I 

111TH CONGRESS 

1ST SESSION H. R. 2779 

To amend the Internal Revenue Code of 1986 to provide transparency with 

respect to fees and expenses charged to participant-directed defined contribution plans, and to improve participant communication. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 9, 2009 

Mr. NEAL of Massachusetts (for himself, Mr. POMEROY, Mr. LARSON of Connecticut, Mr. CROWLEY, and Ms. SCHWARTZ) introduced the following 

bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

transparency with respect to fees and expenses charged 

to participant-directed defined contribution plans, and 

to improve participant communication. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Defined Contribution 

5 Plan Fee Transparency Act of 2009’’. 

6 SEC. 2. DISCLOSURE TO PARTICIPANTS. 

7 (a) IN GENERAL.—Chapter 43 of the Internal Rev8 enue Code of 1986 (relating to qualified pension, etc. 


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1 plans) is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 4980H. FAILURE TO PROVIDE NOTICE TO PARTICI4 PANTS OF PLAN FEE INFORMATION. 

5 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

6 a tax on the failure of any plan administrator of an appli7 cable defined contribution plan to meet the requirements 

8 of subsection (e) with respect to any participant or bene9 ficiary. 

10 ‘‘(b) AMOUNT OF TAX.— 

11 ‘‘(1) IN GENERAL.—The amount of the tax im12 posed by subsection (a) on any failure with respect 

13 to any participant or beneficiary shall be $100 for 

14 each day in the noncompliance period. 

15 ‘‘(2) NONCOMPLIANCE PERIOD.—For purposes 

16 of paragraph (1), the noncompliance period with re17 spect to a failure is the period beginning on the date 

18 the plan administrator failed to provide notice to 

19 participants and beneficiaries in accordance with 

20 subsection (e) and ending on the date the notice to 

21 which the failure relates is provided or the failure is 

22 otherwise corrected. 

23 ‘‘(3) SEPARATE TREATMENT OF VIOLATIONS.— 

24 For purposes of paragraph (1), each violation with 


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1 respect to any single participant or beneficiary shall 

2 be treated as a separate violation. 

3 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.— 

4 ‘‘(1) AGGREGATE LIMITATION.—The total 

5 amount of tax imposed by this section with respect 

6 to any plan for any plan year shall not exceed an 

7 amount equal to the lesser of— 

8 ‘‘(A) 10 percent of the assets of the plan, 

9 determined as of the first day of such plan 

10 year, and 

11 ‘‘(B) $500,000. 

12 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR13 RECTED WITHIN 90 DAYS.—No tax shall be imposed 

14 by subsection (a) on any failure if— 

15 ‘‘(A) any person subject to liability for the 

16 tax under subsection (a) exercised reasonable 

17 diligence to meet the requirements of subsection 

18 (e), and 

19 ‘‘(B) such person provides the notice de20 scribed in subsection (e) during the 90-day pe21 riod beginning on the date such person knew, or 

22 exercising reasonable diligence would have 

23 known, that such failure existed. 

24 ‘‘(3) RELIANCE.—To the extent any of the in25 formation required to be disclosed by a plan adminVerDate Nov 24 2008 05:31 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2779.IH H2779

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1 istrator under this section is given to the plan ad2 ministrator by a service provider, the plan adminis3 trator may rely on the completeness and accuracy of 

4 such information unless the plan administrator— 

5 ‘‘(A) knows, or has reason to know, that 

6 the information is inaccurate or incomplete, or 

7 ‘‘(B) has notice of facts or information 

8 that would prompt a reasonable plan adminis9 trator to inquire into the accuracy or complete10 ness of the information. 

11 ‘‘(4) WAIVER BY SECRETARY.—In the case of a 

12 failure which is due to reasonable cause and not to 

13 willful neglect, the Secretary shall waive part or all 

14 of the tax imposed by subsection (a) to the extent 

15 that the payment of such tax would be excessive or 

16 otherwise inequitable relative to the failure involved. 

17 ‘‘(d) LIABILITY FOR TAX.—The following shall be lia18 ble for the tax imposed by subsection (a): 

19 ‘‘(1) In the case of a plan other than a multi20 employer plan, the employer maintaining the plan. 

