

21 (a) COMPUTATION OF ANNUITY FOR A SPOUSE,

22 FORMER SPOUSE, OR CHILD.—Subsection (a) of section

23 1451 of title 10, United States Code, is amended—

24 (1) in paragraph (1), by striking ‘‘shall be de25 termined as follows:’’ and all that follows and insert-
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1 ing the following: ‘‘shall be the amount equal to 55

2 percent of the base amount.’’;

3 (2) in paragraph (2), by striking ‘‘shall be de4 termined as follows:’’ and all that follows and insert5 ing the following: ‘‘shall be the amount equal to a

6 percentage of the base amount that is less than 55

7 percent and is determined under subsection (f).’’.

8 (b) ANNUITIES FOR SURVIVORS OF CERTAIN PER9 SONS DYING DURING A PERIOD OF SPECIAL ELIGIBILITY

10 FOR SBP.—Subsection (c)(1) of such section is amended

11 by striking ‘‘shall be determined as follows:’’ and all that

12 follows and inserting the following: ‘‘shall be the amount

13 equal to 55 percent of the retired pay to which the member

14 or former member would have been entitled if the member

15 or former member had been entitled to that pay based

16 upon his years of active service when he died.’’.

17 (c) REPEAL OF REQUIREMENT FOR REDUCTION.—

18 Such section is further amended by striking subsection

19 (d).

20 (d) REPEAL OF UNNECESSARY SUPPLEMENTAL

21 SBP.—(1) Subchapter III of chapter 73 of title 10,

22 United States Code, is repealed.

23 (2) The table of subchapters at the beginning of such

24 chapter is amended by striking the item relating to sub25 chapter III.
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on October 1, 2000, and shall

3 apply with respect to annuity payments for months begin4 ning on or after that date.

5 SEC. 208. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS,

6 AND FORMER SPOUSES OF FEDERAL EM7 PLOYEES WHO DIE BEFORE ATTAINING AGE

8 FOR DEFERRED ANNUITY UNDER CIVIL

9 SERVICE RETIREMENT SYSTEM.

10 (a) BENEFITS FOR WIDOW OR WIDOWER.—Section

11 8341(f) of title 5, United States Code, is amended—

12 (1) in the matter preceding paragraph (1) by—

13 (A) by inserting ‘‘a former employee sepa14 rated from the service with title to deferred an15 nuity from the Fund dies before having estab16 lished a valid claim for annuity and is survived

17 by a spouse, or if’’ before ‘‘a Member’’; and

18 (B) by inserting ‘‘of such former employee

19 or Member’’ after ‘‘the surviving spouse’’;

20 (2) in paragraph (1)—

21 (A) by inserting ‘‘former employee or’’ be22 fore ‘‘Member commencing’’; and

23 (B) by inserting ‘‘former employee or’’ be24 fore ‘‘Member dies’’; and
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1 (3) in the undesignated sentence following para2 graph (2)—

3 (A) in the matter preceding subparagraph

4 (A) by inserting ‘‘former employee or’’ before

5 ‘‘Member’’; and

6 (B) in subparagraph (B) by inserting

7 ‘‘former employee or’’ before ‘‘Member’’.

8 (b) BENEFITS FOR FORMER SPOUSE.—Section

9 8341(h) of title 5, United States Code, is amended—

10 (1) in paragraph (1)—

11 (A) by redesignating such paragraph as

12 paragraph (1)(A); and

13 (B) by adding at the end the following:

14 ‘‘(B) Subject to paragraphs (2) through (5) of this

15 subsection, a former spouse of a former employee who dies

16 after having separated from the service with title to a de17 ferred annuity under section 8338(a) but before having

18 established a valid claim for annuity is entitled to a sur19 vivor annuity under this subsection, if and to the extent

20 expressly provided for in an election under section

21 8339(j)(3) of this title, or in the terms of any decree of

22 divorce or annulment or any court order or court-approved

23 property settlement agreement incident to such decree.’’;

24 and

25 (2) in paragraph (2)—
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1 (A) in subparagraph (A)(ii) by striking ‘‘or

2 annuitant,’’ and inserting ‘‘annuitant, or former

3 employee’’; and

4 (B) in subparagraph (B)(iii) by inserting

5 ‘‘former employee or’’ before ‘‘Member’’.

6 (c) PROTECTION OF SURVIVOR BENEFIT RIGHTS.—

7 Section 8339(j)(3) of title 5, United States Code, is

8 amended by adding at the end the following: ‘‘The Office

9 shall provide by regulation for the application of this sub10 section to the widow, widower, or surviving former spouse

11 of a former employee who dies after having separated from

12 the service with title to a deferred annuity under section

13 8338(a) but before having established a valid claim for

14 annuity.’’.

15 (d) EFFECTIVE DATE.—The amendments made by

16 this section shall take effect on the date of the enactment

17 of this Act and shall apply only in the case of a former

18 employee who dies on or after such date.
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1 SEC. 209. ORDER OF PRECEDENCE FOR DISPOSITION OF

2 AMOUNTS REMAINING IN THE THRIFT SAV3 INGS ACCOUNT OF A FEDERAL EMPLOYEE

4 (OR FORMER EMPLOYEE) WHO DIES BEFORE

5 MAKING AN EFFECTIVE ELECTION CONTROL6 LING SUCH DISPOSITION.

7 (a) IN GENERAL.—Section 8433(e) of title 5, United

8 States Code, is amended—

9 (1) by striking ‘‘(e)’’ and inserting ‘‘(e)(1)’’;

10 (2) by striking all that follows ‘‘paid’’ and in11 serting ‘‘in accordance with paragraph (2).’’; and

12 (3) by adding at the end the following:

13 ‘‘(2) An amount under paragraph (1) shall be paid

14 in a manner consistent with the provisions of section

15 8424(d), except that, in applying the order of precedence

16 under such provisions—

17 ‘‘(A) the widow or widower of the decedent shall

18 be the first party entitled to receive (instead of any

19 designated beneficiary); and

20 ‘‘(B) if there is no widow or widower, the party

21 next entitled to receive shall be the beneficiary or

22 beneficiaries designated by the employee or Member

23 (or former employee or Member) in accordance with

24 the procedures that would otherwise normally apply,

25 subject to such additional conditions as the Execu26 tive Director shall by regulation prescribe based on
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1 section 205(c)(2) of the Employee Retirement In2 come Security Act of 1974.’’.

3 (b) EFFECTIVE DATE.—This section and the amend4 ment made by this section shall take effect on the 90th

5 day after the date of the enactment of this Act, and shall

6 apply in the case of any individual who dies on or after

7 such 90th day.

8 SEC. 210. INTEREST ON AMOUNTS PAID TO MAKE UP FOR

9 CERTAIN CIVIL SERVICE ANNUITY BENEFITS

10 WRONGFULLY DENIED.

11 (a) IN GENERAL.—Chapter 77 of title 5, United

12 States Code, is amended by adding at the end the fol13 lowing:

14 ‘‘§ 7704. Interest on amounts paid to make up for cer15 tain annuity benefits wrongfully denied

16 ‘‘(a) In the case of an individual who, on the basis

17 of a timely appeal to the Merit Systems Protection Board

18 under section 8347(d) or 8461(e), or petition for judicial

19 review under section 7703 from a final order or decision

20 of the Board in any such appeal, is found by the relevant

21 authority—

22 ‘‘(1) to have been affected by an erroneous ap23 plication or interpretation of subchapter III of chap24 ter 83, chapter 84, or any other provision of law (or

25 any rule or regulation relating thereto), and
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1 ‘‘(2) to be entitled to receive an amount equal

2 to all or any part of an annuity not paid to such in3 dividual as a result of such erroneous application or

4 interpretation,

5 the amount under paragraph (2) may, in the discretion

6 of such authority, be made payable with interest.

7 ‘‘(b) Any such interest—

8 ‘‘(1) shall be computed in such manner as the

9 Merit Systems Protection Board or the court (as the

10 case may be) considers appropriate; and

11 ‘‘(2) shall be payable out of the Civil Service

12 Retirement and Disability Fund.

13 ‘‘(c) For purposes of this section, the term ‘annuity’

14 means any annuity (including a survivor annuity) payable

15 out of the Civil Service Retirement and Disability Fund.’’.

16 (b) CONFORMING AMENDMENTS.—

17 (1) Section 8348(a)(1)(A) of title 5, United

18 States Code, is amended by striking ‘‘Fund;’’ and

19 inserting ‘‘Fund (including any interest payable

20 under section 7704);’’.

21 (2) The analysis for chapter 77 of title 5,

22 United States Code, is amended by adding at the

23 end the following:

‘‘7704. Interest on amounts paid to make up for certain annuity benefits wrongfully denied.’’.
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1 SEC. 211. AMENDMENTS RELATING TO EFFECTIVE DATE

2 PROVISION OF THE CIVIL SERVICE RETIRE3 MENT SPOUSE EQUITY ACT OF 1984.

4 (a) ELIMINATION OF CERTAIN BARS TO ELIGI5 BILITY.—Section 4(b) of the Civil Service Retirement

6 Spouse Equity Act of 1984 (5 U.S.C. 8341 note) is

7 amended—

8 (1) in paragraph (1)(B)(i), by striking ‘‘after

9 September 14, 1978, and’’; and

10 (2) by repealing paragraph (4).

