I 

111TH CONGRESS 

1ST SESSION H. R. 1984 

To amend title I of the Employee Retirement Income Security Act of 1974 

to provide special reporting and disclosure rules for individual account 

plans and to provide a minimum investment option requirement for 

such plans. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 21, 2009 

Mr. GEORGE MILLER of California (for himself, Mr. ANDREWS, Ms. WOOLSEY, Mr. SABLAN, Mr. GRIJALVA, Ms. HIRONO, Ms. CLARKE, Mr. HARE, 

Mrs. DAVIS of California, and Mr. KILDEE) introduced the following bill; 

which was referred to the Committee on Education and Labor 

A BILL 

To amend title I of the Employee Retirement Income Security Act of 1974 to provide special reporting and disclosure rules for individual account plans and to provide 

a minimum investment option requirement for such 

plans. 

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. 

4 This Act may be cited as the ‘‘401(k) Fair Disclosure 

5 for Retirement Security Act of 2009’’. 

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1 SEC. 2. SPECIAL REPORTING AND DISCLOSURE RULES FOR 

2 INDIVIDUAL ACCOUNT PLANS. 

3 (a) ADDITIONAL REPORTING AND DISCLOSURE

4 RULES.—Part 1 of subtitle B of title I of the Employee 

5 Retirement Income Security Act of 1974 is amended— 

6 (1) by redesignating section 111 (29 U.S.C. 

7 1031) as section 112; and 

8 (2) by inserting after section 110 (29 U.S.C. 

9 1030) the following new section: 

10 ‘‘SEC. 111. SPECIAL REPORTING AND DISCLOSURE RULES 

11 FOR INDIVIDUAL ACCOUNT PLANS. 

12 ‘‘(a) DISCLOSURE TO EMPLOYERS SPONSORING INDI13 VIDUAL ACCOUNT PLANS REGARDING SERVICES NEC14 ESSARY FOR ESTABLISHMENT OR OPERATION OF

15 PLANS.— 

16 ‘‘(1) SERVICE DISCLOSURE STATEMENT.—The 

17 plan administrator of an individual account plan (or 

18 any other plan official with contracting authority 

19 under the terms of the plan) and any other person 

20 may not enter into a contract for services to the 

21 plan (including, for purposes of this section, the of22 fering of any investment option to the plan) unless 

23 such plan administrator or other official has re24 ceived, not less than 10 business days in advance of 

25 entering into the contract, a single written statement 

26 from such person which— 

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1 ‘‘(A) describes such services for the plan 

2 that will be provided in connection with the con3 tract, and 

4 ‘‘(B) provides the expected total annual 

5 charges for such services for the plan that will 

6 be provided in connection with the contract, in7 cluding a reasonable allocation of such total an8 nual charges among all relevant component 

9 charges specified in paragraph (2) (regardless 

10 of how the charges are actually assessed). 

11 The description of the services and the charges for 

12 the services shall be displayed prominently in the 

13 written statement and shall be presented in a format 

14 which is understandable to the typical plan adminis15 trator. 

16 ‘‘(2) MINIMUM ALLOCATION REQUIREMENTS.— 

17 The allocation required under paragraph (1)(B) in 

18 connection with the services provided under each 

19 contract shall specify component charges (to the ex20 tent such services for the plan are provided under 

21 the contract) as follows: 

22 ‘‘(A) charges for administration and rec23 ordkeeping, 

24 ‘‘(B) transaction-based charges, 

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1 ‘‘(C) charges for investment management, 

2 and 

3 ‘‘(D) all such charges not described in sub4 paragraph (A), (B), or (C) as may be specified 

5 by the Secretary. 

6 ‘‘(3) PRESENTATION OF CHARGES.—The total 

7 charges described in paragraph (2)(A) and the total 

8 charges described in paragraph (2)(C) shall each be 

9 presented in the written statement as an aggregate 

10 total dollar amount, and, in addition, each of such 

11 total charges may also be presented as a percentage 

12 of assets. The charges described in paragraph (2)(B) 

13 shall be itemized separately as dollar amounts or as 

14 percentages of the applicable base amounts. 

