I 

111TH CONGRESS 

1ST SESSION H. R. 2989 

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 

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 


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certain pension funding rules added by the Pension Protection Act of 2006. 

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘401(k) Fair Disclosure and Pension Security Act of 

6 2009’’. 

7 (b) TABLE OF CONTENTS.—The table of contents for 

8 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. Five-year extension of automatic amortization extension period for 

multiemployer plans. 


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1 TITLE I—401(k) FAIR 

2 DISCLOSURE FOR RETIREMENT 

3 SEC. 101. SPECIAL REPORTING AND DISCLOSURE RULES 

4 FOR INDIVIDUAL ACCOUNT PLANS. 

5 (a) ADDITIONAL REPORTING AND DISCLOSURE

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

7 Retirement Income Security Act of 1974 is amended— 

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

9 1031) as section 112; and 

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

11 1030) the following new section: 

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

13 FOR INDIVIDUAL ACCOUNT PLANS. 

14 ‘‘(a) DISCLOSURE TO EMPLOYERS SPONSORING INDI15 VIDUAL ACCOUNT PLANS REGARDING SERVICES NEC16 ESSARY FOR ESTABLISHMENT OR OPERATION OF

17 PLANS.— 

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

19 plan administrator of an individual account plan (or 

20 any other plan official with contracting authority 

21 under the terms of the plan) may not enter into a 

22 contract or arrangement for services to the plan (in23 cluding, for purposes of this section, the offering of 

24 any investment option to the plan) unless such plan 

25 administrator or other official has received, reasonVerDate Nov 24 2008 04:04 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2989.IH H2989

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1 ably in advance of entering into the contract or ar2 rangement, a single written statement from the serv3 ice provider which— 

4 ‘‘(A) specifies such services for the plan 

5 that will be provided in connection with the con6 tract or arrangement, and 

7 ‘‘(B) provides the expected total annual 

8 charges for such services for the plan that will 

9 be provided in connection with the contract or 

10 arrangement, including a reasonable allocation 

11 of such total annual charges among all relevant 

12 component charges specified in paragraph (2) 

13 (regardless of how the charges are actually as14 sessed). 

15 The description of the services and specification of 

16 the charges for the services shall be displayed promi17 nently in the written statement and shall be pre18 sented in a format which is understandable to the 

19 typical plan administrator. 

20 ‘‘(2) MINIMUM ALLOCATION REQUIREMENTS.— 

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

22 connection with the services provided under each 

23 contract or arrangement shall specify component 

24 charges (to the extent such services for the plan are 


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1 provided under the contract or arrangement) as fol2 lows: 

3 ‘‘(A) charges for administration and rec4 ordkeeping, 

5 ‘‘(B) transaction based charges, 

6 ‘‘(C) charges for investment management, 

7 and 

8 ‘‘(D) all such charges not described in sub9 paragraph (A), (B), or (C). 

10 The Secretary may by regulation provide for the ap11 propriate allocation of component charges among the 

12 categories of charges provided in subparagraphs (A), 

13 (B), (C), and (D). 

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

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

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

17 presented in the written statement as an aggregate 

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

19 total charges may also be presented as a percentage 

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

21 shall be itemized separately as dollar amounts or as 

22 percentages of the applicable base amounts. 

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

24 the statement required under this subsection in con25 nection with any service, the service provider may 


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1 provide a reasonable and representative estimate of 

2 the charges required to be specified under paragraph 

3 (1)(B) and shall indicate any such estimate as being 

4 such an estimate. Any such estimate shall be based 

5 on reasonable assumptions specified in the statement 

6 (which shall include the previous year’s experience of 

7 the plan or, in the case of a new plan, a reasonable 

8 estimate, taking into account the plan’s participants 

9 and beneficiaries). 

10 ‘‘(5) DISCLOSURE OF FINANCIAL RELATION11 SHIPS.— 

12 ‘‘(A) IN GENERAL.—The statement re13 quired under paragraph (1) shall include a writ14 ten disclosure of— 

15 ‘‘(i) any payment to be provided (or 

16 the amount representing the value of any 

17 services to be provided) to the service pro18 vider (or any affiliate thereof) from any 

19 entity other than the plan or the accounts 

20 of participants or beneficiaries pursuant 

21 to, or in connection with, the contract or 

22 arrangement described in paragraph (1) 

23 and the amount and type of any payment 

24 to be made or credit to be received for 

25 such services (irrespective of whether the 


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1 service provider (or affiliate thereof) or 

2 other person providing such services is af3 filiated or unaffiliated with the plan, the 

4 plan sponsor, the plan administrator, or 

5 any other plan official), and 

6 ‘‘(ii) such other similar arrangements 

7 benefitting the service provider (or any af8 filiate thereof) as may be specified by the 

9 Secretary. 

10 In any case in which the contract or arrange11 ment described in paragraph (1) provides for 

12 the payments described in clause (i) in terms of 

13 a formula, the requirements of such clause may 

14 be met by specifying the formula to be used in 

15 connection with such payments and describing 

16 the application of such formula. 

17 ‘‘(B) INCLUSIONS.— 

18 ‘‘(i) IN GENERAL.—Disclosures de19 scribed under subparagraph (A)(ii) shall 

20 include the extent to which the service pro21 vider (or any affiliate thereof) may benefit 

22 from the offering of its own proprietary in23 vestment products or those of third par24 ties, including (but not limited to) crossVerDate Nov 24 2008 04:04 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2989.IH H2989

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1 selling of affiliated products or services to 

2 the plan sponsor or participants. 

3 ‘‘(ii) APPLICABLE PROHIBITED

4 TRANSACTION EXEMPTION.—Disclosures 

5 under this paragraph may include a de6 scription of any applicable prohibited 

7 transaction exemption under section 408 

8 related to the services described in the 

9 statement required under paragraph (1). 

10 ‘‘(6) DISCLOSURE OF IMPACT OF SHARE CLASS11 ES.—The statement required under paragraph (1) 

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

13 prices of certain mutual fund investments that are 

14 available to the plan may be different from the share 

15 prices outside of the plan due to the existence of dif16 ferent share classes and provide the basis for these 

17 differences. 

18 ‘‘(7) DISCLOSURE OF CERTAIN ARRANGEMENTS

19 IN CONNECTION WITH FREE OR DISCOUNTED SERV20 ICES OR REIMBURSEMENTS BY SERVICE PRO21 VIDERS.—In any case in which services are provided 

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

23 with the plan, by any service provider without ex24 plicit charge or for charges set at a discounted rate 

25 or subject to rebate, the statement required under 


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

2 extent to which, and the amount by which consider3 ation is otherwise obtained by the service provider 

4 (or any affiliate thereof), the plan, or the plan spon5 sor for such services, directly or indirectly, by means 

6 of any charges against the plan. 