11 (b) NEW DEADLINE FOR APPLICATIONS.—

12 (1) IN GENERAL.—Section 4(b)(1)(B)(iv) of the

13 Civil Service Retirement Spouse Equity Act of 1984

14 is amended by striking ‘‘May 7, 1989’’ and inserting

15 ‘‘May 7, 2001’’.

16 (2) AUTHORITY TO WAIVE DEADLINE.—Section

17 4(b) of the Civil Service Retirement Spouse Equity

18 Act of 1984 is amended by adding at the end the

19 following:

20 ‘‘(6)(A) The Director of the Office of Personnel Man21 agement may waive the deadline under paragraph

22 (1)(B)(iv) in any case in which the Director determines

23 that the circumstances so warrant.

24 ‘‘(B) In making a determination under this para25 graph, one of the factors which may be taken into account
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1 is whether the individual involved has previously submitted

2 a timely application under this section—

3 ‘‘(i) which was denied; but

4 ‘‘(ii) which, based on criteria applied under this

5 section pursuant to changes in law subsequent to the

6 denial, would have been approved.’’.

7 TITLE III—SIMPLIFIED

8 INVESTMENT STANDARDS

9 SEC. 301. EXEMPTION FROM PROHIBITED TRANSACTION

10 RULES FOR EMERGENT TRANSACTIONS.

11 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

12 INCOME SECURITY ACT OF 1974.—Section 408 of the

13 Employee Retirement Income Security Act of 1974 (29

14 U.S.C. 1108) is amended by adding at the end the fol15 lowing new subsection:

16 ‘‘(g)(1) Pursuant to regulations issued by the Sec17 retary, a transaction between an employee benefit plan

18 and an eligible person constituting the purchase or sale

19 of a financial product which is in violation of a restriction

20 imposed by section 406 or 407(a) shall be exempted under

21 subsection (a) from treatment as a violation of such re22 striction if—

23 ‘‘(A) prior to engaging in the transaction, the

24 plan acquires from the eligible person a qualifying

25 guarantee, consisting of a letter of credit or other
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1 form of written guarantee, issued by a bank or simi2 lar financial institution (other than the eligible per3 son requesting the exemption or an affiliate) regu4 lated and supervised by, and subject to periodic ex5 amination by, an agency of a State or of the Federal

6 Government, in a stated amount equal, as of the

7 close of business on the day preceding the trans8 action, to not less than 100 percent of the amount

9 of plan assets involved in the transaction, plus inter10 est on that amount at a rate determined by the par11 ties to the transaction, or in the absence of such de12 termination, an interest rate equal to the under13 payment rate defined in section 6621(a)(2) of the

14 Internal Revenue Code of 1986;

15 ‘‘(B) the eligible person receives in such trans16 action not more than reasonable compensation;

17 ‘‘(C) such transaction is expressly approved by

18 an independent fiduciary who has investment au19 thority with respect to the plan assets involved in

20 the transaction;

21 ‘‘(D) within 60 days after the transaction, the

22 eligible person submits to the Secretary an applica23 tion for an exemption under subsection (a) from

24 such restriction;
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1 ‘‘(E) immediately after the acquisition of the fi2 nancial product—

3 ‘‘(i) the fair market value of such financial

4 product does not exceed 1 percent of the fair

5 market value of the assets of the plan, and

6 ‘‘(ii) the aggregate fair market value of all

7 outstanding financial products acquired by the

8 plan from the eligible person pursuant to this

9 subsection does not exceed 5 percent of the fair

10 market value of the assets of the plan;

11 ‘‘(F) the Secretary determines not to grant the

12 exemption; and

13 ‘‘(G) the transaction is reversed within 60 days

14 after the date of the Secretary’s determination.

15 ‘‘(2) For purposes of this subsection—

16 ‘‘(A) a guarantee referred to in paragraph (1)

17 is ‘qualifying’ if such guarantee is irrevocable and,

18 under the terms of the guarantee—

19 ‘‘(i) if the Secretary grants the exemption,

20 the guarantee may expire without any payments

21 made to the plan, and

22 ‘‘(ii) if the Secretary determines not to

23 grant the exemption, the plan has the uncondi24 tional right to apply the amounts under the

25 guarantee to any losses suffered and to the pay-
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1 ment of interest determined under paragraph

2 (1); and

3 ‘‘(B) the term ‘eligible person’ means a person

4 that—

5 ‘‘(i) consists of—

6 ‘‘(I) a bank as defined in section

7 202(a)(2) of the Investment Advisers Act

8 of 1940,

9 ‘‘(II) an investment adviser registered

10 under the Investment Advisers Act of

11 1940,

12 ‘‘(III) an insurance company which is

13 qualified to do business in more than one

14 State, or

15 ‘‘(IV) a broker-dealer registered under

16 the Securities Exchange Act of 1934,

17 ‘‘(ii) has shareholders’ or partners’ equity

18 in excess of $1,000,000, and

19 ‘‘(iii) is not described in section 411.’’.

20 (b) EFFECTIVE DATE.—The amendment made by

21 this section shall apply with respect to transactions occur22 ring after December 31, 2000.
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1 SEC. 302. ALTERNATIVE METHOD FOR PUBLISHING THE

2 PENDENCY OF PROHIBITED TRANSACTION

3 EXEMPTIONS.

4 (a) IN GENERAL.—Section 408(a) of the Employee

5 Retirement Income Security Act of 1974 (29 U.S.C.

6 1108(a)) is amended by inserting before the last sentence

7 the following new sentence: ‘‘Nothing in this subsection

8 shall preclude the Secretary, in the Secretary’s sole discre9 tion, from prescribing by regulation, as an alternative to

10 publication in the Federal Register of the pendency of ex11 emptions under this subsection, an alternative method for

12 providing notice of the pendency of such exemptions, if

13 the other requirements of this subsection are met.’’.

14 (b) EFFECTIVE DATE.—The amendment made by

15 this section shall take effect on the date of the enactment

16 of this Act.

17 SEC. 303. EMPLOYER PROTECTION FROM LIABILITY FOR

18 THE PROVISION OF INVESTMENT ADVICE.

19 (a) IN GENERAL.—Section 402(c) of the Employee

20 Retirement Income Security Act of 1974 (29 U.S.C.

21 1102(c)) is amended—

22 (1) in paragraph (2), by striking ‘‘or’’ at the

23 end;

24 (2) in paragraph (3), by striking the period and

25 inserting ‘‘; or’’; and
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1 (3) by adding after paragraph (3) the following

2 new paragraph:

3 ‘‘(4) that a named fiduciary of a pension plan

4 described in section 404(c) may designate one or

5 more investment advisers to render advice to partici6 pants and beneficiaries with regard to assets held in

7 their individual accounts, if each such investment

8 adviser is—

9 ‘‘(A) registered as an investment adviser

10 under the Investment Advisers Act of 1940 or

11 under the laws of the State in which the invest12 ment adviser maintains its principal office and

13 place of business;

14 ‘‘(B) a bank as defined in section

15 202(a)(2) of the Investment Advisers Act of

16 1940;

17 ‘‘(C) an insurance company qualified to do

18 business under the laws of a State; or

19 ‘‘(D) a person registered as a broker or

20 dealer under the Securities Exchange Act of

21 1934.’’.

22 (b) PROTECTION FROM LIABILITY FOR BREACH BY

23 CO-FIDUCIARY.—Section 405 of such Act (29 U.S.C.

24 1105) is amended—
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1 (1) in subsection (c)(3), by inserting before the

2 period the following: ‘‘or the designation of an in3 vestment adviser in accordance with section

4 402(c)(4)’’; and

5 (2) by adding at the end the following new sub6 section:

7 ‘‘(e)(1) If any investment adviser designated under

8 a plan pursuant to paragraph (4) of section 402(c) ac9 knowledges in writing its designation as a fiduciary pursu10 ant to such paragraph, then, notwithstanding paragraphs

11 (2) and (3) of subsection (a) and subsection (b), no trustee

12 or named fiduciary of such plan shall be liable for acts

13 or omissions of such investment adviser in connection with

14 such plan.

15 ‘‘(2) Nothing in this subsection shall relieve any

16 trustee or named fiduciary of any liability under this part

17 for any act of such trustee or named fiduciary.’’.

18 (c) LIABILITY OF INVESTMENT ADVISERS AND THE

19 SCOPE OF INVESTMENT ADVICE.—Section 404(c)(1) of

20 such Act (29 U.S.C. 1104(c)(1)) is amended by adding

21 at the end the following new subparagraph:

22 ‘‘(C)(i) Notwithstanding subparagraph (B)

23 and section 3(21)(A)(ii), an investment adviser

24 appointed pursuant to section 402(c)(4) shall

25 be considered a fiduciary and shall be liable for
44

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1 any breach in connection with the provision of

2 investment advice to a participant or bene3 ficiary.

4 ‘‘(ii) For purposes of clause (i), an invest5 ment adviser appointed pursuant to section

6 402(c)(4) shall be considered to provide invest7 ment advice to a participant or beneficiary if

8 the adviser provides individualized recommenda9 tions to a participant or beneficiary with re10 spect to the purchase, sale, or retention of secu11 rities or other property for the participant’s or

12 beneficiary’s individual account.’’.

13 (d) RESTORATION OF LOSSES TO INDIVIDUAL AC14 COUNT.—Section 409(a) of such Act (29 U.S.C. 1109(a))

15 is amended by inserting ‘‘(or, in the case of a pension plan

16 which provides for individual accounts, the individual ac17 count)’’ after ‘‘plan’’ the second, third, and fourth places

18 it appears.

