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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2989 Reported in House (RH)]

                                                 Union Calendar No. 289
111th CONGRESS
  2d Session
                                H. R. 2989

                      [Report No. 111-244, Part I]

To amend the Employee Retirement Income Security Act of 1974 to provide 
special reporting and disclosure rules for individual account plans and 
 to provide a minimum investment option requirement for such plans, to 
    amend such Act to provide for independent investment advice for 
 participants and beneficiaries under individual account plans, and to 
    amend such Act and the Internal Revenue Code of 1986 to provide 
 transitional relief under certain pension funding rules added by the 
                    Pension Protection Act of 2006.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 23, 2009

     Mr. George Miller of California (for himself and Mr. Andrews) 
 introduced the following bill; which was referred to the Committee on 
   Education and Labor, and in addition to the Committee on Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

                             July 31, 2009

  Reported from the Committee on Education and Labor with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                             July 31, 2009

   Referral to the Committee on Ways and Means extended for a period 
                 ending not later than October 16, 2009

                            October 16, 2009

   Referral to the Committee on Ways and Means extended for a period 
                ending not later than Novermber 13, 2009

                           November 13, 2009

   Referral to the Committee on Ways and Means extended for a period 
                ending not later than December 11, 2009

                           December 11, 2009

   Referral to the Committee on Ways and Means extended for a period 
                 ending not later than January 19, 2010

                            January 19, 2010

   Referral to the Committee on Ways and Means extended for a period 
                ending not later than February 26, 2010

                           February 26, 2010

   Referral to the Committee on Ways and Means extended for a period 
                  ending not later than March 26, 2010

                             March 26, 2010

   Referral to the Committee on Ways and Means extended for a period 
                  ending not later than April 30, 2010

                             April 30, 2010

   Referral to the Committee on Ways and Means extended for a period 
                   ending not later than May 28, 2010

                              May 28, 2010

                   Additional sponsor: Mr. McDermott

                              May 28, 2010

 Committee on Ways and Means discharged; committed to the Committee of 
  the Whole House on the State of the Union and ordered to be printed
 [For text of introduced bill, see copy of bill as introduced on June 
                               23, 2009]

_______________________________________________________________________

                                 A BILL

 
To amend the Employee Retirement Income Security Act of 1974 to provide 
special reporting and disclosure rules for individual account plans and 
 to provide a minimum investment option requirement for such plans, to 
    amend such Act to provide for independent investment advice for 
 participants and beneficiaries under individual account plans, and to 
    amend such Act and the Internal Revenue Code of 1986 to provide 
 transitional relief under certain pension funding rules added by the 
                    Pension Protection Act of 2006.

 

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``401(k) Fair 
Disclosure and Pension Security Act of 2009''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.

             TITLE I--401(k) FAIR DISCLOSURE FOR RETIREMENT

Sec. 101. Special reporting and disclosure rules for individual account 
                            plans.
Sec. 102. Minimum investment option requirement for individual account 
                            plans.
Sec. 103. Enforcement coordination and review by the Department of 
                            Labor.

         TITLE II--PROHIBITION OF CONFLICTED INVESTMENT ADVICE

Sec. 201. Findings.
Sec. 202. Independent investment advisers for individual account plans.
Sec. 203. Expansion of outreach to promote retirement income savings to 
                            include promotion of education on financial 
                            literacy with respect to investment for 
                            retirement.

    TITLE III--TRANSITIONAL FUNDING RELIEF FOR DEFINED BENEFIT PLANS

Sec. 301. Election to use yield curve.
Sec. 302. Effective date of regulations.
Sec. 303. Clarification of treatment of expenses.
Sec. 304. Information reporting.
Sec. 305. 5-year extension of automatic amortization extension period 
                            for multiemployer plans.
Sec. 306. Pension plan maintained by Christian Schools International 
                            treated as church plan.
Sec. 307. Special rule for determining adequate consideration in 
                            connection with the purchase and sale of 
                            qualifying employer securities.
Sec. 308. Extended period for single-employer defined benefit plans to 
                            amortize the shortfall amortization base 
                            for 2009 and 2010.

             TITLE I--401(k) FAIR DISCLOSURE FOR RETIREMENT

SEC. 101. SPECIAL REPORTING AND DISCLOSURE RULES FOR INDIVIDUAL ACCOUNT 
              PLANS.

    (a) Additional Reporting and Disclosure Rules.--Part 1 of subtitle 
B of title I of the Employee Retirement Income Security Act of 1974 is 
amended--
            (1) by redesignating section 111 (29 U.S.C. 1031) as 
        section 112; and
            (2) by inserting after section 110 (29 U.S.C. 1030) the 
        following new section:

``SEC. 111. SPECIAL REPORTING AND DISCLOSURE RULES FOR INDIVIDUAL 
              ACCOUNT PLANS.

