I 

111TH CONGRESS 

1ST SESSION H. R. 4146 

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

to provide for disclosure regarding compensation for services to pension plans. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2009 

Mr. KLINE of Minnesota 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 for disclosure regarding compensation for services to pension 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 ‘‘Sensible Transparency 

5 for Retirement Plans Act of 2009’’. 


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1 SEC. 2. DISCLOSURE TO PLAN ADMINISTRATORS OF DE2 FINED BENEFIT AND DEFINED CONTRIBU3 TION PENSION PLANS REGARDING COM4 PENSATION FOR SERVICES. 

5 Section 408(b)(2) of the Employee Retirement In6 come Security Act of 1974 (29 U.S.C. 1108(b)(2)) is 

7 amended— 

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

9 (2) by adding at the end the following new sub10 paragraph: 

11 ‘‘(B) DISCLOSURE TO PLAN ADMINISTRATOR OF

12 PENSION PLAN REGARDING COMPENSATION FOR

13 SERVICES TO PLAN.— 

14 ‘‘(i) IN GENERAL.—A contract or arrange15 ment with a service provider for services de16 scribed in subparagraph (A) shall not be treat17 ed as reasonable for purposes of subparagraph 

18 (A) unless, under such arrangement, the service 

19 provider is required to disclose to the plan ad20 ministrator (or any other plan official with con21 tracting authority under the terms of the plan) 

22 the services to be provided and the total com23 pensation to be received by the service provider 

24 in connection with the arrangement to provide 

25 services to the plan. The disclosure of total 

26 compensation shall include a disclosure of the 


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1 direct compensation received by the service pro2 vider from the plan or plan sponsor and a dis3 closure of any indirect compensation received, 

4 in connection with the arrangement to provide 

5 services to the plan, by the service provider 

6 from a person who is not an affiliate. 

7 ‘‘(ii) DISCLOSURE OF TOTAL COMPENSA8 TION.—In any case in which a service provider 

9 and its affiliates provide multiple services to a 

10 plan, or make available plan investment options, 

11 under a single arrangement, the service pro12 vider that has entered into the arrangement to 

13 provide services to the plan shall disclose to the 

14 plan administrator the total compensation pay15 able by the plan or plan sponsor in connection 

16 with such arrangement (including, for each in17 vestment option made available under the ar18 rangement, the total expense ratio or similar 

19 measure of the total fees of the investment op20 tion). 

21 ‘‘(iii) RELIANCE BY SERVICE PROVIDERS

22 AND FIDUCIARIES.— 

23 ‘‘(I) RELIANCE ON INFORMATION

24 PROVIDED BY REGULATED ENTITIES.—To 

25 the extent any of the information required 


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1 to be disclosed by a service provider under 

2 this subparagraph is given to the service 

3 provider by a person that is not an affiliate 

4 and that is regulated by the Federal Gov5 ernment or a State, the service provider 

6 may rely on the completeness and accuracy 

7 of such information unless the service pro8 vider knows or has reason to know that the 

9 information is inaccurate or incomplete. 

10 ‘‘(II) RELIANCE ON DISCLOSURES.—A 

11 fiduciary may rely on disclosures made 

12 pursuant to the requirements of this sub13 section, with respect to a plan service to 

14 which the disclosures relate, for purposes 

15 of satisfying the fiduciary’s obligations 

16 under section 404(a)(1)(B) as they relate 

17 to the requirements of section 

18 404(a)(1)(A)(ii), and for purposes of deter19 mining whether the compensation paid for 

20 services rendered to a plan are reasonable 

21 for purposes of subparagraph (A) and may 

22 treat such disclosures as sufficient for such 

23 purposes. Nothing in this subclause shall 

24 be construed to exempt a fiduciary from 

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1 sures that may be made by the service pro2 vider. 

3 ‘‘(III) CONTINUED APPLICATION OF

4 FIDUCIARY STANDARDS.—Nothing in this 

5 subparagraph shall be construed to— 

6 ‘‘(aa) alter, amend, or limit the 

7 ability of a fiduciary to satisfy the re8 quirements of section 404(a) by con9 sidering the aggregate or total cost of 

10 a group of services for the administra11 tion of a plan, or 

12 ‘‘(bb) subject to subclause (II), 

13 otherwise limit the obligations of plan 

14 sponsors and fiduciaries under this 

15 part. 