15 ‘‘(4) ESTIMATIONS.—For purposes of providing 

16 the statement required under this subsection in con17 nection with any service, the service provider may 

18 provide a reasonable and representative estimate of 

19 the charges required to be disclosed under para20 graph (1)(B) and shall indicate any such estimate as 

21 being such an estimate. Any such estimate shall be 

22 based on the previous year’s experience of the plan 

23 or, in the case of a new plan, the previous year’s ex24 perience of a comparable plan with participants and 

25 beneficiaries of similar demographics. 

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1 ‘‘(5) RELIANCE.—To the extent any of the in2 formation required to be disclosed by a service pro3 vider under this subsection is given to the service 

4 provider by an unaffiliated person which is regulated 

5 by the Federal Government or a State, the service 

6 provider may rely on the completeness and accuracy 

7 of such information unless the service provider— 

8 ‘‘(A) knows that the information is inac9 curate or incomplete, 

10 ‘‘(B) has reason to know that the informa11 tion is inaccurate or incomplete, or 

12 ‘‘(C) has notice of facts or information 

13 that would prompt a reasonable service provider 

14 to inquire into the accuracy or completeness of 

15 the information. 

16 ‘‘(6) DISCLOSURE OF FINANCIAL RELATION17 SHIPS.— 

18 ‘‘(A) IN GENERAL.—The statement re19 quired under paragraph (1) shall include a writ20 ten disclosure of— 

21 ‘‘(i) any payment provided (or the 

22 amount representing the value of any serv23 ices provided) to the service provider (or 

24 any affiliate thereof) pursuant to, or in 

25 connection with, the contract described in 

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1 paragraph (1) and the amount and type of 

2 any payment made or credit received for 

3 such services (irrespective of whether the 

4 service provider (or affiliate thereof) or 

5 other person providing such services is af6 filiated or unaffiliated with the plan, the 

7 plan sponsor, the plan administrator, or 

8 any other plan official), 

9 ‘‘(ii) any personal, business, or finan10 cial relationship with the plan sponsor, the 

11 plan, or the service provider (or any affil12 iate of the service provider) or any totality 

13 of such relationships which is material, if 

14 such relationship results in the service pro15 vider (or any affiliate thereof) deriving any 

16 material benefit, and 

17 ‘‘(iii) such other similar arrangements 

18 benefitting the service provider (or any af19 filiate thereof) as may be specified by the 

20 Secretary. 

21 ‘‘(B) INCLUSIONS.— 

22 ‘‘(i) IN GENERAL.—Disclosures de23 scribed under subparagraph (A)(ii) shall 

24 include the extent to which the service pro25 vider (or any affiliate thereof) may benefit 

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1 from the offering of its own proprietary in2 vestment products or those of third par3 ties. 

4 ‘‘(ii) APPLICABLE PROHIBITED

5 TRANSACTION EXEMPTION.—Disclosures 

6 under this paragraph may include a de7 scription of any applicable prohibited 

8 transaction exemption under section 408 

9 related to the services described in the 

10 statement required under paragraph (1). 

11 ‘‘(7) DISCLOSURE OF IMPACT OF SHARE CLASS12 ES.—The statement required under paragraph (1) 

13 shall, to the extent applicable, disclose that the share 

14 prices of certain mutual fund investments that are 

15 available to the plan may be different from the share 

16 prices outside of the plan due to the existence of dif17 ferent share classes and provide the basis for these 

18 differences. 

19 ‘‘(8) DISCLOSURE OF CERTAIN ARRANGEMENTS

20 IN CONNECTION WITH FREE OR DISCOUNTED SERV21 ICES OR REIMBURSEMENTS BY SERVICE PRO22 VIDERS.—In any case in which services are provided 

23 to the plan, or to the plan sponsor in connection 

24 with the plan, by any service provider without ex25 plicit charge or for charges set at a discounted rate 

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1 or subject to rebate, the statement required under 

2 paragraph (1) shall specify the manner in which, the 

3 extent to which, and the amount by which consider4 ation is otherwise obtained by the service provider 

5 (or any affiliate thereof), the plan, or the plan spon6 sor for such services, directly or indirectly, by means 

7 of any charges against the account of the participant 

8 or beneficiary. 

9 ‘‘(9) MODEL STATEMENT.—The Secretary shall 

10 prescribe a model statement that may be used for 

11 purposes of satisfying the requirements of this sub12 section. 

