I 

108TH CONGRESS 

2D SESSION H. R. 5397 

To improve the retirement security of American families. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2004 

Mr. ANDREWS introduced the following bill; which was referred to the 

Committee on Education and the Workforce 

A BILL 

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 2004’’. 

6 (b) TABLE OF CONTENTS.—The table of contents is 

7 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. Prohibition of requests by plan sponsors for waiver of employee 

rights. 

Sec. 105. Model small employer group pension plan. 
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Sec. 106. 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. Modification 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. Amendments relating to effective date provision of the Civil Service 

Retirement Spouse Equity Act of 1984. 

Sec. 211. Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee. 

Sec. 212. Extension of tier II railroad retirement benefits to surviving former 

spouses pursuant to divorce agreements. 

TITLE III—SIMPLIFIED INVESTMENT STANDARDS 

Sec. 301. Exemption from prohibited transaction rules for certain aborted 

emergent transactions. 

Sec. 302. Prohibited transaction exemption for the provision of investment advice. 

Sec. 303. Participation of participants in trusteeship of single-employer plans 

providing for employee contributions. 

Sec. 304. Diversification of investment of account assets held under individual 

account plans. 

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

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

Sec. 307. Immediate warning of excessive stock holdings. 

Sec. 308. Report to participants and beneficiaries of trades in employer securities. 

TITLE IV—IMPROVEMENTS IN PENSION INFORMATION AND 

ENFORCEMENT 

Sec. 401. Pension benefit information. 

Sec. 402. Disclosures to Secretary of Labor relating to plan termination and relating to plan sponsors after acquisition or merger of plans. 

Sec. 403. Disclosure of operating income of employers adjusted so as to exclude 

certain components mandated in FASB rules governing accounting for defined benefit pension plans. 
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Sec. 404. Specific information regarding multiemployer plans included in annual report. 

Sec. 405. Limited scope audits. 

Sec. 406. Reporting and enforcement requirements for employee benefit plans. 

Sec. 407. Study of pension trends and characteristics. 

Sec. 408. Early resolution program for pension benefit claims. 

Sec. 409. Review of benefit determinations. 

Sec. 410. Allowable relief. 

Sec. 411. Assessment by Secretary of Labor of penalties for failures to meet 

disclosure requirements. 

Sec. 412. Missing participants and unclaimed benefits. 

Sec. 413. Fiduciary duties with respect to changes in investment options. 

Sec. 414. Office of Pension Participant Advocacy. 

Sec. 415. Exclusivity of powers and procedures applicable to rights or claims. 

TITLE V—IMPROVED PENSION PROTECTIONS FOR THE 

CHANGING WORKFORCE 

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

Sec. 502. Automatic rollover upon mandatory distribution in excess of $1,000. 

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

of participant’s covered employment. 

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: 

8 ‘‘MINIMUM COVERAGE REQUIREMENTS

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

10 plan maintained by an employer shall benefit all employees 

11 of the employer. 

12 ‘‘(b) EXCLUSION OF CERTAIN EMPLOYEES.— 
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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

2 in determining, in the case of any plan, whether the 

3 requirements of subsection (a) are met with respect 

4 to the employees of the employer maintaining the 

5 plan, there shall be excluded from consideration— 

6 ‘‘(A) employees who are included in a unit 

7 of employees covered by an agreement which, as 

8 determined in accordance with regulations 

9 issued by the Secretary, constitutes a collective 

10 bargaining agreement between employee rep11 resentatives and the employer or 2 or more em12 ployers including the employer, if there is evi13 dence that retirement benefits were the subject 

14 of good faith bargaining between the employee 

15 representatives and the employer or employers, 

16 ‘‘(B) in the case of a trust, forming a part 

17 of the plan, which is established or maintained 

18 pursuant to an agreement which, as determined 

19 in accordance with regulations issued by the 

20 Secretary, constitutes a collective bargaining 

21 agreement between airline pilots represented in 

22 accordance with title II of the Railway Labor 

23 Act and the employer or 2 or more employers 

24 including the employer, all employees not cov25 ered by the agreement, and 
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1 ‘‘(C) employees who are nonresident aliens 

2 and who receive no earned income (within the 

3 meaning of section 911(d)(2) of the Internal 

4 Revenue Code of 1986) from the employer 

5 which constitutes income from sources within 

6 the United States (within the meaning of sec7 tion 861(a)(3) of such Code). 

8 ‘‘(2) SPECIAL RULES.— 

9 ‘‘(A) TREATMENT OF EMPLOYEES IN

10 UNITS COVERED BY COLLECTIVE BARGAINING

11 AGREEMENTS.—Subsection (a) shall apply sepa12 rately with respect to employees (of an em13 ployer referred to in paragraph (1)(A)) who are 

14 in a unit of employees described in paragraph 

15 (1)(A). 

16 ‘‘(B) TREATMENT OF CERTAIN AIRLINE

17 EMPLOYEES.—Paragraph (1)(B) shall not apply 

18 in the case of any plan (of which the trust re19 ferred to in paragraph (1)(B) forms a part) if 

20 the plan provides for contributions or benefits 

21 for employees whose principal duties are not 

22 customarily performed aboard aircraft in flight. 

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

24 AND SERVICE REQUIREMENTS.— 

25 ‘‘(1) IN GENERAL.—If a plan— 
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1 ‘‘(A) prescribes, consistent with section 

2 202(a), minimum age and service requirements 

3 as a condition of participation, and 

4 ‘‘(B) excludes all employees not meeting 

5 such requirements from participation, 

6 then such employees shall be excluded from consider7 ation for purposes of this section. 

8 ‘‘(2) REQUIREMENTS MAY BE MET SEPARATELY

9 WITH RESPECT TO EXCLUDED GROUP.—If employees 

10 not meeting the minimum age or service require11 ments of section 202(a)(1) (without regard to sub12 paragraph (B) thereof) are covered under a plan of 

13 the employer which meets the requirements of sub14 section (a) separately with respect to such employ15 ees, such employees may be excluded from consider16 ation in determining whether any plan of the em17 ployer meets the requirements of subsection (a). 

18 ‘‘(3) REQUIREMENTS NOT TREATED AS BEING

19 MET BEFORE ENTRY DATE.—An employee shall not 

20 be treated as meeting the age and service require21 ments described in this subsection until the first 

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

23 the same age and service would be eligible to com24 mence participation in the plan. 

25 ‘‘(d) LINE OF BUSINESS EXCEPTION.— 
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1 ‘‘(1) IN GENERAL.—If, under section 414(r) of 

2 the Internal Revenue Code of 1986, an employer is 

3 treated as operating separate lines of business for a 

4 year, the employer may apply the requirements of 

5 this section for such year separately with respect to 

6 employees in each separate line of business. 

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

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

9 plan maintained by an employer unless such plan 

10 benefits such employees as qualify under a classifica11 tion set up by the employer and found by the Sec12 retary of the Treasury not to be discriminatory in 

13 favor of highly compensated employees. 

14 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur15 poses of this section— 

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

17 term ‘highly compensated employee’ has the mean18 ing given such term by section 414(q) of the Inter19 nal Revenue Code of 1986. 

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

21 elect to designate— 

22 ‘‘(A) 2 or more trusts, 

23 ‘‘(B) 1 or more trusts and 1 or more annu24 ity plans, or 

25 ‘‘(C) 2 or more annuity plans, 
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1 as part of 1 plan to determine whether the require2 ments of this section are met with respect to such 

3 plan. 

4 ‘‘(3) SPECIAL RULES FOR CERTAIN DISPOSI5 TIONS OR ACQUISITIONS.— 

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

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

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

9 of such Code, then the requirements of this sec10 tion shall be treated as having been met during 

11 the transition period with respect to any plan 

12 covering employees of such person or any other 

13 member of such group if— 

14 ‘‘(i) such requirements were met im15 mediately before each such change, and 

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

17 not significantly changed during the transi18 tion period (other than by reason of the 

19 change in members of a group) or such 

20 plan meets such other requirements as the 

21 Secretary of the Treasury may prescribe 

22 by regulation. 

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

24 of subparagraph (A), the term ‘transition pe25 riod’ means the period— 
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1 ‘‘(i) beginning on the date of the 

2 change in members of a group, and 

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

4 plan year beginning after the date of such 

5 change. 

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

7 case of contributions which are subject to section 

8 401(k) or 401(m) of the Internal Revenue Code of 

9 1986, employees who are eligible to contribute (or 

10 elect to have contributions made on their behalf) 

11 shall be treated as benefiting under the plan. 

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

13 Treasury shall prescribe such regulations as may be 

14 necessary or appropriate to carry out the purposes 

15 of this section.’’. 

16 (b) CLERICAL AMENDMENT.—The table of contents 

17 in section 1 of such Act is amended by inserting after the 

18 item relating to section 201 the following new item: 

‘‘Sec. 201A. Minimum coverage requirements.’’. 

19 SEC. 102. MINIMUM PARTICIPATION REQUIREMENTS. 

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

21 and 204(b)(4) of the Employee Retirement Income Secu22 rity Act of 1974 (29 U.S.C. 1052(a)(3), 1053(b)(2), and 

23 1054(b)(4)) are each amended by striking ‘‘1,000 hours’’ 

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

25 (b) CONFORMING AMENDMENTS.— 
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1 (1) Sections 202(a)(3)(D), 203(b)(2)(D), and 

2 204(b)(4)(E) (29 U.S.C. 1052(a)(3)(D), 

3 1053(b)(2)(D), and 1054(b)(4)(E)) are each amend4 ed by striking ‘‘125 days’’ and inserting ‘‘94 days’’. 

5 (2) Sections 202(b)(5)(B) and 203(b)(3)(E)(ii) 

6 (29 U.S.C. 1052(b)(5)(B) and 1053(b)(3)(E)(ii)) 

7 are each amended by striking ‘‘501 hours’’ and in8 serting ‘‘376 hours’’. 

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

10 1053(b)(3)(A)) is amended by striking ‘‘500 hours’’ 

11 and inserting ‘‘375 hours’’. 

12 SEC. 103. FASTER VESTING OF BENEFITS UNDER DEFINED 

13 CONTRIBUTION PLANS. 

14 Section 203(a) of the Employee Retirement Income 

15 Security Act of 1974 (29 U.S.C. 1053(a)) is amended— 

16 (1) by striking paragraph (2)(A) and inserting 

17 the following: 

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

19 this subparagraph if an employee has a non20 forfeitable right to 100 percent of the employ21 ee’s accrued benefit derived from employer con22 tributions— 

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

24 plan, as of completion by the employee of 

25 at least 5 years of service, or 
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1 ‘‘(ii) in the case of a defined contribu2 tion plan, as of completion by the employee 

3 of at least 3 years of service.’’; 

4 (2) in paragraph (2)(B), by inserting after ‘‘if’’ 

5 the following: ‘‘the plan is a defined benefit plan 

6 and, under the plan,’’; and 

7 (3) in paragraph (4), by striking ‘‘paragraph 

8 (2) shall be applied—’’ and all that follows through 

9 ‘‘subparagraph (B):’’ and inserting ‘‘paragraph 

10 (2)(B) shall be applied by substituting for the table 

11 contained therein the following table:’’. 

12 SEC. 104. PROHIBITION OF REQUESTS BY PLAN SPONSORS 

13 FOR WAIVER OF EMPLOYEE RIGHTS. 

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

15 the Employee Retirement Income Security Act of 1974 

16 (29 U.S.C. 1051 et seq.) is amended— 

17 (1) by redesignating section 211 as section 212; 

18 and 

19 (2) by inserting after section 210 the following 

20 new section: 

21 ‘‘PROHIBITION OF REQUESTS BY PLAN SPONSORS FOR

22 WAIVER OF EMPLOYEE RIGHTS

23 ‘‘SEC. 211. A plan sponsor may not request any indi24 vidual to waive any right of coverage under, or participa25 tion in, any pension plan which is granted by this title.’’. 
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1 (b) CLERICAL AMENDMENT.—The table of contents 

2 in section 1 of such Act is amended— 

3 (1) by striking the item relating to section 211; 

4 and 

5 (2) by inserting after the item relating to sec6 tion 210 the following new items: 

‘‘Sec. 211. Prohibition of requests by plan sponsors for waiver of employee 

rights. 

‘‘Sec. 212. Effective dates.’’. 

7 SEC. 105. MODEL SMALL EMPLOYER GROUP PENSION 

8 PLAN. 

9 (a) IN GENERAL.—Section 206 of the Employee Re10 tirement Income Security Act of 1974 (29 U.S.C. 1056) 

11 is amended by adding at the end the following new sub12 section: 

13 ‘‘(g) MODEL SIMPLIFIED GROUP PENSION PLANS.— 

14 ‘‘(1) ESTABLISHMENT OF MODEL PLAN.—The 

15 Secretary, in consultation with the Secretary of the 

16 Treasury, shall prescribe by regulations one or more 

17 model simplified group pension plans which would— 

18 ‘‘(A) provide simplicity and minimal ad19 ministrative responsibilities to employers and 

20 provide adequate retirement benefits to employ21 ees upon adoption by an employer, including 

22 models which could be established by a group of 

23 small employers, an employee association, an 

24 employer association, or a financial institution, 
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1 ‘‘(B) cover all employees of the employer, 

2 ‘‘(C) accept contributions from successive 

3 employers, 

4 ‘‘(D) readily permit and accept rollovers to 

5 and from other qualified plans (as defined in 

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

7 ‘‘(E) constitute a plan meeting the require8 ments of this Act and Internal Revenue Code of 

9 1986. 

10 In devising a model pension plan, the Secretary shall 

11 consider the adequacy of existing simplified em12 ployee pension plan alternatives and may make rec13 ommendations to adopt such plans as model sim14 plified plans. 

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

16 Secretary, in consultation with the Secretary of the 

17 Treasury and the Administrator of the Small Busi18 ness Administration, shall advertise the model plans 

19 developed pursuant to paragraph (1), including 

20 through contracts (to the extent provided in appro21 priation Acts) with applicable organizations, to en22 sure that small employers and their employees are 

23 apprised of the availability of administratively simple 

24 single and group pension plans.’’. 
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1 (b) EXEMPTION OF PLAN SPONSOR FROM FIDU2 CIARY LIABILITY.—Section 404(a) of such Act (29 U.S.C. 

3 1104(a)) is amended by adding at the end the following 

4 new paragraph: 

5 ‘‘(3) A plan sponsor of an employee benefit plan shall 

6 not be liable under this part in connection with such plan 

7 for any act or practice by such plan sponsor consistent 

8 with the requirements of such plan if such plan conforms 

9 to the terms of a model simplified group pension plan pre10 scribed pursuant to section 206(g).’’. 

11 (c) INITIAL REGULATIONS.—Regulations under sec12 tion 206(g) of the Employee Retirement Income Security 

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

14 simplified pension plans shall be issued within 12 months 

15 after the date of the enactment of this Act. 

16 (d) STUDY.—Not later than 3 years after the date 

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

18 the Secretary of the Treasury shall conduct a joint study 

19 to determine the feasibility of permitting non-highly com20 pensated employees whose employer does not cover them 

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

22 to seek an automatic payroll deduction or other deferral 

23 mechanism to make contributions to a pension plan con24 forming to the the requirements of a model simplified 

25 group pension plan developed pursuant to section 206(g) 
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1 of the Employee Retirement Income Security Act of 1974 

2 or to similar pension plans. Such Secretaries shall submit 

3 a joint report to the Congress describing the results of 

4 such study and making such recommendations as the Sec5 retaries determine necessary or appropriate. 

6 SEC. 106. ENFORCEMENT UNDER ERISA OF REQUIREMENTS 

7 FOR SIMPLIFIED EMPLOYEE PENSIONS. 

8 Subtitle A of title III of the Employee Retirement 

9 Income Security Act of 1974 is amended by adding after 

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

11 ‘‘TREATMENT OF SIMPLIFIED EMPLOYEE PENSIONS

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

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

14 Revenue Code of 1986 relating to simplified employee pen15 sions (as defined in section 408(k)(1) of such Code) shall 

16 be treated as requirements of title I applicable to employee 

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

18 are such simplified employee pensions.’’. 

19 TITLE II—IMPROVED PENSION 

20 PROTECTIONS FOR WOMEN 

21 SEC. 201. ELIMINATION OF INTEGRATION WITH WORKERS’

22 COMPENSATION AND SIMILAR BENEFITS. 

23 Section 206 of the Employee Retirement Income Se24 curity Act of 1974 (as amended by section 105(a)) is 

25 amended further by adding at the end the following new 

26 subsection: 
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1 ‘‘(h) 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) Notwithstanding paragraph (1), this section 

18 shall not apply to a plan which the Secretary of the Treas19 ury or his delegate has determined is a plan described in 

20 section 404(c) of the Internal Revenue Code of 1986 (or 

21 a continuation thereof) in which participation is substan22 tially limited to individuals who, before January 1, 1976, 

23 ceased employment covered by 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— 

9 (1) by adjusting the margination of paragraph 

10 (3) so as to align such paragraph with the 

11 margination of paragraphs (1) and (2); and 

12 (2) by adding at the end the following new 

13 paragraph: 

14 ‘‘(4) SPECIAL RULE FOR DEFINED CONTRIBUTION

15 PLANS.— 

16 ‘‘(A) IN GENERAL.—In the case of an indi17 vidual account plan, notwithstanding paragraph (2), 

18 if the present value of the qualified joint and sur19 vivor annuity or the qualified preretirement survivor 

20 annuity exceeds $10,000, the plan shall immediately 

21 distribute 50 percent of the present value of such 

22 annuity to each spouse, unless otherwise elected in 

23 advance by the spouse in writing in accordance with 

24 such regulations as the Secretary may prescribe. 

25 Section 211 shall apply with respect to each spouse’s 
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1 rights under this paragraph as if such spouse were 

2 an employee referred to in such section. 

3 ‘‘(B) EXCEPTION.—The plan may distribute a 

4 different percentage of the present value of an annu5 ity to each spouse if a court order or contractual 

6 agreement between the spouses provides for such 

7 different percentage.’’. 