    ``(a) Disclosure to Employers Sponsoring Individual Account Plans 
Regarding Services Necessary for Establishment or Operation of Plans.--
            ``(1) Service disclosure statement.--The plan administrator 
        of an individual account plan (or any other plan official with 
        contracting authority under the terms of the plan) may not 
        enter into a contract or arrangement for services to the plan 
        (including, for purposes of this section, the offering of any 
        investment option to the plan) unless such plan administrator 
        or other official has received, reasonably in advance of 
        entering into the contract or arrangement, a single written 
        statement from the service provider which--
                    ``(A) specifies such services for the plan that 
                will be provided in connection with the contract or 
                arrangement, and
                    ``(B) provides the expected total annual charges 
                for such services for the plan that will be provided in 
                connection with the contract or arrangement, including 
                a reasonable allocation of such total annual charges 
                among all relevant component charges specified in 
                paragraph (2) (regardless of how the charges are 
                actually assessed).
        The description of the services and specification of the 
        charges for the services shall be displayed prominently in the 
        written statement and shall be presented in a format which is 
        understandable to the typical plan administrator.
            ``(2) Minimum allocation requirements.--The allocation 
        required under paragraph (1)(B) in connection with the services 
        provided under each contract or arrangement shall specify 
        component charges (to the extent such services for the plan are 
        provided under the contract or arrangement) as follows:
                    ``(A) charges for administration and recordkeeping,
                    ``(B) transaction based charges,
                    ``(C) charges for investment management, and
                    ``(D) all such charges not described in 
                subparagraph (A), (B), or (C).
        The Secretary may by regulation provide for the appropriate 
        allocation of component charges among the categories of charges 
        provided in subparagraphs (A), (B), (C), and (D).
            ``(3) Presentation of charges.--The total charges described 
        in paragraph (2)(A) and the total charges described in 
        paragraph (2)(C) shall each be presented in the written 
        statement as an aggregate total dollar amount, and, in 
        addition, each of such total charges may also be presented as a 
        percentage of assets. The charges described in paragraph (2)(B) 
        shall be itemized separately as dollar amounts or as 
        percentages of the applicable base amounts.
            ``(4) Estimations.--For purposes of providing the statement 
        required under this subsection in connection with any service, 
        the service provider may provide a reasonable and 
        representative estimate of the charges required to be specified 
        under paragraph (1)(B) and shall indicate any such estimate as 
        being such an estimate. Any such estimate shall be based on 
        reasonable assumptions specified in the statement (which shall 
        include the previous year's experience of the plan or, in the 
        case of a new plan, a reasonable estimate, taking into account 
        the plan's participants and beneficiaries).
            ``(5) Disclosure of financial relationships.--
                    ``(A) In general.--The statement required under 
                paragraph (1) shall include a written disclosure of--
                            ``(i) any payment to be provided (or the 
                        amount representing the value of any services 
                        to be provided) to the service provider (or any 
                        affiliate thereof) from any entity other than 
                        the plan or the accounts of participants or 
                        beneficiaries pursuant to, or in connection 
                        with, the contract or arrangement described in 
                        paragraph (1) and the amount and type of any 
                        payment to be made or credit to be received for 
                        such services (irrespective of whether the 
                        service provider (or affiliate thereof) or 
                        other person providing such services is 
                        affiliated or unaffiliated with the plan, the 
                        plan sponsor, the plan administrator, or any 
                        other plan official), and
                            ``(ii) such other similar arrangements 
                        benefitting the service provider (or any 
                        affiliate thereof) as may be specified by the 
                        Secretary.
                In any case in which the contract or arrangement 
                described in paragraph (1) provides for the payments 
                described in clause (i) in terms of a formula, the 
                requirements of such clause may be met by specifying 
                the formula to be used in connection with such payments 
                and describing the application of such formula.
                    ``(B) Inclusions.--
                            ``(i) In general.--Disclosures described 
                        under subparagraph (A)(ii) shall include the 
                        extent to which the service provider (or any 
                        affiliate thereof) may benefit from the 
                        offering of its own proprietary investment 
                        products or those of third parties, including 
                        (but not limited to) cross-selling of 
                        affiliated products or services to the plan 
                        sponsor or participants.
                            ``(ii) Applicable prohibited transaction 
                        exemption.--Disclosures under this paragraph 
                        may include a description of any applicable 
                        prohibited transaction exemption under section 
                        408 related to the services described in the 
                        statement required under paragraph (1).
            ``(6) Disclosure of impact of share classes.--The statement 
        required under paragraph (1) shall, to the extent applicable, 
        disclose that the share prices of certain mutual fund 
        investments that are available to the plan may be different 
        from the share prices outside of the plan due to the existence 
        of different share classes and provide the basis for these 
        differences.
            ``(7) Disclosure of certain arrangements in connection with 
        free or discounted services or reimbursements by service 
        providers.--In any case in which services are provided to the 
        plan, or to the plan sponsor in connection with the plan, by 
        any service provider without explicit charge or for charges set 
        at a discounted rate or subject to rebate, the statement 
        required under paragraph (1) shall specify the manner in which, 
        the extent to which, and the amount by which consideration is 
        otherwise obtained by the service provider (or any affiliate 
        thereof), the plan, or the plan sponsor for such services, 
        directly or indirectly, by means of any charges against the 
        plan.
            ``(8) Review by the secretary.--The Secretary shall, from 
        time to time as determined appropriate by the Secretary, review 
        the accuracy and sufficiency of statements provided pursuant to 
        this subsection.
            ``(9) Updating.--Each service provider shall provide to the 
        plan administrator an updated written statement described in 
        paragraph (1) describing any material change in the information 
        included in the statement provided pursuant to paragraph (1) as 
        soon as is reasonable after the occurrence of the change is 
        known. Such an updated written statement, or, in the case of a 
        plan year in which no material change in the information 
        included in the statement provided pursuant to paragraph (1) 
        has occurred, a written statement setting forth such fact, 
        shall be provided by the service provider not less often than 
        annually.
            ``(10) Limitations.--
                    ``(A) Dollar limitation.--
                            ``(i) In general.--The requirements of this 
                        subsection shall apply with respect to any 
                        contract or arrangement for services provided 
                        during any plan year only if the total charged 
                        for such services under such contract or 
                        arrangement is reasonably expected to equal or 
                        exceed $5,000.
                            ``(ii) Adjustments by the secretary.--The 
                        Secretary may be regulation adjust the dollar 
                        amount specified in this subparagraph to a 
                        lesser amount for small plans and to a greater 
                        amount for other plans and provide for 
                        appropriate annual adjustments in such adjusted 
                        amounts
                    ``(B) General applicability of requirements with 
                respect to services.--Nothing in this subsection shall 
                be construed to require any service provider to provide 
                any service with respect to any particular plan 
                sponsor.
            ``(11) Satisfaction of fiduciary rules.--Nothing in the 
        preceding provisions of this subsection affects the obligations 
        of fiduciaries under part 4 of this subtitle.
    ``(b) Disclosures to Participants and Beneficiaries.--
            ``(1) Advance notice of available investment options.--The 
        plan administrator of an individual account plan that permits 
        participants or beneficiaries to direct the investment of 
        assets in their individual accounts shall provide to the 
        participant or beneficiary notice of the investment options 
        available for election under the plan before a reasonable 
        period prior to--
                    ``(A) the earliest date provided for under the plan 
                for the participant's initial investment of any 
                contribution made on behalf of such participant, and
                    ``(B) the effective date of any material change in 
                investment options.
        In the case of a plan that provides for immediate eligibility 
        or that contains an automatic contribution arrangement (as 
        defined in subparagraphs (A) and (B) of section 514(e)(2)), the 
        notice required under subparagraph (A) may be provided within 
        any reasonable period prior to such initial investment. With 
        respect to any notice required under this paragraph, the 
        Secretary shall prescribe regulations creating specific 
        requirements for periods of advance notice to be treated as 
        reasonable under this paragraph (of not less than 10 days) in 
        circumstances similar to those described in section 
        101(i)(2)(C), and such notice may be combined with any similar 
        notice that may be required under section 404(c)(5) or under 
        this section.
            ``(2) Information included in notice.--The notice required 
        under paragraph (1) shall--
                    ``(A) include a prominent statement, in language 
                presented in a manner which is easily understandable by 
                the typical participant, indicating which components of 
                the charges (both direct and indirect) for each 
                investment option are payable by the participant or 
                beneficiary and how such components are to be paid,
                    ``(B) set forth, with respect to each available 
                investment option--
                            ``(i) the name of the option,
                            ``(ii) information effectively describing 
                        the investment objectives of the option (such 
                        as a description of a broadly recognized asset 
                        class),
                            ``(iii) the risk level associated with the 
                        option,
                            ``(iv) whether the option is diversified 
                        among various classes of assets so as to 
                        minimize the risk of large losses or should be 
                        combined with other options so as to obtain 
                        such diversification,
                            ``(v) whether the investment option is 
                        actively managed or passively managed in 
                        relation to an index and the difference between 
                        active management and passive management,
                            ``(vi) where, and the manner in which, 
                        additional plan-specific, option-specific, and 
                        generally available investment information 
                        regarding the option may be obtained, and
                            ``(vii) a statement explaining that 
                        investment options should not be evaluated 
                        solely on the basis of the charges for each 
                        option but should also be based on careful 
                        consideration of other key factors, including 
                        the risk level of the option, the investment 
                        objectives of the option, the principal 
                        investment strategies of the option, and 
                        historical returns of the option, and
                    ``(C) include a plan fee comparison chart, relating 
                to the charges described in paragraph (3) in connection 
                with all investment options available under the plan, 
                as provided in paragraph (3).
            ``(3) Plan fee comparison chart.--
                    ``(A) In general.--
                            ``(i) In general.--The notice provided 
                        under this subsection shall include a plan fee 
                        comparison chart consisting of a comparison of 
                        actual service and investment charges 
                        (including, for purposes of this clause, 
                        charges for the offering of an investment 
                        option) that will or could be assessed against 
                        the account of the participant or beneficiary 
                        with respect to the plan year. The plan fee 
                        comparison chart shall be presented in a manner 
                        which is easily understood by the typical 
                        participant and include such information as the 
                        Secretary determines necessary to permit 
                        participants and beneficiaries to assess the 
                        services for which charges will or could be 
                        assessed against the account.
                            ``(ii) Form.--For purposes of this 
                        paragraph, the potential service charges shall 
                        be provided in the form of a dollar amount or 
                        as a formula (such as a percentage of assets), 
                        as appropriate. The form of the potential 
                        service charges shall be presented in a manner 
                        which is easily understandable by the typical 
                        participant, including examples that 
                        demonstrate how the charges will be assessed 
                        against the account of the participant or 
                        beneficiary.
                    ``(B) Categorization of charges.--The plan fee 
                comparison chart shall provide information in relation 
                to the following categories of charges that will or 
                could be assessed against the account of the 
                participant or beneficiary:
                            ``(i) Asset-based charges specific to 
                        investment.--Charges that vary depending on the 
                        investment options selected by the participant 
                        or beneficiary, including expense ratios and 
                        investment-specific asset-based charges. The 
                        information relating to such charges shall 
                        include a statement noting any charges for 1 or 
                        more investment options which pay for services 
                        other than investment management.
                            ``(ii) Asset-based charges not specific to 
                        investment.--Charges that are assessed as a 
                        percentage of the total assets in the account 
                        of the participant or beneficiary, regardless 
                        of the investment option selected.
                            ``(iii) Administrative and transaction-
                        based charges.--Administration and transaction-
                        based charges, including fees charged to 
                        participants to cover plan administration, 
                        compliance, and recordkeeping costs, plan loan 
                        origination fees, possible redemption fees, and 
                        possible surrender charges, that are not 
                        assessed as a percentage of the total assets in 
                        the account and are either automatically 
                        deducted each year or result from certain 
                        transactions engaged in by the participant or 
                        beneficiary.
                            ``(iv) Other charges.--Any other charges 
                        which may be deducted from participants' or 
                        beneficiaries' accounts and which are not 
                        described in clauses (i), (ii), and (iii).
                    ``(C) Description of purpose for charges.--The 
                notice shall indicate the extent to which each charge 
                is for investment management, transactions, plan 
                administration and recordkeeping, or other identified 
                services.
                    ``(D) Fees and historical returns.--In connection 
                with each investment option listed in the plan fee 
                comparison chart, the chart shall also include, as 
                determined periodically by the Secretary in 
                consultation with the Securities and Exchange 
                Commission, appropriate and consistent benchmarks, 
                indices, or other points of comparison that may be used 
                by beneficiaries to compare each investment option's 
                historical returns, net of fees and expenses, for the 
                previous year, 5 years, and 10 years (or for the period 
                since inception, if shorter) as shown in the chart 
                pursuant to this paragraph, including a separate point 
                of comparison with respect to each such time period.
            ``(4) Model notices.--The Secretary shall prescribe one or 
        more model notices that may be used for purposes of satisfying 
        the requirements of this subsection, including model plan fee 
        comparison charts.
            ``(5) Estimations.--For purposes of providing the notice 
        required under this subsection, the plan administrator may 
        provide a reasonable and representative estimate for any 
        charges or percentages disclosed under paragraph (2) or (3) and 
        shall indicate any such estimate as being such an estimate. Any 
        such estimate shall be based on reasonable assumptions stated 
        in the notice (such as the previous year's experience or, in 
        the case of a new plan, a reasonable estimate, taking into 
        account the plan's participants and beneficiaries).
    ``(c) Electronic Media.--Any disclosure required under this section 
may be provided through an electronic medium under such rules as shall 
be prescribed by the Secretary not later than 1 year after the date of 
the enactment of the 401(k) Fair Disclosure and Pension Security Act of 
2009. Such rules shall be similar to those applicable under the 
Internal Revenue Code of 1986 with respect to notices to participants 
in pension plans. The Secretary shall regularly modify such rules as 
appropriate to take into account new developments, including new forms 
of electronic media, and to fairly take into consideration the 
interests of plan sponsors, service providers, and participants. The 
rules prescribed by the Secretary pursuant to this subsection shall 
provide for a method for the typical participant or beneficiary to 
obtain without undue burden any such disclosure in writing on paper in 
lieu of receipt through an electronic medium.
    ``(d) Regulations Regarding Certain Products.--The Secretary may by 
regulation identify certain types of investment options, such as an 
option that provides a guaranteed rate of return and that does not 
identify specific fees, and prescribe alternative disclosures of cost 
and performance measures that correspond to the particular 
circumstances of such options.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Charge.--The term `charge' means, in connection with 
        any service provided to a plan or any financial product 
        provided to the plan in which plan assets are to be invested, 
        any fee, credit, or other compensation charged or paid for such 
        service or product, including money and any other thing of 
        monetary value to be received by the provider of the service or 
        product, or its affiliate, in connection with the service or 
        product.
            ``(2) Service.--The term `service' means, in connection 
        with a plan, a service provided directly or indirectly to, or 
        with respect to, the plan or a service provided directly or 
        indirectly in connection with a financial product in which plan 
        assets are to be invested.
            ``(3) Contract or arrangement.--The term `contract or 
        arrangement' means, in connection with any 2 or more parties, 
        any contract or arrangement entered into between or among such 
        parties, and any extension or renewal thereof.
            ``(4) Service provider.--The terms `service provider' and 
        `provider' mean, in connection with a service, a person 
        directly or indirectly providing such service.
            ``(5) Regulations.--The Secretary shall provide by 
        regulation such definitions of other terms used in this section 
        as the Secretary determines appropriate.''.
    (b) Quarterly Benefit Statements.--Section 105 of such Act (29 
U.S.C. 1025) is amended--
            (1) in subsection (a)(2)--
                    (A) by redesignating subparagraph (C) as 
                subparagraph (H);
                    (B) in subparagraph (B)(ii)--
                            (i) in subclause (II), by striking 
                        ``diversified, and'' and inserting 
                        ``diversified,'';
                            (ii) in subclause (III), by striking the 
                        period and inserting ``, and'';
                            (iii) by adding after subclause (III) the 
                        following new subclause:
                                    ``(IV) with respect to the portion 
                                of a participant's account for which 
                                the participant has the right to direct 
                                the investment of assets, the 
                                information described in subparagraph 
                                (C).''; and
                    (C) by inserting after subparagraph (B) the 
                following new subparagraphs:
                    ``(C) Periodic account information for participants 
                and beneficiaries.--For purposes of subparagraph 
                (B)(ii)(IV), the information described in this 
                subparagraph consists of the following, indicating the 
                portion of each amount described in clauses (i) though 
                (vii) attributable to each investment option elected in 
                connection with the participant's account:
                            ``(i) the starting balance of the 
                        participant's account,
                            ``(ii) contributions made during the 
                        quarter, itemizing separately totals for 
                        employer and totals for employee contributions,
                            ``(iii) investment earnings or losses on 
                        the account balance during the quarter (if 
                        any),
                            ``(iv) actual or estimated charges (within 
                        the meaning of section 111(e)(1)) which reduce 
                        the account during the quarter, expressed in 
                        dollars or, if estimated, such estimated dollar 
                        charges as are derived from an expense ratio 
                        (which may be expressed as a specific date 
                        estimate based on reasonable assumptions stated 
                        in the disclosure (such as the previous year's 
                        expense ratio).
                            ``(v) any other direct charges to the 
                        participant or beneficiary in connection with 
                        the participant's account,
                            ``(vi) the ending balance of the account,
                            ``(vii) the participant's asset allocation 
                        to each investment option, expressed as an 
                        amount and as a percentage, and
                            ``(viii) how to obtain the most recently 
                        updated version of the plan fee comparison 
                        chart prepared for purposes of section 
                        111(b)(3).
                    ``(D) Other information.--The plan administrator 
                may include in the quarterly pension benefit statement 
                information relating to the historical return and risk 
                of each investment option and the estimated amount that 
                the participant needs to contribute each month or year 
                so as to retire at retirement age (as defined in 
                section 216(l) of the Social Security Act).
                    ``(E) Estimations.--For purposes of making the 
                disclosure of actual charges or percentages as required 
                under this paragraph, the plan administrator may 
                provide a reasonable and representative estimate of 
                such charges or percentages and shall indicate any such 
                estimate as being such an estimate. Any such estimate 
                shall be based on reasonable assumptions included in 
                the statement (such as the previous year's experience).
                    ``(F) Model statements.--The Secretary shall 
                prescribe one or more model pension benefit statements 
                that may be used for purposes of satisfying the 
                requirements of subparagraphs (B)(ii) and (C).
                    ``(G) Annual compliance for small plans and with 
                respect to certain information.--In the case of a plan 
                providing for investment as described in paragraph 
                (1)(A)(i)--
                            ``(i) if the plan has 100 or fewer 
                        participants and beneficiaries, the plan may 
                        provide the pension benefit statement under 
                        paragraph (1) on an annual rather than a 
                        quarterly basis, and
                            ``(ii) the plan may comply with the 
                        requirements of subparagraph (B)(ii)(IV) on an 
                        annual rather than a quarterly basis.''; and
            (2) by adding at the end the following new subsections:
    ``(d) Assistance to Small Employers.--The Secretary shall make 
available to employers with 100 or fewer employees--
            ``(1) educational and compliance materials designed to 
        assist such employers in selecting and monitoring service 
        providers for individual account plans which permit a 
        participant or beneficiary to exercise control over the assets 
        in the account of the participant or beneficiary, investment 
        options under such plans, and charges relating to such options, 
        and
            ``(2) services designed to assist such employers in finding 
        and understanding affordable investment options for such plans 
        and in comparing the investment performance of, and charges 
        for, such options on an ongoing basis against appropriate 
        benchmarks or other appropriate measures.
    ``(e) Assistance to Plan Sponsors and Plan Participants and 
Beneficiaries.--The Secretary shall provide assistance to plan sponsors 
of individual account plans and participants and beneficiaries under 
such plans with any questions or problems regarding compliance with the 
requirements of this section.
    ``(f) Electronic Media.--Any disclosure required under this section 
may be provided through an electronic medium under such rules as shall 
be prescribed by the Secretary not later than 1 year after the date of 
the enactment of the 401(k) Fair Disclosure and Pension Security Act of 
2009. Such rules shall be similar to those applicable under the 
Internal Revenue Code of 1986 with respect to notices to participants 
in pension plans. The Secretary shall regularly modify such rules as 
appropriate to take into account new developments, including new forms 
of electronic media, and to fairly take into consideration the 
interests of plan sponsors, service providers, and participants. The 
rules prescribed by the Secretary pursuant to this subsection shall 
provide for a method for the typical participant or beneficiary to 
obtain without undue burden any such disclosure in writing on paper in 
lieu of receipt through an electronic medium.
    ``(g) Definitions.--For purposes of this section--
            ``(1) Charge.--The term `charge' means, in connection with 
        any service provided to a plan or any financial product 
        provided to the plan in which plan assets are to be invested, 
        any fee, credit, or other compensation charged or paid for such 
        service or product, including money and any other thing of 
        monetary value to be received by the provider of the service or 
        product, or its affiliate, in connection with the service or 
        product.
            ``(2) Service provider.--The terms `service provider' and 
        `provider' mean, in connection with a service (as defined in 
        section 111(e)(2)), a person directly or indirectly providing 
        such service.
            ``(3) Regulations.--The Secretary shall provide by 
        regulation such definitions of other terms used in this section 
        as the Secretary determines appropriate.''.
    (c) Enforcement.--Section 502 of such Act (29 U.S.C. 1132) is 
amended--
            (1) in subsection (a)(6), by striking ``under paragraph 
        (2)'' and all that follows through ``subsection (c)'' and 
        inserting ``under paragraph (2), (4), (5), (6), (7), (8), (9), 
        (10), or (11) of subsection (c)''; and
            (2) in subsection (c), by redesignating the second 
        paragraph (10) as paragraph (12), and by inserting after the 
        first paragraph (10) the following new paragraph:
    ``(11)(A) In the case of any violation of section 111(a) by a 
service provider (as defined in section 111(e)(4)), the service 
provider may be assessed by the Secretary a civil penalty of up to 
$1,000 a day with respect to each such violation from the date of the 
initial violation until the date on which such violation is corrected, 
subject to a total maximum penalty of 10 percent of the amount 
involved, as determined by the Secretary.
    ``(B) Any plan administrator with respect to a plan who fails or 
refuses to provide a statement to participants and beneficiaries in 
accordance with section 105(a)(2)(B)(ii) or 111(b) may be assessed by 
the Secretary a civil penalty of up to $100 a day from the date of the 
failure or refusal to the date on which such statement or notice is so 
provided.
    ``(C) For purposes of this paragraph, each violation with respect 
to any single participant, beneficiary, or plan administrator shall be 
treated as a separate violation.''.
    (d) Conforming Amendment.--The table of contents in section 1 of 
such Act is amended by striking the item relating to section 111 and 
inserting the following new items:

``Sec. 111. Special reporting and disclosure rules for individual 
                            account plans.
``Sec. 112. Repeal and effective date.''.
    (e) Effective Dates.--
            (1) Section 111(a) of the Employee Retirement Income 
        Security Act of 1974 (as added by subsection (a) of this 
        section) shall apply with respect to contracts or arrangements 
        for services entered into after one year after the date of the 
        enactment of this Act.
            (2) Section 111(b) of such Act (as added by subsection (a) 
        of this section) shall apply with respect to plan years 
        beginning after one year after the date of the enactment of 
        this Act.
            (3) The amendments made by subsection (b) of this section 
        shall apply with respect to pension benefit statements for 
        calendar quarters beginning after one year after the date of 
        the enactment of this Act.
            (4) The Secretary shall issue final regulations under the 
        amendments made by this section not later than 270 days after 
        the date of the enactment of this Act. Any act or practice in 
        advance of the issuance of final regulations under the 
        amendments made by this section which is in good faith 
        compliance with the requirements of such amendments shall be 
        treated as in compliance with any such final regulations.
    (f) Study Regarding Use of Benchmarks, Indices, and Other Points of 
Comparison in Plan Fee Comparison Charts.--
            (1) Study.--As soon as practicable after the date of the 
        enactment of this Act, the Secretary of Labor shall study the 
        efficacy of including benchmarks, indices, and other points of 
        comparison in plan fee comparison charts provided to 
        participants and beneficiaries pursuant to section 111(b)(3) of 
        the Employee Retirement Income Security Act of 1974 (as added 
        by this Act).
            (2) Matters to be studied.--In the study required under 
        paragraph (1), the Secretary shall investigate whether, and the 
        extent to which, benchmarks, indices, and other points of 
        comparison included in plan fee comparison charts--
                    (A) help participants and beneficiaries understand 
                the charges with respect to their individual account 
                plans,
                    (B) help participants and beneficiaries make more 
                informed decisions on which investment options to 
                choose under such plans, and
                    (C) bias participants and beneficiaries against 
                particular investment options under such plans, types 
                of investment, or individual account plans as a whole.
            (3) Report.--Not later than 180 days after the date of the 
        enactment of this Act, the Secretary shall report to each House 
        of the Congress regarding the results of the study conducted 
        pursuant to this subsection, together with such recommendations 
        as the Secretary may consider appropriate.