21 ‘‘(2) In the case of a multiemployer plan, the 

22 plan. 

23 ‘‘(e) NOTICE OF FEES AND EXPENSES TO PARTICI24 PANTS.— 


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

2 subsection are met if the plan administrator of an 

3 applicable defined contribution plan meets the re4 quirements of paragraphs (2), (3), (4), and (5). 

5 ‘‘(2) NOTICE OF INVESTMENT INFORMATION.— 

6 ‘‘(A) IN GENERAL.—A plan administrator 

7 meets the requirements of this paragraph if 

8 each employee eligible to participate is, a rea9 sonable time before the initial investment of any 

10 contribution made on behalf of such employee 

11 and at least annually thereafter, given an expla12 nation of the plan’s fees and expenses, the key 

13 characteristics of the plan’s designated invest14 ment alternatives, and an explanation of the 

15 manner for making elections among designated 

16 investment alternatives. 

17 ‘‘(B) REQUIREMENTS.—An explanation 

18 shall only be treated as satisfying the expla19 nation requirement of subparagraph (A) if such 

20 explanation provides a description, to the extent 

21 applicable, of the following: 

22 ‘‘(i) The designated investment alter23 natives available to a participant under the 

24 plan, the method for a participant to make 

25 investment elections, and an explanation of 


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1 any specified limitations on such elections 

2 under the documents and instruments gov3 erning the plan, including any restrictions 

4 on transfer to or from an investment alter5 native. 

6 ‘‘(ii) With respect to each designated 

7 investment alternative— 

8 ‘‘(I) a general description of the 

9 alternative’s investment objectives and 

10 principal investment strategies, prin11 cipal risk and return characteristics, 

12 and the name of the alternative’s in13 vestment manager, 

14 ‘‘(II) whether the alternative is 

15 actively managed or passively man16 aged in relation to an index and the 

17 difference between active management 

18 and passive management, 

19 ‘‘(III) whether the alternative is 

20 designed to be a comprehensive, 

21 stand-alone investment for retirement 

22 that provides varying degrees of long23 term appreciation and capital preser24 vation through a mix of equity and 

25 fixed income exposures, 


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1 ‘‘(IV) rates of return for the in2 vestment alternative over the imme3 diately preceding 1-, 5-, and 10-year 

4 periods (determined on either a cal5 endar or plan year basis), 

6 ‘‘(V) the name and returns of an 

7 appropriate broad-based securities 

8 market index over the preceding 1-, 

9 5-, and 10-year periods, which is not 

10 administered by the service provider 

11 or an affiliate thereof unless the index 

12 is widely recognized and used, and 

13 ‘‘(VI) fees and expenses in con14 nection with purchases or sales of in15 terests in the investment alternative, 

16 such as sales loads, sales charges, de17 ferred sales charges, redemption fees, 

18 surrender charges, exchange fees and 

19 other similar fees and expenses. 

20 ‘‘(iii) The annual total operating ex21 penses for each designated investment al22 ternative and, if applicable, a statement 

23 that the fees and expenses of the invest24 ment alternatives pay for services other 

25 than investment management. 


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1 ‘‘(iv) Annual fees and expenses for ad2 ministration and recordkeeping which are 

3 deducted from (or reduce the income of) 

4 participants’ or beneficiaries’ accounts and 

5 which are not reflected in clause (iii), in6 cluding a statement of the method used to 

7 allocate fees and expenses described in this 

8 clause to participants’ and beneficiaries’ 

9 accounts. 

10 ‘‘(v) The existence of fees and ex11 penses associated with participant-initiated 

12 transactions or services which may be de13 ducted from participants’ or beneficiaries’ 

14 accounts other than fees and expenses de15 scribed in clause (ii)(VI) and the method 

16 that participants and beneficiaries may uti17 lize to obtain additional information re18 garding such fees and expenses. 

19 ‘‘(vi) Fees and expenses which may be 

20 deducted from participants’ or bene21 ficiaries’ accounts and which are not re22 flected in clauses (iii), (iv), or (v). 