8 SEC. 203. MODIFICATION OF JOINT AND SURVIVOR ANNU9 ITY REQUIREMENTS. 

10 (a) OPTION TO ELECT QUALIFIED ALTERNATIVE

11 JOINT AND SURVIVOR ANNUITY FORM OF BENEFIT UPON

12 WAIVER OF QUALIFIED JOINT AND SURVIVOR ANNUITY

13 FORM OF BENEFIT.— 

14 (1) IN GENERAL.—Section 205(c)(1)(A) of the 

15 Employee Retirement Income Security Act of 1974 

16 (29 U.S.C. 1055(c)(1)(A)) is amended to read as 

17 follows: 

18 ‘‘(A) under the plan, each participant— 

19 ‘‘(i) may elect at any time during the 

20 applicable election period to waive the 

21 qualified joint and survivor annuity form 

22 of benefit, 

23 ‘‘(ii) may elect at any time during the 

24 applicable election period to waive the 
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1 qualified preretirement survivor annuity 

2 form of benefit, 

3 ‘‘(iii) may elect at any time during the 

4 applicable election period, in any case in 

5 which the qualified joint and survivor an6 nuity form of benefit is not provided by 

7 reason of a waiver under clause (i), to be 

8 provided a qualified alternative joint and 

9 survivor annuity form of benefit, and 

10 ‘‘(iv) may revoke any such election at 

11 any time during the applicable election pe12 riod, and’’. 

13 (2) QUALIFIED ALTERNATIVE JOINT AND SUR14 VIVOR ANNUITY DEFINED.—Section 205(d) of such 

15 Act (29 U.S.C. 1055(d)) is amended— 

16 (A) by redesignating paragraphs (1) and 

17 (2) as subparagraphs (A) and (B), respectively; 

18 (B) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

19 (C) by adding at the end the following new 

20 paragraph: 

21 ‘‘(2)(A) For purposes of this section, the term ‘quali22 fied alternative joint and survivor annuity’ means an an23 nuity— 

24 ‘‘(i) for the life of the participant with a sur25 vivor annuity for the life of the spouse which is 
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1 equal to the applicable percentage (determined under 

2 subparagraph (B)) of (and not greater than 100 

3 percent of) the amount of the annuity which is pay4 able during the joint lives of the participant and the 

5 spouse, and 

6 ‘‘(ii) which is the actuarial equivalent of a sin7 gle annuity for the life of the participant. 

8 Such term also includes any annuity form having the ef9 fect of an annuity described in the preceding sentence. 

10 ‘‘(B)(i) For purposes of subparagraph (A)— 

11 ‘‘(I) if the base survivor annuity percent12 age is less than 75 percent, the applicable per13 centage is 75 percent, and 

14 ‘‘(II) if the base survivor annuity percent15 age is equal to at least 75 percent, the applica16 ble percentage is 50 percent. 

17 ‘‘(ii) For purposes of clause (i), the term ‘survivor 

18 annuity percentage’ means the percentage which the sur19 vivor annuity under the plan’s qualified joint and survivor 

20 annuity form of benefit bears to the annuity payable dur21 ing the joint lives of the participant and the spouse under 

22 such form of benefit.’’. 

23 (b) EXEMPTION IN THE CASE OF PLANS OFFERING

24 FULLY SUBSIDIZED QUALIFIED JOINT AND SURVIVOR
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1 ANNUITIES.—Section 205(c)(5) of such Act (29 U.S.C. 

2 1055(c)(5)) is amended— 

3 (1) by redesignating subparagraph (B) as sub4 paragraph (C); and 

5 (2) by inserting after subparagraph (A) the fol6 lowing new subparagraph: 

7 ‘‘(B) The requirements of this subsection shall not 

8 apply with respect to the qualified alternative joint and 

9 survivor annuity form of benefit if the plan fully subsidizes 

10 the costs of the qualified joint and survivor annuity form 

11 of benefit.’’. 

12 (c) ILLUSTRATION REQUIREMENT.—Clause (i) of 

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

14 1055(c)(3)(A)) is amended to read as follows: 

15 ‘‘(i) the terms and conditions of the qualified 

16 joint and survivor annuity form of benefit offered by 

17 the plan, the terms and conditions of the qualified 

18 preretirement survivor annuity form of benefit of19 fered by the plan, and the terms and conditions of 

20 the qualified alternative joint and survivor annuity 

21 form of benefit offered by the plan, accompanied by 

22 an illustration of the benefits under each such form 

23 of benefit for the particular participant and spouse 

24 and an acknowledgement form to be signed by the 

25 participant and the spouse that they have read and 
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1 considered the illustration before any election is 

2 made pursuant to clause (i) or (ii) of subsection 

3 (c)(1)(A).’’. 

4 (d) RULE OF CONSTRUCTION.—For purposes of sec5 tion 204(g) of the Employee Retirement Income Security 

6 Act of 1974 (29 U.S.C. 1054(g)), a plan shall not be treat7 ed as having decreased the accrued benefit of a participant 

8 solely by reason of the adoption of a plan amendment 

9 under which a qualified alternative joint and survivor an10 nuity form of benefit is added to the plan in accordance 

11 with section 205(c)(1)(A)(ii) of such Act (as amended by 

12 this section). 

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

14 (a) IN GENERAL.—Section 206(d)(3) of the Em15 ployee Retirement Income Security Act of 1974 (29 

16 U.S.C. 1056(d)(3)) is amended by redesignating subpara17 graph (N) as subparagraph (O) and by inserting after 

18 subparagraph (M) the following new subparagraph: 

19 ‘‘(N) SPECIAL RULES AND PROCEDURES FOR DO20 MESTIC RELATIONS ORDERS NOT SPECIFYING DIVISION

21 OF PENSION BENEFITS.— 

22 ‘‘(i) IN GENERAL.—In any case in which— 

23 ‘‘(I) a domestic relations order (including 

24 an annulment or other order of marital dissolu25 tion) relates to provision of marital property 
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1 with respect to a marriage of at least 5 years 

2 duration between an individual who is a partici3 pant in a pension plan and such individual’s 

4 former spouse, 

5 ‘‘(II) such order, and all prior orders (if 

6 any) described in subclause (I) relating to such 

7 marriage, do not specifically provide that pen8 sion benefits were considered by the parties and 

9 that no division of such benefits is intended, 

10 ‘‘(III) such order is not a qualified domes11 tic relations order (as determined without re12 gard to this subparagraph) and there is no 

13 other prior qualified domestic relations order 

14 issued in connection with the dissolution of the 

15 marriage to which such order relates, and 

16 ‘‘(IV) the former spouse notifies the plan 

17 within the period prescribed under clause (vii) 

18 that the former spouse is entitled to benefits 

19 under the plan in accordance with the provi20 sions of this subparagraph, 

21 such domestic relations order shall be treated as a 

22 qualified domestic relations order for purposes of 

23 this paragraph. 

24 ‘‘(ii) AMOUNT OF BENEFIT.—Any domestic re25 lations order treated as a qualified domestic rela-
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1 tions order under clause (i) shall be treated as speci2 fying that the former spouse is entitled to the appli3 cable percentage of the marital share of the partici4 pant’s accrued benefit. 

5 ‘‘(iii) MARITAL SHARE.—For purposes of clause 

6 (ii), the marital share of a participant’s accrued ben7 efit is an amount equal to the product of— 

8 ‘‘(I) such benefit as of the date of the first 

9 payment under the plan (to the extent such ac10 crued benefit is vested on the date of the dis11 solution of the marriage or any later date), and 

12 ‘‘(II) a fraction, the numerator of which is 

13 the period of participation by the participant 

14 under the plan starting with the date of mar15 riage and ending with the date of dissolution of 

16 marriage, and the denominator of which is the 

17 total period of participation by the participant 

18 under the plan. 

19 ‘‘(iv) APPLICABLE PERCENTAGE.—For purposes 

20 of clause (ii), the applicable percentage is— 

21 ‘‘(I) except as provided in subclause (II), 

22 50 percent, and 

23 ‘‘(II) in the case of a participant who fails 

24 to provide the plan with notice of a domestic re-
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1 lations order within the time prescribed under 

2 clause (v), 67 percent. 

3 ‘‘(v) NOTICE BY PARTICIPANT.—Each partici4 pant in a pension plan shall, within 60 days after 

5 the dissolution of the marriage of the participant— 

6 ‘‘(I) notify the plan administrator of the 

7 plan of such dissolution, and 

8 ‘‘(II) provide to the plan administrator a 

9 copy of the domestic relations order (including 

10 an annulment or other order of marital dissolu11 tion) providing for such dissolution and the last 

12 known address of the participant’s former 

13 spouse. 

14 ‘‘(vi) NOTICE BY PLAN ADMINISTRATOR.—Each 

15 plan administrator receiving notice under clause (v) 

16 shall promptly notify the former spouse of a partici17 pant of such spouse’s rights under this subpara18 graph, including the time period within which such 

19 spouse is required to notify the plan of the spouse’s 

20 intention to claim rights under this subparagraph. 

21 ‘‘(vii) NOTICE BY FORMER SPOUSE.—A former 

22 spouse may notify the plan administrator of such 

23 spouse’s intent to claim rights under this subpara24 graph at any time before the last day of the 1-year 

25 period following receipt of notice under clause (vi). 
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1 ‘‘(viii) COORDINATION WITH PLAN PROCE2 DURES.—The determination under subparagraph 

3 (G)(i)(II) with respect to a domestic relations order 

4 to which this subparagraph applies shall be made 

5 within a reasonable period of time after the plan ad6 ministrator receives the notice described in clause 

7 (vii). 

8 ‘‘(ix) INTERPRETATION AS QUALIFIED DOMES9 TIC RELATIONS ORDER.—Each plan shall establish 

10 reasonable rules for determining how any such 

11 deemed domestic relations order is to be interpreted 

12 under the plan so as to constitute a qualified domes13 tic relations order that satisfies subparagraphs (C) 

14 through (E) (and a copy of such rules shall be pro15 vided to such former spouse promptly after delivery 

16 of the divorce decree). Such rules— 

17 ‘‘(I) may delay the effect of such an order 

18 until the earlier of the date the participant is 

19 fully vested or has terminated employment, 

20 ‘‘(II) may allow distribution to the former 

21 spouse to be made immediately, 

22 ‘‘(III) shall permit the former spouse to be 

23 paid not later than the earliest retirement age 

24 under the plan or the participant’s death, 
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1 ‘‘(IV) may require the submitter of the di2 vorce decree to present a marriage certificate or 

3 other evidence of the marriage date to assist in 

4 benefit calculations, and 

5 ‘‘(V) may conform to the rules applicable 

6 to qualified domestic relations orders regarding 

7 form or type of benefit.’’. 

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

9 this section shall apply with respect to notifications made 

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

11 of the Employee Retirement Income Security Act of 1974 

12 (added by this section) after December 31, 2005. 

13 SEC. 205. PERIODS OF FAMILY AND MEDICAL LEAVE 

14 TREATED AS HOURS OF SERVICE FOR PEN15 SION PARTICIPATION AND VESTING. 

16 (a) PARTICIPATION.— 

17 (1) IN GENERAL.—Paragraph (3) of section 

18 202(a) of the Employee Retirement Income Security 

19 Act of 1974 (29 U.S.C. 1052(a)(3)) is amended by 

20 adding at the end the following new subparagraph: 

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

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

23 to be given to such individual under the Family and Med24 ical Leave Act of 1993, the plan shall treat as hours of 

25 service— 
28 

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

2 normally have been credited to such individual but 

3 for such absence, or 

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

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

6 hours of service per day of absence. 

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

8 as hours of service as provided in this subparagraph— 

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

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

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

12 from work begins, or 

13 ‘‘(II) in any other case, in the immediately fol14 lowing year.’’. 

15 (2) COORDINATION WITH TREATMENT OF MA16 TERNITY AND PATERNITY ABSENCES UNDER BREAK

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

18 202(b)(5) of such Act (29 U.S.C. 1052(b)(5)(A)) is 

19 amended by adding at the end the following new 

20 sentence: ‘‘The preceding sentence shall apply to an 

21 absence from work only if no part of such absence 

22 is required to be given under the Family and Med23 ical Leave Act of 1993.’’. 

24 (b) VESTING.— 
29 

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

2 203(b) of such Act (29 U.S.C. 1053(b)(2)) is 

3 amended by adding at the end the following new 

4 subparagraph: 

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

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

7 to be given to such individual under the Family and Med8 ical Leave Act of 1993, the plan shall treat as hours of 

9 service— 

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

11 normally have been credited to such individual but 

12 for such absence, or 

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

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

15 hours of service per day of absence. 

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

17 as hours of service as provided in this subparagraph— 

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

19 work begins, if the participant’s rights in his ac20 crued benefit derived from employer contributions 

21 are to any extent not nonforfeitable and the partici22 pant would have a year of service solely because the 

23 period of absence is treated as hours of service as 

24 provided in clause (i); or 
30 

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1 ‘‘(II) in any other case, in the immediately fol2 lowing year.’’. 

3 (2) COORDINATION WITH TREATMENT OF MA4 TERNITY AND PATERNITY ABSENCES UNDER BREAK

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

6 203(b)(3)(E) of such Act (29 U.S.C. 

7 1053(b)(3)(E)(i)) is amended by adding at the end 

8 the following new sentence: ‘‘The preceding sentence 

9 shall apply to an absence from work only if no part 

10 of such absence is required to be given under the 

11 Family and Medical Leave Act of 1993.’’. 

12 (c) APPLICATION TO CURRENT EMPLOYEES.—The 

13 amendments made by this section shall not apply to any 

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

15 any plan year beginning after December 31, 2005. 

16 SEC. 206. RIGHT OF SPOUSE TO KNOW DISTRIBUTION IN17 FORMATION. 

18 Paragraph (3) of section 205(c) of the Employee Re19 tirement Income Security Act of 1974 (29 U.S.C. 

20 1055(c)(3)) is amended by adding at the end the following 

21 new subparagraph: 

22 ‘‘(C) At the time a plan provides a participant with 

23 a written explanation under subparagraph (A) or (B), 

24 such plan shall provide a copy of such explanation to such 

25 participant’s spouse. If the last known address of the 
31 

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1 spouse is the same as the last known address of the partic2 ipant, the requirement of the preceding sentence shall be 

3 treated as met if the copy referred to in the preceding 

4 sentence is included in a single mailing made to such ad5 dress and addressed to both such participant and 

6 spouse.’’. 

7 SEC. 207. REPEAL OF REDUCTION IN MILITARY SURVIVOR 

8 BENEFIT PLAN ANNUITIES AT AGE 62. 

9 (a) COMPUTATION OF ANNUITY FOR A SPOUSE, 

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

11 1451 of title 10, United States Code, is amended— 

12 (1) in paragraph (1), by striking ‘‘shall be de13 termined as follows:’’ and all that follows and insert14 ing the following: ‘‘shall be the amount equal to 55 

15 percent of the base amount.’’; 

16 (2) in paragraph (2), by striking ‘‘shall be de17 termined as follows:’’ and all that follows and insert18 ing the following: ‘‘shall be the amount equal to a 

19 percentage of the base amount that is less than 55 

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

21 (b) ANNUITIES FOR SURVIVORS OF CERTAIN PER22 SONS DYING DURING A PERIOD OF SPECIAL ELIGIBILITY

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

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

25 follows and inserting the following: ‘‘shall be the amount 
32 

•HR 5397 IH 

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

2 or former member would have been entitled if the member 

3 or former member had been entitled to that pay based 

4 upon his years of active service when he died determined 

5 as follows: 

6 ‘‘(A) In the case of an annuity provided under 

7 section 1448(d) of this title (other than in a case 

8 covered by subparagraph (B)), such retired pay shall 

9 be computed as if the member had been retired 

10 under section 1201 of this title on the date of the 

11 member’s death with a disability rated as total. 

12 ‘‘(B) In the case of an annuity provided under 

13 section 1448(d)(1)(A) of this title by reason of the 

14 death of a member not in line of duty, such retired 

15 pay shall be computed based upon the member’s 

16 years of active service when he died. 

17 ‘‘(C) In the case of an annuity provided under 

18 section 1448(f) of this title, such retired pay shall be 

19 computed based upon the member or former mem20 ber’s years of active service when he died computed 

21 under section 12733 of this title.’’. 

22 (c) REPEAL OF REQUIREMENT FOR REDUCTION.— 

23 Such section is further amended by striking subsection 

24 (d). 
33 

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1 (d) REPEAL OF UNNECESSARY SUPPLEMENTAL

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

3 United States Code, is repealed. 

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

5 chapter is amended by striking the item relating to sub6 chapter III. 

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

8 this section shall take effect on October 1, 2005, and shall 

9 apply with respect to annuity payments for months begin10 ning on or after that date. 

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

12 AND FORMER SPOUSES OF FEDERAL EM13 PLOYEES WHO DIE BEFORE ATTAINING AGE 

14 FOR DEFERRED ANNUITY UNDER CIVIL 

15 SERVICE RETIREMENT SYSTEM. 

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

17 8341(f) of title 5, United States Code, is amended— 

18 (1) in the matter preceding paragraph (1)— 

19 (A) by inserting ‘‘a former employee sepa20 rated from the service with title to deferred an21 nuity from the Fund dies before having estab22 lished a valid claim for annuity and is survived 

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

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

25 or Member’’ after ‘‘the surviving spouse’’; 
34 

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1 (2) in paragraph (1)— 

2 (A) by inserting ‘‘former employee or’’ be3 fore ‘‘Member commencing’’; and 

4 (B) by inserting ‘‘former employee or’’ be5 fore ‘‘Member dies’’; and 

6 (3) in the undesignated sentence following para7 graph (2)— 

8 (A) in the matter preceding subparagraph 

9 (A), by inserting ‘‘former employee or’’ before 

10 ‘‘Member’’; and 

11 (B) in subparagraph (B), by inserting 

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

13 (b) BENEFITS FOR FORMER SPOUSE.—Section 

14 8341(h) of title 5, United States Code, is amended— 

15 (1) in paragraph (1), by inserting ‘‘former em16 ployee entitled to a deferred annuity under section 

17 8338(a) of this title,’’ after ‘‘employee, Member, an18 nuitant,’’; and 

19 (2) in paragraph (2)— 

20 (A) in subparagraph (A)(ii) by striking ‘‘or 

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

22 employee’’; and 

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

24 ‘‘former employee or’’ before ‘‘Member’’. 
35 

•HR 5397 IH 

1 (c) PROTECTION OF SURVIVOR BENEFIT RIGHTS.— 

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

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

4 shall provide by regulation for the application of this sub5 section to the widow, widower, or surviving former spouse 

6 of a former employee who dies after having separated from 

7 the service with title to a deferred annuity under section 

8 8338(a) but before having established a valid claim for 

9 annuity.’’. 