SEC. 102. MINIMUM INVESTMENT OPTION REQUIREMENT FOR INDIVIDUAL ACCOUNT 
              PLANS.

    (a) In General.--Section 404(c) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104(c)) is amended by adding at the 
end the following new paragraph:
            ``(6) Minimum investment option requirement for individual 
        account plans.--Paragraph (1)(A)(ii) shall not apply in 
        connection with any individual account plan which permits a 
        participant or beneficiary to exercise control over the assets 
        in the account of the participant or beneficiary unless the 
        plan includes at least one investment option--
                    ``(A) which is a passively managed investment with 
                a portfolio of securities that is designed to be 
                representative of the United States investable equity 
                market (including representation of small, mid, and 
                large cap stocks) or the United States investment grade 
                bond market (including Treasury, agency, non-agency, 
                and corporate issues), or a combination thereof, and
                    ``(B) which is described in the terms of the plan 
                as offered without any endorsement of the Government or 
                the plan sponsor.
        An investment shall not fail to satisfy the requirements of 
        subparagraph (A) in connection with either market described in 
        subparagraph (A) solely by reason of a failure to invest in all 
        or substantially all equities or bonds (as applicable) in such 
        market, if the methodology used to select the equities or bonds 
        is designed to approximate in a reasonable manner the broad 
        experience of such market.''.
    (b) Conforming Amendment.--Section 404(c)(1)(A)(ii) of such Act (29 
U.S.C. 1104(c)(1)(A)(ii)) is amended by inserting ``except as provided 
in section 404(c)(6) and'' after ``exercise of control,''.
    (c) Effective Dates.--
            (1) The amendments made by this section shall apply with 
        respect to plan years beginning after one year after the date 
        of the enactment of this Act.
            (2) The Secretary shall issue final regulations under the 
        amendments made by this section not later than 270 days after 
        the date of the enactment of this Act. Any act or practice in 
        advance of the issuance of final regulations under the 
        amendments made by this section which is in good faith 
        compliance with the requirements of such amendments shall be 
        treated as in compliance with any such final regulations.

SEC. 103. ENFORCEMENT COORDINATION AND REVIEW BY THE DEPARTMENT OF 
              LABOR.

    (a) In General.--Section 502 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end 
the following new subsection:
    ``(n) Enforcement Coordination of Certain Disclosure Requirements 
and Review by the Department of Labor.--
            ``(1) In general.--
                    ``(A) Notification and action.--The Secretary shall 
                notify the applicable regulatory authority in any case 
                in which the Secretary determines that a service 
                provider is engaged in a pattern or practice that 
                precludes compliance by plan administrators with 
                section 111. The Secretary shall, in consultation with 
                the applicable authority, take such timely enforcement 
                action under this title as is necessary to assure that 
                such pattern or practice ceases and desists and assess 
                any appropriate penalties.
                    ``(B) Dissemination.--The Secretary shall widely 
                disseminate to employee pension benefit plans covered 
                by this title and their participants and beneficiaries 
                the identity of any service providers with respect to 
                such plans found to be engaged in any pattern or 
                practice described in subparagraph (A) with the intent 
                to preclude compliance by plan administrators with 
                section 111 and the particulars of such pattern or 
                practice. Prior to the dissemination of the identity of 
                any service providers identified and determined by the 
                Secretary to be engaged in such a pattern or practice, 
                such service provider shall receive a notice of intent 
                to disseminate, an opportunity to request an 
                administrative hearing, and a timely appeal to the 
                Secretary.
            ``(2) Annual audit of representative sampling of individual 
        account plans.--The Secretary shall annually audit a 
        representative sampling of individual account plans covered by 
        this title to determine compliance with the requirements of 
        section 111. The Secretary shall annually report the results of 
        such audit and any related recommendations of the Secretary to 
        the Committee on Education and Labor of the House of 
        Representatives and the Committee on Health, Education, Labor, 
        and Pensions of the Senate.''.
    (b) Review and Report to the Congress by Secretary of Labor 
Relating to Reporting and Disclosure Requirements.--
            (1) Study.--As soon as practicable after the date of the 
        enactment of this Act, the Secretary of Labor shall review the 
        reporting and disclosure requirements of part 1 of subtitle B 
        of title I of the Employee Retirement Income Security Act of 
        1974 and related provisions of the Pension Protection Act of 
        2006.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary of Labor, in consultation 
        with the Secretary of the Treasury, shall make such 
        recommendations as the Secretary of Labor considers appropriate 
        to the appropriate committees of the Congress to consolidate, 
        simplify, standardize, and improve the applicable reporting and 
        disclosure requirements so as to simplify reporting for 
        employee pension benefit plans and ensure that needed 
        understandable information is provided to participants and 
        beneficiaries of such plans.