19 (e) EFFECTIVE DATE.—The amendments made by

20 this section shall apply with respect to advice referred to

21 in section 3(21)(A)(ii) of the Employee Retirement In22 come Security Act of 1974 provided after December 31,

23 2000.
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1 SEC. 304. PARTICIPATION OF PARTICIPANTS IN TRUSTEE2 SHIP OF DEFINED CONTRIBUTION PLANS.

3 (a) IN GENERAL.—Section 403(a) of the Employee

4 Retirement Income Security Act of 1974 (29 U.S.C.

5 1103(a)) is amended—

6 (1) by redesignating paragraphs (1) and (2) as

7 subparagraphs (A) and (B), respectively;

8 (2) by inserting ‘‘(1)’’ after ‘‘(a)’’; and

9 (3) by adding at the end the following new

10 paragraph:

11 ‘‘(2)(A) Subject to subparagraph (B), the assets of

12 a single-employer plan which is a defined contribution plan

13 and under which some or all of the assets are derived from

14 employee contributions shall be held in trust by a joint

15 board of trustees, which shall consist of two or more trust16 ees representing on an equal basis the interests of the em17 ployer or employers maintaining the plan and the interests

18 of the participants and their beneficiaries.

19 ‘‘(B) This paragraph shall apply for any plan year

20 only if a majority of the participants of the defined con21 tribution plan indicates to the plan administrator, in such

22 form and manner as shall be prescribed in regulations of

23 the Secretary, its intention to have this paragraph so

24 apply.

25 ‘‘(C)(i) Except as provided in clause (ii), in any case

26 in which the plan is maintained pursuant to one or more
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1 collective bargaining agreements between one or more em2 ployee organizations and one or more employers, the trust3 ees representing the interests of the participants and their

4 beneficiaries shall be designated by such employee organi5 zations.

6 ‘‘(ii) Clause (i) shall not apply with respect to a plan

7 described in such clause if the employee organization (or

8 all employee organizations, if more than one) referred to

9 in such clause file with the Secretary, in such form and

10 manner as shall be prescribed in regulations of the Sec11 retary, a written waiver of their rights under clause (i).

12 ‘‘(iii) In any case in which clause (i) does not apply

13 with respect to a single-employer plan because the plan

14 is not described in clause (i) or because of a waiver filed

15 pursuant to clause (ii), the trustee or trustees representing

16 the interests of the participants and their beneficiaries

17 shall be selected in accordance with regulations of the Sec18 retary. Such regulations may provide for selection of trust19 ees by the employer, but only from individuals who have

20 been demonstrated to be independent and to have no con21 flict of interest. An individual shall not be treated as ineli22 gible for selection as trustee solely because such individual

23 is an employee of the plan sponsor, except that the em24 ployee so selected may not be a highly compensated em-
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1 ployee (as defined in section 414(q) of the Internal Rev2 enue Code of 1986).

3 ‘‘(iv) The Secretary shall provide by regulation for

4 the appointment of a neutral, in accordance with the pro5 cedures under section 203(f) of the Labor Management

6 Relations Act, 1947 (29 U.S.C. 173(f)), to cast votes as

7 necessary to resolve tie votes by the trustees.’’.

8 (b) REGULATIONS.—The Secretary of Labor shall

9 prescribe the initial regulations necessary to carry out the

10 provisions of such amendments not later than 90 days

11 after the date of the enactment of this Act.

12 SEC. 305. REMOVAL OF $500,000 CAP ON BONDING REQUIRE13 MENT.

14 Section 412(a) of the Employee Retirement Income

15 Security Act of 1974 (29 U.S.C. 1112(a)) is amended, in

16 the matter following paragraph (2), by striking ‘‘nor more

17 than $500,000’’ and all that follows through ‘‘preceding

18 sentence’’.

19 SEC. 306. DISCLOSURE REGARDING INVESTMENTS AND

20 VOTING OF PROXIES.

21 (a) IN GENERAL.—Section 101 of the Employee Re22 tirement Income Security Act of 1974 (29 U.S.C. 1021)

23 is amended by inserting after subsection (e) the following

24 new subsection:
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1 ‘‘(f) DISCLOSURE REGARDING INVESTMENTS AND

2 VOTING OF PROXIES.—

3 ‘‘(1) IN GENERAL.—Within 30 days after re4 ceipt by the plan administrator of a written request

5 by a participant or beneficiary for relevant and spe6 cific information regarding—

7 ‘‘(A) the nature or extent of any particular

8 investment of plan assets occurring on a par9 ticular date specified in the request, or

10 ‘‘(B) the manner in which any right to

11 vote in connection with such investment has

12 been exercised by or under the plan,

13 the plan administrator shall furnish such informa14 tion in writing to such participant or beneficiary.

15 The administrator may make a reasonable charge to

16 cover the cost of furnishing such information.

17 ‘‘(2) STANDARDS AND REVIEW.—The Secretary

18 shall by regulation prescribe—

19 ‘‘(A) standards which must be met by re20 quests made pursuant to this subsection, in21 cluding standards relating to relevancy and

22 specificity of the information requested, the

23 specificity by which the investment must be

24 identified in the request, and the reasonableness
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1 of charges made for furnishing the information,

2 and

3 ‘‘(B) procedures by which plan administra4 tors may rely on such standards in declining re5 quests for information which fail to meet such

6 standards, including methods for obtaining

7 timely and binding determinations by the Sec8 retary regarding whether such standards are

9 being met by particular requests.’’.

10 (b) ENFORCEMENT.—Section 502(c)(1) of such Act

11 (29 U.S.C. 1132(c)(1)) is amended by striking ‘‘section

12 101(e)(1)’’ and inserting ‘‘subsection (e)(1) or (f)(1) of

13 section 101’’.

14 (c) CONFORMING AMENDMENT.—Section 101(h)(1)

15 of such Act (29 U.S.C. 1021(h)(1)) is amended by insert16 ing ‘‘or subsection (f)’’ after ‘‘this subsection’’.

17 (d) EFFECTIVE DATE.—The amendments made by

18 this section shall apply with respect to written requests

19 received after December 31, 2000.

20 SEC. 307. DIVERSIFICATION IN DEFINED CONTRIBUTION

21 INVESTMENTS.

22 Section 407(d)(3) of the Employee Retirement In23 come Security Act of 1974 (29 U.S.C. 1107(d)(3)) is

24 amended by adding at the end the following:
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1 ‘‘(D)(i) The term ‘eligible individual account

2 plan’ does not include that portion of a profit-shar3 ing plan that consists of employer contributions (in4 cluding elective deferrals (as defined in section

5 402(g)(3) of the Internal Revenue Code of 1986)

6 pursuant to a qualified cash or deferred arrange7 ment (as defined in section 401(k) of such Code))

8 and earnings allocable thereto, if—

9 ‘‘(I) under the documents and instruments

10 governing the plan, such contributions (or earn11 ings allocable thereto) are required to be in12 vested at the direction of a person other than

13 the participant on whose behalf such contribu14 tions are made to the plan (or the participant’s

15 beneficiary), or

16 ‘‘(II) the documents and instruments gov17 erning the plan do not provide for effective im18 plementation of investments directed by such a

19 participant (or beneficiary) within 3 years after

20 such direction is made known to the plan.

21 ‘‘(ii) For purposes of subsection (a), such por22 tion shall be treated as a separate plan.

23 ‘‘(iii) This subparagraph shall not apply to an

24 individual account plan if the fair market value of

25 the assets of all individual account plans maintained
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1 by the employer equals not more than 10 percent of

2 the fair market value of the assets of all pension

3 plans maintained by the employer.

4 ‘‘(iv) This subparagraph shall not apply to an

5 individual account plan that is an employee stock

6 ownership plan as defined in section 409(a) or

7 4975(e)(7) of the Internal Revenue Code or that is

8 a stock bonus plan.’’.

9 SEC. 308. DIVERSIFICATION OF INVESTMENTS UNDER EM10 PLOYEE STOCK OWNERSHIP PLANS BY PAR11 TICIPANTS AND BENEFICIARIES OVER 55

12 YEARS OF AGE.

13 Section 206 of the Employee Retirement Income Se14 curity Act of 1974 (29 U.S.C. 1056) (as amended by sec15 tion 201) is amended by adding at the end the following

16 new subsection:

17 ‘‘(h) DIVERSIFICATION OF INVESTMENTS UNDER EM18 PLOYEE STOCK OWNERSHIP PLANS BY PARTICIPANTS

19 AND BENEFICIARIES OVER 55 YEARS OF AGE.—

20 ‘‘(1) IN GENERAL.—An employee stock owner21 ship plan shall provide that each qualified partici22 pant may elect within 90 days after the close of each

23 plan year in the qualified election period to direct

24 the plan as to the investment of at least 25 percent

25 of the participant’s account in the plan (to the ex-
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1 tent such portion exceeds the amount to which a

2 prior election under this subsection applies). In the

3 case of the election year in which the participant can

4 make the participant’s last election, the preceding

5 sentence shall be applied by substituting ‘50 percent’

6 for ‘25 percent’.

7 ‘‘(2) METHOD OF MEETING REQUIREMENTS.—

8 A plan shall be treated as meeting the requirements

9 of paragraph (1) if—

10 ‘‘(A) the portion of the participant’s ac11 count covered by the election under paragraph

12 (1) is distributed within 90 days after the pe13 riod during which the election may be made, or

14 ‘‘(B) the plan offers at least 3 investment

15 options (not inconsistent with regulations pre16 scribed by the Secretary of the Treasury) to

17 each participant making an election under para18 graph (1) and within 90 days after the period

19 during which the election may be made, the

20 plan invests the portion of the participant’s ac21 count covered by the election in accordance with

22 such election.