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

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

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

13 employee who dies on or after such date. 

14 SEC. 209. ORDER OF PRECEDENCE FOR DISPOSITION OF 

15 AMOUNTS REMAINING IN THE THRIFT SAV16 INGS ACCOUNT OF A FEDERAL EMPLOYEE 

17 (OR FORMER EMPLOYEE) WHO DIES BEFORE 

18 MAKING AN EFFECTIVE ELECTION CONTROL19 LING SUCH DISPOSITION. 

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

21 States Code, is amended— 

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

23 (2) by striking all that follows ‘‘paid’’ and in24 serting ‘‘in accordance with paragraph (2).’’; and 

25 (3) by adding at the end the following: 
36 

•HR 5397 IH 

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

2 in a manner consistent with the provisions of section 

3 8424(d), except that, in applying the order of precedence 

4 under such provisions— 

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

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

7 designated beneficiary); and 

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

9 next entitled to receive shall be the beneficiary or 

10 beneficiaries designated by the employee or Member 

11 (or former employee or Member) in accordance with 

12 the procedures that would otherwise normally apply, 

13 subject to such additional conditions as the Execu14 tive Director shall by regulation prescribe based on 

15 section 205(c)(2) of the Employee Retirement In16 come Security Act of 1974 (relating to spousal con17 sent requirements).’’. 

18 (b) EFFECTIVE DATE.—This section and the amend19 ment made by this section shall take effect on the 90th 

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

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

22 such 90th day. 
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•HR 5397 IH 

1 SEC. 210. 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 7th of the year following the year in which the 

16 Retirement Enhancement Act of 2004 is enacted’’. 

17 (2) AUTHORITY TO WAIVE DEADLINE.—Section 

18 4(b) of the Civil Service Retirement Spouse Equity 

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

20 following: 

21 ‘‘(6)(A) The Director of the Office of Personnel Man22 agement may waive the deadline under paragraph 

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

24 that the circumstances so warrant. 

25 ‘‘(B) In making a determination under this para26 graph, one of the factors which may be taken into account 
38 

•HR 5397 IH 

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 SEC. 211. ENTITLEMENT OF DIVORCED SPOUSES TO RAIL8 ROAD RETIREMENT ANNUITIES INDE9 PENDENT OF ACTUAL ENTITLEMENT OF EM10 PLOYEE. 

11 (a) IN GENERAL.—Section 2 of the Railroad Retire12 ment Act of 1974 (45 U.S.C. 231a) is amended— 

13 (1) in subsection (c)(4)(i), by striking ‘‘(A) is 

14 entitled to an annuity under subsection (a)(1) and 

15 (B)’’; and 

16 (2) in subsection (e)(5), by striking ‘‘or di17 vorced wife’’ the second place it appears. 

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

19 this section shall take effect 1 year after the date of the 

20 enactment of this Act. 
39 

•HR 5397 IH 

1 SEC. 212. EXTENSION OF TIER II RAILROAD RETIREMENT 

2 BENEFITS TO SURVIVING FORMER SPOUSES 

3 PURSUANT TO DIVORCE AGREEMENTS. 

4 (a) IN GENERAL.—Section 5 of the Railroad Retire5 ment Act of 1974 (45 U.S.C. 231d) is amended by adding 

6 at the end the following: 

7 ‘‘(d) Notwithstanding any other provision of law, the 

8 payment of any portion of an annuity computed under sec9 tion 3(b) to a surviving former spouse in accordance with 

10 a court decree of divorce, annulment, or legal separation 

11 or the terms of any court-approved property settlement 

12 incident to any such court decree shall not be terminated 

13 upon the death of the individual who performed the service 

14 with respect to which such annuity is so computed unless 

15 such termination is otherwise required by the terms of 

16 such court decree.’’. 

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

18 this section shall take effect 1 year after the date of the 

19 enactment of this Act. 

20 TITLE III—SIMPLIFIED 

21 INVESTMENT STANDARDS 

22 SEC. 301. EXEMPTION FROM PROHIBITED TRANSACTION 

23 RULES FOR CERTAIN ABORTED EMERGENT 

24 TRANSACTIONS. 

25 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

26 INCOME SECURITY ACT OF 1974.—Section 408 of the 
40 

•HR 5397 IH 

1 Employee Retirement Income Security Act of 1974 (29 

2 U.S.C. 1108) is amended by adding at the end the fol3 lowing new subsection: 

4 ‘‘(g)(1) Pursuant to regulations issued by the Sec5 retary, in the case of a qualifying transaction between an 

6 employee benefit plan and an eligible person which would, 

7 but for this subsection, be in violation of a restriction im8 posed by section 406 or 407(a), if— 

9 ‘‘(A) the eligible person submits to the Sec10 retary, not later than 60 days after the date of the 

11 transaction, an application for an exemption under 

12 subsection (a) from such restriction in the case of 

13 such transaction, 

14 ‘‘(B) the Secretary determines not to grant the 

15 exemption, and 

16 ‘‘(C) the transaction is reversed within 60 days 

17 after the date of the Secretary’s determination, 

18 then the transaction shall be exempted under subsection 

19 (a) from treatment as a violation of such restriction. 

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

21 ‘‘(A) The term ‘qualifying transaction’ means, 

22 in connection with an eligible person, a transaction 

23 between an employee benefit plan and such eligible 

24 person constituting the purchase or sale of a finan25 cial product, if— 
41 

•HR 5397 IH 

1 ‘‘(i) prior to engaging in the transaction, 

2 the plan acquires from the eligible person a suf3 ficient guarantee, consisting of a letter of credit 

4 or other form of written guarantee, issued by a 

5 bank or similar financial institution (other than 

6 the eligible person requesting the exemption or 

7 an affiliate) regulated and supervised by, and 

8 subject to periodic examination by, an agency of 

9 a State or of the Federal Government, in a 

10 stated amount equal, as of the close of business 

11 on the day preceding the transaction, to not 

12 less than 100 percent of the amount of plan as13 sets involved in the transaction, plus interest on 

14 that amount at a rate determined by the parties 

15 to the transaction, or in the absence of such de16 termination, an interest rate equal to the un17 derpayment rate defined in section 6621(a)(2) 

18 of the Internal Revenue Code of 1986, 

19 ‘‘(ii) the eligible person receives in such 

20 transaction not more than reasonable com21 pensation, 

22 ‘‘(iii) such transaction is expressly ap23 proved by an independent fiduciary who has in24 vestment authority with respect to the plan as25 sets involved in the transaction, and 
42 

•HR 5397 IH 

1 ‘‘(iv) immediately after the acquisition of 

2 the financial product— 

3 ‘‘(I) the fair market value of such fi4 nancial product does not exceed 1 percent 

5 of the fair market value of the assets of 

6 the plan, and 

7 ‘‘(II) the aggregate fair market value 

8 of all outstanding financial products ac9 quired by the plan from the eligible person 

10 pursuant to this subsection does not exceed 

11 5 percent of the fair market value of the 

12 assets of the plan. 

13 ‘‘(3) For purposes of this subsection— 

14 ‘‘(A) A guarantee referred to in paragraph (2) 

15 is ‘sufficient’ if such guarantee is irrevocable and, 

16 under the terms of the guarantee, if the Secretary 

17 determines not to grant the exemption, the plan has 

18 the unconditional right to apply the amounts under 

19 the guarantee to any losses suffered and to the pay20 ment of interest determined under the terms of the 

21 transaction. A guarantee shall not be treated as fail22 ing to be ‘sufficient’ solely because, under the terms 

23 of the guarantee, if the Secretary grants the exemp24 tion, the guarantee may expire without any pay25 ments made to the plan. 
43 

•HR 5397 IH 

1 ‘‘(B) The term ‘eligible person’ means a person 

2 that— 

3 ‘‘(i) consists of— 

4 ‘‘(I) a bank as defined in section 

5 202(a)(2) of the Investment Advisers Act 

6 of 1940, 

7 ‘‘(II) an investment adviser registered 

8 under the Investment Advisers Act of 

9 1940, 

10 ‘‘(III) an insurance company which is 

11 qualified to do business in more than one 

12 State, or 

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

14 the Securities Exchange Act of 1934, 

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

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

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

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

19 this section shall apply with respect to transactions occur20 ring after December 31, 2005. 

21 SEC. 302. PROHIBITED TRANSACTION EXEMPTION FOR THE 

22 PROVISION OF INVESTMENT ADVICE. 

23 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

24 INCOME SECURITY ACT OF 1974.— 
44 

•HR 5397 IH 

1 (1) IN GENERAL.—Section 408(b) of the Em2 ployee Retirement Income Security Act of 1974 (29 

3 U.S.C. 1108(b)) is amended by adding at the end 

4 the following new paragraph: 

5 ‘‘(14)(A) Any transaction described in subpara6 graph (B) in connection with the provision of invest7 ment advice described in section 3(21)(A)(ii), in any 

8 case in which— 

9 ‘‘(i) the plan provides for individual ac10 counts and permits a participant or beneficiary 

11 to exercise control over assets in his or her ac12 count, 

13 ‘‘(ii) the advice is qualified investment ad14 vice provided to a participant or beneficiary of 

15 the plan by a fiduciary adviser in connection 

16 with any sale, acquisition, or holding of a secu17 rity or other property for purposes of invest18 ment of plan assets, and 

19 ‘‘(iii) the requirements of subsection (g) 

20 are met in connection with each instance of the 

21 provision of the advice. 

22 ‘‘(B) The transactions described in this sub23 paragraph are the following: 

24 ‘‘(i) the provision of the advice to the par25 ticipant or beneficiary; 
45 

•HR 5397 IH 

1 ‘‘(ii) the sale, acquisition, or holding of a 

2 security or other property (including any lend3 ing of money or other extension of credit associ4 ated with the sale, acquisition, or holding of a 

5 security or other property) pursuant to the ad6 vice; and 

7 ‘‘(iii) the direct or indirect receipt of fees 

8 or other compensation by the fiduciary adviser 

9 or an affiliate thereof (or any employee, agent, 

10 or registered representative of the fiduciary ad11 viser or affiliate) in connection with the provi12 sion of the advice.’’. 

13 (2) REQUIREMENTS.—Section 408 of such Act 

14 is amended further by adding at the end the fol15 lowing new subsection: 

16 ‘‘(g) REQUIREMENTS FOR EXEMPTION FROM PRO17 HIBITED TRANSACTIONS WITH RESPECT TO PROVISION

18 OF INVESTMENT ADVICE.— 

19 ‘‘(1) IN GENERAL.—The requirements of this 

20 subsection are met in connection with the provision 

21 of qualified investment advice provided to a partici22 pant or beneficiary of an employee benefit plan by 

23 a fiduciary adviser with respect to the plan in con24 nection with any sale, acquisition, or holding of a se25 curity or other property for purposes of investment 
46 

•HR 5397 IH 

1 of amounts held by the plan, if the requirements of 

2 the following subparagraphs are met: 

3 ‘‘(A) WRITTEN DISCLOSURES.—At a time 

4 contemporaneous with the provision of the ad5 vice in connection with the sale, acquisition, or 

6 holding of the security or other property, the fi7 duciary adviser shall provide to the recipient of 

8 the advice a clear and conspicuous notification, 

9 written in a manner to be reasonably under10 stood by the average plan participant pursuant 

11 to regulations which shall be prescribed by the 

12 Secretary (including mathematical examples), of 

13 the following: 

14 ‘‘(i) INTERESTS HELD BY THE FIDU15 CIARY ADVISER.—Any interest of the fidu16 ciary adviser in, or any affiliation or con17 tractual relationship of the fiduciary ad18 viser (or affiliates thereof) with any third 

19 party having an interest in, the security or 

20 other property. 

21 ‘‘(ii) RELATED FEES OR COMPENSA22 TION IN CONNECTION WITH THE PROVI23 SION OF THE ADVICE.—All fees or other 

24 compensation relating to the advice (in25 cluding fees or other compensation 
47 

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1 itemized with respect to each security or 

2 other property with respect to which the 

3 advice is provided) that the fiduciary ad4 viser (or any affiliate thereof) is to receive 

5 (including compensation provided by any 

6 third party) in connection with the provi7 sion of the advice or in connection with the 

8 sale, acquisition, or holding of the security 

9 or other property. 

10 ‘‘(iii) ONGOING FEES OR COMPENSA11 TION IN CONNECTION WITH THE SECURITY

12 OR PROPERTY INVOLVED.—All fees or 

13 other compensation that the fiduciary ad14 viser (or any affiliate thereof) is to receive, 

15 on an ongoing basis, in connection with 

16 any security or other property with respect 

17 to which the fiduciary adviser gives the ad18 vice. 

19 ‘‘(iv) APPLICABLE LIMITATIONS ON

20 SCOPE OF ADVICE.—Any limitation placed 

21 (in accordance with the requirements of 

22 this subsection) on the scope of the advice 

23 to be provided by the fiduciary adviser with 

24 respect to the sale, acquisition, or holding 

25 of the security or other property. 
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1 ‘‘(v) TYPES OF SERVICES GENERALLY

2 OFFERED.—The types of services offered 

3 by the fiduciary adviser in connection with 

4 the provision of qualified investment advice 

5 by the fiduciary adviser. 

6 ‘‘(vi) FIDUCIARY STATUS OF THE FI7 DUCIARY ADVISER.—That the fiduciary ad8 visor is a fiduciary of the plan. 

9 ‘‘(B) DISCLOSURE BY FIDUCIARY ADVISER

10 IN ACCORDANCE WITH APPLICABLE SECURITIES

11 LAWS.—The fiduciary adviser shall provide ap12 propriate disclosure, in connection with the sale, 

13 acquisition, or holding of the security or other 

14 property, in accordance with all applicable secu15 rities laws. 

16 ‘‘(C) TRANSACTION OCCURRING SOLELY AT

17 DIRECTION OF RECIPIENT OF ADVICE.—The 

18 sale, acquisition, or holding of the security or 

19 other property shall occur solely at the direction 

20 of the recipient of the advice. 

21 ‘‘(D) REASONABLE COMPENSATION.—The 

22 compensation received by the fiduciary adviser 

23 and affiliates thereof in connection with the 

24 sale, acquisition, or holding of the security or 

25 other property shall be reasonable. 
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1 ‘‘(E) ARM’S LENGTH TRANSACTION.—The 

2 terms of the sale, acquisition, or holding of the 

3 security or other property shall be at least as 

4 favorable to the plan as an arm’s length trans5 action would be. 

6 ‘‘(2) CONTINUED AVAILABILITY OF INFORMA7 TION FOR AT LEAST 1 YEAR.—The requirements of 

8 paragraph (1)(A) shall be deemed not to have been 

9 met in connection with the initial or any subsequent 

10 provision of advice described in paragraph (1) if, at 

11 any time during the 1-year period following the pro12 vision of the advice, the fiduciary adviser fails to 

13 maintain the information described in clauses (i) 

14 through (iv) of subparagraph (A) in currently accu15 rate form or to make the information available, upon 

16 request and without charge, to the recipient of the 

17 advice. 

18 ‘‘(3) EVIDENCE OF COMPLIANCE MAINTAINED

19 FOR AT LEAST 6 YEARS.—A fiduciary adviser re20 ferred to in paragraph (1) who has provided advice 

21 referred to in such paragraph shall, for a period of 

22 not less than 6 years after the provision of the ad23 vice, maintain any records necessary for determining 

24 whether the requirements of the preceding provisions 

25 of this subsection and of subsection (b)(14) have 
50 

•HR 5397 IH 

1 been met. A transaction prohibited under section 

2 406 shall not be considered to have occurred solely 

3 because the records are lost or destroyed prior to the 

4 end of the 6-year period due to circumstances be5 yond the control of the fiduciary adviser. 

6 ‘‘(4) MODEL DISCLOSURE FORMS.—The Sec7 retary shall prescribe regulations setting forth model 

8 disclosure forms to assist fiduciary advisers in com9 plying with the disclosure requirements of this sub10 section. 

11 ‘‘(5) EXEMPTION FOR EMPLOYERS CON12 TRACTING FOR QUALIFIED INVESTMENT ADVICE.— 

13 ‘‘(A) RELIANCE ON CONTRACTUAL AR14 RANGEMENTS.—Subject to subparagraph (B), a 

15 plan sponsor or other person who is a fiduciary 

16 (other than a fiduciary adviser) shall not be 

17 treated as failing to meet the requirements of 

18 this part solely by reason of the provision of 

19 qualified investment advice (or solely by reason 

20 of contracting for or otherwise arranging for 

21 the provision of the investment advice), if— 

22 ‘‘(i) the advice is provided by a fidu23 ciary adviser pursuant to an arrangement 

24 between the plan sponsor or other fidu25 ciary and the fiduciary adviser for the pro-
51 

•HR 5397 IH 

1 vision by the fiduciary adviser of qualified 

2 investment advice, and 

3 ‘‘(ii) the terms of the arrangement re4 quire compliance by the fiduciary adviser 

5 with the requirements of this subsection. 

6 ‘‘(B) CONTINUED DUTY FOR EMPLOYER TO

7 PRUDENTLY SELECT AND REVIEW FIDUCIARY

8 ADVISERS.—Nothing in subparagraph (A) shall 

9 be construed to exempt a plan sponsor or other 

10 person who is a fiduciary from any requirement 

11 of this part for the prudent selection and peri12 odic review of a fiduciary adviser with whom 

13 the plan sponsor or other person enters into an 

14 arrangement for the provision of qualified in15 vestment advice. The plan sponsor or other per16 son who is a fiduciary shall not be liable under 

17 this part with respect to the specific qualified 

18 investment advice given by the fiduciary adviser 

19 to any particular recipient of the advice. Pursu20 ant to regulations which shall be prescribed by 

21 the Secretary, the fiduciary adviser shall pro22 vide appropriate disclosures to the plan sponsor 

23 to enable the plan sponsor to fulfill its fiduciary 

24 responsibilities under this part. In connection 

25 with the provision of the advice by a fiduciary 
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•HR 5397 IH 

1 adviser on an ongoing basis, such regulations 

2 shall provide for such disclosures on at least an 

3 annual basis. 