7 ‘‘(8) REVIEW BY THE SECRETARY.—The Sec8 retary shall, from time to time as determined appro9 priate by the Secretary, review the accuracy and suf10 ficiency of statements provided pursuant to this sub11 section. 

12 ‘‘(9) UPDATING.—Each service provider shall 

13 provide to the plan administrator an updated written 

14 statement described in paragraph (1) describing any 

15 material change in the information included in the 

16 statement provided pursuant to paragraph (1) as 

17 soon as is reasonable after the occurrence of the 

18 change is known. Such an updated written state19 ment, or, in the case of a plan year in which no ma20 terial change in the information included in the 

21 statement provided pursuant to paragraph (1) has 

22 occurred, a written statement setting forth such 

23 fact, shall be provided by the service provider not 

24 less often than annually. 

25 ‘‘(10) LIMITATIONS.— 


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1 ‘‘(A) DOLLAR LIMITATION.— 

2 ‘‘(i) IN GENERAL.—The requirements 

3 of this subsection shall apply with respect 

4 to any contract or arrangement for services 

5 provided during any plan year only if the 

6 total charged for such services under such 

7 contract or arrangement is reasonably ex8 pected to equal or exceed $5,000. 

9 ‘‘(ii) ADJUSTMENTS BY THE SEC10 RETARY.—The Secretary may be regula11 tion adjust the dollar amount specified in 

12 this subparagraph to a lesser amount for 

13 small plans and to a greater amount for 

14 other plans and provide for appropriate an15 nual adjustments in such adjusted 

16 amounts. 

17 ‘‘(B) GENERAL APPLICABILITY OF RE18 QUIREMENTS WITH RESPECT TO SERVICES.— 

19 Nothing in this subsection shall be construed to 

20 require any service provider to provide any serv21 ice with respect to any particular plan sponsor. 

22 ‘‘(11) SATISFACTION OF FIDUCIARY RULES.— 

23 Nothing in the preceding provisions of this sub24 section affects the obligations of fiduciaries under 

25 part 4 of this subtitle. 


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1 ‘‘(b) DISCLOSURES TO PARTICIPANTS AND BENE2 FICIARIES.— 

3 ‘‘(1) ADVANCE NOTICE OF AVAILABLE INVEST4 MENT OPTIONS.—The plan administrator of an indi5 vidual account plan that permits participants or 

6 beneficiaries to direct the investment of assets in 

7 their individual accounts shall provide to the partici8 pant or beneficiary notice of the investment options 

9 available for election under the plan before a reason10 able period prior to— 

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

12 the plan for the participant’s initial investment 

13 of any contribution made on behalf of such par14 ticipant, and 

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

16 change in investment options. 

17 In the case of a plan that provides for immediate eli18 gibility or that contains an automatic contribution 

19 arrangement (as defined in subparagraphs (A) and 

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

21 subparagraph (A) may be provided within any rea22 sonable period prior to such initial investment. With 

23 respect to any notice required under this paragraph, 

24 the Secretary shall prescribe regulations creating 

25 specific requirements for periods of advance notice 


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1 to be treated as reasonable under this paragraph (of 

2 not less than 10 days) in circumstances similar to 

3 those described in section 101(i)(2)(C), and such no4 tice may be combined with any similar notice that 

5 may be required under section 404(c)(5) or under 

6 this section. 

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

8 The notice required under paragraph (1) shall— 

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

10 language presented in a manner which is easily 

11 understandable by the typical participant, indi12 cating which components of the charges (both 

13 direct and indirect) for each investment option 

14 are payable by the participant or beneficiary 

15 and how such components are to be paid, 

16 ‘‘(B) set forth, with respect to each avail17 able investment option— 

18 ‘‘(i) the name of the option, 

19 ‘‘(ii) information effectively describing 

20 the investment objectives of the option 

21 (such as a description of a broadly recog22 nized asset class), 

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

24 option, 


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1 ‘‘(iv) whether the option is diversified 

2 among various classes of assets so as to 

3 minimize the risk of large losses or should 

4 be combined with other options so as to 

5 obtain such diversification, 

6 ‘‘(v) whether the investment option is 

7 actively managed or passively managed in 

8 relation to an index and the difference be9 tween active management and passive 

10 management, 

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

12 additional plan-specific, option-specific, 

13 and generally available investment infor14 mation regarding the option may be ob15 tained, and 

16 ‘‘(vii) a statement explaining that in17 vestment options should not be evaluated 

18 solely on the basis of the charges for each 

19 option but should also be based on careful 

20 consideration of other key factors, includ21 ing the risk level of the option, the invest22 ment objectives of the option, the principal 

23 investment strategies of the option, and 

24 historical returns of the option, and 


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

2 relating to the charges described in paragraph 

3 (3) in connection with all investment options 

4 available under the plan, as provided in para5 graph (3). 

6 ‘‘(3) PLAN FEE COMPARISON CHART.— 

7 ‘‘(A) IN GENERAL.— 

8 ‘‘(i) IN GENERAL.—The notice pro9 vided under this subsection shall include a 

10 plan fee comparison chart consisting of a 

11 comparison of actual service and invest12 ment charges (including, for purposes of 

13 this clause, charges for the offering of an 

14 investment option) that will or could be as15 sessed against the account of the partici16 pant or beneficiary with respect to the plan 

17 year. The plan fee comparison chart shall 

18 be presented in a manner which is easily 

19 understood by the typical participant and 

20 include such information as the Secretary 

21 determines necessary to permit partici22 pants and beneficiaries to assess the serv23 ices for which charges will or could be as24 sessed against the account. 


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1 ‘‘(ii) FORM.—For purposes of this 

2 paragraph, the potential service charges 

3 shall be provided in the form of a dollar 

4 amount or as a formula (such as a per5 centage of assets), as appropriate. The 

6 form of the potential service charges shall 

7 be presented in a manner which is easily 

8 understandable by the typical participant, 

9 including examples that demonstrate how 

10 the charges will be assessed against the ac11 count of the participant or beneficiary. 

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

13 plan fee comparison chart shall provide infor14 mation in relation to the following categories of 

15 charges that will or could be assessed against 

16 the account of the participant or beneficiary: 

17 ‘‘(i) ASSET-BASED CHARGES SPECIFIC

18 TO INVESTMENT.—Charges that vary de19 pending on the investment options selected 

20 by the participant or beneficiary, including 

21 expense ratios and investment-specific 

22 asset-based charges. The information relat23 ing to such charges shall include a state24 ment noting any charges for 1 or more inVerDate Nov 24 2008 04:04 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H2989.IH H2989

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1 vestment options which pay for services 

2 other than investment management. 