23 ‘‘(3) DEFINITIONS.—For purposes of this

24 subsection—
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1 ‘‘(A) EMPLOYEE STOCK OWNERSHIP

2 PLAN.—The term ‘employee stock ownership

3 plan’ means a defined contribution plan which

4 is an employee stock ownership plan (within the

5 meaning of section 4975(e)(7) of the Internal

6 Revenue Code of 1986) or which meets the re7 quirements of section 409(a) of such Code.

8 ‘‘(B) QUALIFIED PARTICIPANT.—The term

9 ‘qualified participant’ means any participant

10 who has completed at least 10 years of partici11 pation under the plan and has attained age 55.

12 ‘‘(C) QUALIFIED ELECTION PERIOD.—The

13 term ‘qualified election period’ means the 6-

14 plan-year period beginning with the later of—

15 ‘‘(i) the first plan year in which the

16 individual first became a qualified partici17 pant, or

18 ‘‘(ii) the first plan year beginning

19 after December 31, 2000.

20 For purposes of the preceding sentence, an em21 ployer may elect to treat an individual first be22 coming a qualified participant in the first plan

23 year beginning in 2001 as having become a par24 ticipant in the first plan year beginning in

25 2002.’’.
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1 TITLE IV—IMPROVEMENTS IN

2 PENSION INFORMATION AND

3 ENFORCEMENT

4 SEC. 401. PERIODIC PENSION BENEFIT STATEMENTS.

5 (a) IN GENERAL.—Subsection (a) of section 105 of

6 the Employee Retirement Income Security Act of 1974

7 (29 U.S.C. 1025) is amended—

8 (1) by striking ‘‘shall furnish to any plan par9 ticipant or beneficiary who so requests in writing,’’

10 and inserting ‘‘shall furnish at least once every 3

11 years, in the case of a participant in a defined ben12 efit plan who has attained age 35, and annually, in

13 the case of a defined contribution plan, to each plan

14 participant, and shall furnish to any plan participant

15 or beneficiary who so requests,’’, and

16 (2) by adding at the end the following flush

17 sentence:

18 ‘‘Information furnished under the preceding sentence to

19 a participant in a defined benefit plan (other than at the

20 request of the participant) may be based on reasonable

21 estimates determined under regulations prescribed by the

22 Secretary.’’

23 (b) RULE FOR MULTIEMPLOYER PLANS.—Subsection

24 (d) of section 105 of such Act (29 U.S.C. 1025) is amend25 ed to read as follows:
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1 ‘‘(d) Each administrator of a plan to which more than

2 1 unaffiliated employer is required to contribute shall fur3 nish to any plan participant or beneficiary who so requests

4 in writing, a statement described in subsection (a).’’.

5 (c) MODEL STATEMENTS.—The Secretary of Labor

6 shall develop a model benefit statement to be used by plan

7 administrators in complying with the requirements of sec8 tion 105 of the Employee Retirement Income Security Act

9 of 1974. Such statement shall include—

10 (1) the amount of nonforfeitable accrued bene11 fits as of the statement date which is payable at nor12 mal retirement age under the plan,

13 (2) the amount of accrued benefits which are

14 forfeitable but which may become nonforfeitable

15 under the terms of the plan,

16 (3) the amount or percentage of any reduction

17 due to integration of the benefit with the partici18 pant’s Social Security benefits or similar govern19 mental benefits,

20 (4) information on how to contact the Social

21 Security Administration to obtain a participant’s

22 personal earnings and benefit estimate statement,

23 and

24 (5) information on early retirement benefit and

25 joint and survivor annuity reductions.
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1 SEC. 402. BENEFIT STATEMENTS REQUIRED TO INCLUDE

2 INFORMATION ON INVESTMENT PERFORM3 ANCE.

4 Section 105(a) of the Employee Retirement Income

5 Security Act of 1974 (29 U.S.C. 1025(a)) is amended—

6 (1) in paragraph (1), by striking ‘‘and’’;

7 (2) in paragraph (2), by striking the period at

8 the end and inserting ‘‘, and’’; and

9 (3) by adding at the end the following new

10 paragraph:

11 ‘‘(3) the percentage of the net return on invest12 ment of plan assets for the preceding plan year (or,

13 with respect to investments directed by the partici14 pant, the net return on investment of plan assets for

15 such year so directed), and, stated separately, the

16 administrative and transaction fees incurred in con17 nection with such investment.’’.

18 SEC. 403. DISCLOSURES TO SECRETARY OF LABOR RELAT19 ING TO PLAN TERMINATION AND RELATING

20 TO PLAN SPONSORS AFTER ACQUISITION OR

21 MERGER OF PLANS.

22 (a) IN GENERAL.—Section 104 of the Employee Re23 tirement Income Security Act of 1974 (29 U.S.C. 1024)

24 is amended—

25 (1) by redesignating subsection (d) as sub26 section (e); and
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1 (2) by inserting after subsection (c) the fol2 lowing new subsection:

3 ‘‘(d)(1) The administrator of any employee benefit

4 plan subject to this part shall file with the Secretary a

5 written notice of—

6 ‘‘(A) the termination of the plan, or

7 ‘‘(B) in connection with any plan that is ac8 quired by or merged with another plan, the name

9 and address of the sponsor of the acquired or

10 merged plan.

11 ‘‘(2) The notice required under paragraph (1) shall

12 be filed with the Secretary not later than 60 days after

13 the effective date of the termination, acquisition, or merg14 er.’’.

15 (b) EFFECTIVE DATE.—The amendments made by

16 this section shall apply with respect to terminations, acqui17 sitions, and mergers occurring after December 31, 2000.

18 SEC. 404. DISCLOSURE OF OPERATING INCOME OF EM19 PLOYERS ADJUSTED SO AS TO EXCLUDE CER20 TAIN COMPONENTS MANDATED IN FASB

21 RULES GOVERNING ACCOUNTING FOR DE22 FINED BENEFIT PENSION PLANS.

23 (a) MATTERS TO BE INCLUDED IN ANNUAL RE24 PORT.—Section 103(c) of the Employee Retirement In-
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1 come Security Act of 1974 (29 U.S.C. 1023(c)) is

2 amended—

3 (1) by redesignating paragraph (5) as para4 graph (6); and

5 (2) by inserting after paragraph (4) the fol6 lowing new paragraph:

7 ‘‘(5) In the case of a pension plan that is a de8 fined benefit plan, the amount of the annual oper9 ating income of each employer maintaining the plan,

10 as shown on the employer’s most recent annual fi11 nancial statement, together with such amount as ad12 justed by excluding all components of net benefit

13 cost other than the service cost component.’’.

14 (b) INFORMATION TO BE PROVIDED ANNUALLY TO

15 PARTICIPANTS AND BENEFICIARIES.—Section 104(b)(3)

16 of such Act (29 U.S.C. 1024(b)(3)) is amended by adding

17 at the end the following new sentence: ‘‘In the case of a

18 defined benefit plan, such other material shall include the

19 information described in paragraph (5) of section 103(c),

20 together with an explanation, written in a manner cal21 culated to be understood by the average plan participant,

22 of such information, of the service cost component in23 cluded in the adjusted amount of annual operating income

24 reported pursuant to such paragraph, and of each compo-
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1 nent excluded from such adjusted amount of annual oper2 ating income.’’.

3 SEC. 405. SPECIFIC INFORMATION REGARDING MULTIEM4 PLOYER PLANS INCLUDED IN ANNUAL RE5 PORT.

6 Section 103 of the Employee Retirement Income Se7 curity Act of 1974 (29 U.S.C. 1023) is amended by adding

8 at the end the following new subsection:

9 ‘‘(f) With respect to a pension plan that is a multiem10 ployer plan, an annual report under this section shall in11 clude the following information regarding each contrib12 uting employer:

13 ‘‘(1) the employer’s name,

14 ‘‘(2) the employer’s taxpayer identification

15 number,

16 ‘‘(3) the contract period relating to the plan,

17 and

18 ‘‘(4) the amount contributed by the employer

19 for the year.’’.

20 SEC. 406. LIMITED SCOPE AUDITS.

21 Subparagraph (C) of section 103(a)(3) of the Em22 ployee Retirement Income Security Act of 1974 (29

23 U.S.C. 1023(a)(3)(C)) is amended to read as follows:

24 ‘‘(C)(i) Subject to clause (ii), the opinion required by

25 subparagraph (A) need not be expressed as to any state-
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1 ments required by subsection (b)(3)(G) prepared by a

2 bank or similar institution or insurance carrier regulated

3 and supervised and subject to periodic examination by a

4 State or Federal agency if no less than ninety-five (95)

5 percent of the plan’s assets have a readily ascertainable

6 market value at the end of the plan year for which the

7 opinion is being offered, and if such statements—

8 ‘‘(I) are certified by the bank, similar institu9 tion or insurance carrier as complete and accurate,

10 ‘‘(II) certify the current value of each asset,

11 ‘‘(III) include a representation that, within the

12 eighteen month period preceding the date of its cer13 tification, an independent, qualified public account14 ant who has satisfied the requirements of subsection

15 (D), has issued a report, in accordance with gen16 erally accepted auditing standards, to the bank or

17 similar institution or insurance carrier, stating that

18 its internal controls and procedures or the internal

19 controls and procedures of any affiliated entity, as

20 they pertain to the execution, maintenance of ac21 countability, recording and processing of trans22 actions related to plan or participant recordkeeping,

23 are adequate, and

24 ‘‘(IV) are made a part of the annual report.
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1 ‘‘(ii) To the extent that the processing of transactions

2 related to plan or participant recordkeeping is performed

3 by an entity unaffiliated with the bank or similar institu4 tion or insurance carrier, clause(i) shall not apply unless

5 the plan has obtained a representation from the entity

6 that, within the eighteen month period preceding the date

7 of the opinion, an independent, qualified public accountant

8 who has satisfied the requirements of subsection (D), has

9 issued a report, in accordance with generally accepted au10 diting standards, to the entity stating that its internal

11 controls and procedures, as they pertain to the execution,

12 maintenance of accountability, recording and processing of

13 transactions related to plan or participant recordkeeping,

14 are adequate.