4 ‘‘(C) PLAN ASSETS MAY BE USED TO PAY

5 REASONABLE EXPENSES.—Nothing in this part 

6 shall be construed to preclude the use of plan 

7 assets to pay for reasonable expenses in pro8 viding qualified investment advice. 

9 ‘‘(6) ANNUAL REVIEWS BY THE SECRETARY.— 

10 The Secretary shall conduct annual reviews of ran11 domly selected fiduciary advisers providing qualified 

12 investment advice to participants and beneficiaries. 

13 In the case of each review, the Secretary shall review 

14 the following: 

15 ‘‘(A) COMPLIANCE BY ADVICE COMPUTER

16 MODELS WITH GENERALLY ACCEPTED INVEST17 MENT MANAGEMENT PRINCIPLES.—The extent 

18 to which advice computer models employed by 

19 the fiduciary adviser comply with generally ac20 cepted investment management principles. 

21 ‘‘(B) COMPLIANCE WITH DISCLOSURE RE22 QUIREMENTS.—The extent to which disclosures 

23 provided by the fiduciary adviser have complied 

24 with the requirements of this subsection. 
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1 ‘‘(C) EXTENT OF VIOLATIONS.—The ex2 tent to which any violations of fiduciary duties 

3 have occurred in connection with the provision 

4 of the advice. 

5 ‘‘(D) EXTENT OF REPORTED COM6 PLAINTS.—The extent to which complaints to 

7 relevant agencies have been made in connection 

8 with the provision of the advice. 

9 Any proprietary information obtained by the Sec10 retary shall be treated as confidential. 

11 ‘‘(7) DUTY OF CONFLICTED FIDUCIARY AD12 VISER TO PROVIDE FOR ALTERNATIVE INDE13 PENDENT ADVICE.— 

14 ‘‘(A) IN GENERAL.—In connection with 

15 any qualified investment advice provided by a 

16 fiduciary adviser to a participant or beneficiary 

17 regarding any security or other property, if the 

18 fiduciary adviser— 

19 ‘‘(i) has an interest in the security or 

20 other property, or 

21 ‘‘(ii) has an affiliation or contractual 

22 relationship with any third party that has 

23 an interest in the security or other prop24 erty, 
54 

•HR 5397 IH 

1 the requirements of paragraph (1) shall be 

2 treated as not met in connection with the advice 

3 unless the fiduciary adviser has arranged, as an 

4 alternative to the advice that would otherwise 

5 be provided by the fiduciary advisor, for quali6 fied investment advice with respect to the secu7 rity or other property provided by at least one 

8 alternative investment adviser meeting the re9 quirements of subparagraph (B). 

10 ‘‘(B) INDEPENDENCE AND QUALIFICA11 TIONS OF ALTERNATIVE INVESTMENT AD12 VISER.—Any alternative investment adviser 

13 whose qualified investment advice is arranged 

14 for by a fiduciary adviser pursuant to subpara15 graph (A)— 

16 ‘‘(i) shall have no material interest in, 

17 and no material affiliation or contractual 

18 relationship with any third party having a 

19 material interest in, the security or other 

20 property with respect to which the invest21 ment adviser is providing the advice, and 

22 ‘‘(ii) shall meet the requirements of a 

23 fiduciary adviser under paragraph (8)(A), 

24 except that an alternative investment ad25 viser may not be a fiduciary of the plan 
55 

•HR 5397 IH 

1 other than in connection with the provision 

2 of the advice. 

3 ‘‘(C) SCOPE AND FEES OF ALTERNATIVE

4 INVESTMENT ADVICE.—Any qualified invest5 ment advice provided pursuant to this para6 graph by an alternative investment adviser shall 

7 be of the same type and scope, and provided 

8 under the same terms and conditions (including 

9 no additional charge to the participant or bene10 ficiary), as apply with respect to the qualified 

11 investment advice to be provided by the fidu12 ciary adviser. 

13 ‘‘(8) FIDUCIARY ADVISER DEFINED.—For pur14 poses of this subsection and subsection (b)(14)— 

15 ‘‘(A) IN GENERAL.—The term ‘fiduciary 

16 adviser’ means, with respect to a plan, a person 

17 who— 

18 ‘‘(i) is a fiduciary of the plan by rea19 son of the provision of qualified investment 

20 advice by such person to a participant or 

21 beneficiary, 

22 ‘‘(ii) meets the qualifications of sub23 paragraph (B), and 

24 ‘‘(iii) meets the additional require25 ments of subparagraph (C). 
56 

•HR 5397 IH 

1 ‘‘(B) QUALIFICATIONS.—A person meets 

2 the qualifications of this subparagraph if such 

3 person— 

4 ‘‘(i) is registered as an investment ad5 viser under the Investment Advisers Act of 

6 1940 (15 U.S.C. 80b–1 et seq.), 

7 ‘‘(ii) if not registered as an invest8 ment adviser under such Act by reason of 

9 section 203A(a)(1) of such Act (15 U.S.C. 

10 80b–3a(a)(1)), is registered under the laws 

11 of the State in which the fiduciary main12 tains its principal office and place of busi13 ness, and, at the time the fiduciary last 

14 filed the registration form most recently 

15 filed by the fiduciary with such State in 

16 order to maintain the fiduciary’s registra17 tion under the laws of such State, also 

18 filed a copy of such form with the Sec19 retary, 

20 ‘‘(iii) is registered as a broker or deal21 er under the Securities Exchange Act of 

22 1934 (15 U.S.C. 78a et seq.), 

23 ‘‘(iv) is a bank or similar financial in24 stitution referred to in section 408(b)(4), 
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•HR 5397 IH 

1 ‘‘(v) is an insurance company quali2 fied to do business under the laws of a 

3 State, or 

4 ‘‘(vi) is any other comparable entity 

5 which satisfies such criteria as the Sec6 retary determines appropriate. 

7 ‘‘(C) ADDITIONAL REQUIREMENTS WITH

8 RESPECT TO CERTAIN EMPLOYEES OR OTHER

9 AGENTS OF CERTAIN ADVISERS.—A person 

10 meets the additional requirements of this sub11 paragraph if every individual who is employed 

12 (or otherwise compensated) by such person and 

13 whose scope of duties includes the provision of 

14 qualified investment advice on behalf of such 

15 person to any participant or beneficiary is— 

16 ‘‘(i) a registered representative of 

17 such person, 

18 ‘‘(ii) an individual described in sub19 clause (I), (II), or (III) of subparagraph 

20 (A)(ii), or 

21 ‘‘(iii) such other comparable qualified 

22 individual as may be designated in regula23 tions of the Secretary. 

24 ‘‘(9) ADDITIONAL DEFINITIONS.—For purposes 

25 of this subsection and subsection (b)(14)— 
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1 ‘‘(A) QUALIFIED INVESTMENT ADVICE.— 

2 The term ‘qualified investment advice’ means, 

3 in connection with a participant or beneficiary, 

4 investment advice referred to in section 

5 3(21)(A)(ii) which— 

6 ‘‘(i) consists of an individualized rec7 ommendation to the participant or bene8 ficiary with respect to the purchase, sale, 

9 or retention of securities or other property 

10 for the individual account of the partici11 pant or beneficiary, in accordance with 

12 generally accepted investment management 

13 principles, and 

14 ‘‘(ii) takes into account all investment 

15 options under the plan. 

16 ‘‘(B) AFFILIATE.—The term ‘affiliate’ of 

17 another entity means an affiliated person of 

18 such entity (as defined in section 2(a)(3) of the 

19 Investment Company Act of 1940 (15 U.S.C. 

20 80a–2(a)(3))). 

21 ‘‘(C) REGISTERED REPRESENTATIVE.— 

22 The term ‘registered representative’ of another 

23 entity means a person described in section 

24 3(a)(18) of the Securities Exchange Act of 

25 1934 (15 U.S.C. 78c(a)(18)) (substituting such 
59 

•HR 5397 IH 

1 entity for the broker or dealer referred to in 

2 such section) or a person described in section 

3 202(a)(17) of the Investment Advisers Act of 

4 1940 (15 U.S.C. 80b–2(a)(17)) (substituting 

5 such entity for the investment adviser referred 

6 to in such section).’’. 

7 (b) ENFORCEMENT.— 

8 (1) LIABILITY FOR BREACH.— 

9 (A) LIABILITY IN CONNECTION WITH INDI10 VIDUAL ACCOUNT PLANS.—Section 409 of such 

11 Act (29 U.S.C. 1109) is amended by adding at 

12 the end the following new subsection: 

13 ‘‘(c)(1) In any case in which the provision by a fidu14 ciary adviser of qualified investment advice to a partici15 pant or beneficiary regarding any security or other prop16 erty consists of a breach described in subsection (a), the 

17 fiduciary adviser shall be personally liable to make good 

18 to the individual account of the participant or beneficiary 

19 any losses to the individual account resulting from the 

20 breach, and to restore to the individual account any profits 

21 of the fiduciary adviser which have been made through use 

22 of assets of the individual account by— 

23 ‘‘(A) the fiduciary adviser, or 

24 ‘‘(B) any other party with respect to whom a 

25 material affiliation or contractual relationship of the 
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•HR 5397 IH 

1 fiduciary adviser resulted in a violation of section 

2 408(g)(1)(A) in connection with the advice. 

3 ‘‘(2) In the case of any action under this title by a 

4 participant or beneficiary against a fiduciary adviser for 

5 relief under this subsection in connection with the provi6 sion of any qualified investment advice— 

7 ‘‘(A) if the participant or beneficiary shows that 

8 the fiduciary adviser had any interest in, or had any 

9 affiliation or contractual relationship with a third 

10 party having an interest in, the security or other 

11 property, there shall be a presumption (rebuttable by 

12 a preponderance of the evidence) that the fiduciary 

13 adviser failed to meet the requirements of subpara14 graphs (A) and (B) of section 404(a)(1) in connec15 tion with the provision of the advice, and 

16 ‘‘(B) the dispute may be settled by arbitration, 

17 but only pursuant to terms and conditions estab18 lished by agreement entered into voluntarily by both 

19 parties after the commencement of the dispute. 

20 ‘‘(3) For purposes of this subsection, the terms ‘fidu21 ciary adviser’ and ‘qualified investment advice’ shall have 

22 the meanings provided such terms in subparagraphs (A) 

23 and (B), respectively, of section 406(g)(7).’’. 
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1 (B) LIMITATION ON EXEMPTION FROM LI2 ABILITY.—Section 403(c) of such Act (29 

3 U.S.C. 1104(c)) is amended— 

4 (i) by redesignating paragraph (2) as 

5 paragraph (3) (and by adjusting the 

6 margination of such paragraph to full 

7 measure and adjusting the margination of 

8 subparagraphs (A) through (B) thereof ac9 cordingly); and 

10 (ii) by inserting after paragraph (1) 

11 the following new paragraph: 

12 ‘‘(2)(A) In any case in which— 

13 ‘‘(i) a participant or beneficiary exercises con14 trol over the assets in his or her account by means 

15 of a sale, acquisition, or holding of a security or 

16 other property with regard to which qualified invest17 ment advice was provided by a fiduciary adviser, and 

18 ‘‘(ii) any transaction in connection with the ex19 ercise of such control is not a prohibited transaction 

20 solely by reason of section 408(b)(14), paragraph 

21 (1) shall not apply with respect to the fiduciary ad22 viser in connection with the provision of the advice. 

23 ‘‘(B) For purposes of this subsection, the terms ‘fidu24 ciary adviser’ and ‘qualified investment advice’ shall have 
62 

•HR 5397 IH 

1 the meanings provided such terms in subparagraphs (A) 

2 and (B), respectively, of section 408(g)(7).’’. 

3 (2) ATTORNEY’S FEES.—Section 502(g) of such 

4 Act (29 U.S.C. 1132(g)) is amended— 

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

6 after ‘‘paragraph (2)’’; and 

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

8 paragraph: 

9 ‘‘(3) In any action under this title by the participant 

10 or beneficiary against a fiduciary adviser for relief under 

11 section 409(c) in which the plaintiff prevails, the court 

12 shall allow a reasonable attorney’s fee and costs of action 

13 to the prevailing plaintiff.’’. 

14 (3) APPLICABILITY OF STATE FRAUD LAWS.— 

15 Section 514(b) of such Act (29 U.S.C. 1144(b)) is 

16 amended— 

17 (A) by redesignating paragraph (9) as 

18 paragraph (10); and 

19 (B) by inserting after paragraph (8) the 

20 following new paragraph: 

21 ‘‘(9) Nothing in this title shall be construed to super22 sede any State action for fraud against a fiduciary adviser 

23 for any act or failure to act by the fiduciary adviser consti24 tuting a violation of section 409(c).’’. 
63 

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

2 this section shall apply with respect to advice referred to 

3 in section 3(21)(A)(ii) of the Employee Retirement In4 come Security Act of 1974 provided on or after January 

5 1, 2006. 

6 SEC. 303. PARTICIPATION OF PARTICIPANTS IN TRUSTEE7 SHIP OF SINGLE-EMPLOYER PLANS PRO8 VIDING FOR EMPLOYEE CONTRIBUTIONS. 

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

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

11 1103(a)) is amended— 

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

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

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

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

16 paragraph: 

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

18 a pension plan which is a single-employer plan and under 

19 which some or all of the assets are derived from employee 

20 contributions shall be held in trust by a joint board of 

21 trustees, which shall consist of two or more trustees rep22 resenting on an equal basis the interests of the employer 

23 or employers maintaining the plan and the interests of the 

24 participants and their beneficiaries. 
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•HR 5397 IH 

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

2 only if a majority of the participants of the plan indicates 

3 to the plan administrator, in such form and manner as 

4 shall be prescribed in regulations of the Secretary, its in5 tention to have this paragraph so apply. 

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

7 in which the plan is maintained pursuant to one or more 

8 collective bargaining agreements between one or more em9 ployee organizations and one or more employers, the trust10 ees representing the interests of the participants and their 

11 beneficiaries shall be designated by such employee organi12 zations. 

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

14 described in such clause if the employee organization (or 

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

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

17 manner as shall be prescribed in regulations of the Sec18 retary, a written waiver of their rights under clause (i). 

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

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

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

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

23 the interests of the participants and their beneficiaries 

24 shall be selected in accordance with regulations of the Sec25 retary. Such regulations may provide for selection of trust-
65 

•HR 5397 IH 

1 ees by the employer, but only from individuals who have 

2 been demonstrated to be independent and to have no con3 flict of interest. An individual shall not be treated as ineli4 gible for selection as trustee solely because such individual 

5 is an employee of the plan sponsor, except that the em6 ployee so selected may not be a highly compensated em7 ployee (as defined in section 414(q) of the Internal Rev8 enue Code of 1986). 

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

10 the appointment of a neutral, in accordance with the pro11 cedures under section 203(f) of the Labor Management 

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

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

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

15 prescribe the initial regulations necessary to carry out the 

16 provisions of such amendments not later than 90 days 

17 after the date of the enactment of this Act. 

18 SEC. 304. DIVERSIFICATION OF INVESTMENT OF ACCOUNT 

19 ASSETS HELD UNDER INDIVIDUAL ACCOUNT 

20 PLANS. 

21 (a) IN GENERAL.—Section 404 of the Employee Re22 tirement Income Security Act of 1974 (29 U.S.C. 1104) 

23 is amended by adding at the end the following new sub24 section: 
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•HR 5397 IH 

1 ‘‘(e) DIVERSIFICATION OF INVESTMENT OF ACCOUNT

2 ASSETS HELD UNDER INDIVIDUAL ACCOUNT PLANS.— 

3 ‘‘(1) IN GENERAL.—In the case of an individual 

4 account plan under which a participant or bene5 ficiary is permitted to exercise control over assets in 

6 his or her account, with respect to the assets in the 

7 account to which the participant or beneficiary has 

8 a nonforfeitable right and which consist of employer 

9 securities which are readily tradable on an estab10 lished securities market, the plan shall meet the re11 quirements of paragraphs (2), (3), (4), (5), (6), and 

12 (7). 

13 ‘‘(2) ASSETS ATTRIBUTABLE TO EMPLOYEE

14 CONTRIBUTIONS.—In the case of any portion of the 

15 account assets described in paragraph (1) which is 

16 attributable to employee contributions, there shall be 

17 no restrictions on the right of a participant or bene18 ficiary to allocate the assets in such portion to any 

19 investment option provided under the plan. 

20 ‘‘(3) ELECTIVE DEFERRALS INVESTED IN EM21 PLOYER SECURITIES.— 

22 ‘‘(A) IN GENERAL.—In the case of the por23 tion of the account assets described in para24 graph (1) which is attributable to elective defer25 rals and is invested in employer securities, a 
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•HR 5397 IH 

1 plan meets the requirements of this paragraph 

2 if each applicable individual in such plan may 

3 elect to direct the plan to divest any portion of 

4 such securities in the individual’s account and 

5 to reinvest an equivalent amount in other in6 vestment options which meet the requirements 

7 of paragraph (5). The preceding sentence shall 

8 apply to the extent that the amount attributable 

9 to such reinvested portion exceeds the amount 

10 to which a prior election under this paragraph 

11 or section 401(a)(28) of the Internal Revenue 

12 Code of 1986 applies. 

13 ‘‘(B) APPLICABLE INDIVIDUAL.—For pur14 poses of this paragraph, the term ‘applicable in15 dividual’ means— 

16 ‘‘(i) any participant in the plan, 

17 ‘‘(ii) any beneficiary who is an alter18 nate payee (within the meaning of section 

19 206(d)(3)(K)) under an applicable quali20 fied domestic relations order (within the 

21 meaning of section 206(d)(3)(B)(i)), and 

22 ‘‘(iii) any beneficiary of a deceased 

23 participant or alternate payee. 

24 ‘‘(4) OTHER EMPLOYER CONTRIBUTIONS.— 
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1 ‘‘(A) IN GENERAL.—In the case of the por2 tion of the account assets described in para3 graph (1) which is attributable to employer con4 tributions (other than elective deferrals) and is 

5 invested in employer securities, a plan meets 

6 the requirements of this paragraph if each 

7 qualified participant in the plan may elect to di8 rect the plan to divest any portion of such secu9 rities in the participant’s account and to rein10 vest an equivalent amount in other investment 

11 options which meet the requirements of para12 graph (6). The preceding sentence shall apply 

13 to the extent that the amount attributable to 

14 such reinvested portion exceeds the amount to 

15 which a prior election under this paragraph or 

16 section 401(a)(28) of such Code applies. 