3 ‘‘(ii) ASSET-BASED CHARGES NOT

4 SPECIFIC TO INVESTMENT.—Charges that 

5 are assessed as a percentage of the total 

6 assets in the account of the participant or 

7 beneficiary, regardless of the investment 

8 option selected. 

9 ‘‘(iii) ADMINISTRATIVE AND TRANS10 ACTION-BASED CHARGES.—Administration 

11 and transaction-based charges, including 

12 fees charged to participants to cover plan 

13 administration, compliance, and record14 keeping costs, plan loan origination fees, 

15 possible redemption fees, and possible sur16 render charges, that are not assessed as a 

17 percentage of the total assets in the ac18 count and are either automatically de19 ducted each year or result from certain 

20 transactions engaged in by the participant 

21 or beneficiary. 

22 ‘‘(iv) OTHER CHARGES.—Any other 

23 charges which may be deducted from par24 ticipants’ or beneficiaries’ accounts and 


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

2 and (iii). 

3 ‘‘(C) DESCRIPTION OF PURPOSE FOR

4 CHARGES.—The notice shall indicate the extent 

5 to which each charge is for investment manage6 ment, transactions, plan administration and 

7 recordkeeping, or other identified services. 

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

9 In connection with each investment option listed 

10 in the plan fee comparison chart, the chart 

11 shall specify (as amounts or percentages) the 

12 fees assessed in connection with such option 

13 and the historical returns, net of fees and ex14 penses, together with language indicating that 

15 past performance does not guarantee future re16 sults. The historical returns shall be specified 

17 for the previous year, 5 years, and 10 years (or 

18 for the period since inception, if shorter). 

19 ‘‘(4) MODEL NOTICES.—The Secretary shall 

20 prescribe one or more model notices that may be 

21 used for purposes of satisfying the requirements of 

22 this subsection, including model plan fee comparison 

23 charts. 

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

25 the notice required under this subsection, the plan 


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

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

5 Any such estimate shall be based on reasonable as6 sumptions stated in the notice (such as the previous 

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

8 reasonable estimate, taking into account the plan’s 

9 participants and beneficiaries). 

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

11 under this section may be provided through an electronic 

12 medium under rules prescribed by the Secretary. Such 

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

16 rules from time to time as appropriate to take into account 

17 new developments, including new forms of electronic 

18 media, and to fairly take into consideration the interests 

19 of plan sponsors, service providers, and participants. The 

20 rules prescribed by the Secretary pursuant to this sub21 section shall provide for a method for the typical partici22 pant or beneficiary to obtain without undue burden any 

23 such disclosure in writing on paper in lieu of receipt 

24 through an electronic medium. 


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1 ‘‘(d) REGULATIONS REGARDING CERTAIN PROD2 UCTS.—The Secretary may by regulation identify certain 

3 types of investment options, such as an option that pro4 vides a guaranteed rate of return and that does not iden5 tify specific fees, and prescribe alternative disclosures of 

6 cost and performance measures that correspond to the 

7 particular circumstances of such options. 

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

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

10 connection with any service provided to a plan or 

11 any financial product provided to the plan in which 

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

13 other compensation charged or paid for such service 

14 or product, including money and any other thing of 

15 monetary value to be received by the provider of the 

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

17 the service or product. 

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

19 connection with a plan, a service provided directly or 

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

21 provided directly or indirectly in connection with a 

22 financial product in which plan assets are to be in23 vested. 

24 ‘‘(3) CONTRACT OR ARRANGEMENT.—The term 

25 ‘contract or arrangement’ means, in connection with 


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1 any 2 or more parties, any contract or arrangement 

2 entered into between or among such parties, and any 

3 extension or renewal thereof. 

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

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

6 service, a person directly or indirectly providing such 

7 service. 

8 ‘‘(5) REGULATIONS.—The Secretary shall pro9 vide by regulation such definitions of other terms 

10 used in this section as the Secretary determines ap11 propriate.’’. 

12 (b) QUARTERLY BENEFIT STATEMENTS.—Section 

13 105 of such Act (29 U.S.C. 1025) is amended— 

14 (1) in subsection (a)(2)— 

15 (A) by redesignating subparagraph (C) as 

16 subparagraph (H); 

17 (B) in subparagraph (B)(ii)— 

18 (i) in subclause (II), by striking ‘‘di19 versified, and’’ and inserting ‘‘diversified,’’; 

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

21 period and inserting ‘‘, and’’; and 

22 (iii) by adding after subclause (III) 

23 the following new subclause: 

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

25 participant’s account for which the particiVerDate Nov 24 2008 04:04 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\H2989.IH H2989

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1 pant has the right to direct the investment 

2 of assets, the information described in sub3 paragraph (C).’’; and 

4 (C) by inserting after subparagraph (B) 

5 the following new subparagraphs: 

6 ‘‘(C) PERIODIC ACCOUNT INFORMATION

7 FOR PARTICIPANTS AND BENEFICIARIES.—For 

8 purposes of subparagraph (B)(ii)(IV), the infor9 mation described in this subparagraph consists 

10 of the following, indicating the portion of each 

11 amount described in clauses (i) though (vii) at12 tributable to each investment option elected in 

13 connection with the participant’s account: 

14 ‘‘(i) the starting balance of the par15 ticipant’s account, 

16 ‘‘(ii) contributions made during the 

17 quarter, itemizing separately totals for em18 ployer and totals for employee contribu19 tions, 

20 ‘‘(iii) investment earnings or losses on 

21 the account balance during the quarter (if 

22 any), 

23 ‘‘(iv) actual or estimated charges 

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

25 which reduce the account during the quarVerDate Nov 24 2008 04:04 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\H2989.IH H2989

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1 ter, expressed in dollars or, if estimated, 

2 such estimated dollar charges as are de3 rived from an expense ratio (which may be 

4 expressed as a specific date estimate based 

5 on reasonable assumptions stated in the 

6 disclosure (such as the previous year’s ex7 pense ratio)), 

8 ‘‘(v) any other direct charges to the 

9 participant or beneficiary in connection 

10 with the participant’s account, 

11 ‘‘(vi) the ending balance of the ac12 count, 

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

14 to each investment option, expressed as an 

15 amount and as a percentage, and 

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

17 updated version of the plan fee comparison 

18 chart prepared for purposes of section 

19 111(b)(3). 