15 ‘‘(iii) For purposes of this subparagraph (C), the

16 term ‘readily ascertainable market value’ means a value

17 that can be readily determined on an established securities

18 market or in accordance with regulations promulgated by

19 the Secretary.’’.

20 SEC. 407. REPORTING AND ENFORCEMENT REQUIREMENTS

21 FOR EMPLOYEE BENEFIT PLANS.

22 (a) IN GENERAL.—Part 1 of subtitle B of title I of

23 the Employee Retirement Income Security Act of 1974

24 (29 U.S.C. 1021 et seq.) is amended—
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1 (1) by redesignating section 111 as section 112,

2 and

3 (2) inserting after section 110 the following

4 new section:

5 ‘‘DIRECT REPORTING OF CERTAIN EVENTS

6 ‘‘SEC. 111. (a) REQUIRED NOTIFICATIONS.—

7 ‘‘(1) NOTIFICATIONS BY PLAN ADMINIS8 TRATOR.—The administrator of an employee benefit

9 plan, within 5 business days after the administrator

10 determines that there is evidence (or after the ad11 ministrator is notified under paragraph (2)) that an

12 irregularity may have occurred with respect to the

13 plan, shall—

14 ‘‘(A) notify the Secretary of the irregu15 larity in writing; and

16 ‘‘(B) furnish a copy of such notification to

17 the accountant who is currently engaged under

18 section 103(a)(3)(A).

19 ‘‘(2) NOTIFICATIONS BY ACCOUNTANT.—

20 ‘‘(A) IN GENERAL.—An accountant en21 gaged by the administrator of an employee ben22 efit plan under section 103(a)(3)(A), within 5

23 business days after the accountant in connec24 tion with such engagement determines that

25 there is evidence that an irregularity may have

26 occurred with respect to the plan, shall—
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1 ‘‘(i) notify the plan administrator of

2 the irregularity in writing, or

3 ‘‘(ii) if the accountant determines that

4 there is evidence that the irregularity may

5 have involved an individual who is the plan

6 administrator or who is a senior official of

7 the plan administrator, notify the Sec8 retary of the irregularity in writing.

9 ‘‘(B) NOTIFICATION UPON FAILURE OF

10 PLAN ADMINISTRATOR TO NOTIFY.—If an ac11 countant who has provided notification to the

12 plan administrator pursuant to subparagraph

13 (A)(i) does not receive a copy of the administra14 tor’s notification to the Secretary required

15 under paragraph (1)(B) within the 5-business16 day period specified therein, the accountant

17 shall furnish to the Secretary a copy of the ac18 countant’s notification made to the plan admin19 istrator on the next business day following such

20 period.

21 ‘‘(3) IRREGULARITY DEFINED.—

22 ‘‘(A) For purposes of this subsection, the

23 term ’irregularity’ means--

24 ‘‘(i) a theft, embezzlement, or a viola25 tion of section 664 of title 18, United
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1 States Code (relating to theft or embezzle2 ment from an employee benefit plan);

3 ‘‘(ii) an extortion or a violation of sec4 tion 1951 of title 18, United States Code

5 (relating to interference with commerce by

6 threats or violence);

7 ‘‘(iii) a bribery, a kickback, or a viola8 tion of section 1954 of title 18, United

9 States Code (relating to offer, acceptance,

10 or solicitation to influence operations of an

11 employee benefit plan);

12 ‘‘(iv) a violation of section 1027 of

13 title 18, United States Code (relating to

14 false statements and concealment of facts

15 in relation to employer benefit plan

16 records); or–

17 ‘‘(v) a violation of section 411, 501, or

18 511 of this title (relating to criminal viola19 tions).

20 ‘‘(B) The term ’irregularity’ does not in21 clude any act or omission described in this

22 paragraph involving less than $1,000 unless

23 there is reason to believe that the act or omis24 sion may bear on the integrity of plan manage25 ment.
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1 ‘‘(b) NOTIFICATION UPON TERMINATION OF EN2 GAGEMENT OF ACCOUNTANT.—

3 ‘‘(1) NOTIFICATION BY PLAN ADMINIS4 TRATOR.—Within 5 business days after the termi5 nation of an engagement under section 103(a)(3)(A)

6 with respect to an employee benefit plan, the admin7 istrator of such plan shall—

8 ‘‘(A) notify the Secretary in writing of

9 such termination, giving the reasons for such

10 termination, and

11 ‘‘(B) furnish the accountant whose engage12 ment was terminated with a copy of the notifi13 cation sent to the Secretary.

14 ‘‘(2) NOTIFICATION BY ACCOUNTANT.—If the

15 accountant referred to in paragraph (1)(B) has not

16 received a copy of the administrator’s notification to

17 the Secretary as required under paragraph (1)(B),

18 or if the accountant disagrees with the reasons given

19 in the notification of termination of the engagement

20 for auditing services, the accountant shall notify the

21 Secretary in writing of the termination, giving the

22 reasons for the termination, within 10 business days

23 after the termination of the engagement.

24 ‘‘(c) DETERMINATION OF PERIODS REQUIRED FOR

25 NOTIFICATION.—In determining whether a notification re-
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1 quired under this section with respect to any act or omis2 sion has been made within the required number of busi3 ness days—

4 ‘‘(1) the day on which such act or omission be5 gins shall not be included; and

6 ‘‘(2) Saturdays, Sundays, and legal holidays

7 shall not be included.

8 For purposes of this subsection, the term ’legal holiday’

9 means any Federal legal holiday and any other day ap10 pointed as a holiday by the State in which the person re11 sponsible for making the notification principally conducts

12 business.

13 ‘‘(d) IMMUNITY FOR GOOD FAITH NOTIFICATION.—

14 Except as provided in this Act, no accountant or plan ad15 ministrator shall be liable to any person for any finding,

16 conclusion, or statement made in any notification made

17 pursuant to subsections (a)(2) or (b)(2), or pursuant to

18 any regulations issued under those subsections, if the find19 ing, conclusion, or statement is made in good faith.’’.

20 (b) CIVIL PENALTY.—

21 (1) IN GENERAL.—Section 502(c) (29 U.S.C.

22 1132(c)) is amended by inserting after paragraph

23 (6) the following new paragraph:

24 ‘‘(7)(A) The Secretary may assess a civil penalty of

25 up to $50,000 against any administrator who fails to pro-
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1 vide the Secretary with any notification as required under

2 section 111.

3 ‘‘(B) The Secretary may assess a civil penalty of up

4 to $50,000 against any accountant who knowingly and

5 willfully fails to provide the Secretary with any notification

6 as required under section 111.’’.

7 (2) CONFORMING AMENDMENT.—Section

8 502(a)(6) (29 U.S.C. 1132(a)(6)) as amended by

9 section 101(e)(2)A)(i) of the Health Insurance Port10 ability and Accountability Act of 1996, is amended

11 by striking ‘‘or (5)’’ and inserting ‘‘(5), or (7)’’.

12 (c) CLERICAL AMENDMENTS.—

13 (1) Section 514(d)(29 U.S.C. 114(d)) is amend14 ed by striking ‘‘111’’ and inserting ‘‘112’’.

15 (2) The table of contents in section 1 is amend16 ed by striking the item relating to section 111 and

17 inserting the following new items:

‘‘Sec. 111. Direct reporting of certain events.

‘‘Sec. 112. Repeal and effective date.’’.

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply with respect to any irregularity or

20 termination of engagement described in the amendments

21 only if the 5-day period described in the amendments in

22 connection with the irregularity or termination commences

23 at least 90 days after the date of the enactment of this

24 Act.
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1 SEC. 408. STUDY OF PENSION TRENDS AND CHARACTERIS2 TICS.

3 (a) IN GENERAL.—Section 513 of the Employee Re4 tirement Income Security Act of 1974 (29 U.S.C. 1143)

5 is amended by adding at the end the following new sub6 section:

7 ‘‘(d) PENSION SURVEYS.—

8 ‘‘(1) IN GENERAL.—The Secretary shall submit

9 to each House of the Congress, before the close of

10 the second session of each Congress, a report, based

11 on a study of current statistical and survey data,

12 which describes dominant and emerging trends and

13 characteristics of the private pension system, so as

14 to ensure that the Congress is provided with periodic

15 and timely information regarding such system.