17 ‘‘(B) QUALIFIED PARTICIPANT.—For pur18 poses of this paragraph, the term ‘qualified par19 ticipant’ means— 

20 ‘‘(i) any participant in the plan who 

21 has completed at least 3 years of service 

22 (as determined under section 203(a)) 

23 under the plan, 

24 ‘‘(ii) any beneficiary who, with respect 

25 to a participant who met the service re-
69 

•HR 5397 IH 

1 quirement in clause (i), is an alternate 

2 payee (within the meaning of section 

3 206(d)(3)(K)) under an applicable quali4 fied domestic relations order (within the 

5 meaning of section 206(d)(3)(B)(i)), and 

6 ‘‘(iii) any beneficiary of a deceased 

7 participant who met the service require8 ment in clause (i) or alternate payee de9 scribed in clause (ii). 

10 ‘‘(5) INVESTMENT OPTIONS.—The requirements 

11 of this paragraph are met if, with respect to the ac12 count assets described in paragraph (1), the plan of13 fers not less than 3 investment options (not incon14 sistent with regulations prescribed by the Secretary) 

15 other than employer securities. 

16 ‘‘(6) PROMPT COMPLIANCE WITH DIRECTIONS

17 TO ALLOCATE INVESTMENTS.— 

18 ‘‘(A) IN GENERAL.—Except as provided in 

19 subparagraph (B), a plan meets the require20 ments of this paragraph with respect to plan 

21 assets described in paragraph (1) if the plan 

22 provides that, within 5 days after the date of 

23 any election by a participant or beneficiary allo24 cating any such assets to any investment option 

25 provided under the plan, the plan administrator 
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•HR 5397 IH 

1 shall take such actions as are necessary to ef2 fectuate such allocation. 

3 ‘‘(B) SPECIAL RULE FOR PERIODIC ELEC4 TIONS.—In any case in which the plan provides 

5 for elections periodically during prescribed peri6 ods, the 5-day period described in subparagraph 

7 (A) shall commence at the end of each such 

8 prescribed period. 

9 ‘‘(7) NOTICE OF RIGHTS AND OF IMPORTANCE

10 OF DIVERSIFICATION.—A plan meets the require11 ments of this paragraph if the plan provides that, 

12 not later than 30 days prior to the date on which 

13 the right of a participant under the plan to his or 

14 her accrued benefit becomes nonforfeitable, the plan 

15 administrator shall provide to such participant and 

16 his or her beneficiaries a written notice— 

17 ‘‘(A) setting forth their rights under this 

18 section with respect to the accrued benefit, and 

19 ‘‘(B) describing the importance of diversi20 fying the investment of account assets. 

21 ‘‘(8) PRESERVATION OF AUTHORITY OF PLAN

22 TO LIMIT INVESTMENT.—Nothing in this subsection 

23 shall be construed to limit the authority of a plan to 

24 impose limitations on the portion of plan assets in 
71 

•HR 5397 IH 

1 any account which may be invested in employer se2 curities. 

3 ‘‘(9) OTHER DEFINITIONS AND RULES.—For 

4 purposes of this subsection— 

5 ‘‘(A) EMPLOYER SECURITIES.—The term 

6 ‘employer securities’ shall have the meaning 

7 given such term by section 407(d)(1) of the 

8 Employee Retirement Income Security Act of 

9 1974. 

10 ‘‘(B) ELECTIVE DEFERRALS.—The term 

11 ‘elective deferrals’ means an employer contribu12 tion described in section 402(g)(3)(A) of such 

13 Code and any employee contribution. 

14 ‘‘(C) ELECTION.—Elections under this 

15 subsection shall be not less frequently than 

16 quarterly. 

17 ‘‘(D) EMPLOYEE STOCK OWNERSHIP

18 PLAN.—The term ‘employee stock ownership 

19 plan’ shall have the same meaning given to 

20 such term by section 4975(e)(7) of such Code.’’. 

21 (b) RECOMMENDATIONS RELATING TO NON-PUB22 LICLY TRADED STOCK.—Within 1 year after the date of 

23 the enactment of this Act, the Secretary of Labor shall 

24 transmit to the Committee on Education and the Work25 force of the House of Representatives and the Committee 
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•HR 5397 IH 

1 on Health, Education, Labor, and Pensions of the Senate 

2 the Secretary’s recommendations regarding legislative 

3 changes relating to treatment, under section 404(e) of the 

4 Employee Retirement Income Security Act of 1974 (added 

5 by this section), of individual account plans under which 

6 a participant or beneficiary is permitted to exercise control 

7 over assets in his or her account, in cases in which such 

8 assets do not include employer securities which are readily 

9 tradable under an established securities market. 

10 (c) EFFECTIVE DATE.— 

11 (1) IN GENERAL.—Except as provided in para12 graph (2), the amendments made by this section 

13 shall apply with respect to plan years beginning 

14 after December 31, 2005. 

15 (2) EXCEPTION.—The amendments made by 

16 this section shall not apply to employer securities 

17 held by an employee stock ownership plan which are 

18 not subject to section 401(a)(28) of the Internal 

19 Revenue Code of 1986 by reason of section 

20 1175(a)(2) of the Tax Reform Act of 1986 (100 

21 Stat. 2519). 

22 (3) DELAYED EFFECTIVE DATE OF EXISTING

23 HOLDINGS.—In any case in which a portion of the 

24 nonforfeitable accrued benefit of a participant or 

25 beneficiary is held in the form of employer securities 
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1 (as defined in section 407(d)(1) of the Employee Re2 tirement Income Security Act of 1974) immediately 

3 before the first date of the first plan year to which 

4 the amendments made by this section apply, such 

5 portion shall be taken into account only with respect 

6 to plan years beginning on or after January 1, 2007. 

7 SEC. 305. REMOVAL OF $500,000 CAP ON BONDING REQUIRE8 MENT. 

9 Section 412(a) of the Employee Retirement Income 

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

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

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

13 sentence’’. 

14 SEC. 306. DISCLOSURE REGARDING INVESTMENTS AND 

15 VOTING OF PROXIES. 

16 (a) IN GENERAL.—Section 101 of the Employee Re17 tirement Income Security Act of 1974 (29 U.S.C. 1021) 

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

19 new subsection: 

20 ‘‘(f) DISCLOSURE REGARDING INVESTMENTS AND

21 VOTING OF PROXIES.— 

22 ‘‘(1) IN GENERAL.—Within 30 days after re23 ceipt by the plan administrator of a written request 

24 by a participant or beneficiary for relevant and spe25 cific information regarding— 
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1 ‘‘(A) the nature or extent of any particular 

2 investment of plan assets occurring on a par3 ticular date specified in the request, or 

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

5 vote in connection with such investment has 

6 been exercised by or under the plan, 

7 the plan administrator shall furnish such informa8 tion in writing to such participant or beneficiary. 

9 The administrator may make a reasonable charge to 

10 cover the cost of furnishing such information. 

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

12 shall by regulation prescribe— 

13 ‘‘(A) standards which must be met by re14 quests made pursuant to this subsection, in15 cluding standards relating to relevancy and 

16 specificity of the information requested, the 

17 specificity by which the investment must be 

18 identified in the request, and the reasonableness 

19 of charges made for furnishing the information, 

20 and 

21 ‘‘(B) procedures by which plan administra22 tors may rely on such standards in declining re23 quests for information which fail to meet such 

24 standards, including methods for obtaining 

25 timely and binding determinations by the Sec-
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1 retary regarding whether such standards are 

2 being met by particular requests.’’. 

3 (b) CONFORMING AMENDMENT.—Section 101(h)(1) 

4 of such Act (29 U.S.C. 1021(h)(1)) is amended by insert5 ing ‘‘or subsection (f)’’ after ‘‘this subsection’’. 

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

7 this section shall apply with respect to written requests 

8 received after December 31, 2005. 

9 SEC. 307. IMMEDIATE WARNING OF EXCESSIVE STOCK 

10 HOLDINGS. 

11 Section 105 of the Employee Retirement Income Se12 curity Act of 1974 (29 U.S.C. 1025) is amended by adding 

13 at the end the following new subsection: 

14 ‘‘(e)(1) Upon receipt of information by the plan ad15 ministrator of an individual account plan indicating that 

16 the individual account of any participant which had not 

17 been excessively invested in employer securities is exces18 sively invested in such securities (or that such account, 

19 as initially invested, is excessively invested in employer se20 curities), the plan administrator shall immediately provide 

21 to the participant a separate, written statement— 

22 ‘‘(A) indicating that the participant’s account 

23 has become excessively invested in employer securi24 ties, 
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1 ‘‘(B) setting forth the notice described in sub2 section (e)(7), and 

3 ‘‘(C) referring the participant to investment 

4 education materials and investment advice which 

5 shall be made available by or under the plan. 

6 In any case in which such a separate, written statement 

7 is required to be provided to a participant under this para8 graph, each statement issued to such participant pursuant 

9 to subsection (a) thereafter shall also contain such sepa10 rate, written statement until the plan administrator is 

11 made aware that such participant’s account has ceased to 

12 be excessively invested in employer securities or the em13 ployee, in writing, waives the receipt of the notice and ac14 knowledges understanding the importance of diversifica15 tion. 

16 ‘‘(2) Each notice required under this subsection shall 

17 be provided in a form and manner which shall be pre18 scribed in regulations of the Secretary. Such regulations 

19 shall provide for inclusion in the notice a prominent ref20 erence to the risks of large losses in assets available for 

21 retirement from excessive investment in employer securi22 ties. 

23 ‘‘(3) For purposes of paragraph (1), a participant’s 

24 account is ‘excessively invested’ in employer securities if 

25 more than 10 percent of the balance in such account is 
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1 invested in employer securities (as defined in section 

2 407(d)(1)).’’. 

3 SEC. 308. REPORT TO PARTICIPANTS AND BENEFICIARIES 

4 OF TRADES IN EMPLOYER SECURITIES. 

5 (a) IN GENERAL.—Section 104 of the Employee Re6 tirement Income Security Act of 1974 (29 U.S.C. 1024) 

7 is amended— 

8 (1) by redesignating subsection (d) as sub9 section (e); and 

10 (2) by inserting after subsection (c) the fol11 lowing new subsection: 

12 ‘‘(d)(1) In any case in which assets in the individual 

13 account of a participant or beneficiary under an individual 

14 account plan include employer securities, if any person en15 gages in a transaction constituting a direct or indirect 

16 purchase or sale of employer securities and— 

17 ‘‘(A) such transaction is required under section 

18 16 of the Securities Exchange Act of 1934 to be re19 ported by such person to the Securities and Ex20 change Commission, or 

21 ‘‘(B) such person is a named fiduciary of the 

22 plan, 

23 such person shall comply with the requirements of para24 graph (2). 
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1 ‘‘(2) A person described in paragraph (1) complies 

2 with the requirements of this paragraph in connection 

3 with a transaction described in paragraph (1) if such per4 son provides to the plan administrator of the plan a writ5 ten notification of the transaction not later than 1 busi6 ness day after the date of the transaction. 

7 ‘‘(3)(A) If the plan administrator is made aware, on 

8 the basis of notifications received pursuant to paragraph 

9 (2) or otherwise, that the proceeds from any transaction 

10 described in paragraph (1), constituting direct or indirect 

11 sales of employer securities by any person described in 

12 paragraph (1), exceed $100,000, the plan administrator 

13 of the plan shall provide to each participant and bene14 ficiary a notification of such transaction. Such notification 

15 shall be in writing, except that such notification may be 

16 in electronic or other form to the extent that such form 

17 is reasonably accessible to the participant or beneficiary. 

18 ‘‘(B) In any case in which the proceeds from any 

19 transaction described in paragraph (1) (with respect to 

20 which a notification has not been provided pursuant to 

21 this paragraph), together with the proceeds from any 

22 other such transaction or transactions described in para23 graph (1) occurring during the preceding one-year period, 

24 constituting direct or indirect sales of employer securities 

25 by any person described in paragraph (1), exceed (in the 
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1 aggregate) $100,000, such series of transactions by such 

2 person shall be treated as a transaction described in sub3 paragraph (A) by such person. 

4 ‘‘(C) Each notification required under this paragraph 

5 shall be provided as soon as practicable, but not later than 

6 3 business days after receipt of the written notification 

7 or notifications indicating that the transaction (or series 

8 of transactions) requiring such notice has occurred. 

9 ‘‘(4) Each notification required under paragraph (2) 

10 or (3) shall be made in such form and manner as may 

11 be prescribed in regulations of the Secretary and shall in12 clude the number of shares involved in each transaction 

13 and the price per share, and the notification required 

14 under paragraph (3) shall be written in language designed 

15 to be understood by the average plan participant. The Sec16 retary may provide by regulation, in consultation with the 

17 Securities and Exchange Commission, for exemptions 

18 from the requirements of this subsection with respect to 

19 specified types of transactions to the extent that such ex20 emptions are consistent with the best interests of plan par21 ticipants and beneficiaries. Such exemptions may relate to 

22 transactions involving reinvestment plans, stock splits, 

23 stock dividends, qualified domestic relations orders, and 

24 similar matters. 
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1 ‘‘(5) For purposes of this subsection, the term ‘em2 ployer security’ has the meaning provided in section 

3 407(d)(1).’’. 

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

5 this section shall apply with respect to transactions occur6 ring after 90 days after the date of the enactment of this 

7 Act. 

8 TITLE IV—IMPROVEMENTS IN 

9 PENSION INFORMATION AND 

10 ENFORCEMENT 

11 SEC. 401. PENSION BENEFIT INFORMATION. 

12 (a) PENSION BENEFIT STATEMENTS REQUIRED ON

13 PERIODIC BASIS.— 

14 (1) IN GENERAL.—Subsection (a) of section 

15 105 of the Employee Retirement Income Security 

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

17 (A) by redesignating paragraphs (1) and 

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

19 and by inserting ‘‘(1)’’ after ‘‘(a)’’; 

20 (B) by striking ‘‘shall furnish to any plan 

21 participant or beneficiary who so requests in 

22 writing, a statement’’ and inserting ‘‘shall, as 

23 provided in paragraph (2), provide to plan par24 ticipants and beneficiaries statements’’; and 
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1 (C) by adding at the end the following new 

2 paragraphs: 

3 ‘‘(2)(A) The statements described in paragraph 

4 (1) shall be furnished—— 

5 ‘‘(i) in the case of a defined benefit plan, 

6 at last once every 3 years to participants who 

7 have attained age 35, 

8 ‘‘(ii) in the case of an individual account 

9 plan, at least annually to each participant, and 

10 ‘‘(iii) to any participant or beneficiary who 

11 so requests in writing. 

12 ‘‘(B) Subparagraph (A)(i) shall not apply to a 

13 plan to which more than 1 unaffiliated employer is 

14 required to contribute. 

15 ‘‘(3) Information furnished under paragraph 

16 (1) to a participant in a defined benefit plan (other 

17 than at the request of the participant) may be based 

18 on reasonable estimates determined under regula19 tions prescribed by the Secretary. 

20 ‘‘(4)(A) The Secretary of Labor shall develop a 

21 model benefit statement which shall be used by plan 

22 administrators in complying with the requirements 

23 of paragraph (1). Such statement shall include— 
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1 ‘‘(i) the amount of nonforfeitable accrued 

2 benefits as of the statement date which is pay3 able at normal retirement age under the plan, 

4 ‘‘(ii) the amount of accrued benefits which 

5 are forfeitable but which may become non6 forfeitable under the terms of the plan, 

7 ‘‘(iii) the amount or percentage of any re8 duction due to integration of the benefit with 

9 the participant’s Social Security benefits or 

10 similar governmental benefits, 

11 ‘‘(iv) information on early retirement ben12 efit and joint and survivor annuity reductions, 

13 ‘‘(v) in the case of an individual account 

14 plan, the percentage of the net return on invest15 ment of plan assets for the preceding plan year 

16 (or, with respect to investments directed by the 

17 participant, the net return on investment of 

18 plan assets for such year so directed), itemized 

19 with respect to each type of investment, and, 

20 stated separately, the administrative and trans21 action fees incurred in connection with each 

22 such type of investment, and 

23 ‘‘(vi) in the case of an individual account 

24 plan, the amount and percentage of assets in 

25 the individual account that consists of employer 
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1 securities and employer real property (as de2 fined in paragraphs (1) and (2), respectively, of 

3 section 407(d)), as determined as of the most 

4 recent valuation date of the plan. 

5 ‘‘(B) The Secretary shall also develop a sepa6 rate notice, which shall be included by the plan ad7 ministrator with the information furnished pursuant 

8 to paragraph (1), which advises participants and 

9 beneficiaries of generally accepted investment prin10 ciples, including principles of risk management and 

11 diversification for long-term retirement security and 

12 the risks of holding substantial assets in a single 

13 asset such as employer securities.’’. 

14 (2) CONFORMING AMENDMENT.—Subsection (d) 

15 of section 105 of such Act (29 U.S.C. 1025(d)) is 

16 repealed. 

17 (b) DISCLOSURE OF BENEFIT CALCULATIONS.— 

18 (1) IN GENERAL.—Section 105 of such Act (as 

19 amended by the preceding provisions of this section) 

20 is amended further— 

21 (A) by redesignating subsection (c) as sub22 section (d); and 

23 (B) by inserting after subsection (b) the 

24 following new subsection: 
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1 ‘‘(c)(1) In the case of a participant or beneficiary who 

2 is entitled to a distribution of a benefit under an employee 

3 pension benefit plan, the administrator of such plan shall 

4 provide to the participant or beneficiary the information 

5 described in paragraph (2) upon the written request of 

6 the participant or beneficiary. 

7 ‘‘(2) The information described in this paragraph in8 cludes— 

9 ‘‘(A) a worksheet explaining how the amount of 

10 the distribution was calculated and stating the as11 sumptions used for such calculation, 

12 ‘‘(B) upon written request of the participant or 

13 beneficiary, any documents relating to the calcula14 tion (if available), and 

15 ‘‘(C) such other information as the Secretary 

16 may prescribe. 