20 ‘‘(D) OTHER INFORMATION.—The plan ad21 ministrator may include in the quarterly pen22 sion benefit statement information relating to 

23 the historical return and risk of each invest24 ment option and the estimated amount that the 

25 participant needs to contribute each month or 


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1 year so as to retire at retirement age (as de2 fined in section 216(l) of the Social Security 

3 Act). 

4 ‘‘(E) ESTIMATIONS.—For purposes of 

5 making the disclosure of actual charges or per6 centages as required under this paragraph, the 

7 plan administrator may provide a reasonable 

8 and representative estimate of such charges or 

9 percentages and shall indicate any such esti10 mate as being such an estimate. Any such esti11 mate shall be based on reasonable assumptions 

12 included in the statement (such as the previous 

13 year’s experience). 

14 ‘‘(F) MODEL STATEMENTS.—The Sec15 retary shall prescribe one or more model pen16 sion benefit statements that may be used for 

17 purposes of satisfying the requirements of sub18 paragraphs (B)(ii) and (C). 

19 ‘‘(G) ANNUAL COMPLIANCE FOR SMALL

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

22 investment as described in paragraph 

23 (1)(A)(i)— 

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


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1 provide the pension benefit statement 

2 under paragraph (1) on an annual rather 

3 than a quarterly basis, and 

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

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

7 and 

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

10 ‘‘(d) ASSISTANCE TO SMALL EMPLOYERS.—The Sec11 retary shall make available to employers with 100 or fewer 

12 employees— 

13 ‘‘(1) educational and compliance materials de14 signed to assist such employers in selecting and 

15 monitoring service providers for individual account 

16 plans which permit a participant or beneficiary to 

17 exercise control over the assets in the account of the 

18 participant or beneficiary, investment options under 

19 such plans, and charges relating to such options, 

20 and 

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

22 in finding and understanding affordable investment 

23 options for such plans and in comparing the invest24 ment performance of, and charges for, such options 


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1 on an ongoing basis against appropriate benchmarks 

2 or other appropriate measures. 

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

4 PARTICIPANTS AND BENEFICIARIES.—The Secretary shall 

5 provide assistance to plan sponsors of individual account 

6 plans and participants and beneficiaries under such plans 

7 with any questions or problems regarding compliance with 

8 the requirements of this section. 

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

10 under this section may be provided through an electronic 

11 medium under rules prescribed by the Secretary. Such 

12 rules shall be similar to those applicable under the Inter13 nal Revenue Code of 1986 with respect to notices to par14 ticipants in pension plans. The Secretary may modify such 

15 rules from time to time as appropriate to take into account 

16 new developments, including new forms of electronic 

17 media, and to fairly take into consideration the interests 

18 of plan sponsors, service providers, and participants. The 

19 rules prescribed by the Secretary pursuant to this sub20 section shall provide for a method for the typical partici21 pant or beneficiary to obtain without undue burden any 

22 such disclosure in writing on paper in lieu of receipt 

23 through an electronic medium. 

24 ‘‘(g) DEFINITIONS.—For purposes of this section— 


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

2 connection with any service provided to a plan or 

3 any financial product provided to the plan in which 

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

5 other compensation charged or paid for such service 

6 or product, including money and any other thing of 

7 monetary value to be received by the provider of the 

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

9 the service or product. 

10 ‘‘(2) SERVICE PROVIDER.—The terms ‘service 

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

12 service (as defined in section 111(e)(2)), a person di13 rectly or indirectly providing such service. 

14 ‘‘(3) REGULATIONS.—The Secretary shall pro15 vide by regulation such definitions of other terms 

16 used in this section as the Secretary determines ap17 propriate.’’. 

18 (c) ENFORCEMENT.—Section 502 of such Act (29 

19 U.S.C. 1132) is amended— 

20 (1) in subsection (a)(6), by striking ‘‘under 

21 paragraph (2)’’ and all that follows through ‘‘sub22 section (c)’’ and inserting ‘‘under paragraph (2), 

23 (4), (5), (6), (7), (8), (9), (10), or (11) of subsection 

24 (c)’’; and 


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1 (2) in subsection (c), by redesignating the sec2 ond paragraph (10) as paragraph (12), and by in3 serting after the first paragraph (10) the following 

4 new paragraph: 

5 ‘‘(11)(A) In the case of any violation of section 

6 111(a) by a service provider (as defined in section 

7 111(e)(4)), the service provider may be assessed by the 

8 Secretary a civil penalty of up to $1,000 a day with re9 spect to each such violation from the date of the initial 

10 violation until the date on which such violation is cor11 rected, subject to a total maximum penalty of 10 percent 

12 of the amount involved, as determined by the Secretary. 

13 ‘‘(B) Any plan administrator with respect to a plan 

14 who fails or refuses to provide a statement to participants 

15 and beneficiaries in accordance with section 

16 105(a)(2)(B)(ii) or 111(b) may be assessed by the Sec17 retary a civil penalty of up to $100 a day from the date 

18 of the failure or refusal to the date on which such state19 ment or notice is so provided. 

20 ‘‘(C) For purposes of this paragraph, each violation 

21 with respect to any single participant, beneficiary, or plan 

22 administrator shall be treated as a separate violation.’’. 

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


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1 is amended by striking the item relating to section 111 

2 and inserting the following new items: 

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

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

3 (e) EFFECTIVE DATES.— 

4 (1) Section 111(a) of the Employee Retirement 

5 Income Security Act of 1974 (as added by sub6 section (a) of this section) shall apply with respect 

7 to contracts or arrangements for services entered 

8 into after one year after the date of the enactment 

9 of this Act. 

10 (2) Section 111(b) of such Act (as added by 

11 subsection (a) of this section) shall apply with re12 spect to plan years beginning after one year after 

13 the date of the enactment of this Act. 

14 (3) The amendments made by subsection (b) of 

15 this section shall apply with respect to pension ben16 efit statements for calendar quarters beginning after 

17 one year after the date of the enactment of this Act. 

18 (4) The Secretary shall issue final regulations 

19 under the amendments made by this section not 

20 later than 270 days after the date of the enactment 

21 of this Act. Any act or practice in advance of the 

22 issuance of final regulations under the amendments 

23 made by this section which is in good faith compli24 ance with the requirements of such amendments 


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1 shall be treated as in compliance with any such final 

2 regulations. 