13 ‘‘(10) UPDATING.—Each contract described in 

14 paragraph (1) shall require that the service provider 

15 must provide to the plan administrator an updated 

16 written statement described in paragraph (1) de17 scribing any material change in the information in18 cluded in the statement provided pursuant to para19 graph (1) as soon as is reasonable after the occur20 rence of the change is known. The contract shall 

21 provide that such an updated written statement, or, 

22 in the case of a plan year in which no material 

23 change in the information included in the statement 

24 provided pursuant to paragraph (1) has occurred, a 

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1 written statement setting forth such fact, must be 

2 provided not less often than annually. 

3 ‘‘(11) LIMITATIONS.— 

4 ‘‘(A) DOLLAR LIMITATION.— 

5 ‘‘(i) IN GENERAL.—The requirements 

6 of this subsection shall apply with respect 

7 to any contract for services provided dur8 ing any plan year only if the total charged 

9 for such services under such contract (re10 gardless of whether, in connection with 

11 such services under such contract, such 

12 charges are received by the service provider 

13 (or any affiliate thereof) directly or are re14 ceived by the service provider (or any affil15 iate thereof) indirectly from other affiliated 

16 or unaffiliated parties) equals or exceeds 

17 $5,000. 

18 ‘‘(ii) COST OF LIVING ADJUSTMENT.— 

19 ‘‘(I) IN GENERAL.—In the case 

20 of any plan year beginning during a 

21 calendar year beginning after 2010, 

22 the dollar amount in clause (i) shall 

23 be increased by an amount equal to 

24 such dollar amount, multiplied by the 

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1 age of the Consumer Price Index for 

2 all urban consumers (United States 

3 city average) for the 12-month period 

4 ending with September of the pre5 ceding calendar year exceeds such av6 erage for the 12-month period ending 

7 with September 2009. 

8 ‘‘(II) ROUNDING.—If any dollar 

9 amount after being increased under 

10 subclause (I) is not a multiple of 

11 $500, such dollar amount shall be 

12 rounded to the next lower multiple of 

13 $500. 

14 ‘‘(iii) ADJUSTMENTS BY THE SEC15 RETARY.—The Secretary may by regula16 tion adjust the dollar amount specified in 

17 this subparagraph to a lesser amount for 

18 small plans and to a greater amount for 

19 other plans and provide for appropriate an20 nual adjustments in such adjusted 

21 amounts at the same rate as would apply 

22 under clause (ii). 

23 ‘‘(B) GENERAL APPLICABILITY OF RE24 QUIREMENTS WITH RESPECT TO SERVICES.— 

25 Nothing in this subsection shall be construed to 

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1 require any service provider to provide any serv2 ice with respect to any particular plan sponsor. 

3 ‘‘(12) COORDINATION WITH FIDUCIARY

4 RULES.—Nothing in this subsection affects the obli5 gations of plan sponsors and fiduciaries under part 

6 4 of this subtitle. 

7 ‘‘(b) DISCLOSURES TO PARTICIPANTS AND BENE8 FICIARIES.— 

9 ‘‘(1) ADVANCE NOTICE OF AVAILABLE INVEST10 MENT OPTIONS.—The plan administrator of an indi11 vidual account plan which permits a participant or 

12 beneficiary to exercise control over the assets in the 

13 account of the participant or beneficiary shall pro14 vide to the participant or beneficiary with respect to 

15 each plan year notice of the investment options 

16 available for election under the plan at least 10 busi17 ness days prior to— 

18 ‘‘(A) the earliest date provided for under 

19 the plan for the participant’s initial investment 

20 of any contribution made on behalf of such par21 ticipant, and 

22 ‘‘(B) the effective date of any material 

23 change in investment options. 

24 In the case of a plan that provides for immediate eli25 gibility or that contains an automatic contribution 

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1 arrangement (as defined in subparagraphs (A) and 

2 (B) of section 514(e)(2)), the notice required under 

3 subparagraph (A) may be provided within any rea4 sonable period prior to such initial investment. With 

5 respect to the notice required under this paragraph, 

6 the Secretary shall prescribe regulations creating ex7 ceptions to the 10-day notice requirement in cir8 cumstances similar to those described in section 

9 101(i)(2)(C), and such notice may be combined with 

10 any similar notice that may be required under sec11 tion 404(c)(5) or under this section. 