23 ‘‘(vii) A statement of where, and the 

24 manner in which, additional alternative25 specific and generally available investment 


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1 information may be obtained (such as an 

2 Internet Web site address). 

3 ‘‘(viii) A statement explaining that in4 vestment alternatives should be selected 

5 not only on the basis of the level of fees 

6 charged by each alternative but also on the 

7 basis of consideration of other key factors, 

8 including the alternative’s investment ob9 jective, level of risk, historic rates of return 

10 and the participant’s personal investment 

11 objective. 

12 ‘‘(3) NOTICE OF ACCOUNT CHARGES.— 

13 ‘‘(A) IN GENERAL.—A plan administrator 

14 meets the requirements of this paragraph if 

15 each participant and beneficiary is, at least 

16 once each calendar quarter, given an expla17 nation describing the investment alternatives in 

18 which the participant’s or beneficiary’s account 

19 is invested as of the last day of the preceding 

20 quarter and the key characteristics of such in21 vestment alternatives. 

22 ‘‘(B) REQUIREMENTS.—An explanation 

23 shall only be treated as satisfying the expla24 nation requirement of subparagraph (A) if such 

25 explanation provides a description, to the extent 


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1 applicable, of the following for the preceding 

2 quarter: 

3 ‘‘(i) As of the last day of the quarter, 

4 the different asset classes that the partici5 pant’s or beneficiary’s account is invested 

6 in and the percentage of the account allo7 cated to each asset class. 

8 ‘‘(ii) The total administration and rec9 ordkeeping fees and expenses described in 

10 paragraph (2)(B)(iv) which were deducted 

11 from the participant’s or beneficiary’s ac12 count during the quarter. 

13 ‘‘(iii) The total fees and expenses for 

14 participant-initiated transactions or serv15 ices described in paragraph (2)(B)(v) 

16 which were deducted from the participant’s 

17 or beneficiary’s account during the quar18 ter. 

19 ‘‘(iv) The total other fees and ex20 penses described in paragraph (2)(B)(vi) 

21 which were deducted from the participant’s 

22 or beneficiary’s account during the quar23 ter. 

24 ‘‘(v) With respect to each investment 

25 alternative in which the participant or benVerDate Nov 24 2008 05:31 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2779.IH H2779

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1 eficiary was invested as of the last day of 

2 the quarter, the following: 

3 ‘‘(I) The percentage of the par4 ticipant’s or beneficiary’s account that 

5 is invested in such alternative. 

6 ‘‘(II) Whether the investment al7 ternative is actively or passively man8 aged. 

9 ‘‘(III) A general statement of the 

10 investment alternative’s principal risk 

11 and return characteristics. 

12 ‘‘(IV) Total annual operating ex13 penses for the investment alternative. 

14 ‘‘(vi) Fees and expenses in connection 

15 with purchases or sales of interests in in16 vestment alternatives which have been de17 ducted from the participant’s or bene18 ficiary’s account during the quarter. 

19 ‘‘(vii) The statement described in 

20 paragraph (2)(B)(viii). 

21 ‘‘(viii) A statement regarding how a 

22 participant or beneficiary may access the 

23 information required to be disclosed under 

24 paragraph (2). 


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1 ‘‘(4) SERVICE PROVIDER DISCLOSURE.—The re2 quirements of this paragraph are met if the plan ad3 ministrator provides to participants and beneficiaries 

4 a copy of any statement received pursuant to section 

5 4980I within 30 days after receipt of a written re6 quest for such statement. 

7 ‘‘(5) NOTICE OF INVESTMENT MENU

8 CHANGES.—The requirements of this paragraph are 

9 met if, in advance of any change in the investment 

10 alternatives available under the plan, the plan ad11 ministrator provides the notice described in para12 graph (2) to affected participants and beneficiaries 

13 with respect to the change in investment alter14 natives. 