3 SEC. 102. MINIMUM INVESTMENT OPTION REQUIREMENT 

4 FOR INDIVIDUAL ACCOUNT PLANS. 

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

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

7 1104(c)) is amended by adding at the end the following 

8 new paragraph: 

9 ‘‘(6) MINIMUM INVESTMENT OPTION REQUIRE10 MENT FOR INDIVIDUAL ACCOUNT PLANS.—Para11 graph (1)(A)(ii) shall not apply in connection with 

12 any individual account plan which permits a partici13 pant or beneficiary to exercise control over the as14 sets in the account of the participant or beneficiary 

15 unless the plan includes at least one investment op16 tion— 

17 ‘‘(A) which is a passively managed invest18 ment with a portfolio of securities that is de19 signed to be representative of the United States 

20 investable equity market (including representa21 tion of small, mid, and large cap stocks) or the 

22 United States investment grade bond market 

23 (including Treasury, agency, non-agency, and 

24 corporate issues), or a combination thereof, and 


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1 ‘‘(B) which is described in the terms of the 

2 plan as offered without any endorsement of the 

3 Government or the plan sponsor. 

4 An investment shall not fail to satisfy the require5 ments of subparagraph (A) in connection with either 

6 market described in subparagraph (A) solely by rea7 son of a failure to invest in all or substantially all 

8 equities or bonds (as applicable) in such market, if 

9 the methodology used to select the equities or bonds 

10 is designed to approximate in a reasonable manner 

11 the broad experience of such market.’’. 

12 (b) CONFORMING AMENDMENT.—Section 

13 404(c)(1)(A)(ii) of such Act (29 U.S.C. 1104(c)(1)(A)(ii)) 

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

15 404(c)(6) and’’ after ‘‘exercise of control,’’. 

16 (c) EFFECTIVE DATES.— 

17 (1) The amendments made by this section shall 

18 apply with respect to plan years beginning after one 

19 year after the date of the enactment of this Act. 

20 (2) The Secretary shall issue final regulations 

21 under the amendments made by this section not 

22 later than 270 days after the date of the enactment 

23 of this Act. Any act or practice in advance of the 

24 issuance of final regulations under the amendments 

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1 ance with the requirements of such amendments 

2 shall be treated as in compliance with any such final 

3 regulations. 

4 SEC. 103. ENFORCEMENT COORDINATION AND REVIEW BY 

5 THE DEPARTMENT OF LABOR. 

6 (a) IN GENERAL.—Section 502 of the Employee Re7 tirement Income Security Act of 1974 (29 U.S.C. 1132) 

8 is amended by adding at the end the following new sub9 section: 

10 ‘‘(n) ENFORCEMENT COORDINATION OF CERTAIN

11 DISCLOSURE REQUIREMENTS AND REVIEW BY THE DE12 PARTMENT OF LABOR.— 

13 ‘‘(1) IN GENERAL.— 

14 ‘‘(A) NOTIFICATION AND ACTION.—The 

15 Secretary shall notify the applicable regulatory 

16 authority in any case in which the Secretary de17 termines that a service provider is engaged in 

18 a pattern or practice that precludes compliance 

19 by plan administrators with section 111. The 

20 Secretary shall, in consultation with the appli21 cable authority, take such timely enforcement 

22 action under this title as is necessary to assure 

23 that such pattern or practice ceases and desists 

24 and assess any appropriate penalties. 


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1 ‘‘(B) DISSEMINATION.—The Secretary 

2 shall widely disseminate to employee pension 

3 benefit plans covered by this title and their par4 ticipants and beneficiaries the identity of any 

5 service providers with respect to such plans 

6 found to be engaged in any pattern or practice 

7 described in subparagraph (A) with the intent 

8 to preclude compliance by plan administrators 

9 with section 111 and the particulars of such 

10 pattern or practice. Prior to the dissemination 

11 of the identity of any service providers identi12 fied and determined by the Secretary to be en13 gaged in such a pattern or practice, such serv14 ice provider shall receive a notice of intent to 

15 disseminate, an opportunity to request an ad16 ministrative hearing, and a timely appeal to the 

17 Secretary. 

18 ‘‘(2) ANNUAL AUDIT OF REPRESENTATIVE SAM19 PLING OF INDIVIDUAL ACCOUNT PLANS.—The Sec20 retary shall annually audit a representative sampling 

21 of individual account plans covered by this title to 

22 determine compliance with the requirements of sec23 tion 111. The Secretary shall annually report the re24 sults of such audit and any related recommendations 

25 of the Secretary to the Committee on Education and 


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1 Labor of the House of Representatives and the Com2 mittee on Health, Education, Labor, and Pensions 

3 of the Senate.’’. 

4 (b) REVIEW AND REPORT TO THE CONGRESS BY

5 SECRETARY OF LABOR RELATING TO REPORTING AND

6 DISCLOSURE REQUIREMENTS.— 

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

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

9 Labor shall review the reporting and disclosure re10 quirements of part 1 of subtitle B of title I of the 

11 Employee Retirement Income Security Act of 1974 

12 and related provisions of the Pension Protection Act 

13 of 2006. 

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

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

16 of Labor, in consultation with the Secretary of the 

17 Treasury, shall make such recommendations as the 

18 Secretary of Labor considers appropriate to the ap19 propriate committees of the Congress to consolidate, 

20 simplify, standardize, and improve the applicable re21 porting and disclosure requirements so as to simplify 

22 reporting for employee pension benefit plans and en23 sure that needed understandable information is pro24 vided to participants and beneficiaries of such plans. 


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1 TITLE II—PROHIBITION OF CON2 FLICTED INVESTMENT AD3 VICE 

4 SEC. 201. FINDINGS. 

5 The Congress finds as follows: 

6 (1) The market downturn of 2008 had a dev7 astating effect on the retirement security income of 

8 millions of American workers. 

9 (2) According to the Congressional Budget Of10 fice, $2 trillion of Americans’ retirement savings was 

11 wiped out over a 15-month period starting in 2008. 

12 (3) According to Congressional Budget Office 

13 estimates, the value of pension funds and retirement 

14 accounts dropped by roughly $1 trillion last year. 

15 (4) Individual average losses of participants in 

16 401(k) plans ranged from 7.2 percent to 11.2 per17 cent in the first nine months of 2008, according to 

18 an Employee Benefit Research Institute analysis of 

19 2.2 million retirements account participants. 

20 (5) During the first nine months of 2008, 

21 stocks were down, with the S&P 500 index losing 

22 more than 19 percent. With over two-thirds of the 

23 assets in 401(k)-style defined contribution plans in24 vested in equities, either directly or through mutual 

25 funds, participants are exposed to increased risk and 


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•HR 2989 IH

1 lack meaningful access to independent investment 

2 advise to help them better plan for their retirement. 

3 (6) Currently, 401(k) plan account holders have 

4 access to a self-interested or conflicted investment 

5 adviser. 

6 (7) In 2007, the Government Accountability Of7 fice concluded that conflicts of interest can have an 

8 adverse affect on defined benefit and defined con9 tribution plans. 