         TITLE II--PROHIBITION OF CONFLICTED INVESTMENT ADVICE

SEC. 201. FINDINGS.

    The Congress finds as follows:
            (1) The market downturn of 2008 had a devastating effect on 
        the retirement security income of millions of American workers.
            (2) According to the Congressional Budget Office, $2 
        trillion of Americans' retirement savings was wiped out over a 
        15-month period starting in 2008.
            (3) According to Congressional Budget Office estimates, the 
        value of pension funds and retirement accounts dropped by 
        roughly $1 trillion last year.
            (4) Individual average losses of participants in 401(k) 
        plans ranged from 7.2 percent to 11.2 percent in the first nine 
        months of 2008, according to an Employee Benefit Research 
        Institute analysis of 2.2 million retirements account 
        participants.
            (5) During the first nine months of 2008, stocks were down, 
        with the S&P 500 index losing more than 19 percent. With over 
        two-thirds of the assets in 401(k)-style defined contribution 
        plans invested in equities, either directly or through mutual 
        funds, participants are exposed to increased risk and lack 
        meaningful access to independent investment advise to help them 
        better plan for their retirement.
            (6) Currently, 401(k) plan account holders have access to a 
        self-interested or conflicted investment adviser.
            (7) In 2007, the Government Accountability Office concluded 
        that conflicts of interest can have an adverse affect on 
        defined benefit and defined contribution plans.

SEC. 202. INDEPENDENT INVESTMENT ADVISERS FOR INDIVIDUAL ACCOUNT PLANS.