12 ‘‘(2) INFORMATION INCLUDED IN NOTICE.— 

13 The notice required under paragraph (1) shall— 

14 ‘‘(A) include a prominent statement, in 

15 language presented in a manner which is easily 

16 understandable by the typical participant, indi17 cating which components of the charges (both 

18 direct and indirect) for each investment option 

19 are payable by the participant or beneficiary 

20 and how such components are to be paid, 

21 ‘‘(B) set forth, with respect to each avail22 able investment option— 

23 ‘‘(i) the name of the option, 

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1 ‘‘(ii) the investment objectives and 

2 principal investment strategies of the op3 tion, 

4 ‘‘(iii) the risk level associated with the 

5 option, 

6 ‘‘(iv) whether the option is diversified 

7 among various classes of assets so as to 

8 minimize the risk of large losses or should 

9 be combined with other options so as to 

10 obtain such diversification, 

11 ‘‘(v) whether the investment option is 

12 actively managed or passively managed in 

13 relation to an index and the difference be14 tween active management and passive 

15 management, 

16 ‘‘(vi) where, and the manner in which, 

17 additional plan-specific, option-specific, 

18 and generally available investment infor19 mation regarding the option may be ob20 tained, and 

21 ‘‘(vii) a statement explaining that in22 vestment options should not be evaluated 

23 solely on the basis of the charges for each 

24 option but should also be based on careful 

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1 ing the risk level of the option, the invest2 ment objectives of the option, the principal 

3 investment strategies of the option, and 

4 historical returns derived by the option, 

5 and 

6 ‘‘(C) include a plan fee comparison chart, 

7 relating to the charges described in paragraph 

8 (3) in connection with all investment options 

9 available under the plan, as provided in para10 graph (3). 

11 ‘‘(3) PLAN FEE COMPARISON CHART.— 

12 ‘‘(A) IN GENERAL.— 

13 ‘‘(i) IN GENERAL.—The notice pro14 vided under this subsection shall include a 

15 plan fee comparison chart consisting of a 

16 comparison of actual service and invest17 ment charges (including, for purposes of 

18 this clause, charges for the offering of an 

19 investment option) that will or could be as20 sessed against the account of the partici21 pant or beneficiary with respect to the plan 

22 year. The plan fee comparison chart shall 

23 be presented in a manner which is easily 

24 understood by the typical participant and 

25 include such information as the Secretary 

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1 determines necessary to permit partici2 pants and beneficiaries to assess the serv3 ices for which charges will or could be as4 sessed against the account. 

5 ‘‘(ii) FORM.—For purposes of this 

6 paragraph, the potential service charges 

7 shall be provided in the form of a dollar 

8 amount and may also be provided, in addi9 tion, as a percentage of assets. The form 

10 of the potential service charges shall be 

11 presented in a manner which is easily un12 derstandable by the typical participant, in13 cluding examples that demonstrate how the 

14 charges will be assessed against the ac15 count of the participant or beneficiary. 

16 ‘‘(B) CATEGORIZATION OF CHARGES.—The 

17 plan fee comparison chart shall provide infor18 mation in relation to 4 categories of charges 

19 that will or could be assessed against the ac20 count of the participant or beneficiary, as fol21 lows: 

22 ‘‘(i) ASSET-BASED CHARGES SPECIFIC

23 TO INVESTMENT.—Charges that vary de24 pending on the investment options selected 

25 by the participant or beneficiary, including 

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1 expense ratios and investment-specific 

2 asset-based charges. The information relat3 ing to such charges shall include a state4 ment noting any charges for 1 or more in5 vestment options which pay for services 

6 other than investment management. 

7 ‘‘(ii) ASSET-BASED CHARGES NOT

8 SPECIFIC TO INVESTMENT.—Charges that 

9 are assessed as a percentage of the total 

10 assets in the account of the participant or 

11 beneficiary, regardless of the investment 

12 option selected. 

13 ‘‘(iii) ADMINISTRATIVE AND TRANS14 ACTION-BASED CHARGES.—Administration 

15 and transaction-based charges, including 

16 fees charged to participants to cover plan 

17 administration, compliance, and record18 keeping costs, plan loan origination fees, 

19 possible redemption fees, and possible sur20 render charges, that are not assessed as a 

21 percentage of the total assets in the ac22 count and are either automatically de23 ducted each year or result from certain 

24 transactions engaged in by the participant 

25 or beneficiary. 