17 Any information provided under this paragraph shall be 

18 in a form calculated to be understood by the average plan 

19 participant.’’. 

20 (2) CONFORMING AMENDMENTS.— 

21 (A) Section 101(a)(2) of such Act (29 

22 U.S.C. 1021(a)(2)) is amended by striking 

23 ‘‘105(a) and (c)’’ and inserting ‘‘105(a), (c), 

24 and (d)’’. 
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1 (B) Section 106(b) of such Act (29 U.S.C. 

2 1026(b)) is amended by striking ‘‘sections 

3 105(a) and 105(c)’’ and inserting ‘‘section 

4 105’’. 

5 (c) EFFECTIVE DATE.— 

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

7 this section shall take effect 60 days after the adop8 tion of rules or other guidance to carry out the 

9 amendments made by this subsection, which shall in10 clude a model notice of generally accepted invest11 ment principles, including principles of risk manage12 ment and diversification. 

13 (2) MODEL INVESTMENT PRINCIPLES.—For 

14 purposes of paragraph (1), not later than 120 days 

15 after the date of the enactment of this Act, the Sec16 retary of Labor shall issue rules or other guidance 

17 and a model notice which meets the requirements of 

18 section 105 of the Employee Retirement Income Se19 curity Act of 1974 added by this section. 
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1 SEC. 402. DISCLOSURES TO SECRETARY OF LABOR RELAT2 ING TO PLAN TERMINATION AND RELATING 

3 TO PLAN SPONSORS AFTER ACQUISITION OR 

4 MERGER OF PLANS. 

5 (a) IN GENERAL.—Section 104 of the Employee Re6 tirement Income Security Act of 1974 (29 U.S.C. 1024) 

7 is amended— 

8 (1) by redesignating subsection (d) as sub9 section (e); and 

10 (2) by inserting after subsection (c) the fol11 lowing new subsection: 

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

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

14 written notice of— 

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

16 ‘‘(B) in connection with any plan that is ac17 quired by or merged with another plan, the name 

18 and address of the sponsor of the acquired or 

19 merged plan. 

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

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

22 the effective date of the termination, acquisition, or merg23 er.’’. 

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

25 this section shall apply with respect to terminations, acqui26 sitions, and mergers occurring after December 31, 2005. 
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1 SEC. 403. DISCLOSURE OF OPERATING INCOME OF EM2 PLOYERS ADJUSTED SO AS TO EXCLUDE CER3 TAIN COMPONENTS MANDATED IN FASB 

4 RULES GOVERNING ACCOUNTING FOR DE5 FINED BENEFIT PENSION PLANS. 

6 (a) MATTERS TO BE INCLUDED IN ANNUAL RE7 PORT.—Section 103(c) of the Employee Retirement In8 come Security Act of 1974 (29 U.S.C. 1023(c)) is amend9 ed— 

10 (1) by redesignating paragraph (5) as para11 graph (6); and 

12 (2) by inserting after paragraph (4) the fol13 lowing new paragraph: 

14 ‘‘(5) In the case of a pension plan that is a de15 fined benefit plan, the amount of the annual oper16 ating income of each employer maintaining the plan, 

17 as shown on the employer’s most recent annual fi18 nancial statement, together with such amount as ad19 justed by excluding all components of net benefit 

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

21 (b) INFORMATION TO BE PROVIDED ANNUALLY TO

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

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

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

25 defined benefit plan, such other material shall include the 

26 information described in paragraph (5) of section 103(c), 
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1 together with an explanation, written in a manner cal2 culated to be understood by the average plan participant, 

3 of such information, of the service cost component in4 cluded in the adjusted amount of annual operating income 

5 reported pursuant to such paragraph, and of each compo6 nent excluded from such adjusted amount of annual oper7 ating income.’’. 

8 SEC. 404. SPECIFIC INFORMATION REGARDING MULTIEM9 PLOYER PLANS INCLUDED IN ANNUAL RE10 PORT. 

11 Section 103 of the Employee Retirement Income Se12 curity Act of 1974 (29 U.S.C. 1023) is amended by adding 

13 at the end the following new subsection: 

14 ‘‘(f) With respect to a pension plan that is a multiem15 ployer plan, an annual report under this section shall in16 clude the following information regarding each contrib17 uting employer: 

18 ‘‘(1) the employer’s name, 

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

20 number, 

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

22 and 

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

24 for the year.’’. 
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1 SEC. 405. LIMITED SCOPE AUDITS. 

2 Subparagraph (C) of section 103(a)(3) of the Em3 ployee Retirement Income Security Act of 1974 (29 

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

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

6 subparagraph (A) need not be expressed as to any state7 ments required by subsection (b)(3)(G) prepared by a 

8 bank or similar institution or insurance carrier regulated 

9 and supervised and subject to periodic examination by a 

10 State or Federal agency if no less than 95 percent of the 

11 plan’s assets have a readily ascertainable market value at 

12 the end of the plan year for which the opinion is being 

13 offered, and if such statements— 

14 ‘‘(I) are certified by the bank, similar insti15 tution, or insurance carrier as complete and ac16 curate, 

17 ‘‘(II) certify the current value of each 

18 asset, 

19 ‘‘(III) include a representation that, within 

20 the 18-month month period preceding the date 

21 of its certification, an independent, qualified 

22 public accountant who has satisfied the require23 ments of subsection (D), has issued a report, in 

24 accordance with generally accepted auditing 

25 standards, to the bank or similar institution or 

26 insurance carrier, stating that its internal con-
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•HR 5397 IH 

1 trols and procedures or the internal controls 

2 and procedures of any affiliated entity, as they 

3 pertain to the execution, maintenance of ac4 countability, recording and processing of trans5 actions related to plan or participant record6 keeping, are adequate, and 

7 ‘‘(IV) are made a part of the annual re8 port. 

9 ‘‘(ii) To the extent that the processing of trans10 actions related to plan or participant recordkeeping 

11 is performed by an entity unaffiliated with the bank 

12 or similar institution or insurance carrier, clause (i) 

13 shall not apply unless the plan has obtained a rep14 resentation from the entity that, within the 18- 

15 month period preceding the date of the opinion, an 

16 independent, qualified public accountant who has 

17 satisfied the requirements of subparagraph (D), has 

18 issued a report, in accordance with generally accept19 ed auditing standards, to the entity stating that its 

20 internal controls and procedures, as they pertain to 

21 the execution, maintenance of accountability, record22 ing, and processing of transactions related to plan or 

23 participant recordkeeping, are adequate. 

24 ‘‘(iii) For purposes of clause (i), the term ‘read25 ily ascertainable market value’ means a value that 
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1 can be readily determined on an established securi2 ties market or in accordance with regulations pro3 mulgated by the Secretary.’’. 

4 SEC. 406. REPORTING AND ENFORCEMENT REQUIREMENTS 

5 FOR EMPLOYEE BENEFIT PLANS. 

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

7 the Employee Retirement Income Security Act of 1974 

8 (29 U.S.C. 1021 et seq.) is amended— 

9 (1) by redesignating section 111 as section 112, 

10 and 

11 (2) inserting after section 110 the following 

12 new section: 

13 ‘‘DIRECT REPORTING OF CERTAIN EVENTS

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

15 ‘‘(1) NOTIFICATIONS BY PLAN ADMINIS16 TRATOR.—The administrator of an employee benefit 

17 plan, within 5 business days after the administrator 

18 determines that there is evidence (or after the ad19 ministrator is notified under paragraph (2)) that an 

20 irregularity may have occurred with respect to the 

21 plan, shall— 

22 ‘‘(A) notify the Secretary of the irregu23 larity in writing; and 

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

25 the accountant who is currently engaged under 

26 section 103(a)(3)(A). 
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1 ‘‘(2) NOTIFICATIONS BY ACCOUNTANT.— 

2 ‘‘(A) IN GENERAL.—An accountant en3 gaged by the administrator of an employee ben4 efit plan under section 103(a)(3)(A), within 5 

5 business days after the accountant in connec6 tion with such engagement determines that 

7 there is evidence that an irregularity may have 

8 occurred with respect to the plan, shall— 

9 ‘‘(i) notify the plan administrator of 

10 the irregularity in writing, or 

11 ‘‘(ii) if the accountant determines that 

12 there is evidence that the irregularity may 

13 have involved an individual who is the plan 

14 administrator or who is a senior official of 

15 the plan administrator, notify the Sec16 retary of the irregularity in writing. 

17 ‘‘(B) NOTIFICATION UPON FAILURE OF

18 PLAN ADMINISTRATOR TO NOTIFY.—If an ac19 countant who has provided notification to the 

20 plan administrator pursuant to subparagraph 

21 (A)(i) does not receive a copy of the administra22 tor’s notification to the Secretary required 

23 under paragraph (1)(B) within the 5-business24 day period specified therein, the accountant 

25 shall furnish to the Secretary a copy of the ac-
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1 countant’s notification made to the plan admin2 istrator on the next business day following such 

3 period. 

4 ‘‘(3) IRREGULARITY DEFINED.— 

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

6 term ’irregularity’ means— 

7 ‘‘(i) a theft, embezzlement, or a viola8 tion of section 664 of title 18, United 

9 States Code (relating to theft or embezzle10 ment from an employee benefit plan); 

11 ‘‘(ii) an extortion or a violation of sec12 tion 1951 of title 18, United States Code 

13 (relating to interference with commerce by 

14 threats or violence); 

15 ‘‘(iii) a bribery, a kickback, or a viola16 tion of section 1954 of title 18, United 

17 States Code (relating to offer, acceptance, 

18 or solicitation to influence operations of an 

19 employee benefit plan); 

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

21 title 18, United States Code (relating to 

22 false statements and concealment of facts 

23 in relation to employer benefit plan 

24 records); or 
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1 ‘‘(v) a violation of section 411, 501, or 

2 511 of this title (relating to criminal viola3 tions). 

4 ‘‘(B) The term ’irregularity’ does not in5 clude any act or omission described in this 

6 paragraph involving less than $1,000 unless 

7 there is reason to believe that the act or omis8 sion may bear on the integrity of plan manage9 ment. 

10 ‘‘(b) NOTIFICATION UPON TERMINATION OF EN11 GAGEMENT OF ACCOUNTANT.— 

12 ‘‘(1) NOTIFICATION BY PLAN ADMINIS13 TRATOR.—Within 5 business days after the termi14 nation of an engagement under section 103(a)(3)(A) 

15 with respect to an employee benefit plan, the admin16 istrator of such plan shall— 

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

18 such termination, giving the reasons for such 

19 termination, and 

20 ‘‘(B) furnish the accountant whose engage21 ment was terminated with a copy of the notifi22 cation sent to the Secretary. 

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

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

25 received a copy of the administrator’s notification to 
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1 the Secretary as required under paragraph (1)(B), 

2 or if the accountant disagrees with the reasons given 

3 in the notification of termination of the engagement 

4 for auditing services, the accountant shall notify the 

5 Secretary in writing of the termination, giving the 

6 reasons for the termination, within 10 business days 

7 after the termination of the engagement. 

8 ‘‘(c) DETERMINATION OF PERIODS REQUIRED FOR

9 NOTIFICATION.—In determining whether a notification re10 quired under this section with respect to any act or omis11 sion has been made within the required number of busi12 ness days— 

13 ‘‘(1) the day on which such act or omission be14 gins shall not be included; and 

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

16 shall not be included. 

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

18 means any Federal legal holiday and any other day ap19 pointed as a holiday by the State in which the person re20 sponsible for making the notification principally conducts 

21 business. 

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

23 Except as provided in this Act, no accountant or plan ad24 ministrator shall be liable to any person for any finding, 

25 conclusion, or statement made in any notification made 
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1 pursuant to subsections (a)(2) or (b)(2), or pursuant to 

2 any regulations issued under those subsections, if the find3 ing, conclusion, or statement is made in good faith.’’. 

4 (b) CLERICAL AMENDMENTS.— 

5 (1) Section 514(d)(29 U.S.C. 114(d)) is amend6 ed by striking ‘‘111’’ and inserting ‘‘112’’. 

7 (2) The table of contents in section 1 is amend8 ed by striking the item relating to section 111 and 

9 inserting the following new items: 

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

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

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

11 this section shall apply with respect to any irregularity or 

12 termination of engagement described in the amendments, 

13 but only if the 5-day period described in the amendments 

14 in connection with the irregularity or termination com15 mences at least 90 days after the date of the enactment 

16 of this Act. 

17 SEC. 407. STUDY OF PENSION TRENDS AND CHARACTERIS18 TICS. 

19 (a) IN GENERAL.—Section 513 of the Employee Re20 tirement Income Security Act of 1974 (29 U.S.C. 1143) 

21 is amended by adding at the end the following new sub22 section: 

23 ‘‘(d) PENSION SURVEYS.— 
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1 ‘‘(1) IN GENERAL.—The Secretary shall submit 

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

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

4 on a study of current statistical and survey data, 

5 which describes dominant and emerging trends and 

6 characteristics of the private pension system, so as 

7 to ensure that the Congress is provided with periodic 

8 and timely information regarding such system. 

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

10 submitted pursuant to paragraph (1) shall include, 

11 but not be limited to, information relating to exist12 ing pension plans regarding— 

13 ‘‘(A) the types of such plans, 

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

15 contributions, 

16 ‘‘(C) vesting status, 

17 ‘‘(D) accrued benefits, 

18 ‘‘(E) benefit receipt, and 

19 ‘‘(F) form of benefit payments. 

20 Such information shall be presented by category in 

21 connection with cohorts defined on the basis of ap22 propriate attributes of the participants involved, in23 cluding gender, age, race, and income. 

24 ‘‘(3) IDENTIFICATION OF BARRIERS TO PEN25 SION RECEIPT.—Each report submitted pursuant to 
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1 paragraph (1) shall also include information which 

2 summarizes the types of problems that plan partici3 pants and beneficiaries experience in connection with 

4 the receipt of promised retirement benefits.’’. 

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

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

7 Income Security Act of 1974 shall be submitted not later 

8 than December 31, 2005. 

9 SEC. 408. EARLY RESOLUTION PROGRAM FOR PENSION 

10 BENEFIT CLAIMS. 

11 (a) IN GENERAL.—Section 503 of the Employee Re12 tirement Income Security Act of 1974 (29 U.S.C. 1133) 

13 is amended— 

14 (1) by adding at the end of the heading the fol15 lowing: ‘‘AND EARLY RESOLUTION OF PENSION

16 CLAIMS’’; 

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

18 ‘‘Sec. 503.’’; and 

19 (3) by adding at the end the following new sub20 section: 

21 ‘‘(b) EARLY RESOLUTION PROGRAM FOR PENSION

22 BENEFIT CLAIMS.— 

23 ‘‘(1) IN GENERAL.—The Secretary shall estab24 lish, in consultation with national bar and arbitra25 tion associations and other interested organizations, 
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1 an early resolution program for mediation of dis2 putes regarding claims for benefits which have been 

3 denied under pension plans. 

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

5 for recruitment of mediators to serve under the pro6 gram from individuals who have the requisite exper7 tise for such service. The program shall provide for 

8 ongoing training for all mediators in employee bene9 fits law as determined necessary. Upon submission 

10 of a claim to mediation proceedings under this sub11 section, the program shall provide for appointment 

12 of a mediator, from the roster of mediators serving 

13 under the program, to act as the mediator with re14 gard to the claim. Such appointment shall be 

15 through a random selection procedure which shall be 

16 prescribed in regulations. 

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

18 necessary from each party to cover the costs of par19 ticipation in the program. The Secretary may reduce 

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

21 ‘‘(4) INITIATION OF PROCEEDINGS.—A claim22 ant with a dispute which is eligible under the pro23 gram for submission to mediation thereunder may 

24 elect to commence proceedings under the program 

25 by means of filing under the program an election for 
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1 mediation of the dispute. An election to commence 

2 mediation proceedings under the program shall be in 

3 such form and manner as the Secretary may pre4 scribe. Any such election shall in all cases be vol5 untary, and any provision of the plan or other ar6 rangement which has the effect of providing for the 

7 commencement of such proceedings other than by 

8 means of voluntary election by the claimant shall be 

9 null and void as a matter of law. 

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

11 receipt of the election to commence proceedings, the 

12 program shall provide for participation by all rel13 evant parties. Each such party shall participate, and 

14 cooperate fully, in the proceedings. The plan admin15 istrator shall ensure that a copy of the written 

16 record of any claims procedure completed by the 

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

18 documents are presented to the mediator within 30 

19 days after commencement of the proceedings. The 

20 program shall provide for appropriate confidentiality 

21 of the proceedings. 

22 ‘‘(6) TIME LIMIT FOR PROCEEDINGS.—The me23 diation proceedings under the program with respect 

24 to the claim in dispute shall be completed within 30 
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1 days after compilation of all relevant plan documents 

2 relating to the claim has been achieved. 

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

4 conclusions made in the mediation proceedings 

5 under the program shall be treated as advisory in 

6 nature and nonbinding. Except as provided in para7 graph (8), the rights of the parties under this title 

8 shall not be affected by participation in the medi9 ation proceedings under the program. 

10 ‘‘(8) RESOLUTION THROUGH SETTLEMENT

11 AGREEMENT.—If a case is settled through participa12 tion in the mediation proceedings under the pro13 gram, the mediator shall assist the parties in draw14 ing up an agreement which shall constitute, upon 

15 signature of the parties, a binding contract between 

16 the parties, which shall be enforceable under section 

17 502 as if the terms of such agreement were terms 

18 of the plan. 

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

20 for ongoing oversight of the program so as to ensure 

21 that proceedings are conducted equitably and that 

22 mediators meet prescribed standards of performance. 

23 The Secretary shall monitor and record the results 

24 of mediation proceedings conducted under the pro25 gram so as to enable comprehensive evaluation of 
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1 the effectiveness of the program as a means of alter2 native dispute resolution. 

3 ‘‘(10) NOTICE.—The Secretary shall— 

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

5 other sources of assistance in resolving benefits 

6 claim disputes, and 

7 ‘‘(B) provide model information with re8 spect to the program to be included in all sum9 mary plan descriptions and benefit determina10 tions.’’. 

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

12 this section shall apply with respect to claims arising on 

13 or after December 31, 2005. 