    (a) In General.--Section 3 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002) is amended by adding at the end 
the following new paragraph:
            ``(43) Independent investment adviser.--
                    ``(A) In general.--The term `independent investment 
                adviser' means, with respect to an individual account 
                plan that permits a participant or beneficiary to 
                direct the investment of assets in their individual 
                account, a person who--
                            ``(i) is a fiduciary of the plan by reason 
                        of the provision of investment advice referred 
                        to in section 3(21)(A)(ii) by the person to the 
                        plan or a participant or beneficiary of the 
                        plan (irrespective of the manner in which such 
                        advice is provided or the extent to which such 
                        advice is based on a computer model), and
                            ``(ii) meets the requirements of either 
                        subparagraph (B) or (C).
                    ``(B) Requirements applicable to investment 
                adviser.--An investment adviser meets the requirements 
                of this subparagraph, if--
                            ``(i) such adviser is--
                                    ``(I) registered as an investment 
                                adviser under the Investment Advisers 
                                Act of 1940 (15 U.S.C. 80b-1 et seq.) 
                                or under the laws of the State in which 
                                the adviser maintains its principal 
                                office and place of business, or
                                    ``(II) any other person, but only 
                                if every individual providing the 
                                investment advice referred to in 
                                section 3(21)(A)(ii) on behalf of such 
                                person (or on behalf of any affiliate 
                                thereof) is a registered representative 
                                of a person described in subclause (I),
                            ``(ii) such adviser is not the plan 
                        investment provider,
                            ``(iii) the fees or other compensation 
                        received, directly or indirectly, by such 
                        adviser (and any affiliate thereof) with 
                        respect to the provision of investment advice 
                        to any individual account plan or the 
                        participants or beneficiaries of such a plan 
                        either--
                                    ``(I) are not received from any 
                                person or persons (or anyone affiliated 
                                with such persons) that market, sell, 
                                manage or provide investments in which 
                                plan assets of the individual account 
                                plan are invested, or
                                    ``(II) do not vary depending on the 
                                basis of any investment option 
                                selected, and are calculated pursuant 
                                to one or more of the following bases--
                                            ``(aa) a flat-dollar basis,
                                            ``(bb) a flat percentage of 
                                        total plan assets basis,
                                            ``(cc) a flat or sliding-
                                        scale percentage of the assets 
                                        in a participant's or 
                                        beneficiary's account basis, or
                                            ``(dd) a per-participant or 
                                        per-beneficiary account basis, 
                                        and
                            ``(iv) such adviser provides the investment 
                        advice pursuant to a written arrangement with 
                        the individual account plan that--
                                    ``(I) provides that the investment 
                                adviser is a fiduciary of the plan with 
                                respect to the provision of the advice,
                                    ``(II) requires that the advice be 
                                provided only by registered 
                                representatives of the investment 
                                adviser or an affiliate thereof,
                                    ``(III) discloses, before a 
                                reasonable period prior to entering 
                                into such arrangement, whether the 
                                investment adviser or any affiliate 
                                thereof has any material financial, 
                                referral, or other relationship or 
                                arrangement with a money manager, 
                                broker, other client of the investment 
                                adviser or any affiliate thereof, other 
                                service provider to the plan, or any 
                                other entity that creates or may create 
                                a conflict of interest for the 
                                investment adviser in performing 
                                services pursuant to the arrangement 
                                with the plan and, if so, includes a 
                                description of such relationship or 
                                arrangement,
                                    ``(IV) includes a representation by 
                                the investment adviser that, before the 
                                arrangement was entered into (or 
                                extended or renewed), the investment 
                                adviser provided to the plan fiduciary 
                                that has authority to cause the 
                                employee benefit plan to enter into (or 
                                extend or renew) the arrangement a 
                                written statement disclosing all fees 
                                or other compensation that the 
                                investment adviser or any affiliate 
                                thereof anticipates to receive with 
                                respect to the advice during the first 
                                year, or other period if less than a 
                                year, of the arrangement,
                                    ``(V) provides that the investment 
                                adviser will provide to such plan 
                                fiduciary (and the participant and 
                                beneficiary receiving the advice, if 
                                applicable) a statement annually 
                                disclosing all fees or other 
                                compensation that the investment 
                                adviser or any affiliate thereof has 
                                received with respect to the advice 
                                during the prior year, and
                                    ``(VI) provides that the terms of 
                                the arrangement required under this 
                                clause and any information provided 
                                under such arrangement pursuant to 
                                subclauses (III) and (IV) will also be 
                                furnished by the investment adviser to 
                                the participant or beneficiary that is 
                                the recipient of the advice.
                    ``(C) Advice provided to participants and 
                beneficiaries under an investment advice computer 
                program meeting requirements.--An investment adviser 
                meets the requirements of this subparagraph if the 
                investment advice provided by the adviser, to the 
                extent that such advice is provided to participants and 
                beneficiaries of individual account plans, is provided 
                under an investment advice computer program with 
                respect to which the requirements of clauses (i) 
                through (x) are met.
                            ``(i) Adviser requirements.--The 
                        requirements of this clause are met if the 
                        investment adviser providing the investment 
                        advice under the program is--
                                    ``(I) described in subclauses (I) 
                                or (II) of subparagraph (B)(i),
                                    ``(II) an insurance company 
                                qualified to do business under the laws 
                                of a State,
                                    ``(III) a person registered as a 
                                broker or dealer under the Securities 
                                Exchange Act of 1934 (15 U.S.C. 78a et 
                                seq.),
                                    ``(IV) an affiliate of a person 
                                described in any of subclauses (I) 
                                through (III), or
                                    ``(V) an employee, agent, or 
                                registered representative of a person 
                                described in subclauses (I) through 
                                (IV) who satisfies the requirements of 
                                applicable insurance, banking, and 
                                securities laws relating to the 
                                provision of the advice.
                            ``(ii) Computer model.--The requirements of 
                        this clause are met if the investment advice 
                        provided under the investment advice computer 
                        program is provided pursuant to a computer 
                        model that--
                                    ``(I) applies generally accepted 
                                investment theories that take into 
                                account the historic returns of 
                                different asset classes over defined 
                                periods of time,
                                    ``(II) utilizes relevant 
                                information about the participant, 
                                which may include age, life expectancy, 
                                retirement age, risk tolerance, other 
                                assets or sources of income, and 
                                preferences as to certain types of 
                                investments,
                                    ``(III) utilizes prescribed 
                                objective criteria to provide asset 
                                allocation portfolios comprised of 
                                investment options available under the 
                                plan,
                                    ``(IV) operates in a manner that is 
                                not biased in favor of investments 
                                offered by the investment adviser or 
                                any person with a material affiliation 
                                or contractual relationship with the 
                                investment adviser,
                                    ``(V) takes into account all 
                                investment options under the plan in 
                                specifying how a participant's account 
                                balance should be invested and is not 
                                inappropriately weighted with respect 
                                to any investment option,
                                    ``(VI) operates so that it does 
                                not, directly or indirectly, in any 
                                manner act to benefit the investment 
                                adviser (or any affiliate of the 
                                adviser or any person with a material 
                                affiliation or contractual relationship 
                                with the adviser) at the expense of 
                                plan participants and beneficiaries,
                                    ``(VII) takes into account the fees 
                                associated with each investment option, 
                                and
                                    ``(VIII) conforms to such other 
                                requirements as shall be prescribed by 
                                the Secretary to ensure that it 
                                operates in the best interest of plan 
                                participants and beneficiaries.
                            ``(iii) Certification.--
                                    ``(I) In general.--The requirements 
                                of this clause are met with respect to 
                                the program if an eligible investment 
                                expert certifies, prior to the 
                                utilization of the computer model and 
                                in accordance with rules prescribed by 
                                the Secretary, that the computer model 
                                meets the requirements of clause (ii).
                                    ``(II) Renewal of certifications.--
                                If, as determined under regulations 
                                prescribed by the Secretary, there are 
                                material modifications to the computer 
                                model, the requirements of this 
                                subparagraph are met only if a 
                                certification described in subclause 
                                (I) is obtained with respect to the 
                                computer model as so modified.
                                    ``(III) Eligible investment 
                                expert.--For purposes of this clause, 
                                the term `eligible investment expert' 
                                means any person--
                                            ``(aa) which meets such 
                                        requirements as the Secretary 
                                        may provide, and
                                            ``(bb) does not have any 
                                        material affiliation or 
                                        contractual relationship with 
                                        any investment adviser or a 
                                        related person thereof (or any 
                                        employee, agent, or registered 
                                        representative of the 
                                        investment adviser or related 
                                        person).
                            ``(iv) Exclusivity of recommendation.--The 
                        requirements of this clause are met with 
                        respect to the program, if--
                                    ``(I) the only investment advice 
                                provided under the program is the 
                                advice generated by the computer model 
                                described in clause (ii), and
                                    ``(II) any transaction pursuant to 
                                the investment advice occurs solely at 
                                the direction of the participant or 
                                beneficiary.
                            ``(v) Express authorization by separate 
                        fiduciary.--The requirements of this clause are 
                        met with respect to the program if the program 
                        is expressly authorized by a plan fiduciary 
                        other than--
                                    ``(I) the person offering the 
                                program,
                                    ``(II) any person that is a plan 
                                investment provider with respect to the 
                                plan, and
                                    ``(III) any affiliate of either 
                                person described in subclause (I) or 
                                (II).
                            ``(vi) Annual audit.--The requirements of 
                        this clause are met with respect to the program 
                        if an independent auditor, who has appropriate 
                        technical training or experience and 
                        proficiency and so represents in writing--
                                    ``(I) conducts an annual audit of 
                                the program other than the computer 
                                model referred to in clause (ii) which 
                                is certified pursuant to clause (iii) 
                                for compliance with the requirements of 
                                this subparagraph, and
                                    ``(II) following completion of the 
                                annual audit, issues a written report 
                                to the fiduciary who authorized use of 
                                the program which presents its specific 
                                findings regarding compliance of the 
                                program with the requirements of this 
                                subsection.
                        For purposes of this clause, an auditor is 
                        considered independent if it is not related to 
                        the person offering the program to the plan and 
                        is not affiliated with any person providing 
                        investment options under the plan.
                            ``(vii) Disclosure.--The requirements of 
                        this clause are met with respect to the 
                        program, if--
                                    ``(I) the investment adviser 
                                provides to the fiduciary referred to 
                                in clause (v) and the participant or 
                                beneficiary receiving investment advice 
                                under the program with regard to any 
                                security or other property offered as 
                                an investment option, before providing 
                                the advice, a written notification 
                                (which may consist of notification by 
                                means of electronic communication)--
                                            ``(aa) of the role of any 
                                        party that has a material 
                                        affiliation or contractual 
                                        relationship with the 
                                        investment adviser in the 
                                        development of the investment 
                                        advice program and in the 
                                        selection of investment options 
                                        available under the plan,
                                            ``(bb) of all fees or other 
                                        compensation relating to the 
                                        advice that the investment 
                                        adviser or any affiliate 
                                        thereof is to receive 
                                        (including compensation 
                                        provided by any third party) in 
                                        connection with the provision 
                                        of the advice or in connection 
                                        with the sale, acquisition, or 
                                        holding of the security or 
                                        other property,
                                            ``(cc) of any material 
                                        affiliation or contractual 
                                        relationship of the investment 
                                        adviser or affiliates thereof 
                                        in the security or other 
                                        property,
                                            ``(dd) of the manner, and 
                                        under what circumstances, any 
                                        information relating to the 
                                        participant or beneficiary 
                                        which is provided under the 
                                        program will be used or 
                                        disclosed,
                                            ``(ee) of the types of 
                                        services provided by the 
                                        investment adviser in 
                                        connection with the provision 
                                        of investment advice by the 
                                        investment adviser, and
                                            ``(ff) that a recipient of 
                                        the advice may separately 
                                        arrange for the provision of 
                                        advice by another adviser, that 
                                        could have no material 
                                        affiliation with, and could 
                                        receive no fees or other 
                                        compensation, in connection 
                                        with the security or other 
                                        property, and
                                    ``(II) at all times during the 
                                provision of advisory services to the 
                                participant or beneficiary, the 
                                investment adviser--
                                            ``(aa) maintains the 
                                        information described in 
                                        subclause (I) in accurate form 
                                        and in the manner described in 
                                        clause (ix),
                                            ``(bb) provides, without 
                                        charge, accurate information to 
                                        the recipient of the advice no 
                                        less frequently than annually,
                                            ``(cc) provides, without 
                                        charge, accurate information to 
                                        the recipient of the advice 
                                        upon request of the recipient, 
                                        and
                                            ``(dd) provides, without 
                                        charge, accurate information to 
                                        the recipient of the advice 
                                        concerning any material change 
                                        to the information required to 
                                        be provided to the recipient of 
                                        the advice at a time reasonably 
                                        contemporaneous to the change 
                                        in information.
                            ``(viii) Other conditions.--The 
                        requirements of this clause are met with 
                        respect to the program, if--
                                    ``(I) the investment adviser 
                                provides appropriate disclosure, in 
                                connection with the sale, acquisition, 
                                or holding of the security or other 
                                property with respect to which the 
                                investment advice is provided under the 
                                program, in accordance with all 
                                applicable securities laws,
                                    ``(II) the sale, acquisition, or 
                                holding occurs solely at the direction 
                                of the recipient of the advice,
                                    ``(III) the compensation received 
                                by the investment adviser and 
                                affiliates thereof in connection with 
                                the sale, acquisition, or holding of 
                                the security or other property is 
                                reasonable, and
                                    ``(IV) the terms of the sale, 
                                acquisition, or holding of the security 
                                or other property are at least as 
                                favorable to the plan as an arm's 
                                length transaction would be.
                            ``(ix) Standards for presentation of 
                        information.--
                                    ``(I) In general.--The requirements 
                                of this clause are met with respect to 
                                the program if the notification 
                                required to be provided to participants 
                                and beneficiaries under clause (vii)(I) 
                                is written in a clear and conspicuous 
                                manner and in a manner calculated to be 
                                understood by the average plan 
                                participant and is sufficiently 
                                accurate and comprehensive to 
                                reasonably apprise such participants 
                                and beneficiaries of the information 
                                required to be provided in the 
                                notification.
                                    ``(II) Model form for disclosure of 
                                fees and other compensation.--The 
                                Secretary shall issue a model form for 
                                the disclosure of fees and other 
                                compensation required in clause 
                                (vii)(I)(bb) which meets the 
                                requirements of subclause (I).
                            ``(x) Maintenance for 6 years of evidence 
                        of compliance.--The requirements of this clause 
                        are met with respect to the program if the 
                        investment adviser who provides advice under 
                        the program maintains, for a period of not less 
                        than 6 years after the provision of the advice, 
                        any records necessary for determining whether 
                        the requirements of the preceding provisions of 
                        this subparagraph and of subsection (b)(14) 
                        have been met. A failure to meet the 
                        requirements of this clause shall not be 
                        considered to have occurred solely because the 
                        records are lost or destroyed prior to the end 
                        of the 6-year period due to circumstances 
                        beyond the control of the investment adviser.
                    ``(D) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Affiliate.--The term `affiliate' 
                        means, in connection with any other person, any 
                        person directly or indirectly (through one or 
                        more intermediaries) controlling, controlled 
                        by, or under common control with such other 
                        person, or any officer, director, agent, or 
                        employee of, or partner with, such other 
                        person.
                            ``(ii) Registered representative.--The term 
                        `registered representative' of another entity 
                        means a person described in section 3(a)(18) of 
                        the Securities Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(18)) (substituting the entity for the 
                        broker or dealer referred to in such section) 
                        or a person described in section 202(a)(17) of 
                        the Investment Advisers Act of 1940 (15 U.S.C. 
                        80b-2(a)(17)) (substituting the entity for the 
                        investment adviser referred to in such 
                        section).
                            ``(iii) Plan investment provider.--The term 
                        `plan investment provider' means any person (or 
                        any person affiliated with such person) that 
                        creates or manages any investment in which any 
                        individual account plan invests. Such term does 
                        not include--
                                    ``(I) a plan sponsor (or an 
                                affiliate thereof) with respect to any 
                                investment created or managed by the 
                                plan sponsor (or affiliate), if only 
                                employee benefit plans maintained by 
                                such plan sponsor or an affiliate 
                                thereof invest in such investments,
                                    ``(II) any person who makes the 
                                investment available to the plan, or 
                                any participant or beneficiary in the 
                                plan, as a part of a portfolio of 
                                investment options, to the extent that 
                                the investment options are created and 
                                managed by a person who is not an 
                                affiliate of the person making such 
                                portfolio available, and
                                    ``(III) any person, solely by 
                                reason of authorization by a 
                                participant or beneficiary in the plan 
                                of such person to exercise control over 
                                the assets in the participant's or 
                                beneficiary's account in such plan, if 
                                such assets are not invested in any 
                                investments created or managed by such 
                                person (or an affiliate thereof).
                            ``(iv) Fees or other compensation.--The 
                        term `fees or other compensation' includes 
                        money or any other thing of monetary value (for 
                        example, gifts, awards, and trips) received, or 
                        to be received, directly from the plan or plan 
                        sponsor or indirectly (i.e., from any source 
                        other than the plan or the plan sponsor) by the 
                        investment adviser or any affiliate thereof in 
                        connection with the advice to be provided 
                        pursuant to the arrangement or because of the 
                        investment adviser's or any affiliate's 
                        position with the plan. Fees or other 
                        compensation may be expressed in terms of a 
                        monetary amount, percentage of the plan's 
                        assets, or per capita charge for each 
                        participant or beneficiary of the plan. The 
                        manner in which compensation or fees are 
                        expressed shall contain sufficient information 
                        to enable the plan fiduciary to evaluate the 
                        reasonableness of such compensation or fees.''.
    (b) Fiduciary Duties With Respect to Investment Advice.--
            (1) In general.--Section 404(a) of such Act (29 U.S.C. 
        1104(a)) is amended by adding at the end the following new 
        paragraph:
    ``(3)(A) The fiduciary of an individual account plan that permits a 
participant or beneficiary to direct the investment of assets in the 
individual account shall not appoint, contract with, or otherwise 
arrange for an investment adviser to provide investment advice referred 
to in section 3(21)(A)(ii) to the plan or the participant or 
beneficiary unless the investment adviser is an independent investment 
adviser (as defined in section 3(43)).
    ``(B) The independent investment adviser providing investment 
advice to a plan or to a participant or beneficiary shall provide, 
before a reasonable period prior to the initial provision of the 
advice, a written notification--
            ``(i) of the past performance and historical rates of 
        return of the investment options available with respect to the 
        plan and comparisons of such options to relevant benchmarks, 
        and
            ``(ii) that the investment adviser is acting as a fiduciary 
        of the plan in connection with the provision of the advice.
    ``(C) Nothing in this paragraph shall be construed to exempt a plan 
sponsor or other person who is a fiduciary from any requirement of this 
part for the prudent selection and periodic review of an independent 
investment adviser with whom the plan sponsor or other person enters 
into an arrangement for the provision of investment advice referred to 
in section 3(21)(A)(ii), except that any such requirement shall not be 
construed to preclude reasonable reliance by the plan sponsor or other 
person on the representation of any person that such person making the 
representation meets the requirements of section 3(43)(A). The plan 
sponsor and any other person who is a fiduciary (other than the 
independent investment adviser) has no duty under this part to monitor 
the specific investment advice given by the independent investment 
adviser to any particular recipient of the advice and shall not be 
liable under this title for any loss, or by reason of any breach, which 
results from such specific investment advice given by the independent 
investment adviser.
    ``(D) Nothing in this part shall be construed to preclude the use 
of plan assets to pay for reasonable expenses in providing investment 
advice referred to in section 3(21)(A)(ii).''.
            (2) Report on prior advisory opinions and exceptions.--The 
        Secretary of Labor shall, as soon as practicable after the date 
        of the enactment of this Act--
                    (A) review each Advisory Opinion and exception 
                described in section 404(a)(3)(E)(i) of the Employee 
                Retirement Income Security Act of 1974 (as added by 
                this paragraph (1)) to determine the extent to which 
                such Advisory Opinion or exception fails to adequately 
                serve the interests of participants and beneficiaries 
                and to be adequately protective of the rights of 
                participants and beneficiaries, and
                    (B) submit a report to each House of the Congress 
                describing the extent of any such failure by any such 
                Advisory Opinion or exception.
    (c) Conforming Amendments.--Section 408 of such Act (29 U.S.C. 
1108) is amended--
            (1) by striking subsection (g); and
            (2) by striking subsection (b)(14)(B) and inserting the 
        following:
                    ``(B) the investment advice is provided by an 
                independent investment adviser (as defined in section 
                3(43)).''.
    (d) Regulatory Authority.--The Secretary of Labor may issue 
regulations providing that an investment adviser can still be 
considered as meeting the requirements of section 3(43)(B) of the 
Employee Retirement Income Security Act of 1974 despite the receipt of 
a de minimus amount of compensation that fails to meet the requirements 
of section 3(43)(B)(iii) of such Act due to the existence of previously 
existing contracts.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after one year after the date of the 
enactment of this Act.