16 ‘‘(iv) TIMING OF DISCLOSURE.—The serv17 ice provider shall provide the disclosure re18 quired by this subparagraph prior to or at the 

19 time the arrangement is entered into and within 

20 60 days after the end of each plan year or cal21 endar year thereafter while such arrangement 

22 remains in effect. The disclosure may be pro23 vided electronically, but only if the adminis24 trator may obtain a paper copy upon request. 


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1 ‘‘(v) FORM OF DISCLOSURE.—A service 

2 provider may provide the disclosure required 

3 under this subparagraph, regarding any matter 

4 in connection with the amount of fees or com5 pensation received for any service, in the form 

6 of a reasonable and representative estimate, if 

7 the service provider indicates any such estimate 

8 as being such an estimate and discloses the 

9 basis for such estimate. For purposes of disclo10 sure under this subparagraph, fees and ex11 penses may be expressed as a dollar amount, a 

12 percentage of assets, a formula, or other meth13 od sufficient to allow the fiduciary to evaluate 

14 the total compensation paid under the arrange15 ment. 

16 ‘‘(vi) REGULATORY AUTHORITY.—The Sec17 retary shall issue regulations implementing this 

18 subparagraph. Such regulations shall require 

19 the disclosure to be concise, written in a man20 ner designed to be understood by the typical 

21 plan administrator, and calculated to assist the 

22 plan administrator in comparing the aggregate 

23 compensation received by different service pro24 viders for providing similar services and deter25 mining what compensation is paid directly or 


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1 indirectly by the plan. Such regulations may 

2 provide for categories of service providers who 

3 shall not be subject to this subparagraph if the 

4 Secretary determines that such service pro5 viders do not provide significant services mer6 iting the disclosure required by this subpara7 graph. 

8 ‘‘(vii) AFFILIATE.—For purposes of this 

9 subparagraph, the term ‘affiliate’ of another en10 tity means an affiliated person of the entity (as 

11 defined in section 2(a)(3) of the Investment 

12 Company Act of 1940 (15 U.S.C. 80a– 

13 2(a)(3))).’’. 

14 SEC. 3. DISCLOSURE TO PARTICIPANTS AND BENE15 FICIARIES OF INDIVIDUAL ACCOUNT PLANS 

16 REGARDING INVESTMENTS AND FEES. 

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

18 the Employee Retirement Income Security Act of 1974 is 

19 amended— 

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

21 1031) as section 112; and 

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

23 1030) the following new section: 


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1 ‘‘SEC. 111. DISCLOSURES TO PARTICIPANTS AND BENE2 FICIARIES OF INDIVIDUAL ACCOUNT PLANS. 

3 ‘‘(a) DISCLOSURE REQUIREMENTS.— 

4 ‘‘(1) ADVANCE NOTICE OF FEES AND AVAIL5 ABLE INVESTMENT OPTIONS.—The plan adminis6 trator of an individual account plan which permits 

7 a participant or beneficiary to exercise control over 

8 the assets in the account of the participant or bene9 ficiary shall provide to the participant or bene10 ficiary— 

11 ‘‘(A) a description of the direct fees and 

12 expenses that may be charged against the par13 ticipant or beneficiary’s account, and 

14 ‘‘(B) a description of the investment op15 tions available for election under the plan. 

16 The notice shall be provided at least 10 business 

17 days prior to the earliest date provided for under the 

18 plan for the participant’s initial investment of any 

19 contribution made on behalf of such participant and 

20 at least 10 business days prior to the effective date 

21 of any material change in the information. In the 

22 case of a plan that provides for immediate eligibility 

23 or that contains an automatic contribution arrange24 ment (as defined in subparagraphs (A) and (B) of 

25 section 514(e)(2)), the initial notice may be provided 

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1 vestment. With respect to the notice required under 

2 this paragraph, the Secretary shall prescribe regula3 tions creating exceptions to the 10-day notice re4 quirement in circumstances similar to those de5 scribed in section 101(i)(2)(C), and such notice may 

6 be combined with any similar notice that may be re7 quired under section 404(c)(5) or under this section. 