10 SEC. 202. INDEPENDENT INVESTMENT ADVISERS FOR INDI11 VIDUAL ACCOUNT PLANS. 

12 (a) IN GENERAL.—Section 3 of the Employee Retire13 ment Income Security Act of 1974 (29 U.S.C. 1002) is 

14 amended by adding at the end the following new para15 graph: 

16 ‘‘(43) INDEPENDENT INVESTMENT ADVISER.— 

17 ‘‘(A) IN GENERAL.—The term ‘inde18 pendent investment adviser’ means, with respect 

19 to an individual account plan that permits a 

20 participant or beneficiary to direct the invest21 ment of assets in their individual account, a 

22 person who— 

23 ‘‘(i) is a fiduciary of the plan by rea24 son of the provision of investment advice 

25 referred to in section 3(21)(A)(ii) by the 


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•HR 2989 IH

1 person to the plan or a participant or ben2 eficiary of the plan (irrespective of the 

3 manner in which such advice is provided or 

4 the extent to which such advice is based on 

5 a computer model), and 

6 ‘‘(ii) meets the requirements of either 

7 subparagraph (B) or (C). 

8 ‘‘(B) REQUIREMENTS APPLICABLE TO IN9 VESTMENT ADVISER.—An investment adviser 

10 meets the requirements of this subparagraph, 

11 if— 

12 ‘‘(i) such adviser is— 

13 ‘‘(I) registered as an investment 

14 adviser under the Investment Advisers 

15 Act of 1940 (15 U.S.C. 80b–1 et seq.) 

16 or under the laws of the State in 

17 which the adviser maintains its prin18 cipal office and place of business, 

19 ‘‘(II) a bank or similar financial 

20 institution referred to in section 

21 408(b)(4) or a savings association (as 

22 defined in section 3(b)(1) of the Fed23 eral Deposit Insurance Act (12 U.S.C. 

24 1813(b)(1))), but only if the invest25 ment advice referred to in section 


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1 3(21)(A)(ii) which is provided by such 

2 bank or institution is provided 

3 through a trust department of the 

4 bank or similar financial institution or 

5 savings association which is subject to 

6 periodic examination and review by 

7 Federal or State banking authorities, 

8 or 

9 ‘‘(III) any other person, but only 

10 if every individual providing the in11 vestment advice referred to in section 

12 3(21)(A)(ii) on behalf of such person 

13 (or on behalf of any affiliate thereof) 

14 is a registered representative, 

15 ‘‘(ii) such adviser is not the plan in16 vestment provider, 

17 ‘‘(iii) the fees or other compensation 

18 received, directly or indirectly, by such ad19 viser (and any affiliate thereof) with re20 spect to the provision of investment advice 

21 to any individual account plan or the par22 ticipants or beneficiaries of such a plan ei23 ther— 

24 ‘‘(I) are not received from any 

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1 ated with such persons) that market, 

2 sell, manage or provide investments in 

3 which plan assets of the individual ac4 count plan are invested, or 

5 ‘‘(II) do not vary depending on 

6 the basis of any investment option se7 lected, and are calculated pursuant to 

8 one or more of the following bases— 

9 ‘‘(aa) a flat-dollar basis, 

10 ‘‘(bb) a flat percentage of 

11 total plan assets basis, 

12 ‘‘(cc) a flat or sliding-scale 

13 percentage of the assets in a par14 ticipant’s or beneficiary’s account 

15 basis, or 

16 ‘‘(dd) a per-participant or 

17 per-beneficiary account basis, 

18 and 

19 ‘‘(iv) such adviser provides the invest20 ment advice pursuant to a written arrange21 ment with the individual account plan 

22 that— 

23 ‘‘(I) provides that the investment 

24 adviser is a fiduciary of the plan with 

25 respect to the provision of the advice, 


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•HR 2989 IH

1 ‘‘(II) requires that the advice be 

2 provided only by registered represent3 atives of the investment adviser or an 

4 affiliate thereof, 

5 ‘‘(III) discloses, before a reason6 able period prior to entering into such 

7 arrangement, whether the investment 

8 adviser or any affiliate thereof has 

9 any material financial, referral, or 

10 other relationship or arrangement 

11 with a money manager, broker, other 

12 client of the investment adviser or any 

13 affiliate thereof, other service provider 

14 to the plan, or any other entity that 

15 creates or may create a conflict of in16 terest for the investment adviser in 

17 performing services pursuant to the 

18 arrangement with the plan and, if so, 

19 includes a description of such relation20 ship or arrangement, 

21 ‘‘(IV) includes a representation 

22 by the investment adviser that, before 

23 the arrangement was entered into (or 

24 extended or renewed), the investment 

25 adviser provided to the plan fiduciary 


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•HR 2989 IH

1 that has authority to cause the em2 ployee benefit plan to enter into (or 

3 extend or renew) the arrangement a 

4 written statement disclosing all fees or 

5 other compensation that the invest6 ment adviser or any affiliate thereof 

7 anticipates to receive with respect to 

8 the advice during the first year, or 

9 other period if less than a year, of the 

10 arrangement, 

11 ‘‘(V) provides that the investment 

12 adviser will provide to such plan fidu13 ciary (and the participant and bene14 ficiary receiving the advice, if applica15 ble) a statement annually disclosing 

16 all fees or other compensation that 

17 the investment adviser or any affiliate 

18 thereof has received with respect to 

19 the advice during the prior year, and 

20 ‘‘(VI) provides that the terms of 

21 the arrangement required under this 

22 clause and any information provided 

23 under such arrangement pursuant to 

24 subclauses (III) and (IV) will also be 

25 furnished by the investment adviser to 


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•HR 2989 IH

1 the participant or beneficiary that is 

2 the recipient of the advice. 

3 ‘‘(C) ADVICE PROVIDED TO PARTICIPANTS

4 AND BENEFICIARIES UNDER AN INVESTMENT

5 ADVICE COMPUTER PROGRAM MEETING RE6 QUIREMENTS.—An investment adviser meets 

7 the requirements of this subparagraph if the in8 vestment advice provided by the adviser, to the 

9 extent that such advice is provided to partici10 pants and beneficiaries of individual account 

11 plans, is provided under an investment advice 

12 computer program with respect to which the re13 quirements of clauses (i) through (x) are met. 

14 ‘‘(i) ADVISER REQUIREMENTS.—The 

15 requirements of this clause are met if the 

16 investment adviser providing the invest17 ment advice under the program is— 

18 ‘‘(I) described in subclauses (I) 

19 or (II) of subparagraph (B)(i), 

20 ‘‘(II) an insurance company 

21 qualified to do business under the 

22 laws of a State, 

23 ‘‘(III) a person registered as a 

24 broker or dealer under the Securities 


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1 Exchange Act of 1934 (15 U.S.C. 78a 

2 et seq.), 

3 ‘‘(IV) an affiliate of a person de4 scribed in any of subclauses (I) 

5 through (III), or 

6 ‘‘(V) an employee, agent, or reg7 istered representative of a person de8 scribed in subclauses (I) through (IV) 

9 who satisfies the requirements of ap10 plicable insurance, banking, and secu11 rities laws relating to the provision of 

12 the advice. 