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1 ‘‘(iv) OTHER CHARGES.—Any other 

2 charges which may be deducted from par3 ticipants’ or beneficiaries’ accounts and 

4 which are not described in clauses (i), (ii), 

5 and (iii). 

6 ‘‘(C) DESCRIPTION OF PURPOSE FOR

7 CHARGES.—The notice shall indicate the extent 

8 to which each charge is for investment manage9 ment, transactions, plan administration and 

10 recordkeeping, or other identified services. 

11 ‘‘(D) FEES AND HISTORICAL RETURNS.— 

12 In connection with each investment option listed 

13 in the plan fee comparison chart, the chart 

14 shall include the amounts of the fees assessed 

15 in connection with such option and a history of 

16 the returns derived net of fees and expenses. 

17 Any such history shall be for the previous year, 

18 5 years, and 10 years (or since inception if 

19 later). 

20 ‘‘(4) MODEL NOTICE.—The Secretary shall pre21 scribe a model notice that may be used for purposes 

22 of satisfying the requirements of this subsection, in23 cluding a model plan fee comparison chart. 

24 ‘‘(5) ESTIMATIONS.—For purposes of providing 

25 the notice required under this subsection, the plan 

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1 administrator may provide a reasonable and rep2 resentative estimate for any charges or percentages 

3 disclosed under paragraph (2) or (3) and shall indi4 cate any such estimate as being such an estimate. 

5 Any such estimate shall be based on the previous 

6 year’s experience or, in the case of a new plan, the 

7 previous year’s experience of a comparable plan with 

8 participants and beneficiaries of similar demo9 graphics. 

10 ‘‘(c) ELECTRONIC MEDIA.—Any disclosure required 

11 under this section may be provided through an electronic 

12 medium under rules prescribed by the Secretary. Such 

13 rules shall be similar to those applicable under the Inter14 nal Revenue Code of 1986 with respect to notices to par15 ticipants in pension plans. The Secretary shall have the 

16 authority to modify such rules as appropriate to take into 

17 account new developments, including new forms of elec18 tronic media. The rules prescribed by the Secretary pursu19 ant to this subsection shall provide for a method for the 

20 typical participant or beneficiary to obtain without undue 

21 burden any such disclosure in writing on paper in lieu of 

22 receipt through an electronic medium. 

23 ‘‘(d) REGULATIONS REGARDING CERTAIN PROD24 UCTS.—The Secretary shall prescribe regulations identi25 fying (and establishing separate rules, if necessary, to 

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1 identify) any investment options that provide a guaranteed 

2 rate of return and that do not identify specific fees. 

3 ‘‘(e) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) CHARGE.—The term ‘charge’ means, in 

5 connection with any service provided to a plan or 

6 any financial product provided to the plan in which 

7 plan assets are to be invested, any fee, credit, or 

8 other compensation charged or paid for such service 

9 or product, including money and any other thing of 

10 monetary value to be received by the provider of the 

11 service or product, or its affiliate, in connection with 

12 the service or product. 

13 ‘‘(2) SERVICE.—The term ‘service’ means, in 

14 connection with a plan, a service provided directly or 

15 indirectly to, or with respect to, the plan or a service 

16 provided directly or indirectly in connection with a 

17 financial product in which plan assets are to be in18 vested. 

19 ‘‘(3) CONTRACT.—The term ‘contract’ means, 

20 in connection with any 2 or more parties, any con21 tract or arrangement entered into between or among 

22 such parties, and any extension or renewal thereof. 

23 ‘‘(4) SERVICE PROVIDER.—The terms ‘service 

24 provider’ and ‘provider’ mean, in connection with a 

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1 service, a person directly or indirectly providing such 

2 service. 

3 ‘‘(5) REGULATIONS.—The Secretary shall pro4 vide by regulation definitions of other terms used in 

5 this section.’’. 