8 ‘‘(2) DESCRIPTION OF ACCOUNT FEES.—The 

9 notice required under paragraph (1)(A) shall— 

10 ‘‘(A) include an explanation of any fees 

11 and expenses for plan administrative services 

12 that will be charged against the individual ac13 count of the participant or beneficiary, 

14 ‘‘(B) include an explanation of any fees 

15 and expenses that may be charged against the 

16 individual account of a participant or bene17 ficiary for services provided on an individual 

18 basis, rather than plan basis, including fees and 

19 expenses for using plan features or services, 

20 and 

21 ‘‘(C) if fees of investment options are used 

22 to defray costs of plan administration or other 

23 plan costs, include a statement describing the 

24 fact that fees of investments defray other plan 

25 costs. 


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1 ‘‘(3) DESCRIPTION OF INVESTMENT OPTIONS.— 

2 The notice required under paragraph (1)(B) shall— 

3 ‘‘(A) set forth, with respect to each avail4 able investment option— 

5 ‘‘(i) the name of the investment op6 tion, 

7 ‘‘(ii) the investment objectives and 

8 principal investment strategies of the in9 vestment option, 

10 ‘‘(iii) the principal risks associated 

11 with the investment option, 

12 ‘‘(iv) the fees associated with the in13 vestment option, including fees for pur14 chase and sale of the option and the total 

15 annual operating expenses of the option ex16 pressed as percentage, 

17 ‘‘(v) the historical return of the in18 vestment option derived net of fees and ex19 penses for the previous year, 5 years, and 

20 10 years (or since inception if later), 

21 ‘‘(vi) whether the investment option is 

22 diversified among various classes of assets 

23 so as to minimize the risk of large losses 

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1 ment options so as to obtain such diver2 sification, 

3 ‘‘(vii) whether the investment option 

4 is actively managed or passively managed 

5 in relation to an index and the difference 

6 between active management and passive 

7 management, and 

8 ‘‘(viii) where, and the manner in 

9 which, additional information regarding 

10 the investment option may be obtained, 

11 ‘‘(B) include a statement explaining that 

12 investment options should not be evaluated sole13 ly on the basis of the charges for each option 

14 but should also be based on careful consider15 ation of other key factors, including the risk 

16 level of the option, the investment objectives of 

17 the option, the principal investment strategies 

18 of the option, and historical returns derived by 

19 the option, 

20 ‘‘(C) be presented in a manner which is de21 signed to be understood by the typical partici22 pant and include such information as the Sec23 retary determines necessary to permit partici24 pants and beneficiaries to assess the services 


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1 for which charges will or could be assessed 

2 against the account, and 

3 ‘‘(D) include, for each investment option, 

4 under regulations issued by the Secretary, an il5 lustrative example showing the estimated an6 nual dollar fees and expenses expressed as a 

7 percentage of assets for each $1,000 invested. 

8 ‘‘(4) MODEL NOTICE.—The Secretary shall pre9 scribe a model notice that may be used for purposes 

10 of satisfying the requirements of this subsection. 

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

12 the notice required under this subsection, the plan 

13 administrator may provide a reasonable and rep14 resentative estimate of fees and charges, if the plan 

15 administrator indicates any such estimate as being 

16 an estimate and discloses the basis for the estimate. 

17 ‘‘(b) ELECTRONIC MEDIA.—The disclosure required 

18 under this section may be provided electronically, but only 

19 if the plan administrator discloses that the participant or 

20 beneficiary may obtain a paper copy upon request at no 

21 charge and provides a paper copy upon request at no 

22 charge. 

23 ‘‘(c) REGULATIONS REGARDING CERTAIN PROD24 UCTS.—The Secretary shall prescribe regulations address25 ing the disclosure of fees for any investment options that 


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1 provide a contracted guaranteed rate of return and that 

2 do not identify specific fees. Such regulations shall ensure 

3 that participants and beneficiaries receive sufficient infor4 mation to allow them to make informed comparisons 

5 among the investment options available in the plan.’’. 