16 ‘‘(2) INCLUDED INFORMATION.—Each report

17 submitted pursuant to paragraph (1) shall include,

18 but not be limited to, information relating to exist19 ing pension plans regarding—

20 ‘‘(A) the types of such plans,

21 ‘‘(B) the level of employer and employee

22 contributions,

23 ‘‘(C) vesting status,

24 ‘‘(D) accrued benefits,

25 ‘‘(E) benefit receipt, and

26 ‘‘(F) form of benefit payments.
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1 Such information shall be presented by category in

2 connection with cohorts defined on the basis of ap3 propriate attributes of the participants involved, in4 cluding gender, age, race, and income.

5 ‘‘(3) IDENTIFICATION OF BARRIERS TO PEN6 SION RECEIPT.—Each report submitted pursuant to

7 paragraph (1) shall also include information which

8 summarizes the types of problems that plan partici9 pants and beneficiaries experience in connection with

10 the receipt of promised retirement benefits.’’.

11 (b) INITIAL REPORT.—The initial report submitted

12 pursuant to section 513(d) of the Employee Retirement

13 Income Security Act of 1974 shall be submitted not later

14 than the close of the second session of the 106th Congress.

15 SEC. 409. EARLY RESOLUTION PROGRAM FOR PENSION

16 BENEFIT CLAIMS.

17 (a) IN GENERAL.—Section 503 of the Employee Re18 tirement Income Security Act of 1974 (29 U.S.C. 1133)

19 is amended—

20 (1) by adding at the end of the heading the fol21 lowing: ‘‘AND EARLY RESOLUTION OF PENSION

22 CLAIMS’’;

23 (2) by inserting ‘‘(a) IN GENERAL.—’’ after

24 ‘‘SEC. 503.’’; and
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1 (3) by adding at the end the following new sub2 section:

3 ‘‘(b) EARLY RESOLUTION PROGRAM FOR PENSION

4 BENEFIT CLAIMS.—

5 ‘‘(1) IN GENERAL.—The Secretary shall estab6 lish, in consultation with national bar and arbitra7 tion associations and other interested organizations,

8 an early resolution program for mediation of dis9 putes regarding claims for benefits which have been

10 denied under pension plans.

11 ‘‘(2) MEDIATORS.—The program shall provide

12 for recruitment of mediators to serve under the pro13 gram from individuals who have the requisite exper14 tise for such service. The program shall provide for

15 ongoing training for all mediators in employee bene16 fits law as determined necessary. Upon submission

17 of a claim to mediation proceedings under this sub18 section, the program shall provide for appointment

19 of a mediator, from the roster of mediators serving

20 under the program, to act as the mediator with re21 gard to the claim. Such appointment shall be

22 through a random selection procedure which shall be

23 prescribed in regulations.

24 ‘‘(3) FEES.—The Secretary shall assess fees as

25 necessary from each party to cover the costs of par-
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1 ticipation in the program. The Secretary may reduce

2 or waive a fee on the basis of inability to pay.

3 ‘‘(4) INITIATION OF PROCEEDINGS.—A claim4 ant with a dispute which is eligible under the pro5 gram for submission to mediation thereunder may

6 elect to commence proceedings under the program

7 by means of filing under the program an election for

8 mediation of the dispute. An election to commence

9 mediation proceedings under the program shall be in

10 such form and manner as the Secretary may pre11 scribe.

12 ‘‘(5) PARTICIPATION IN PROCEEDINGS.—Upon

13 receipt of the election to commence proceedings, the

14 program shall provide for participation by all rel15 evant parties. Each such party shall participate, and

16 cooperate fully, in the proceedings. The plan admin17 istrator shall ensure that a copy of the written

18 record of any claims procedure completed by the

19 plan pursuant to subsection (a) and all relevant plan

20 documents are presented to the mediator within 30

21 days after commencement of the proceedings. The

22 program shall provide for appropriate confidentiality

23 of the proceedings.

24 ‘‘(6) TIME LIMIT FOR PROCEEDINGS.—The me25 diation proceedings under the program with respect
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1 to the claim in dispute shall be completed within 30

2 days after compilation of all relevant plan documents

3 relating to the claim has been achieved.

4 ‘‘(7) PROCESS NONBINDING.—Findings and

5 conclusions made in the mediation proceedings

6 under the program shall be treated as advisory in

7 nature and nonbinding. Except as provided in para8 graph (8), the rights of the parties under this title

9 shall not be affected by participation in the medi10 ation proceedings under the program.

11 ‘‘(8) RESOLUTION THROUGH SETTLEMENT

12 AGREEMENT.—If a case is settled through participa13 tion in the mediation proceedings under the pro14 gram, the mediator shall assist the parties in draw15 ing up an agreement which shall constitute, upon

16 signature of the parties, a binding contract between

17 the parties, which shall be enforceable under section

18 502 as if the terms of such agreement were terms

19 of the plan.

20 ‘‘(9) OVERSIGHT.—The Secretary shall provide

21 for ongoing oversight of the program so as to ensure

22 that proceedings are conducted equitably and that

23 mediators meet prescribed standards of performance.

24 The Secretary shall monitor and record the results

25 of mediation proceedings conducted under the pro-
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1 gram so as to enable comprehensive evaluation of

2 the effectiveness of the program as a means of alter3 native dispute resolution.

4 ‘‘(10) NOTICE.—The Secretary shall—

5 ‘‘(A) notify individuals of the program or

6 other sources of assistance in resolving benefits

7 claim disputes, and

8 ‘‘(B) provide model information with re9 spect to the program to be included in all sum10 mary plan descriptions and benefit determina11 tions.’’.

12 (b) EFFECTIVE DATE.—The amendments made by

13 this section shall apply with respect to claims arising on

14 or after December 31, 2000.

15 SEC. 410. DE NOVO REVIEW OF BENEFIT DETERMINATIONS.

16 (a) INTERNAL REVIEW.—Section 503 of the Em17 ployee Retirement Income Security Act of 1974 (29

18 U.S.C. 1133) is amended—

19 (1) by inserting ‘‘(a)’’ after ‘‘SEC. 503.’’;

20 (2) by redesignating paragraph (1) and (2) as

21 subparagraphs (A) and (B), respectively; and

22 (3) by adding at the end the following new

23 paragraph:

24 ‘‘(2) Any review required under paragraph (1)(B)—

25 ‘‘(A) shall be de novo, and
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1 ‘‘(B) shall be conducted by an individual who

2 did not make the initial decision denying the claim

3 and who is authorized to approve payment of the

4 claim.’’.

5 (b) COURT REVIEW.—Section 502(e) of such Act (29

6 U.S.C. 1132(e)) is amended by adding at the end the fol7 lowing new paragraph:

8 ‘‘(2) Notwithstanding any provision by the plan for

9 the exercise by a fiduciary of discretionary authority with

10 respect to any benefit determination, in any action under

11 paragraph (1)(B) or (3) of subsection (a) or in any other

12 action under this section to review a final benefit deter13 mination under the plan, the review by the court shall be

14 de novo, and the court may review all evidence pre15 sented.’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply with respect to causes of action

18 arising after December 31, 2000.

19 SEC. 411. ALLOWABLE RELIEF.

20 (a) PRE-JUDGMENT INTEREST, ATTORNEY FEES,

21 AND COSTS OF ACTION.—

22 (1) PRE-JUDGMENT INTEREST ON UNPAID BEN23 EFITS.—Section 502(a)(1)(B) of the Employee Re24 tirement Income Security Act of 1974 (29 U.S.C.

25 1132(a)(1)(B)) is amended by inserting ‘‘(together
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1 with reasonable pre-judgment interest on unpaid

2 pension plan benefits)’’ after ‘‘to recover benefits

3 due to him under the terms of his plan’’.

4 (2) ATTORNEY FEES AND COSTS OF ACTION.—

5 Section 502(g) of such Act (29 U.S.C. 1132(g)) is

6 amended—

7 (A) in paragraph (1), by inserting ‘‘or (3)’’

8 after ‘‘paragraph (2)’’; and

9 (B) by adding at the end the following new

10 paragraph:

11 ‘‘(3) In any action or settlement proceeding under

12 this title with respect to an employee pension benefit plan

13 brought by a participant or beneficiary under such plan

14 in which the participant or beneficiary prevails or substan15 tially prevails, the participant or beneficiary shall be enti16 tled to reasonable attorney’s fees, reasonable expert wit17 ness fees, and other reasonable costs relating to the ac18 tion.’’.

19 (b) ALLOWANCE FOR LEGAL RELIEF.—Section

20 502(a) of such Act (29 U.S.C. 1132(a)) is amended, in

21 paragraphs (3)(B), (5)(B), and (8)(B), by inserting ‘‘legal

22 or’’ before ‘‘equitable’’ each place it appears.

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply with respect to causes of action

25 arising after the date of the enactment of this Act.
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1 SEC. 412. CIVIL PENALTY FOR BREACH OF FIDUCIARY RE2 SPONSIBILITY.

3 (a) IMPOSITION AND AMOUNT OF PENALTY MADE

4 DISCRETIONARY.—Section 502(l)(1) of the Employee Re5 tirement Income Security Act of 1974 (29 U.S.C. 1132(l))

6 is amended—

7 (1) by striking ‘‘shall’’ and inserting ‘‘may’’,

8 and

9 (2) by striking ‘‘equal to’’ and inserting ‘‘not

10 greater than’’.