13 ‘‘(ii) COMPUTER MODEL.—The re14 quirements of this clause are met if the in15 vestment advice provided under the invest16 ment advice computer program is provided 

17 pursuant to a computer model that— 

18 ‘‘(I) applies generally accepted 

19 investment theories that take into ac20 count the historic returns of different 

21 asset classes over defined periods of 

22 time, 

23 ‘‘(II) utilizes relevant information 

24 about the participant, which may in25 clude age, life expectancy, retirement 


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•HR 2989 IH

1 age, risk tolerance, other assets or 

2 sources of income, and preferences as 

3 to certain types of investments, 

4 ‘‘(III) utilizes prescribed objective 

5 criteria to provide asset allocation 

6 portfolios comprised of investment op7 tions available under the plan, 

8 ‘‘(IV) operates in a manner that 

9 is not biased in favor of investments 

10 offered by the investment adviser or 

11 any person with a material affiliation 

12 or contractual relationship with the 

13 investment adviser, and 

14 ‘‘(V) takes into account all in15 vestment options under the plan in 

16 specifying how a participant’s account 

17 balance should be invested and is not 

18 inappropriately weighted with respect 

19 to any investment option. 

20 ‘‘(iii) CERTIFICATION.— 

21 ‘‘(I) IN GENERAL.—The require22 ments of this clause are met with re23 spect to the program if an eligible in24 vestment expert certifies, prior to the 

25 utilization of the computer model and 


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1 in accordance with rules prescribed by 

2 the Secretary, that the computer 

3 model meets the requirements of 

4 clause (ii). 

5 ‘‘(II) RENEWAL OF CERTIFI6 CATIONS.—If, as determined under 

7 regulations prescribed by the Sec8 retary, there are material modifica9 tions to the computer model, the re10 quirements of this subparagraph are 

11 met only if a certification described in 

12 subclause (I) is obtained with respect 

13 to the computer model as so modified. 

14 ‘‘(III) ELIGIBLE INVESTMENT

15 EXPERT.—For purposes of this 

16 clause, the term ‘eligible investment 

17 expert’ means any person— 

18 ‘‘(aa) which meets such re19 quirements as the Secretary may 

20 provide, and 

21 ‘‘(bb) does not have any ma22 terial affiliation or contractual 

23 relationship with any investment 

24 adviser or a related person there25 of (or any employee, agent, or 


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•HR 2989 IH

1 registered representative of the 

2 investment adviser or related per3 son). 

4 ‘‘(iv) EXCLUSIVITY OF RECOMMENDA5 TION.—The requirements of this clause are 

6 met with respect to the program, if— 

7 ‘‘(I) the only investment advice 

8 provided under the program is the ad9 vice generated by the computer model 

10 described in clause (ii), and 

11 ‘‘(II) any transaction pursuant to 

12 the investment advice occurs solely at 

13 the direction of the participant or 

14 beneficiary. 

15 ‘‘(v) EXPRESS AUTHORIZATION BY

16 SEPARATE FIDUCIARY.—The requirements 

17 of this clause are met with respect to the 

18 program if the program is expressly au19 thorized by a plan fiduciary other than— 

20 ‘‘(I) the person offering the pro21 gram, 

22 ‘‘(II) any person that is a plan 

23 investment provider with respect to 

24 the plan, and 


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1 ‘‘(III) any affiliate of either per2 son described in subclause (I) or (II). 

3 ‘‘(vi) ANNUAL AUDIT.—The require4 ments of this clause are met with respect 

5 to the program if an independent auditor, 

6 who has appropriate technical training or 

7 experience and proficiency and so rep8 resents in writing— 

9 ‘‘(I) conducts an annual audit of 

10 the program other than the computer 

11 model referred to in clause (ii) which 

12 is certified pursuant to clause (iii)) for 

13 compliance with the requirements of 

14 this subparagraph, and 

15 ‘‘(II) following completion of the 

16 annual audit, issues a written report 

17 to the fiduciary who authorized use of 

18 the program which presents its spe19 cific findings regarding compliance of 

20 the program with the requirements of 

21 this subsection. 

22 For purposes of this clause, an auditor is 

23 considered independent if it is not related 

24 to the person offering the program to the 

25 plan and is not affiliated with any person 


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1 providing investment options under the 

2 plan. 

3 ‘‘(vii) DISCLOSURE.—The require4 ments of this clause are met with respect 

5 to the program, if— 

6 ‘‘(I) the investment adviser pro7 vides to the fiduciary referred to in 

8 clause (v) and the participant or bene9 ficiary receiving investment advice 

10 under the program with regard to any 

11 security or other property offered as 

12 an investment option, before providing 

13 the advice, a written notification 

14 (which may consist of notification by 

15 means of electronic communication)— 

16 ‘‘(aa) of the role of any 

17 party that has a material affili18 ation or contractual relationship 

19 with the investment adviser in 

20 the development of the invest21 ment advice program and in the 

22 selection of investment options 

23 available under the plan, 

24 ‘‘(bb) of all fees or other 

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1 vice that the investment adviser 

2 or any affiliate thereof is to re3 ceive (including compensation 

4 provided by any third party) in 

5 connection with the provision of 

6 the advice or in connection with 

7 the sale, acquisition, or holding 

8 of the security or other property, 

9 ‘‘(cc) of any material affili10 ation or contractual relationship 

11 of the investment adviser or af12 filiates thereof in the security or 

13 other property, 

14 ‘‘(dd) of the manner, and 

15 under what circumstances, any 

16 information relating to the par17 ticipant or beneficiary which is 

18 provided under the program will 

19 be used or disclosed, 

20 ‘‘(ee) of the types of services 

21 provided by the investment ad22 viser in connection with the pro23 vision of investment advice by the 

24 investment adviser, and 


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1 ‘‘(ff) that a recipient of the 

2 advice may separately arrange 

3 for the provision of advice by an4 other adviser, that could have no 

5 material affiliation with, and 

6 could receive no fees or other 

7 compensation, in connection with 

8 the security or other property, 

9 and 

10 ‘‘(II) at all times during the pro11 vision of advisory services to the par12 ticipant or beneficiary, the investment 

13 adviser— 

14 ‘‘(aa) maintains the infor15 mation described in subclause (I) 

16 in accurate form and in the man17 ner described in clause (ix), 

18 ‘‘(bb) provides, without 

19 charge, accurate information to 

20 the recipient of the advice no less 

21 frequently than annually, 

22 ‘‘(cc) provides, without 

23 charge, accurate information to 

24 the recipient of the advice upon 

25 request of the recipient, and 


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1 ‘‘(dd) provides, without 

2 charge, accurate information to 

3 the recipient of the advice con4 cerning any material change to 

5 the information required to be 

6 provided to the recipient of the 

7 advice at a time reasonably con8 temporaneous to the change in 

9 information. 