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 (G); 

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 

19 of a participant’s account for which 

20 the participant has the right to direct 

21 the investment of assets, the informa22 tion described in subparagraph (C).’’; 

23 and 

24 (C) by inserting after subparagraph (B) 

25 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) any direct charges to the partici19 pant or beneficiary’s account during the 

20 quarter, 

21 ‘‘(v) the ending balance of the ac22 count, 

23 ‘‘(vi) the participant’s asset allocation 

24 to each investment option as of the end of 


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1 the quarter, expressed as an amount and 

2 as a percentage, and 

3 ‘‘(vii) a copy of the most recently up4 dated information described in subpara5 graphs (A)(iv), (A)(v), and (D) of section 

6 111(a)(3). 

7 ‘‘(D) ESTIMATIONS.—For purposes of pro8 viding the notice required under this subsection, 

9 the plan administrator may provide a reason10 able and representative estimate of fees and 

11 charges, but only if the plan administrator indi12 cates any estimate as being an estimate and 

13 discloses the basis for the estimate. 

14 ‘‘(E) MODEL STATEMENT.—The Secretary 

15 shall prescribe a model pension benefit state16 ment that may be used for purposes of satis17 fying the requirements of this subparagraph 

18 and subparagraph (B)(ii). 

19 ‘‘(F) ANNUAL COMPLIANCE FOR SMALL

20 PLANS AND WITH RESPECT TO CERTAIN INFOR21 MATION.—In the case of a plan providing for 

22 investment as described in paragraph 

23 (1)(A)(i)— 

24 ‘‘(i) if the plan has 100 or fewer par25 ticipants and beneficiaries, the plan may 


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1 provide the pension benefit statement 

2 under paragraph (1) on an annual rather 

3 than a quarterly basis, and 

4 ‘‘(ii) the plan may comply with the re5 quirements of subparagraph (B)(ii)(IV) on 

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

7 and 

8 (2) by adding at the end the following new sub9 sections: 

10 ‘‘(d) ASSISTANCE TO EMPLOYERS AND PLAN PAR11 TICIPANTS AND BENEFICIARIES.—The Secretary shall 

12 make available to employers educational and compliance 

13 materials designed to assist such employers in complying 

14 with the requirements of this section and make available 

15 to participants and beneficiaries educational materials de16 signed to assist participants and beneficiaries in under17 standing the disclosures provided by this section. 

18 ‘‘(e) ELECTRONIC MEDIA.—The disclosure required 

19 under this section may be provided electronically, but only 

20 if the plan administrator discloses that the participant or 

21 beneficiary may obtain a paper copy upon request at no 

22 charge and provides a paper copy upon request at no 

23 charge.’’. 

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

25 (29 U.S.C. 1132(c)(7)) is amended— 


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

2 (2) adding at the end the following new sub3 paragraph: 

4 ‘‘(B)(i) Any plan administrator or other person who 

5 fails or refuses to provide a statement to participants and 

6 beneficiaries in accordance with section 105(a)(2)(B)(ii) 

7 or 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 ‘‘(ii) 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 ‘‘(iii) No penalty shall be assessed under this sub24 paragraph against any person solely because the person 

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1 affiliated person which is regulated by the Federal Govern2 ment or a State, unless the person knows or has reason 

3 to know that the information is inaccurate or incom4 plete.’’. 

5 (d) CLERICAL AMENDMENT.—The table of contents 

6 in section 1 of such Act is amended by striking the item 

7 relating to section 111 and inserting the following new 

8 items: 

‘‘Sec. 111. Disclosures to participants and beneficiaries of individual account 

plans. 

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

9 SEC. 4. EFFECTIVE DATE. 

10 The Secretary shall issue proposed and then final reg11 ulations under sections 2 and 3 within one year after the 

12 date of the enactment of this Act. The amendments made 

13 by section 2 shall apply to contracts entered into in plan 

14 years beginning at least one year after the date of the 

15 issuance of the final regulations. The amendments made 

16 by section 3 shall apply to plan years beginning at least 

17 one year after the date of the issuance of the final regula18 tions. 

Æ 


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