11 (b) APPLICABLE RECOVERY AMOUNT.—Section

12 502(l)(2) of such Act (29 U.S.C. 1132(l)(2)) is amended

13 to read as follows:

14 ‘‘(2) For purposes of paragraph (1), the term ‘appli15 cable recovery amount’ means any amount which is recov16 ered from (or on behalf of) any fiduciary or other person

17 with respect to a breach or violation described in para18 graph (1) on or after the 30th day following receipt by

19 the fiduciary or other person of written notice from the

20 Secretary of the violation, whether paid voluntarily or by

21 order of a court in a judicial proceeding instituted by the

22 Secretary under subsection (a)(2) or (a)(5). The Secretary

23 may, in the Secretary’s sole discretion, extend the 30-day

24 period described in the preceding sentence.’’.
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1 (c) OTHER RULES.—Section 502(l) of such Act (29

2 U.S.C. 1132(l)) is amended by adding at the end the fol3 lowing new paragraphs:

4 ‘‘(5) A person shall be jointly and severally liable for

5 the penalty described in paragraph (1) to the same extent

6 that the person is jointly and severally liable for the appli7 cable recovery amount on which the penalty is based.

8 ‘‘(6) No penalty shall be assessed under this sub9 section unless the person against whom the penalty is as10 sessed is given notice and opportunity for a hearing with

11 respect to the violation and applicable recovery amount.

12 ‘‘(7) The Secretary, in his or her discretion, may pro13 vide for payment of some or all of any penalty assessed

14 under this subsection to the individual or individuals ag15 grieved by the violation giving rise to the penalty.’’.

16 (d) EFFECTIVE DATES.—

17 (1) IN GENERAL.—The amendments made by

18 this section shall apply to any breach of fiduciary re19 sponsibility or other violation of part 4 of title I of

20 the Employee Retirement Income Security Act of

21 1974 occurring on or after the date of enactment of

22 this Act.

23 (2) TRANSITION RULE.—In applying the

24 amendment made by subsection (b) (relating to ap25 plicable recovery amount), a breach or other viola-
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1 tion occurring before the date of the enactment of

2 this Act which continues after the 180th day after

3 that date (and which may be discontinued at any

4 time during its existence) shall be treated as having

5 occurred after the date of enactment.

6 SEC. 413. ASSESSMENT BY SECRETARY OF LABOR OF PEN7 ALTIES FOR FAILURES TO MEET DISCLOSURE

8 REQUIREMENTS.

9 (a) FAILURES BY PLAN ADMINISTRATOR.—Section

10 502(c)(1) of the Employee Retirement Income Security

11 Act of 1974 (29 U.S.C. 1132(c)(1)) is amended—

12 (1) by inserting ‘‘(A)’’ after ‘‘(c)(1)’’; and

13 (2) by adding at the end the following new sub14 paragraph:

15 ‘‘(B) In addition to any remedy provided under sub16 paragraph (A), the Secretary may assess against any plan

17 administrator a civil penalty of not more than $1,000 a

18 day from the date of any failure or refusal by such plan

19 administrator described in subparagraph (A).’’.

20 (b) FAILURES BY EMPLOYERS.—Section 502(c)(3) of

21 such Act (29 U.S.C. 1132(c)(3)) is amended—

22 (1) by inserting ‘‘(A)’’ after ‘‘(3)’’; and

23 (2) by adding at the end the following new sub24 paragraph:
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1 ‘‘(B) In addition to any remedy provided under sub2 paragraph (A), the Secretary may assess against any em3 ployer a civil penalty of not more than $1,000 a day from

4 the date of any failure by such employer described in sub5 paragraph (A).’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply with respect to failures and refus8 als occurring on or after the date of the enactment of this

9 Act.

10 SEC. 414. MISSING PARTICIPANTS.

11 (a) IN GENERAL.—Section 4050 of the Employee Re12 tirement Income Security Act of 1974 (29 U.S.C. 1350)

13 is amended by redesignating subsection (c) as subsection

14 (e) and by inserting after subsection (b) the following new

15 subsections:

16 ‘‘(c) MULTIEMPLOYER PLANS.—The corporation

17 shall prescribe rules similar to the rules in subsection (a)

18 for multiemployer plans covered by this title that termi19 nate under section 4041A.

20 ‘‘(d) PLANS NOT OTHERWISE SUBJECT TO TITLE.—

21 ‘‘(1) TRANSFER TO CORPORATION.—The plan

22 administrator of a plan described in paragraph (4)

23 may elect to transfer a missing participant’s benefits

24 to the corporation upon termination of the plan.
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1 ‘‘(2) INFORMATION TO THE CORPORATION.—To

2 the extent provided in regulations, the plan adminis3 trator of a plan described in paragraph (4) shall,

4 upon termination of the plan, provide the corpora5 tion information with respect to benefits of a miss6 ing participant if the plan transfers such benefits—

7 ‘‘(A) to the corporation, or

8 ‘‘(B) to an entity other than the corpora9 tion or a plan described in paragraph (4)(B)(ii).

10 ‘‘(3) PAYMENT BY THE CORPORATION.—If ben11 efits of a missing participant were transferred to the

12 corporation under paragraph (1), the corporation

13 shall, upon location of the participant or beneficiary,

14 pay to the participant or beneficiary the amount

15 transferred (or the appropriate survivor benefit)

16 either—

17 ‘‘(A) in a single sum (plus interest), or

18 ‘‘(B) in such other form as is specified in

19 regulations of the corporation.

20 ‘‘(4) PLANS DESCRIBED.—A plan is described

21 in this paragraph if—

22 ‘‘(A) the plan is a pension plan (within the

23 meaning of section 3(2))—
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1 ‘‘(i) to which the provisions of this

2 section do not apply (without regard to

3 this subsection), and

4 ‘‘(ii) which is not a plan described in

5 paragraphs (2) through (11) of section

6 4021(b), and

7 ‘‘(B) at the time the assets are to be dis8 tributed upon termination, the plan—

9 ‘‘(i) has missing participants, and

10 ‘‘(ii) has not provided for the transfer

11 of assets to pay the benefits of all missing

12 participants to another pension plan (with13 in the meaning of section 3(2)).

14 ‘‘(5) CERTAIN PROVISIONS NOT TO APPLY.—

15 Subsections (a)(1) and (a)(3) shall not apply to a

16 plan described in paragraph (4).’’.

17 (b) CONFORMING AMENDMENTS.—Section 206(f) of

18 the Employee Retirement Income Security Act of 1974

19 (29 U.S.C. 1056(f)) is amended—

20 (1) by striking ‘‘title IV’’ and inserting ‘‘section

21 4050’’, and

22 (2) by striking ‘‘the plan shall provide that,’’.

23 (c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to distributions made after 1 year

25 after the date of the enactment of this Act.
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1 SEC. 415. INCREASE IN GUARANTEED BENEFIT LEVEL FOR

2 MULTIEMPLOYER PLANS.

3 (a) IN GENERAL.—Section 4022A(c) of the Employee

4 Retirement Income Security Act of 1974 (29 U.S.C.

5 1322a(c)) is amended—

6 (1) by striking ‘‘$5’’ each place it appears in

7 paragraph (1) and inserting ‘‘$11’’;

8 (2) by striking ‘‘$15’’ in paragraph (1) and in9 serting ‘‘$33’’;

10 (3) by striking paragraphs (2), (5), and (6);

11 and

12 (4) by redesignating paragraphs (3) and (4) as

13 paragraphs (2) and (3), respectively.

14 (b) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to any multiemployer plan that has

16 not received financial assistance (within the meaning of

17 section 4261 of the Employee Retirement Income Security

18 Act of 1974) within the 1-year period ending on the date

19 of the enactment of this Act.

20 TITLE V—IMPROVED PENSION

21 PROTECTIONS FOR THE

22 CHANGING WORKFORCE

23 SEC. 501. LOANS FROM RETIREMENT PLANS FOR HEALTH

24 INSURANCE AND JOB TRAINING EXPENSES.

25 (a) IN GENERAL.—Section 206 of the Employee Re26 tirement Income Security Act of 1974 (29 U.S.C. 1056)
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1 (as amended by sections 201 and 308) is amended further

2 by adding at the end the following new subsection:

3 ‘‘(i) LOANS FROM RETIREMENT PLANS FOR HEALTH

4 INSURANCE AND JOB TRAINING EXPENSES.—

5 ‘‘(1) IN GENERAL.—Notwithstanding any other

6 provision of this subsection, a pension plan shall

7 provide that a participant or beneficiary who is in8 voluntarily separated from employment may, on the

9 date of such separation, obtain a loan from the plan

10 the proceeds of which are to be used within 6

11 months after the date of such loan—

12 ‘‘(A) for payments for insurance which

13 constitutes medical care for the participant and

14 the participant’s spouse and dependents, or

15 ‘‘(B) for job training expenses.

16 ‘‘(2) QUALIFIED LOAN.—For purposes of this

17 subsection, the term ‘qualified loan’ means a loan—

18 ‘‘(A) which by its terms requires interest

19 on the loan to accrue not less frequently than

20 monthly,

21 ‘‘(B) which by its terms requires—

22 ‘‘(i) repayment to begin not later than

23 18 months after the date of the loan, and
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1 ‘‘(ii) repayment in full not later the

2 date which is 36 months after the date of

3 the loan, and

4 ‘‘(C) which bears interest from the date of

5 the loan at a rate not less than 2 percentage

6 points below, and not more than 2 percentage

7 points above, the rate for comparable United

8 States Treasury obligations on such date.

9 ‘‘(3) LIMITATION ON AMOUNT OF LOANS.—The

10 aggregate amount of borrowings for a plan year

11 shall not exceed the sum of the amount of accruals

12 (other than contributions) during the plan year prior

13 to the plan year in which the loan is made.