15 ‘‘(6) FORM OF FEE DISCLOSURE.—Fees and ex16 penses may be expressed as a dollar amount or as 

17 a percentage of assets (or a combination thereof). If 

18 fees and expenses are expressed (in part or in whole) 

19 as a percentage of assets, the disclosure shall include 

20 a generic example that illustrates how a charge that 

21 is expressed as a percentage of assets is assessed in 

22 dollars on an account balance. 

23 ‘‘(7) CERTAIN ESTIMATES PERMITTED.—A plan 

24 administrator shall not be treated as failing to sat25 isfy the requirements of paragraphs (2), (3), and (4) 


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1 solely because the plan administrator uses estimates 

2 of expenses and fees, or allocates fees and expenses 

3 among different fee classifications, in a manner that 

4 is reasonable and in good faith. For purposes of 

5 paragraph (3), an estimate shall be considered to be 

6 reasonable and in good faith if such estimate is 

7 based on fees and expenses as of the last day of the 

8 plan year immediately preceding the date the notice 

9 is provided or any subsequent date preceding the 

10 date the notice is provided. Nothing in this para11 graph shall be construed to require a plan adminis12 trator to use the same estimation methodology for 

13 every investment alternative. 

14 ‘‘(8) COMBINATION WITH OTHER NOTICES.—A 

15 plan shall not be treated as failing to satisfy the re16 quirements of paragraphs (2), (3), and (4) solely be17 cause the information is provided in combination 

18 with other plan communications or in more than one 

19 plan communication provided contemporaneously. 

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

21 prescribe model statements that may be used for 

22 purposes of satisfying the requirements of para23 graphs (2), (3), and (4). 

24 ‘‘(10) ANNUAL COMPLIANCE FOR SMALL

25 PLANS.—A plan that has fewer than 100 particiVerDate Nov 24 2008 05:31 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H2779.IH H2779

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1 pants and beneficiaries as of the first day of the 

2 plan year may provide the notice described in para3 graph (3) on an annual rather than a quarterly 

4 basis. 

5 ‘‘(11) CALENDAR YEAR TREATED AS PLAN

6 YEAR.—The Secretary shall allow a plan adminis7 trator to treat the calendar year as the plan year for 

8 purposes of paragraph (3). 

9 ‘‘(12) PLAIN LANGUAGE.—Explanations and 

10 notices under this subsection shall be provided in a 

11 manner which is easily understandable by the typical 

12 plan participant. 

13 ‘‘(13) REGULATIONS.—The Secretary shall 

14 issue regulations that permit plan administrators— 

15 ‘‘(A) in appropriate circumstances to pro16 vide the notice described in paragraph (2) after 

17 the initial contribution made on a participant’s 

18 behalf in the case of a plan that provides for 

19 automatic enrollment or immediate eligibility, 

20 and 

21 ‘‘(B) in appropriate circumstances to pro22 vide the notice described in paragraph (4) after 

23 the investment menu change is effective. 

24 ‘‘(f) DEFINITIONS.— 


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1 ‘‘(1) APPLICABLE DEFINED CONTRIBUTION

2 PLAN.—The term ‘applicable defined contribution 

3 plan’ means the portion of any defined contribution 

4 plan which— 

5 ‘‘(A) permits a participant or beneficiary 

6 to exercise control over assets in his or her ac7 count, and 

8 ‘‘(B) is described in clauses (iii) through 

9 (vi) of section 402(c)(8)(B). 

10 ‘‘(2) PLAN ADMINISTRATOR.—The term ‘plan 

11 administrator’ has the meaning given such term by 

12 section 414(g). 

13 ‘‘(g) REGULATORY AUTHORITY.—The Secretary shall 

14 issue regulations for purposes of this section, including 

15 regulations which— 

16 ‘‘(1) identify and establish separate rules, if 

17 necessary, for any investment options that provide a 

18 guaranteed rate of return and do not identify spe19 cific fees, and 

20 ‘‘(2) provide guidelines, and a safe harbor, for 

21 the selection of an appropriate broad-based securi22 ties market index for purposes of paragraph 

23 (2)(B)(ii)(V) for a designated investment alter24 native.’’. 