6 (b) QUARTERLY BENEFIT STATEMENTS.—Section 

7 105 of such Act (29 U.S.C. 1025) is amended— 

8 (1) in subsection (a)(2)— 

9 (A) by redesignating subparagraph (C) as 

10 subparagraph (H); 

11 (B) in subparagraph (B)(ii)— 

12 (i) in subclause (II), by striking ‘‘di13 versified, and’’ and inserting ‘‘diversified,’’; 

14 (ii) in subclause (III), by striking the 

15 period and inserting ‘‘, and’’; and 

16 (iii) by adding after subclause (III) 

17 the following new subclause: 

18 ‘‘(IV) with respect to the portion of a 

19 participant’s account for which the partici20 pant has the right to direct the investment 

21 of assets, the information described in sub22 paragraph (C).’’; and 

23 (C) by inserting after subparagraph (B) 

24 the following new subparagraphs: 

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1 ‘‘(C) PERIODIC ACCOUNT INFORMATION

2 FOR PARTICIPANTS AND BENEFICIARIES.—For 

3 purposes of subparagraph (B)(ii)(IV), the infor4 mation described in this subparagraph consists 

5 of the following, indicating the portion of each 

6 amount described in clauses (i) though (vii) at7 tributable to each investment option elected in 

8 connection with the participant’s account: 

9 ‘‘(i) the starting balance of the par10 ticipant’s account, 

11 ‘‘(ii) contributions made during the 

12 quarter, itemizing separately totals for em13 ployer and totals for employee contribu14 tions, 

15 ‘‘(iii) investment earnings or losses on 

16 the account balance during the quarter (if 

17 any), 

18 ‘‘(iv) actual or estimated charges 

19 (within the meaning of section 111(e)(1)) 

20 which reduce the account during the quar21 ter, expressed in dollars or, if estimated, 

22 such estimated dollar charges as derived 

23 from an expense ratio (which may be ex24 pressed as a specific date estimate based 

25 on the previous year’s expense ratio), 

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1 ‘‘(v) any other charges to the partici2 pant or beneficiary in connection with the 

3 participant’s account, 

4 ‘‘(vi) the ending balance of the ac5 count, 

6 ‘‘(vii) the participant’s asset allocation 

7 to each investment option, including the 

8 net return, expressed as an amount and as 

9 a percentage, and 

10 ‘‘(viii) how to obtain the most recently 

11 updated version of the plan fee comparison 

12 chart prepared for purposes of section 

13 111(b)(3). 

14 ‘‘(D) OTHER INFORMATION.—The plan ad15 ministrator may include in the quarterly pen16 sion benefit statement information relating to 

17 the historical return and risk of each invest18 ment option and the estimated amount that the 

19 participant needs to contribute each month or 

20 year so as to retire at retirement age (as de21 fined in section 216(l) of the Social Security 

22 Act). 

23 ‘‘(E) ESTIMATIONS.—For purposes of 

24 making the disclosure of actual charges or per25 centages as required under this paragraph, the 

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1 plan administrator may provide a reasonable 

2 and representative estimate of such charges or 

3 percentages and shall indicate any such esti4 mate as being such an estimate. Any such esti5 mate shall be based on the previous year’s expe6 rience. 

7 ‘‘(F) MODEL STATEMENT.—The Secretary 

8 shall prescribe a model pension benefit state9 ment that may be used for purposes of satis10 fying the requirements of this subparagraph 

11 and subparagraph (B)(ii). 

12 ‘‘(G) ANNUAL COMPLIANCE FOR SMALL

13 PLANS AND WITH RESPECT TO CERTAIN INFOR14 MATION.—In the case of a plan providing for 

15 investment as described in paragraph 

16 (1)(A)(i)— 

17 ‘‘(i) if the plan has 100 or fewer par18 ticipants and beneficiaries, the plan may 

19 provide the pension benefit statement 

20 under paragraph (1) on an annual rather 

21 than a quarterly basis, and 

22 ‘‘(ii) the plan may comply with the re23 quirements of subparagraph (B)(ii)(IV) on 

24 an annual rather than a quarterly basis.’’; 

25 and 

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1 (2) by adding at the end the following new sub2 sections: 

3 ‘‘(d) ASSISTANCE TO SMALL EMPLOYERS.—The Sec4 retary shall make available to employers with 100 or fewer 

5 employees— 

6 ‘‘(1) educational and compliance materials de7 signed to assist such employers in selecting and 

8 monitoring service providers for individual account 

9 plans which permit a participant or beneficiary to 

10 exercise control over the assets in the account of the 

11 participant or beneficiary, investment options under 

12 such plans, and charges relating to such options, 

13 and 

14 ‘‘(2) services designed to assist such employers 

15 in finding and understanding affordable investment 

16 options for such plans and in comparing the invest17 ment performance of, and charges for, such options 

18 on an ongoing basis against appropriate benchmarks 

19 or other appropriate measures. 