14 ‘‘(4) LIMITATION ON NUMBER OF LOANS.—Not

15 more than 3 loans to an individual under this sub16 section may be outstanding at any time.

17 ‘‘(5) DELINQUENCIES TREATED AS DISTRIBU18 TION.—Any amount required to be paid by a partici19 pant or beneficiary under paragraph (2)(B) during

20 any plan year which is not paid at the time required

21 to be paid, and any amount remaining unpaid as of

22 the beginning of the plan year beginning after the

23 period described in paragraph (2)(B)(ii), shall be

24 treated as distributed during such plan year to the

25 participant or beneficiary.’’.
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1 (b) PROHIBITED TRANSACTION EXEMPTION.—Sec2 tion 408(b) of such Act (29 U.S.C. 1108(b)) is amended

3 by adding at the end the following new paragraph:

4 ‘‘(14) Any loan made by the plan to a disquali5 fied person who is a participant or beneficiary of the

6 plan if such loan—

7 ‘‘(A) is for the payment of health insur8 ance premiums or job training expenses, and

9 ‘‘(B) meets the requirements of section

10 206(i).’’.

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to loans made after the effective

13 date specified in section 601.

14 SEC. 502. IMMEDIATE DISTRIBUTIONS PERMITTED ONLY IF

15 DISTRIBUTION ROLLED TO A QUALIFIED

16 PLAN.

17 (a) VESTING.—Subsection (e) of section 203 of Em18 ployee Retirement Income Security Act of 1974 is

19 amended—

20 (1) by redesignating paragraph (3) as para21 graph (4); and

22 (2) by striking all that precedes paragraph (4)

23 (as redesignated) and inserting the following:

24 ‘‘(e)(1) A pension plan shall provide that the non25 forfeitable benefit with respect to a participant in the plan
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1 (to the extent the distribution of such benefit is otherwise

2 includible in gross income) may be immediately distributed

3 only in a trustee-to-trustee transfer to a qualified plan of

4 such individual which is specified by such individual.

5 ‘‘(2) For purposes of paragraph (1), the term ‘quali6 fied plan’ means a plan, contract, pension, or trust de7 scribed in subparagraph (A) or (B) of section 219(g)(5)

8 of the Internal Revenue Code of 1986.

9 ‘‘(3) This subsection shall not apply in any case in

10 which the present value of the nonforfeitable benefit with

11 respect to the participant (calculated in accordance with

12 section 205(g)(3)) does not exceed $500.’’.

13 (b) JOINT AND SURVIVOR ANNUITIES.—Section

14 205(g) of such Act (29 U.S.C. 1055(g)) is amended by

15 striking so much as precedes paragraph (3) and inserting

16 the following:

17 ‘‘(g) RESTRICTIONS ON IMMEDIATE DISTRIBU18 TIONS.—

19 ‘‘(1) IN GENERAL.—A pension plan may pro20 vide that the present value of a qualified joint and

21 survivor annuity under the plan or a qualified pre22 retirement survivor annuity under the plan (to the

23 extent the distribution of such value is otherwise in24 cludible in gross income) will be immediately distrib-
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1 uted, but only if (in any case in which such value

2 exceeds $500)—

3 ‘‘(A) the participant and the spouse of the

4 participant (or where the participant has died,

5 the surviving spouse) do not elect payment of

6 the distribution to themselves, and

7 ‘‘(B) such distribution is made in a trust8 ee-to-trustee transfer to 1 or more qualified

9 plans in accordance with paragraph (2).

10 ‘‘(2) DESIGNATION OF QUALIFIED PLAN.—An

11 immediate distribution described in paragraph (1)

12 may be made only to 1 or more qualified plans of

13 the participant or spouse designated by the partici14 pant and spouse (or where the participant has died,

15 the surviving spouse) or (if no such qualified plan is

16 so designated) to a qualified plan designated by the

17 administrator of such pension plan.

18 ‘‘(3) QUALIFIED PLAN.—For purposes of this

19 subsection, the term ‘qualified plan’ means a plan,

20 contract, pension, or trust described in subpara21 graph (A) or (B) of section 219(g)(5) of the Internal

22 Revenue Code of 1986.’’.
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1 SEC. 503. PROMPT DISTRIBUTION FROM DEFINED CON2 TRIBUTION PLANS UPON TERMINATION OF

3 PARTICIPANT’S COVERED EMPLOYMENT.

4 Section 206(a) of the Employee Retirement Income

5 Security Act of 1974 (29 U.S.C. 1056(a)) is amended—

6 (1) by redesignating paragraphs (1), (2), and

7 (3) as subparagraphs (A), (B), and (C), respectively,

8 and by inserting ‘‘(1)’’ after ‘‘(a)’’;

9 (2) in the first sentence, by striking ‘‘pension

10 plan’’ and inserting ‘‘defined benefit plan’’;

11 (3) in the second sentence, by striking ‘‘In the

12 case of a plan’’ and inserting ‘‘In the case of a de13 fined benefit plan’’; and

14 (4) by adding at the end the following new

15 paragraph:

16 ‘‘(2)(A) Except as provided in subparagraph (B),

17 each defined contribution plan shall provide that, unless

18 the participant otherwise elects—

19 ‘‘(i) the payment of benefits under the plan to

20 the participant will begin not later than the 60th

21 day after the close of the plan year in which occurs

22 the date on which the participant attains the earlier

23 of age 65 or the normal retirement age specified

24 under the plan, and

25 ‘‘(ii) in any case in which the participant termi26 nates his service with the employer prior to the date
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1 described in clause (i), the participant’s accrued ben2 efit shall be distributed, in the form of one or more

3 rollover contributions under section 402(c),

4 403(a)(4), or 403(b)(8) of the Internal Revenue

5 Code of 1986, clause (ii), (iii), or (iv) of section

6 408(d)(3)(A) of such Code, section 411(a)(12) of

7 such Code, or section 457(e)(16) of such Code, not

8 later than the 60th day after the date of the partici9 pant’s termination of such service.

10 ‘‘(B) In any case in which immediate valuation of the

11 participant’s accrued benefit is not practicable, the plan

12 may provide for a period of more than 60 days in lieu

13 of the 60-day period described in clauses (i) and (ii) of

14 subparagraph (A), except that any such longer period pro15 vided by the plan may not extend beyond 60 days after

16 the applicable valuation date under the plan.’’.

17 SEC. 504. EXTENDED PERIOD FOR RECOUPMENT OF OVER18 PAYMENTS.

19 Section 206 of the Employee Retirement Income Se20 curity Act of 1974 (29 U.S.C. 1056) (as amended by sec21 tions 201, 308, and 501(a)) is amended further by adding

22 at the end the following new subsection:

23 ‘‘(j) RECOUPMENT OF BENEFIT OVERPAYMENTS.—

24 ‘‘(1) MINIMUM PERIOD FOR RECOUPMENT.—

25 Any minimum period specified by an employee pen-
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1 sion benefit plan during which an overpayment of

2 benefits under the plan must be repaid to the plan

3 may not be less than the 5-year period beginning on

4 the date of the overpayment.

5 ‘‘(2) WAIVER PERMITTED.—Nothing in this

6 title shall be construed to preclude the waiver by any

7 fiduciary on behalf of the plan of any overpayment

8 of benefits to a participant or beneficiary in any case

9 in which such participant or beneficiary is without

10 fault if recovery of the overpayment would defeat the

11 purpose of this title or would be against equity and

12 good conscience, and any such waiver may not be

13 precluded under the terms of the plan. In making

14 for purposes of this subsection any determination of

15 whether any participant or beneficiary is without

16 fault, the fiduciary shall specifically take into ac17 count any physical, mental, educational, or linguistic

18 limitation such participant or beneficiary may have

19 (including any lack of facility with the English lan20 guage).’’.

21 TITLE VI—GENERAL

22 PROVISIONS

23 SEC. 601. GENERAL EFFECTIVE DATE.

24 (a) IN GENERAL.—Except as otherwise provided in

25 this Act, and subject to subsection (b), the amendments
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1 made by this Act shall apply with respect to plan years

2 beginning on or after January 1, 2001.

3 (b) SPECIAL RULE FOR COLLECTIVELY BARGAINED

4 PLANS.—In the case of a plan maintained pursuant to 1

5 or more collective bargaining agreements between em6 ployee representatives and 1 or more employers ratified

7 on or before the date of the enactment of this Act, sub8 section (a) shall be applied to benefits pursuant to, and

9 individuals covered by, any such agreement by substituting

10 for ‘‘January 1, 2001’’ the date of the commencement of

11 the first plan year beginning on or after the earlier of—

12 (1) the later of—

13 (A) January 1, 2002, or

14 (B) the date on which the last of such col15 lective bargaining agreements terminates (de16 termined without regard to any extension there17 of after the date of the enactment of this Act),

18 or

19 (2) January 1, 2003.

20 SEC. 602. PLAN AMENDMENTS.

21 If any amendment made by this Act requires an

22 amendment to any plan, such plan amendment shall not

23 be required to be made before the first plan year beginning

24 on or after January 1, 2003, if—
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1 (1) during the period after such amendment

2 made by this Act takes effect and before such first

3 plan year, the plan is operated in accordance with

4 the requirements of such amendment made by this

5 Act, and

6 (2) such plan amendment applies retroactively

7 to the period after such amendment made by this

8 Act takes effect and such first plan year.

Æ