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1 (b) CLERICAL AMENDMENT.—The table of sections 

2 for chapter 43 of such Code is amended by adding at the 

3 end the following new item: 

‘‘Sec. 4980H. Failure to provide notice to participants of plan fee information.’’. 

4 SEC. 3. DISCLOSURE BETWEEN SERVICE PROVIDERS AND 

5 PLANS. 

6 (a) IN GENERAL.—Chapter 43 of the Internal Rev7 enue Code of 1986 (relating to qualified pension, etc. 

8 plans), as amended by section 2, is amended by adding 

9 at the end the following new section: 

10 ‘‘SEC. 4980I. FAILURE TO PROVIDE NOTICE OF PLAN FEE 

11 INFORMATION TO PLAN ADMINISTRATORS. 

12 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

13 a tax on any service provider that fails to meet the require14 ments of subsection (d) with respect to any applicable de15 fined contribution plan. 

16 ‘‘(b) AMOUNT OF TAX.— 

17 ‘‘(1) IN GENERAL.—The amount of the tax im18 posed by subsection (a) on any failure with respect 

19 to any applicable defined contribution plan shall be 

20 $1,000 for each day in the noncompliance period. 

21 ‘‘(2) NONCOMPLIANCE PERIOD.—For purposes 

22 of paragraph (1), the noncompliance period with re23 spect to a failure is the period beginning on the date 

24 the service provider failed to meet the requirements 


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1 of subsection (d) and ending on the date such re2 quirements to which the failure relates are met or 

3 the failure is otherwise corrected. 

4 ‘‘(3) SEPARATE TREATMENT OF VIOLATIONS.— 

5 For purposes of paragraph (1), each violation with 

6 respect to any applicable defined contribution plan 

7 shall be treated as a separate violation. 

8 ‘‘(c) LIMITATIONS.— 

9 ‘‘(1) AGGREGATE LIMITATION.—The total 

10 amount of tax imposed by this section on any service 

11 provider for any failure with respect to any applica12 ble defined contribution plan shall not exceed an 

13 amount equal to the lesser of— 

14 ‘‘(A) 10 percent of the assets of the plan, 

15 determined as of the first day of such plan 

16 year, and 

17 ‘‘(B) $1,000,000. 

18 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR19 RECTED WITHIN 90 DAYS.—No tax shall be imposed 

20 by subsection (a) on any failure if— 

21 ‘‘(A) the service provider subject to liability 

22 for the tax under subsection (a) exercised rea23 sonable diligence to meet the requirements of 

24 subsection (d), and 


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1 ‘‘(B) such service provider provides the no2 tice described in subsection (d) during the 90- 

3 day period beginning on the date such person 

4 knew, or exercising reasonable diligence would 

5 have known, that such failure existed. 

6 ‘‘(3) RELIANCE.—To the extent any of the in7 formation required to be disclosed by a service pro8 vider under this section is given to the service pro9 vider by a person that is not an affiliate of the serv10 ice provider, the service provider may rely on the 

11 completeness and accuracy of such information un12 less the service provider— 

13 ‘‘(A) knows, or has reason to know, that 

14 the information is inaccurate or incomplete, or 

15 ‘‘(B) has notice of facts or information 

16 that would prompt a reasonable service provider 

17 to inquire into the accuracy or completeness of 

18 the information. 

19 ‘‘(4) WAIVER BY SECRETARY.—In the case of a 

20 failure which is due to reasonable cause and not to 

21 willful neglect, the Secretary may waive part or all 

22 of the tax imposed by subsection (a) to the extent 

23 that the payment of such tax would be excessive or 

24 otherwise inequitable relative to the failure involved. 


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1 ‘‘(5) SMALL SERVICE PROVIDERS.—This section 

2 shall apply with respect to any service provider for 

3 a plan year only if the total fees and compensation 

4 received directly or indirectly by the service provider, 

5 its affiliates and any subcontractor of the service 

6 provider in connection with the services arrangement 

7 is reasonably expected to equal or exceed $5,000. 

8 ‘‘(6) LIMITATION ON SCOPE.—Nothing in this 

9 section shall be construed to require any service pro10 vider to provide any services with respect to any par11 ticular plan. 