14 SEC. 409. REVIEW OF BENEFIT DETERMINATIONS. 

15 (a) DE NOVO REVIEW.— 

16 (1) INTERNAL REVIEW.—Section 503 of the 

17 Employee Retirement Income Security Act of 1974 

18 (as amended by section 408) is amended further— 

19 (A) by redesignating subsection (b) as sub20 section (c); and 

21 (B) by inserting after subsection (a) the 

22 following new subsection: 

23 ‘‘(b) REVIEW REQUIREMENTS.—Any review required 

24 under subsection (a)(2)— 

25 ‘‘(1) shall be de novo, and 
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1 ‘‘(2) shall be conducted by an individual who did not 

2 make the initial decision denying the claim and who is au3 thorized to approve payment of the claim.’’. 

4 (2) COURT REVIEW.—Section 502(e) of such 

5 Act (29 U.S.C. 1132(e)) is amended by adding at 

6 the end the following new paragraph: 

7 ‘‘(3) Notwithstanding any provision by the plan for 

8 the exercise by a fiduciary of discretionary authority with 

9 respect to any benefit determination, in any action under 

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

11 action under this section to review a final benefit deter12 mination under the plan, the review by the court shall be 

13 de novo, and the court may review all evidence pre14 sented.’’. 

15 (b) APPLICATION OF COMMON LAW PRINCIPLES OF

16 CONTRACT INTERPRETATION.—Section 502(e) of such 

17 Act (as amended by subsection (a)(2)) is amended further 

18 by adding at the end the following new paragraph: 

19 ‘‘(4) In interpreting the terms of an employee benefit 

20 plan under this section, the court shall employ such com21 mon law principles of contract interpretation as are deter22 mined appropriate by the court. Nothing in this title shall 

23 preclude the Federal courts from developing and applying 

24 Federal common law for purposes of this paragraph which 

25 is consistent with the provisions of this title.’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply with respect to causes of action 

3 arising after December 31, 2005. 

4 SEC. 410. ALLOWABLE RELIEF. 

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

6 AND COSTS OF ACTION.— 

7 (1) PRE-JUDGMENT INTEREST ON UNPAID BEN8 EFITS.—Section 502(a)(1)(B) of the Employee Re9 tirement Income Security Act of 1974 (29 U.S.C. 

10 1132(a)(1)(B)) is amended by inserting ‘‘(together 

11 with reasonable pre-judgment interest on unpaid 

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

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

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

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

16 amended— 

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

18 after ‘‘paragraph (2)’’; and 

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

20 paragraph: 

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

22 this title with respect to an employee pension benefit plan 

23 brought by a participant or beneficiary under such plan 

24 in which the participant or beneficiary prevails or substan25 tially prevails, the participant or beneficiary shall be enti-
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1 tled to reasonable attorney’s fees, reasonable expert wit2 ness fees, and other reasonable costs relating to the ac3 tion.’’. 

4 (b) ALLOWANCE FOR LEGAL RELIEF.—Section 

5 502(a) of such Act (29 U.S.C. 1132(a)) is amended, in 

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

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

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

9 this section shall apply with respect to causes of action 

10 arising after December 31, 2005. 

11 SEC. 411. ASSESSMENT BY SECRETARY OF LABOR OF PEN12 ALTIES FOR FAILURES TO MEET DISCLOSURE 

13 REQUIREMENTS. 

14 (a) IN GENERAL.—Section 502(c) of the Employee 

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

16 1132(c)) is amended to read as follows: 

17 ‘‘(c)(1) The Secretary may assess a civil penalty 

18 against any person of up to $1,000 a day from the date 

19 of any failure or refusal by such person described in para20 graph (2). 

21 ‘‘(2) A failure or refusal described in this paragraph 

22 is any of the following: 

23 ‘‘(A) A failure or refusal by a plan adminis24 trator to comply with a request for any information 

25 which such administrator is required by this title to 
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1 furnish to a participant or beneficiary by mailing the 

2 material requested to the last known address of the 

3 requesting participant or beneficiary within 30 days 

4 after such request. 

5 ‘‘(B) A failure or refusal by a plan adminis6 trator to file the annual report required to be filed 

7 with the Secretary under section 101(b)(4). For pur8 poses of this subparagraph, an annual report that 

9 has been rejected under section 104(a)(4) for failure 

10 to provide material information shall not be treated 

11 as having been filed with the Secretary. 

12 ‘‘(C) A failure or refusal by an employer main13 taining a plan to meet the notice requirement of sec14 tion 101(d) with respect to any participant or bene15 ficiary. 

16 ‘‘(D) A failure or refusal by a plan adminis17 trator to meet the requirements of section 101(e)(1) 

18 with respect to a participant or beneficiary. 

19 ‘‘(E) A failure or refusal by an employer main20 taining a plan to meet the requirements of section 

21 101(e)(2) with respect to any person. 

22 ‘‘(F) A failure or refusal by any person to meet 

23 the requirements of section 101(f)(1). 

24 ‘‘(G) A failure or refusal by any person to file 

25 the information required to be filed by such person 
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1 with the Secretary under regulations prescribed pur2 suant to section 101(g). 

3 ‘‘(H) A failure or refusal by a plan adminis4 trator to provide notice to participants and bene5 ficiaries in accordance with section 101(i). 

6 ‘‘(I) A failure or refusal by a plan adminis7 trator to furnish documents to the Secretary, as re8 quested by the Secretary under section 104(a)(6), 

9 within 30 days after such a request. 

10 ‘‘(J) A failure or refusal by a plan adminis11 trator to meet the requirements of paragraph (1) or 

12 (4) of section 606. 

13 ‘‘(3) For purposes of this subsection, each violation 

14 described in subparagraph (A), (C), (D), (E), (F), (H), 

15 or (J) of paragraph (2) with respect to any single partici16 pant, beneficiary, or other person shall be treated as a 

17 separate violation. 

18 ‘‘(4) In the case of any failure or refusal described 

19 in paragraph subparagraph (A), (C), or (J) of paragraph 

20 (2) by any administrator or employer with respect to any 

21 participant, beneficiary, or other person, such adminis22 trator or employer may, in the court’s discretion, be liable 

23 to such participant, beneficiary, or other person in the 

24 amount of up to $1,000 a day from the date of such fail-
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1 ure or refusal. Any liability under this paragraph shall be 

2 in addition to any liability imposed under paragraph (1). 

3 ‘‘(5)(A) The Secretary may assess a civil penalty of 

4 up to $50,000 against any administrator who fails to pro5 vide the Secretary with any notification as required under 

6 section 111. 

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

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

9 willfully fails to provide the Secretary with any notification 

10 as required under section 111. 

11 ‘‘(6) In addition to any liability imposed under para12 graph (1), (4), or (5), the court may in its discretion order 

13 such other relief as it deems proper. 

14 ‘‘(7) No liability may be imposed on any person under 

15 this subsection for any failure resulting from matters rea16 sonably beyond the control of such person. 

17 ‘‘(8) The Secretary and the Secretary of Health and 

18 Human Services shall maintain such ongoing consultation 

19 as may be necessary and appropriate to coordinate en20 forcement under this subsection with enforcement under 

21 section 1144(c)(8) of the Social Security Act.’’. 

22 (b) CONFORMING AMENDMENT.—Section 502(a)(6) 

23 of such Act (29 U.S.C. 1132(a)(6)) is amended by striking 

24 ‘‘under paragraph (2), (4), (5), (6), or (7) of subsection 
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1 (c) or under subsection (i) or (l)’’ and inserting ‘‘under 

2 subsection (c), (i), or (l)’’. 

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

4 this section shall apply with respect to failures and refus5 als occurring after December 31, 2005. 

6 SEC. 412. MISSING PARTICIPANTS AND UNCLAIMED BENE7 FITS. 

8 (a) TREATMENT OF MISSING PARTICIPANTS OF

9 MULTIEMPLOYER PLANS AND CERTAIN PLANS NOT OTH10 ERWISE COVERED.—Section 4050 of the Employee Retire11 ment Income Security Act of 1974 (29 U.S.C. 1350) is 

12 amended— 

13 (1) by redesignating subsections (b) and (c) as 

14 subsections (f) and (g), respectively; and 

15 (2) by inserting after subsection (a) the fol16 lowing new subsections: 

17 ‘‘(b) MULTIEMPLOYER PLANS.—The corporation 

18 shall prescribe rules similar to the rules in subsection (a) 

19 for multiemployer plans covered by this title that termi20 nate under section 4041A. 

21 ‘‘(c) ELECTIVE TRANSFER OF MISSING PARTICI22 PANT’S BENEFITS TO THE CORPORATION BY CERTAIN

23 OTHER PLANS UPON TERMINATION.— 

24 ‘‘(1) IN GENERAL.—The plan administrator of 

25 a plan described in paragraph (4) may elect to 
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1 transfer a missing participant’s benefits to the cor2 poration upon termination of the plan. 

3 ‘‘(2) INFORMATION TO THE CORPORATION.—To 

4 the extent provided in regulations, the plan adminis5 trator of a plan described in paragraph (4) shall, 

6 upon termination of the plan, provide the corpora7 tion information with respect to the benefits of a 

8 missing participant if the plan transfers such bene9 fits— 

10 ‘‘(A) to the corporation, or 

11 ‘‘(B) to an entity other than the corpora12 tion or a plan described in paragraph (4)(B)(ii). 

13 ‘‘(3) PAYMENT BY THE CORPORATION.—If ben14 efits of a missing participant were transferred to the 

15 corporation under paragraph (1), the corporation 

16 shall, upon location of the participant or beneficiary, 

17 pay to the participant or beneficiary the amount 

18 transferred (or the appropriate survivor benefit) ei19 ther— 

20 ‘‘(A) in a single sum (plus interest), or 

21 ‘‘(B) in such other form as is specified in 

22 regulations of the corporation. 

23 ‘‘(4) PLANS DESCRIBED.—A plan is described 

24 in this paragraph if— 
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1 ‘‘(A) the plan is a pension plan (within the 

2 meaning of section 3(2))— 

3 ‘‘(i) to which the provisions of this 

4 section do not apply (without regard to 

5 this subsection), and 

6 ‘‘(ii) which is not a plan described in 

7 paragraphs (2) through (11) of section 

8 4021(b), and 

9 ‘‘(B) at the time the assets are to be dis10 tributed upon termination, the plan— 

11 ‘‘(i) has missing participants, and 

12 ‘‘(ii) has not provided for the transfer 

13 of assets to pay the benefits of all missing 

14 participants to another pension plan (with15 in the meaning of section 3(2)). 

16 ‘‘(5) CERTAIN PROVISIONS NOT TO

17 APPLY.—Subsections (a)(1) and (a)(3) shall not 

18 apply to a plan described in paragraph (4).’’. 

19 (b) TREATMENT OF UNCLAIMED BENEFITS IN CASES

20 NOT INVOLVING TERMINATION OR IN CASES OF CERTAIN

21 PLANS.— 

22 (1) IN GENERAL.—Section 4050 of such Act 

23 (as amended by subsection (a)) is amended further 

24 by inserting after subsection (c) the following new 

25 subsection: 
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1 ‘‘(d) TREATMENT OF UNCLAIMED BENEFITS IN

2 CASES NOT INVOLVING TERMINATION OR IN CASES OF

3 CERTAIN PLANS.— 

4 ‘‘(1) ELECTIVE TRANSFER OF UNCLAIMED BEN5 EFITS TO THE CORPORATION.—The plan adminis6 trator of a plan described in paragraph (6) may 

7 elect to transfer unclaimed benefits to the corpora8 tion. 

9 ‘‘(2) INFORMATION TO THE CORPORATION.— 

10 The corporation may impose such conditions on 

11 transfers of unclaimed benefits to the corporation as 

12 the corporation determines are necessary to facilitate 

13 administration of this subsection and are not incon14 sistent with the purposes of this subsection. Such 

15 conditions may include requirements that the trans16 ferring plan provide to the corporation specified in17 formation and documentation. 

18 ‘‘(3) PAYMENT TO THE CORPORATION.—With 

19 respect to any participant, any transfer of an un20 claimed benefit to the corporation shall— 

21 ‘‘(A) in the case of a defined benefit plan, 

22 be a transfer of the participant’s designated 

23 benefit, or 
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1 ‘‘(B) in the case of an individual account 

2 plan, be a transfer of the participant’s vested 

3 account balance under the plan. 

4 ‘‘(4) PAYMENT BY THE CORPORATION.—Subject 

5 to such reasonable restrictions as may be prescribed 

6 in regulations of the corporation (relating to invest7 ment limitations and otherwise)— 

8 ‘‘(A) unclaimed benefits of a participant or 

9 beneficiary which are transferred to the cor10 poration pursuant to this subsection shall be 

11 distributed by the corporation to the participant 

12 or beneficiary not later than upon application 

13 filed by the participant or beneficiary with the 

14 corporation in such form and manner as may 

15 be prescribed in regulations of the corporation, 

16 and 

17 ‘‘(B) such benefits shall— 

18 ‘‘(i) in the case of an individual ac19 count plan, be paid in a single sum (plus 

20 interest) or in such other form as is speci21 fied in regulations of the corporation, or 

22 ‘‘(ii) in the case of a defined benefit 

23 plan, be paid— 

24 ‘‘(I) in an amount based on the 

25 designated benefit and the assump-
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1 tions prescribed by the corporation at 

2 the time that the corporation received 

3 the benefit, and 

4 ‘‘(II) in a form determined under 

5 regulations of the corporation. 

6 ‘‘(5) NOTICE.—Any transfer of unclaimed bene7 fits of a participant or beneficiary to the corporation 

8 pursuant to this subsection may occur only after 

9 reasonable advance notice of such transfer is pro10 vided by the plan administrator to the participant or 

11 beneficiary. The plan administrator shall also pro12 vide to the participant or beneficiary notice of any 

13 such transfer not later than 30 days after the date 

14 of the transfer. Notice mailed to the last known ad15 dress of the participant or beneficiary shall be treat16 ed as a notice to the participant or beneficiary for 

17 purposes of this paragraph. Any such notice shall in18 clude information regarding procedures for obtaining 

19 the distribution of benefits from the corporation in 

20 accordance with paragraph (4). 

21 ‘‘(6) PLANS DESCRIBED.—A plan is described 

22 in this paragraph if the plan is a pension plan (with23 in the meaning of section 3(2)— 

24 ‘‘(A)(i) which has neither terminated nor is 

25 in the process of terminating, or 
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1 ‘‘(ii) in the case of an unclaimed benefit to 

2 which section 401(a)(31)(B) of the Internal 

3 Revenue Code of 1986 applies (other than an 

4 unclaimed benefit of a missing participant), 

5 which has terminated or is in the process of ter6 minating, and 

7 ‘‘(B) which is not a plan described in para8 graphs (2) through (11) of section 4021(b). 

9 ‘‘(7) CERTAIN PROVISIONS NOT TO APPLY.— 

10 Subsection (a) shall not apply to a plan described in 

11 paragraph (6).’’. 

12 (2) UNCLAIMED BENEFIT DEFINED.—Sub13 section (f) of section 4050 of such Act (as redesig14 nated by subsection (a)(1)) is amended by adding at 

15 the end the following paragraph: 

16 ‘‘(3) UNCLAIMED BENEFIT.—The term ‘un17 claimed benefit’ means— 

18 ‘‘(A) any benefit of a participant or bene19 ficiary which is distributable under the terms of 

20 the plan to the participant or beneficiary, if the 

21 distribution of the benefit has not commenced 

22 within 1 year after the later of the date on 

23 which the benefit first became so distributable 

24 or the participant’s severance from employment; 
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1 ‘‘(B) any benefit or other amount of a par2 ticipant or beneficiary which is distributable 

3 under the terms of the plan with respect to a 

4 missing participant, or 

5 ‘‘(C) any benefit to which section 

6 401(a)(31)(B) of the Internal Revenue Code of 

7 1986 applies or would apply if subclause (I) of 

8 section 401(a)(31)(B)(i) of such Code did not 

9 require the distribution to exceed $1,000. 

10 A benefit otherwise described in subparagraph (A) 

11 shall not be treated as an unclaimed benefit under 

12 subparagraph (A) if the participant or beneficiary 

13 elects not to have such treatment apply. Any such 

14 participant or beneficiary shall be given reasonable 

15 notice of the opportunity to make such an election. 

16 If the participant or beneficiary fails to make such 

17 an election within a reasonable period specified in 

18 the notice, any subsequent election shall not be given 

19 effect and the benefit shall be treated as an un20 claimed benefit. A notice mailed to the last known 

21 address of the participant or beneficiary shall be 

22 treated as a notice to the participant or beneficiary 

23 for purposes of this paragraph.’’. 

24 (3) CONFORMING AMENDMENT.—Section 

25 4021(b) of such Act (29 U.S.C. 1321(b)(1)) is 
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1 amended by striking ‘‘This’’ and inserting ‘‘Except 

2 to the extent provided in subsections (c) and (d) of 

3 section 4050, this’’. 

4 (c) TREATMENT OF TRANSFERRED ASSETS.—Sec5 tion 4050 of such Act (as amended by the preceding provi6 sions of this section) is amended further— 

7 (1) in subsection (a), by striking paragraph (2) 

8 and redesignating paragraph (3) as paragraph (2); 

9 and 

10 (2) by inserting after subsection (d) the fol11 lowing new subsection: 

12 ‘‘(e) TREATMENT OF TRANSFERRED ASSETS.—A 

13 transfer to the corporation under this section shall be 

14 treated as a transfer of assets from a terminated plan to 

15 the corporation as trustee, and shall be held with assets 

16 of terminated plans for which the corporation is trustee 

17 under section 4042, subject to the rules set forth in that 

18 section.’’. 

19 (d) ESCHEAT LAWS SUPERSEDED.—Section 514(b) 

20 of such Act (29 U.S.C. 1144(b)) is amended— 

21 (1) by redesignating paragraph (9) as para22 graph (10), and 

23 (2) by inserting after paragraph (8) the fol24 lowing new paragraph: 
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1 ‘‘(9) Any escheat or similar law of any State 

2 shall be superseded to the extent inconsistent with 

3 any transfer or other treatment of unclaimed bene4 fits (as defined in section 4050(e)(3)) permitted 

5 under section 4050(d).’’. 