SEC. 203. EXPANSION OF OUTREACH TO PROMOTE RETIREMENT INCOME SAVINGS TO 
              INCLUDE PROMOTION OF EDUCATION ON FINANCIAL LITERACY WITH 
              RESPECT TO INVESTMENT FOR RETIREMENT.

    Section 516 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1146) is amended--
            (1) in subsection (b), by inserting after ``creation of 
        educational materials,'' the following: ``promotion of 
        education in financial literacy with respect to investment for 
        retirement as provided in subsection (e),'';
            (2) by redesignating subsection (e) as subsection (f); and
            (3) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Promotion of Education in Financial Literacy With Respect to 
Investment for Retirement.--The Secretary, in consultation with the 
Secretary of Education and the Secretary of the Treasury, shall 
establish a program under which--
            ``(1) employees and the general public are provided with 
        information and materials--
                    ``(A) informing them about resources available for 
                attaining financial literacy with respect to investment 
                for retirement,
                    ``(B) effectively educating them about the 
                importance of, and appropriate techniques with respect 
                to, personal finance, saving for retirement, and 
                choosing independent investment advisers when managing 
                their accounts under individual account plans, and
                    ``(C) effectively educating them about debt 
                obligations, the relationship of debt to savings, and 
                the potential consequences of debt with respect to 
                saving for retirement,
            ``(2) employers are enlisted to participate in such program 
        so as to assist in the attainment of the goals described in 
        subparagraphs (A), (B), and (C) of paragraph (1) with respect 
        to their employees, and
            ``(3) appropriate standards of financial literacy of 
        employees and the general public with respect to investment for 
        retirement are developed and published for utilization under 
        such program.''.
            (4) Study and report to the congress.--
                    (A) In general.--The Secretary of Labor shall 
                conduct a survey of ongoing efforts by the Federal 
                Government to assist employees and the general public 
                with attainment of financial literacy with respect to 
                investment for retirement and to educate them about the 
                importance of, and appropriate techniques with respect 
                to, personal finance, debt obligations, saving for 
                retirement, and choosing independent investment 
                advisers when managing their accounts under individual 
                account plans.
                    (B) Report.--Not later than 180 days after the date 
                of the enactment of this Act, the Secretary shall 
                submit a report to each House of the Congress setting 
                forth the results of the Secretary's survey conducted 
                pursuant to subparagraph (A), together with such 
                recommendations as the Secretary considers appropriate 
                for improvement in efforts by the Federal Government in 
                assisting employees and the general public with 
                attainment of financial literacy in connection with 
                investment for retirement and educating them about the 
                importance of, and appropriate techniques with respect 
                to, personal finance, debt obligations, saving for 
                retirement, and choosing independent investment 
                advisers when managing their accounts under individual 
                account plans.

    TITLE III--TRANSITIONAL FUNDING RELIEF FOR DEFINED BENEFIT PLANS

SEC. 301. ELECTION TO USE YIELD CURVE.