12 ‘‘(d) NOTICE OF FEES AND EXPENSES.— 

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

14 subsection are met if the service provider meets the 

15 requirements of paragraphs (2) and (3). 

16 ‘‘(2) INITIAL DISCLOSURE.—A service provider 

17 meets the requirements of this paragraph if the serv18 ice provider, prior to entering into (or materially 

19 modifying) a contract with a plan for the provision 

20 of plan services, provides the plan administrator 

21 with the following, in writing: 

22 ‘‘(A) An estimate of— 

23 ‘‘(i) the total fees and expenses ex24 pected to be paid by the plan under the 

25 contract, including itemization of the folVerDate Nov 24 2008 05:31 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6201 E:\BILLS\H2779.IH H2779

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1 lowing components in the case of a con2 tract that provides for both investment 

3 management and administration and rec4 ordkeeping, 

5 ‘‘(ii) the annual fees and expenses at6 tributable to investment management, and 

7 ‘‘(iii) the annual fees and expenses at8 tributable to plan administration and rec9 ordkeeping. 

10 ‘‘(B) A detailed and itemized list of the 

11 services to be provided by the service provider, 

12 its affiliates, and any subcontractors under the 

13 contract. 

14 ‘‘(C) A schedule of fees and expenses asso15 ciated with participant-initiated transactions or 

16 services which may be deducted from partici17 pants’ or beneficiaries’ accounts. 

18 ‘‘(D) A statement of whether the service 

19 provider reasonably expects to remit fees and 

20 expenses expected to be paid by the plan under 

21 the contract, including commissions, finders 

22 fees, sales loads and charges, to one or more 

23 third-party service providers or intermediaries 

24 and, if so, a statement of the amount expected 


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1 to be paid to each such third party and the 

2 identity of each such third party. 

3 ‘‘(E) A statement of whether the service 

4 provider expects to receive compensation from a 

5 source other than the plan or plan sponsor in 

6 connection with the services provided to the 

7 plan and, if so, a statement of the amount ex8 pected to be received from each such source and 

9 the identity of each such source. 

10 ‘‘(F) A statement of whether the service 

11 provider (or any affiliate thereof) may benefit 

12 from the offering of its own proprietary invest13 ment products or those of third parties. 

14 ‘‘(G) To the extent applicable, a statement 

15 that the investment options available to the 

16 plan may be offered at different price levels to 

17 parties other than the plan. 

18 ‘‘(3) PERIODIC DISCLOSURE.—A service pro19 vider meets the requirements of this paragraph if 

20 the service provider, by the due date for filing the 

21 section 6058 annual return for the plan year (deter22 mined without regard to extensions), provides a writ23 ten statement of the following: 

24 ‘‘(A) Fees and expenses paid by the plan 

25 to the service provider under the arrangement 


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1 during the plan year, including itemization of 

2 the components described in subparagraphs (A) 

3 and (D) of paragraph (2). 

4 ‘‘(B) The amount of any compensation re5 ceived by the service provider during the plan 

6 year from each source other than the plan or 

7 plan sponsor in connection with the services 

8 provided to the plan by the service provider and 

9 the identity of each such source. 

10 ‘‘(4) FORM OF FEE DISCLOSURE.—Fees and ex11 penses may be expressed as a dollar amount or as 

12 a percentage of assets (or a combination thereof). 

13 ‘‘(5) CERTAIN ESTIMATES PERMITTED.—A 

14 service provider shall not be treated as failing to sat15 isfy the requirements of this subsection solely be16 cause— 

17 ‘‘(A) the service provider that does not 

18 separately price services attributable to the 

19 components described in subparagraph (A) of 

20 paragraph (2) allocates fees and expenses 

21 among such components in a manner that is 

22 reasonable and in good faith, 

23 ‘‘(B) the service provider uses estimates of 

24 expenses, fees and compensation if the service 

25 provider discloses the basis for such estimates if 


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1 such estimates are made in a manner that is 

2 reasonable and in good faith, or 

3 ‘‘(C) the service provider discloses amounts 

4 under subparagraphs (D) and (E) of paragraph 

5 (2) only to the extent that such amounts are 

6 expected to exceed $5,000 for the plan year. 