20 ‘‘(e) ASSISTANCE TO PLAN SPONSORS AND PLAN

21 PARTICIPANTS AND BENEFICIARIES.—The Secretary shall 

22 provide assistance to plan sponsors of individual account 

23 plans and participants and beneficiaries under such plans 

24 with any questions or problems regarding compliance with 

25 the requirements of this section. 

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1 ‘‘(f) ELECTRONIC MEDIA.—Any disclosure required 

2 under this section may be provided through an electronic 

3 medium under rules prescribed by the Secretary. Such 

4 rules shall be similar to those applicable under the Inter5 nal Revenue Code of 1986 with respect to notices to par6 ticipants in pension plans. The Secretary shall have the 

7 authority to modify such rules as appropriate to take into 

8 account new developments, including new forms of elec9 tronic media. The rules prescribed by the Secretary pursu10 ant to this subsection shall provide for a method for the 

11 typical participant or beneficiary to obtain without undue 

12 burden any such disclosure in writing on paper in lieu of 

13 receipt through an electronic medium.’’. 

14 (c) ENFORCEMENT.—Section 502(c)(7) of such Act 

15 (29 U.S.C. 1132(c)(7)) is amended— 

16 (1) by inserting ‘‘(A)’’ after ‘‘(7)’’; and 

17 (2) by adding at the end the following new sub18 paragraph: 

19 ‘‘(B)(i) In the case of any violation of section 111(a) 

20 by a service provider (as defined in section 111(e)(4)) with 

21 respect to one or more participants and beneficiaries, the 

22 service provider shall be assessed by the Secretary a civil 

23 penalty of up to $1,000 a day with respect to each such 

24 participant or beneficiary from the date of the initial viola25 tion until the date on which such violation is corrected, 

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1 subject to a total maximum penalty of 10 percent of the 

2 amount involved. 

3 ‘‘(ii) Any plan administrator or other person who is 

4 a service provider with respect to the plan who fails or 

5 refuses to provide a statement to participants and bene6 ficiaries in accordance with section 105(a)(2)(B)(ii) or 

7 111(b) shall be assessed by the Secretary a civil penalty 

8 of up to $100 a day from the date of the failure or refusal 

9 to the date on which such statement or notice is so pro10 vided. 

11 ‘‘(iii) For purposes of this subparagraph, each viola12 tion with respect to any single participant, beneficiary, or 

13 plan administrator shall be treated as a separate violation. 

14 The Secretary may compromise, modify, or remit any civil 

15 penalty imposed on any person under this subparagraph 

16 if the Secretary determines— 

17 ‘‘(I) that the person acted reasonably and in 

18 good faith or that severe financial hardship would 

19 otherwise occur to the plan sponsor, and 

20 ‘‘(II) that such compromise, modification, or re21 mission is in the interests of participants and bene22 ficiaries.’’. 

23 (d) CONFORMING AMENDMENT.—The table of con24 tents in section 1 of such Act, as amended by section 2, 

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1 is amended by striking the item relating to section 111 

2 and inserting the following new items: 

‘‘Sec. 111. Special reporting and disclosure rules for individual account plans. 

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

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

4 this section shall apply to contracts for services entered 

5 into in plan years beginning after one year after the date 

6 of the enactment of this Act. 

7 SEC. 3. MINIMUM INVESTMENT OPTION REQUIREMENT 

8 FOR INDIVIDUAL ACCOUNT PLANS. 

9 (a) IN GENERAL.—Section 404(c) of the Employee 

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

11 1104(c)) is amended by adding at the end the following 

12 new paragraph: 

13 ‘‘(6) MINIMUM INVESTMENT OPTION REQUIRE14 MENT FOR INDIVIDUAL ACCOUNT PLANS.—Para15 graph (1)(A)(ii) shall not apply in connection with 

16 any individual account plan which permits a partici17 pant or beneficiary to exercise control over the as18 sets in the account of the participant or beneficiary 

19 unless the plan includes at least one investment op20 tion— 

21 ‘‘(A) which is an unmanaged or passively 

22 managed mutual fund with a portfolio of securi23 ties designed to substantially match the per24 formance of the entire United States equity 

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1 market or the entire United States bond mar2 ket, or a combination thereof, 