    (a) Amendment to ERISA.--The last sentence of clause (ii) of 
section 303(h)(2)(D) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1083(h)(2)(D)(ii)) is amended to read as follows: 
``Such election, once made, may be revoked only with the consent of the 
Secretary, except that any election in effect for a plan with respect 
to a plan year beginning in 2009 may be revoked for the plan year 
beginning in 2010 without such consent.''.
    (b) Amendment to IRC.--The last sentence of clause (ii) of section 
430(h)(2)(D) of the Internal Revenue Code of 1986 (relating to election 
to use yield curve) is amended to read as follows: ``Such election, 
once made, may be revoked only with the consent of the Secretary, 
except that any election in effect for a plan with respect to a plan 
year beginning in 2009 may be revoked for the plan year beginning in 
2010 without such consent.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2009.

SEC. 302. EFFECTIVE DATE OF REGULATIONS.

    The Secretary of the Treasury shall--
            (1) make the final regulations issued under sections 206(g) 
        and 303 of the Employee Retirement Income Security Act of 1974 
        and sections 430 and 436 of the Internal Revenue Code of 1986 
        effective no earlier than plan years beginning after December 
        31, 2009; and
            (2) provide rules, for plan years beginning before the 
        effective date of such final regulations, under which 
        compliance with a reasonable interpretation of an applicable 
        provision under section 206(g) or 303 of the Employee 
        Retirement Income Security Act of 1974 or section 430 or 436 of 
        the Internal Revenue Code of 1986 shall be treated as 
        compliance with such provision.

SEC. 303. CLARIFICATION OF TREATMENT OF EXPENSES.

    (a) Amendments to ERISA.--
            (1) In general.--Clause (ii) of section 303(b)(1)(A) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1083(b)(1)(A)(ii)) is amended by striking ``plan-related 
        expenses'' and inserting ``plan-related administrative 
        expenses''.
            (2) Conforming amendment.--Subclause (II) of section 
        303(i)(2)(A)(i) of such Act (29 U.S.C. 1083(i)(2)(A)(i)(II)) is 
        amended by striking ``plan-related expenses'' and inserting 
        ``plan-related administrative expenses''.
    (b) Amendments to IRC.--
            (1) In general.--Clause (ii) of section 430(b)(1)(A) of the 
        Internal Revenue Code of 1986 (relating to target normal cost) 
        is amended by striking ``plan-related expenses'' and inserting 
        ``plan-related administrative expenses''.
            (2) Conforming amendment.--Subclause (II) of section 
        430(i)(2)(A)(i) of such Code is amended by striking ``plan-
        related expenses'' and inserting ``plan-related administrative 
        expenses''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in the enactment of paragraphs (1)(A), (1)(F)(i), 
(2)(A), and (2)(F)(i) of section 101(b) of the Worker, Retiree, and 
Employer Recovery Act of 2008 (Public Law 110-458; 122 Stat. 5093).

SEC. 304. INFORMATION REPORTING.

    (a) In General.--Paragraph (1) of section 4010(b) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1310(b)(1)) is 
amended to read as follows:
            ``(1) either of the following requirements are met:
                    ``(A) the funding target attainment percentage (as 
                defined in subsection (d)) at the end of the preceding 
                plan year of a plan maintained by the contributing 
                sponsor or any member of its controlled group is less 
                thqan 80 percent; or
                    ``(B) the aggregate unfunded vested benefits (as 
                determined under section 4006(a)(3)(E)(iii)) of plans 
                maintained by the contributing sponsor and the members 
                of its controlled group exceed $50,000,000 
                (disregarding plans with no unfunded vested 
                benefits);''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after 2009.

SEC. 305. 5-YEAR EXTENSION OF AUTOMATIC AMORTIZATION EXTENSION PERIOD 
              FOR MULTIEMPLOYER PLANS.

    (a) ERISA Amendments.--Section 304(d) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1084(d)) is amended--
            (1) in paragraph (1)(A), by striking ``5 years'' and 
        inserting ``10 years''; and
            (2) in paragraph (2)(A), by striking ``10 years'' and 
        inserting ``15 years''.
    (b) IRC Amendments.--Section 431(d) of the Internal Revenue Code of 
1986 (relating to extension of amortization periods for multiemployer 
plans) is amended--
            (1) in paragraph (1)(A), by striking ``5 years'' and 
        inserting ``10 years''; and
            (2) in paragraph (2)(A), by striking ``10 years'' and 
        inserting ``15 years''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to applications for extension filed on or after the 
date of the enactment of this Act.

SEC. 306. PENSION PLAN MAINTAINED BY CHRISTIAN SCHOOLS INTERNATIONAL 
              TREATED AS CHURCH PLAN.

    (a) In General.--For purposes of title I of the Employee Retirement 
Income Security Act of 1974 and the Internal Revenue Code of 1986, any 
pension plan maintained by Christian Schools International as of 
January 1, 2009, shall be treated as a church plan within the meaning 
of section  3(33) of such Act and section 414(e) of such Code which is 
maintained by an organization described in section 3(33)(C)(ii)(II) of 
such Act and section 414(e)(3)(B)(ii) of such Code.
    (b) Effective Date.--This section shall apply to plan years 
beginning on or after January 1, 2007.

SEC. 307. SPECIAL RULE FOR DETERMINING ADEQUATE CONSIDERATION IN 
              CONNECTION WITH THE PURCHASE AND SALE OF QUALIFYING 
              EMPLOYER SECURITIES.

    (a) In General.--Section 3(18) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(18)) is amended--
            (1) by redesignating clauses (i) and (ii) of subparagraph 
        (A) as subclauses (I) and (II), respectively, and by 
        redesignating subparagraphs (A) and (B) as clauses (i) and 
        (ii), respectively;
            (2) by inserting ``(A)'' after ``(18)''; and
            (3) by adding at the end the following new subparagraph:
    ``(B) In the case of a plan described in section 407(d)(3)(A) which 
was in existence on the date of the enactment of this Act, if the 
valuation set for the purchase or sale by the plan of a qualifying 
employer security (as defined in section 407(d)(5)) is set at a price 
which has not been found by the Secretary to be in violation of this 
Act and which is book value computed annually in accordance with 
generally accepted accounting principles and the provisions of the 
plan, and if the valuations set for all prior purchases or sales by the 
plan of qualifying employer securities have been consistently so 
priced, then all such valuations for qualifying employer securities 
shall be deemed to be adequate consideration within the meaning of 
subparagraph (A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to purchases and sales of qualifying employer securities on or 
after September 2, 1974.

SEC. 308. EXTENDED PERIOD FOR SINGLE-EMPLOYER DEFINED BENEFIT PLANS TO 
              AMORTIZE THE SHORTFALL AMORTIZATION BASE FOR 2009 AND 
              2010.

    (a) Amendments to ERISA.--
            (1) In general.--Paragraph (2) of section 303(c) of the 
        Employee Retirement Income Security Act of 1974 is amended by 
        adding at the end the following new subparagraph:
                    ``(D) Special rule for 2009 and 2010.--In the case 
                of the shortfall amortization base of the plan for any 
                plan year beginning in 2009 or 2010 (hereafter in this 
                subparagraph referred to as the `base year')--
                            ``(i) Determination of installments.--The 
                        shortfall amortization installments are--
                                    ``(I) in the case of the last 7 
                                plan years in the 9-plan-year period 
                                beginning with the base year, the 
                                amounts necessary to amortize the 
                                shortfall amortization base of the plan 
                                for the base year in level annual 
                                installments over such last 7 plan 
                                years, and
                                    ``(II) in the case of the first 2 
                                plan years in such 9-plan-year period, 
                                interest on such shortfall amortization 
                                base (determined as provided in 
                                subparagraph (C)).
                            ``(ii) Shortfall installment.--The 
                        shortfall amortization installment for any plan 
                        year in the 9-plan-year period under clause (i) 
                        with respect to such shortfall amortization 
                        base is the annual installment determined under 
                        clause (i) for that year for that base.''.
            (2) Conforming amendment.--Paragraph (1) of section 303(c) 
        of such Act is amended by striking ``the shortfall amortization 
        bases for such plan year and each of the 6 preceding plan 
        years'' and inserting ``any shortfall amortization base which 
        has not been fully amortized under this subsection''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2008.
                                                 Union Calendar No. 289

111th CONGRESS

  2d Session

                               H. R. 2989

                      [Report No. 111-244, Part I]

_______________________________________________________________________

                                 A BILL

To amend the Employee Retirement Income Security Act of 1974 to provide 
special reporting and disclosure rules for individual account plans and 
 to provide a minimum investment option requirement for such plans, to 
    amend such Act to provide for independent investment advice for 
 participants and beneficiaries under individual account plans, and to 
    amend such Act and the Internal Revenue Code of 1986 to provide 
 transitional relief under certain pension funding rules added by the 
                    Pension Protection Act of 2006.

_______________________________________________________________________

                              May 28, 2010

Discharged; committed to the Committee of the Whole House on the State 
                 of the Union and ordered to be printed
```