7 ‘‘(6) ALTERNATIVE METHOD OF COMPLI8 ANCE.—A service provider shall not be treated as 

9 failing to satisfy the requirements of paragraph (2) 

10 if disclosure is made on the basis of calendar years. 

11 ‘‘(7) PLAIN LANGUAGE.—Disclosures under this 

12 subsection shall be presesnted in a format which is 

13 easily understandable by the typical plan adminis14 trator. 

15 ‘‘(8) REGULATORY AUTHORITY.—The Secretary 

16 shall issue regulations to carry out this subsection, 

17 including regulations addressing the appropriate 

18 classification of fees and expenses under subpara19 graph (A) of paragraph (2). Such regulations shall 

20 include safe harbor methods for the allocation of ex21 penses under subparagraph (A) of paragraph (2) 

22 under which service providers will be treated as hav23 ing reasonably allocated fees and expenses but such 

24 safe harbor methods shall not be the exclusive meth25 ods for the allocation of expenses. 


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

2 ‘‘(1) APPLICABLE DEFINED CONTRIBUTION

3 PLAN.—The term ‘applicable defined contribution 

4 plan’ means any defined contribution plan described 

5 in clauses (iii) through (vi) of section 402(c)(8)(B). 

6 ‘‘(2) SERVICE PROVIDER.—The term ‘service 

7 provider’ means any person providing services to a 

8 plan under a contract. For this purpose, all corpora9 tions that provide services to a plan and are mem10 bers of a controlled group of corporations within the 

11 meaning of section 1563(a) (determined without re12 gard to subsections (a)(4) and (e)(3)(C) thereof) 

13 shall be treated as a single service provider.’’. 

14 (b) CLERICAL AMENDMENT.—The table of sections 

15 for chapter 43 of such Code, as so amended, is amended 

16 by adding at the end the following new item: 

‘‘Sec. 4980I. Failure to provide notice of plan fee information to plan administrators.’’. 

17 SEC. 4. METHOD OF PROVIDING REQUIRED NOTICES AND 

18 DISCLOSURES. 

19 (a) DIRECTIVE TO TREASURY.—The Secretary of the 

20 Treasury shall issue final regulations no later than 6 

21 months after the date of enactment of this Act under 

22 which an applicable notice shall be treated as provided in 

23 writing or in written form if— 


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1 (1) the applicable notice is posted on a secure 

2 Internet Web site that is accessible to the partici3 pant or beneficiary, 

4 (2) a notice of the availability of such applicable 

5 notice is provided in writing or in a manner that sat6 isfies Treasury regulation section 1.401(a)–21 at the 

7 same time that the applicable notice is otherwise re8 quired, and 

9 (3) the notice of availability advises the recipi10 ent that he or she may request and receive the appli11 cable notice in writing on paper at no charge and, 

12 upon request, the applicable notice is provided in 

13 writing on paper to the recipient at no charge. 

14 (b) APPLICABLE NOTICE.—The term ‘‘applicable no15 tice’’ includes any notice, report, statement, or other docu16 ment required to be provided to a recipient under the fol17 lowing types of retirement plans: a qualified retirement 

18 plan under section 401(a) or 403(a) of the Internal Rev19 enue Code of 1986; a section 403(b) plan under such 

20 Code; a simplified employee pension (SEP) under section 

21 408(k) of such Code; a simple retirement plan under sec22 tion 408(p) of such Code; and an eligible governmental 

23 plan under section 457(b) of such Code. 


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26 

•HR 2779 IH

1 SEC. 5. EFFECTIVE DATE. 

2 (a) IN GENERAL.—The amendments made by this 

3 Act shall apply to plan years beginning after one year 

4 after the date of the enactment of this Act. 

5 (b) FINAL REGULATIONS.—The Secretary of the 

6 Treasury shall issue final regulations to carry out the 

7 amendments made by this Act not later than December 

8 31, 2010. 

Æ 


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