3 ‘‘(B) which offers a combination of histor4 ical returns, risk, and charges (within the 

5 meaning of section 111(e)(1)) that is likely to 

6 meet retirement income needs at adequate lev7 els of contribution, and 

8 ‘‘(C) which is described in the terms of the 

9 plan as offered without any endorsement of the 

10 Government or the plan sponsor.’’. 

11 (b) CONFORMING AMENDMENT.—Section 

12 404(c)(1)(A)(ii) of such Act (29 U.S.C. 1104(c)(1)(A)(ii)) 

13 is amended by inserting ‘‘except as provided in section 

14 404(c)(6) and’’ after ‘‘exercise of control,’’. 

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

16 this section shall apply with respect to plan years begin17 ning after one year after the date of the enactment of this 

18 Act. 

19 SEC. 4. ENFORCEMENT COORDINATION AND REVIEW BY 

20 THE DEPARTMENT OF LABOR. 

21 (a) IN GENERAL.—Section 502 of the Employee Re22 tirement Income Security Act of 1974 (29 U.S.C. 1132) 

23 is amended by adding at the end the following new sub24 section: 

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1 ‘‘(n) ENFORCEMENT COORDINATION OF CERTAIN

2 DISCLOSURE REQUIREMENTS AND REVIEW BY THE DE3 PARTMENT OF LABOR.— 

4 ‘‘(1) IN GENERAL.— 

5 ‘‘(A) NOTIFICATION AND ACTION.—The 

6 Secretary shall notify the applicable regulatory 

7 authority in any case in which the Secretary de8 termines that a service provider is engaged in 

9 a pattern or practice that precludes compliance 

10 by plan administrators with section 111. The 

11 Secretary shall, in consultation with the appli12 cable authority, take such timely enforcement 

13 action under this title as is necessary to assure 

14 that such pattern or practice ceases and desists 

15 and assess any appropriate penalties. 

16 ‘‘(B) DISSEMINATION.—The Secretary 

17 shall widely disseminate to employee pension 

18 benefit plans covered by this title and their par19 ticipants and beneficiaries the identity of any 

20 service providers with respect to such plans 

21 found to be engaged in any pattern or practice 

22 described in subparagraph (A) with the intent 

23 to preclude compliance by plan administrators 

24 with section 111 and the particulars of such 

25 pattern or practice. Prior to the dissemination 

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•HR 1984 IH

1 of the identity of any service providers identi2 fied and determined by the Secretary to be en3 gaged in such a pattern or practice, such serv4 ice provider shall receive a notice of intent to 

5 disseminate, an opportunity to request an ad6 ministrative hearing, and a timely appeal to the 

7 Secretary. 

8 ‘‘(2) ANNUAL AUDIT OF REPRESENTATIVE SAM9 PLING OF INDIVIDUAL ACCOUNT PLANS.—The Sec10 retary shall annually audit a representative sampling 

11 of individual account plans covered by this title to 

12 determine compliance with the requirements of sec13 tion 111. The Secretary shall annually report the re14 sults of such audit and any related recommendations 

15 of the Secretary to the Committee on Education and 

16 Labor of the House of Representatives and the Com17 mittee on Health, Education, Labor, and Pensions 

18 of the Senate.’’. 

19 (b) REVIEW AND REPORT TO THE CONGRESS BY

20 SECRETARY OF LABOR RELATING TO REPORTING AND

21 DISCLOSURE REQUIREMENTS.— 

22 (1) STUDY.—As soon as practicable after the 

23 date of the enactment of this Act, the Secretary of 

24 Labor shall review the reporting and disclosure re25 quirements of part 1 of subtitle B of title I of the 

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1 Employee Retirement Income Security Act of 1974 

2 and related provisions of the Pension Protection Act 

3 of 2006. 

4 (2) REPORT.—Not later than 18 months after 

5 the date of the enactment of this Act, the Secretary 

6 of Labor, in consultation with the Secretary of the 

7 Treasury, shall make such recommendations as the 

8 Secretary of Labor considers appropriate to the ap9 propriate committees of the Congress to consolidate, 

10 simplify, standardize, and improve the applicable re11 porting and disclosure requirements so as to simplify 

12 reporting for employee pension benefit plans and en13 sure that needed understandable information is pro14 vided to participants and beneficiaries of such plans. 

Æ 

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