6 (e) EFFECTIVE DATES AND RELATED RULES.— 

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

8 subsection (a) shall apply to terminations occurring 

9 after December 31, 2005. the amendments made by 

10 subsections (b) and (c) shall apply with respect to 

11 transfers occurring after such date. The amend12 ments made by subsection (d) shall apply with re13 spect to transfers or treatment of unclaimed benefits 

14 occurring after such date. 

15 (2) REGULATIONS.—The Pension Benefit Guar16 anty Corporation shall issue regulations necessary to 

17 carry out the amendments made by this section not 

18 later than December 31, 2005. 

19 SEC. 413. FIDUCIARY DUTIES WITH RESPECT TO CHANGES 

20 IN INVESTMENT OPTIONS. 

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

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

23 1104(c)) is amended— 
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1 (1) by adjusting the margination of paragraphs 

2 (2) and (3) so as to align them with paragraph (1); 

3 and 

4 (2) by adding at the end the following new 

5 paragraph: 

6 ‘‘(4) For purposes of paragraph (1), in the case of 

7 any pension plan amendment changing investment options 

8 under the plan, the plan shall not be treated as permitting 

9 a participant or beneficiary to exercise control over assets 

10 in his or her account unless, under the terms of such 

11 amendment, the participant or beneficiary is permitted to 

12 retain any existing investment option with respect to any 

13 assets in his or her account invested pursuant to such op14 tion until such assets are otherwise invested by the partici15 pant or beneficiary.’’. 

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

17 this section shall apply with respect to plan amendments 

18 adopted after the date of the enactment of this Act. 

19 SEC. 414. OFFICE OF PENSION PARTICIPANT ADVOCACY. 

20 (a) IN GENERAL.—Title III of the Employee Retire21 ment Income Security Act of 1974 (29 U.S.C. 3001 et 

22 seq.) is amended by adding at the end the following: 
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1 ‘‘Subtitle D—Office of Pension 

2 Participant Advocacy 

3 ‘‘SEC. 3051. OFFICE OF PENSION PARTICIPANT ADVOCACY. 

4 ‘‘(a) ESTABLISHMENT.— 

5 ‘‘(1) IN GENERAL.—There is established in the 

6 Department of Labor an office to be known as the 

7 ‘Office of Pension Participant Advocacy’. 

8 ‘‘(2) PENSION PARTICIPANT ADVOCATE.—The 

9 Office of Pension Participant Advocacy shall be 

10 under the supervision and direction of an official to 

11 be known as the ‘Pension Participant Advocate’ who 

12 shall— 

13 ‘‘(A) have demonstrated experience in the 

14 area of pension participant assistance, and 

15 ‘‘(B) be selected by the Secretary after 

16 consultation with pension participant advocacy 

17 organizations. 

18 The Pension Participant Advocate shall report di19 rectly to the Secretary and shall be entitled to com20 pensation at the same rate as the highest rate of 

21 basic pay established for the Senior Executive Serv22 ice under section 5382 of title 5, United States 

23 Code. 

24 ‘‘(b) FUNCTIONS OF OFFICE.—It shall be the func25 tion of the Office of Pension Participant Advocacy to— 
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1 ‘‘(1) assist participants and beneficiaries in un2 derstanding their rights to benefits under employee 

3 benefit plans, and, to the extent feasible, assist par4 ticipants in obtaining such benefits, 

5 ‘‘(2) evaluate the efforts of the Federal Govern6 ment, business, and financial, professional, retiree, 

7 labor, women’s, and other appropriate organizations 

8 in assisting and protecting pension plan participants, 

9 including— 

10 ‘‘(A) serving as a focal point for, and ac11 tively seeking out, the receipt of information 

12 with respect to the policies and activities of the 

13 Federal Government, business, and such organi14 zations which affect such participants, 

15 ‘‘(B) identifying significant problems for 

16 pension plan participants and the capabilities of 

17 the Federal Government, business, and such or18 ganizations to address such problems, and 

19 ‘‘(C) developing proposals for changes in 

20 such policies and activities to correct such prob21 lems, and communicating such changes to the 

22 appropriate officials, 

23 ‘‘(3) promote the expansion of pension plan cov24 erage and the receipt of promised benefits by in25 creasing the awareness of the general public of the 
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1 value of pension plans and by protecting the rights 

2 of pension plan participants, including— 

3 ‘‘(A) enlisting the cooperation of the public 

4 and private sectors in disseminating informa5 tion, and 

6 ‘‘(B) forming private-public partnerships 

7 and other efforts to assist pension plan partici8 pants in receiving their benefits, 

9 ‘‘(4) advocate for the full attainment of the 

10 rights of pension plan participants, including by 

11 making pension plan sponsors and fiduciaries aware 

12 of their responsibilities, 

13 ‘‘(5) give priority to the special needs of low 

14 and moderate income participants, and 

15 ‘‘(6) develop needed information with respect to 

16 pension plans, including information on the types of 

17 existing pension plans, levels of employer and em18 ployee contributions, vesting status, accumulated 

19 benefits, benefits received, and forms of benefits. 

20 ‘‘(c) REPORTS.— 

21 ‘‘(1) ANNUAL REPORT.—Not later than Decem22 ber 31 of each calendar year, the Pension Partici23 pant Advocate shall report to the Committees on 

24 Education and the Workforce and Ways and Means 

25 of the House of Representatives and the Committees 
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1 on Health, Education, Labor, and Pensions and Fi2 nance of the Senate on its activities during the fiscal 

3 year ending in the calendar year. Such report 

4 shall— 

5 ‘‘(A) identify significant problems the Ad6 vocate has identified, 

7 ‘‘(B) include specific legislative and regu8 latory changes to address the problems, and 

9 ‘‘(C) identify any actions taken to correct 

10 problems identified in any previous report. 

11 The Advocate shall submit a copy of such report to 

12 the Secretary and any other appropriate official at 

13 the same time it is submitted to the committees of 

14 Congress. 

15 ‘‘(2) SPECIFIC REPORTS.—The Pension Partici16 pant Advocate shall report to the Secretary or any 

17 other appropriate official any time the Advocate 

18 identifies a problem which may be corrected by the 

19 Secretary or such official. 

20 ‘‘(3) REPORTS TO BE SUBMITTED DIRECTLY.— 

21 The report required under paragraph (1) shall be 

22 provided directly to the committees of Congress 

23 without any prior review or comment by the Sec24 retary or any other Federal officer or employee. 

25 ‘‘(d) SPECIFIC POWERS.— 
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1 ‘‘(1) RECEIPT OF INFORMATION.—Subject to 

2 such confidentiality requirements as may be appro3 priate, the Secretary and other Federal officials 

4 shall, upon request, provide such information (in5 cluding plan documents) as may be necessary to en6 able the Pension Participant Advocate to carry out 

7 the Advocate’s responsibilities under this section. 

8 ‘‘(2) APPEARANCES.—The Pension Participant 

9 Advocate may represent the views and interests of 

10 pension plan participants before any Federal agency, 

11 including, upon request of a participant, in any pro12 ceeding involving the participant. 

13 ‘‘(3) CONTRACTING AUTHORITY.—In carrying 

14 out responsibilities under subsection (b)(5), the Pen15 sion Participant Advocate may, in addition to any 

16 other authority provided by law— 

17 ‘‘(A) contract with any person to acquire 

18 statistical information with respect to pension 

19 plan participants, and 

20 ‘‘(B) conduct direct surveys of pension 

21 plan participants.’’. 

22 (b) CONFORMING AMENDMENT.—The table of con23 tents for title III of such Act is amended by adding at 

24 the end the following: 
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‘‘Subtitle C—Office of Pension Participant Advocacy 

‘‘3051. Office of Pension Participant Advocacy.’’. 

1 (c) EFFECTIVE DATE AND TRANSITION RULES.— 

2 (1) EFFECTIVE DATE.—The amendment made 

3 by this section shall take effect on January 1, 2005. 

4 (2) ABOLISHMENT OF THE OFFICE OF PARTICI5 PANT ASSISTANCE AND COMMUNICATIONS AND RE6 LATED TRANSITION RULES.—Effective January 1, 

7 2005, the Office of Participant Assistance and Com8 munications in the Department of Labor is abol9 ished, and the Secretary of Labor shall provide for 

10 the transfer, as appropriate, of the functions and 

11 personnel of such Office to the Office of Pension 

12 Participant Advocacy established under subtitle D of 

13 title III of the Employee Retirement Income Secu14 rity Act of 1974 (as added by this Act). 

15 SEC. 415. EXCLUSIVITY OF POWERS AND PROCEDURES AP16 PLICABLE TO RIGHTS OR CLAIMS. 

17 Section 502 of the Employee Retirement Income Se18 curity Act of 1974 (29 U.S.C. 1132) is amended by adding 

19 at the end the following new subsection: 

20 ‘‘(n) Notwithstanding any Federal statute of general 

21 applicability that would modify any of the powers and pro22 cedures expressly applicable to a right or claim arising 

23 under this title and that is not expressly incorporated by 

24 a provision of this title, such powers and procedures shall 
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1 be the exclusive powers and procedures applicable to such 

2 right or such claim unless after such right or such claim 

3 arises the claimant voluntarily enters into an agreement 

4 to resolve such right or such claim through arbitration or 

5 another procedure.’’. 

6 TITLE V—IMPROVED PENSION 

7 PROTECTIONS FOR THE 

8 CHANGING WORKFORCE 

9 SEC. 501. LOANS FROM RETIREMENT PLANS FOR HEALTH 

10 INSURANCE AND JOB TRAINING EXPENSES. 

11 (a) IN GENERAL.—Section 206 of the Employee Re12 tirement Income Security Act of 1974 (29 U.S.C. 1056) 

13 (as amended by sections 105 and 201) is amended further 

14 by adding at the end the following new subsection: 

15 ‘‘(i) LOANS FROM RETIREMENT PLANS FOR HEALTH

16 INSURANCE AND JOB TRAINING EXPENSES.— 

17 ‘‘(1) IN GENERAL.—Notwithstanding any other 

18 provision of this subsection, a pension plan shall 

19 provide that a participant or beneficiary who is in20 voluntarily separated from employment may, on the 

21 date of such separation, obtain a loan from the plan 

22 the proceeds of which are to be used within 6 

23 months after the date of such loan— 
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1 ‘‘(A) for payments for insurance which 

2 constitutes medical care for the participant and 

3 the participant’s spouse and dependents, or 

4 ‘‘(B) for job training expenses. 

5 ‘‘(2) QUALIFIED LOAN.—For purposes of this 

6 subsection, the term ‘qualified loan’ means a loan— 

7 ‘‘(A) which by its terms requires interest 

8 on the loan to accrue not less frequently than 

9 monthly, 

10 ‘‘(B) which by its terms requires— 

11 ‘‘(i) repayment to begin not later than 

12 18 months after the date of the loan, and 

13 ‘‘(ii) repayment in full not later the 

14 date which is 36 months after the date of 

15 the loan, and 

16 ‘‘(C) which bears interest from the date of 

17 the loan at a rate not less than 2 percentage 

18 points below, and not more than 2 percentage 

19 points above, the rate for comparable United 

20 States Treasury obligations on such date. 

21 ‘‘(3) LIMITATION ON AMOUNT OF LOANS.—The 

22 aggregate amount of borrowings for a plan year 

23 shall not exceed the sum of the amount of accruals 

24 (other than contributions) during the plan year prior 

25 to the plan year in which the loan is made. 
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1 ‘‘(4) LIMITATION ON NUMBER OF LOANS.—Not 

2 more than 3 loans to an individual under this sub3 section may be outstanding at any time. 

4 ‘‘(5) DELINQUENCIES TREATED AS DISTRIBU5 TION.—Any amount required to be paid by a partici6 pant or beneficiary under paragraph (2)(B) during 

7 any plan year which is not paid at the time required 

8 to be paid, and any amount remaining unpaid as of 

9 the beginning of the plan year beginning after the 

10 period described in paragraph (2)(B)(ii), shall be 

11 treated as distributed during such plan year to the 

12 participant or beneficiary.’’. 

13 (b) PROHIBITED TRANSACTION EXEMPTION.—Sec14 tion 408(b) of such Act (29 U.S.C. 1108(b)) is amended 

15 by adding at the end the following new paragraph: 

16 ‘‘(14) Any loan made by the plan to a disquali17 fied person who is a participant or beneficiary of the 

18 plan if such loan— 

19 ‘‘(A) is for the payment of health insur20 ance premiums or job training expenses, and 

21 ‘‘(B) meets the requirements of section 

22 206(i).’’. 

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

24 this section shall apply to loans made after the effective 

25 date specified in section 601. 
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1 SEC. 502. AUTOMATIC ROLLOVER UPON MANDATORY DIS2 TRIBUTION IN EXCESS OF $1,000. 

3 Section 206 of the Employee Retirement Income Se4 curity Act of 1974 (29 U.S.C. 1056) (as amended by sec5 tions 105, 201, and 501) is amended further by adding 

6 at the end the following new subsection: 

7 ‘‘(j) DIRECT TRANSFERS OF MANDATORY DISTRIBU8 TIONS IN EXCESS OF $1,000.— 

9 ‘‘(1) IN GENERAL.—A pension plan shall pro10 vide that, if— 

11 ‘‘(A) a distribution described in paragraph 

12 (2) is made, and 

13 ‘‘(B) the distributee does not elect to have 

14 such distribution paid directly to an eligible re15 tirement plan and does not elect to receive the 

16 distribution directly, 

17 the plan administrator shall make such transfer to 

18 an individual retirement plan of a designated trustee 

19 or issuer and shall notify the distributee in writing 

20 (either separately or as part of a notice required 

21 under section 402(f) of the Internal Revenue Code 

22 of 1986) that the distribution may be transferred to 

23 another individual retirement plan. 

24 ‘‘(2) DISTRIBUTION DESCRIBED.—A distribu25 tion from a plan is described in this paragraph if 

26 such distribution is an immediate distribution of the 
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1 entire nonforfeitable accrued benefit of the partici2 pant and is in excess of $1,000. 

3 ‘‘(3) DEFINITIONS.—For purposes of this sub4 section— 

5 ‘‘(A) ELIGIBLE RETIREMENT PLAN.—The 

6 term ‘eligible retirement plan’ has the meaning 

7 given such term by section 402(c)(8)(B) of the 

8 Internal Revenue Code of 1986, except that a 

9 qualified trust under section 401(a) of such 

10 Code shall be considered an eligible retirement 

11 plan only if it is a defined contribution plan, 

12 the terms of which permit the acceptance of 

13 rollover distributions. 

14 ‘‘(B) INDIVIDUAL RETIREMENT PLAN.— 

15 The term ‘individual retirement plan’ has the 

16 meaning given such term by section 

17 7701(a)(37) of the Internal Revenue Code of 

18 1986.’’. 

19 SEC. 503. PROMPT DISTRIBUTION FROM DEFINED CON20 TRIBUTION PLANS UPON TERMINATION OF 

21 PARTICIPANT’S COVERED EMPLOYMENT. 

22 Section 206(a) of the Employee Retirement Income 

23 Security Act of 1974 (29 U.S.C. 1056(a)) is amended— 
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1 (1) by redesignating paragraphs (1), (2), and 

2 (3) as subparagraphs (A), (B), and (C), respectively, 

3 and by inserting ‘‘(1)’’ after ‘‘(a)’’; 

4 (2) in the first sentence, by striking ‘‘pension 

5 plan’’ and inserting ‘‘defined benefit plan’’; 

6 (3) in the second sentence, by striking ‘‘In the 

7 case of a plan’’ and inserting ‘‘In the case of a de8 fined benefit plan’’; and 

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

10 paragraph: 

11 ‘‘(2)(A) Except as provided in subparagraph (B), 

12 each defined contribution plan shall provide that, unless 

13 the participant otherwise elects— 

14 ‘‘(i) the payment of benefits under the plan to 

15 the participant will begin not later than the 60th 

16 day after the close of the plan year in which occurs 

17 the date on which the participant attains the earlier 

18 of age 65 or the normal retirement age specified 

19 under the plan, and 

20 ‘‘(ii) in any case in which the participant termi21 nates his service with the employer prior to the date 

22 described in clause (i), the participant’s accrued ben23 efit shall be distributed, in the form of one or more 

24 rollover contributions under section 402(c), 

25 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of 
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1 the Internal Revenue Code of 1986, not later than 

2 the 60th day after the date of the participant’s ter3 mination of such service. 

4 ‘‘(B) In any case in which immediate valuation of the 

5 participant’s accrued benefit is not practicable, the plan 

6 may provide for a period of more than 60 days in lieu 

7 of the 60-day period described in clauses (i) and (ii) of 

8 subparagraph (A), except that any such longer period pro9 vided by the plan may not extend beyond 60 days after 

10 the applicable valuation date under the plan.’’. 

11 TITLE VI—GENERAL 

12 PROVISIONS 

13 SEC. 601. GENERAL EFFECTIVE DATE. 

14 (a) IN GENERAL.—Except as otherwise provided in 

15 this Act, and subject to subsection (b), the amendments 

16 made by this Act shall apply with respect to plan years 

17 beginning on or after January 1, 2006. 

18 (b) SPECIAL RULE FOR COLLECTIVELY BARGAINED

19 PLANS.—In the case of a plan maintained pursuant to 1 

20 or more collective bargaining agreements between em21 ployee representatives and 1 or more employers ratified 

22 on or before the date of the enactment of this Act, sub23 section (a) shall be applied to benefits pursuant to, and 

24 individuals covered by, any such agreement by substituting 
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1 for ‘‘January 1, 2002’’ the date of the commencement of 

2 the first plan year beginning on or after the earlier of— 

3 (1) the later of— 

4 (A) January 1, 2007, or 

5 (B) the date on which the last of such col6 lective bargaining agreements terminates (de7 termined without regard to any extension there8 of after the date of the enactment of this Act), 

9 or 

10 (2) January 1, 2008. 

11 SEC. 602. PLAN AMENDMENTS. 

12 If any amendment made by this Act requires an 

13 amendment to any plan, such plan amendment shall not 

14 be required to be made before the first plan year beginning 

15 on or after January 1, 2006, if— 

16 (1) during the period after such amendment 

17 made by this Act takes effect and before such first 

18 plan year, the plan is operated in accordance with 

19 the requirements of such amendment made by this 

20 Act, and 

21 (2) such plan amendment applies retroactively 

22 to the period after such amendment made by this 

23 Act takes effect and such first plan year. 

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