10 ‘‘(viii) OTHER CONDITIONS.—The re11 quirements of this clause are met with re12 spect to the program, if— 

13 ‘‘(I) the investment adviser pro14 vides appropriate disclosure, in con15 nection with the sale, acquisition, or 

16 holding of the security or other prop17 erty with respect to which the invest18 ment advice is provided under the 

19 program, in accordance with all appli20 cable securities laws, 

21 ‘‘(II) the sale, acquisition, or 

22 holding occurs solely at the direction 

23 of the recipient of the advice, 

24 ‘‘(III) the compensation received 

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1 ates thereof in connection with the 

2 sale, acquisition, or holding of the se3 curity or other property is reasonable, 

4 and 

5 ‘‘(IV) the terms of the sale, ac6 quisition, or holding of the security or 

7 other property are at least as favor8 able to the plan as an arm’s length 

9 transaction would be. 

10 ‘‘(ix) STANDARDS FOR PRESENTATION

11 OF INFORMATION.— 

12 ‘‘(I) IN GENERAL.—The require13 ments of this clause are met with re14 spect to the program if the notifica15 tion required to be provided to partici16 pants and beneficiaries under clause 

17 (vii)(I) is written in a clear and con18 spicuous manner and in a manner cal19 culated to be understood by the aver20 age plan participant and is sufficiently 

21 accurate and comprehensive to rea22 sonably apprise such participants and 

23 beneficiaries of the information re24 quired to be provided in the notifica25 tion. 


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1 ‘‘(II) MODEL FORM FOR DISCLO2 SURE OF FEES AND OTHER COM3 PENSATION.—The Secretary shall 

4 issue a model form for the disclosure 

5 of fees and other compensation re6 quired in clause (vii)(I)(bb) which 

7 meets the requirements of subclause 

8 (I). 

9 ‘‘(x) MAINTENANCE FOR 6 YEARS OF

10 EVIDENCE OF COMPLIANCE.—The require11 ments of this clause are met with respect 

12 to the program if the investment adviser 

13 who provides advice under the program 

14 maintains, for a period of not less than 6 

15 years after the provision of the advice, any 

16 records necessary for determining whether 

17 the requirements of the preceding provi18 sions of this subparagraph and of sub19 section (b)(14) have been met. A failure to 

20 meet the requirements of this clause shall 

21 not be considered to have occurred solely 

22 because the records are lost or destroyed 

23 prior to the end of the 6-year period due 

24 to circumstances beyond the control of the 

25 investment adviser. 


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1 ‘‘(D) DEFINITIONS.—For purposes of this 

2 paragraph— 

3 ‘‘(i) AFFILIATE.—The term ‘affiliate’ 

4 means, in connection with any other per5 son, any person directly or indirectly 

6 (through one or more intermediaries) con7 trolling, controlled by, or under common 

8 control with such other person, or any offi9 cer, director, agent, or employee of, or 

10 partner with, such other person. 

11 ‘‘(ii) REGISTERED REPRESENTA12 TIVE.—The term ‘registered representa13 tive’ of another entity means a person de14 scribed in section 3(a)(18) of the Securi15 ties Exchange Act of 1934 (15 U.S.C. 

16 78c(a)(18)) (substituting the entity for the 

17 broker or dealer referred to in such sec18 tion) or a person described in section 

19 202(a)(17) of the Investment Advisers Act 

20 of 1940 (15 U.S.C. 80b–2(a)(17)) (sub21 stituting the entity for the investment ad22 viser referred to in such section). 

23 ‘‘(iii) PLAN INVESTMENT PRO24 VIDER.—The term ‘plan investment pro25 vider’ means any person that creates or 


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1 manages any investment in which plan as2 sets of the individual account plan are in3 vested and held in trust on behalf of such 

4 plan and includes any affiliate of such per5 son. Such term does not include— 

6 ‘‘(I) a plan sponsor (or an affil7 iate thereof) with respect to any in8 vestment created or managed by the 

9 plan sponsor (or affiliate), if only em10 ployee benefit plans maintained by 

11 such plan sponsor or an affiliate 

12 thereof invest in such investments, 

13 ‘‘(II) any person who makes the 

14 investment available to the plan, or 

15 any participant or beneficiary in the 

16 plan, as a part of a portfolio of invest17 ment options, to the extent that the 

18 investment options are created and 

19 managed by a person who is not an 

20 affiliate of the person making such 

21 portfolio available, and 

22 ‘‘(III) any person, solely by rea23 son of authorization by a participant 

24 or beneficiary in the plan of such per25 son to exercise control over the assets 


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1 in the participant’s or beneficiary’s 

2 account in such plan, if such assets 

3 are not invested in any investments 

4 created or managed by such person 

5 (or an affiliate thereof). 

6 ‘‘(iv) FEES OR OTHER COMPENSA7 TION.—The term ‘fees or other compensa8 tion’ includes money or any other thing of 

9 monetary value (for example, gifts, awards, 

10 and trips) received, or to be received, di11 rectly from the plan or plan sponsor or in12 directly (i.e., from any source other than 

13 the plan or the plan sponsor) by the invest14 ment adviser or any affiliate thereof in 

15 connection with the advice to be provided 

16 pursuant to the arrangement or because of 

17 the investment adviser’s or any affiliate’s 

18 position with the plan. Fees or other com19 pensation may be expressed in terms of a 

20 monetary amount, percentage of the plan’s 

21 assets, or per capita charge for each par22 ticipant or beneficiary of the plan. The 

23 manner in which compensation or fees are 

24 expressed shall contain sufficient informa25 tion to enable the plan fiduciary to evaluVerDate Nov 24 2008 04:04 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 E:\BILLS\H2989.IH H2989

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1 ate the reasonableness of such compensa2 tion or fees.’’. 

3 (b) FIDUCIARY DUTIES WITH RESPECT TO INVEST4 MENT ADVICE.— 

5 (1) IN GENERAL.—Section 404(a) of such Act 

6 (29 U.S.C. 1104(a)) is amended by adding at the 

7 end the following new paragraph: 

8 ‘‘(3)(A) The fiduciary of an individual account plan 

9 that permits a participant or beneficiary to direct the in10 vestment of assets in the individual account shall not ap11 point, contract with, or otherwise arrange for an invest12 ment adviser to provide investment advice referred to in 

13 section 3(21)(A)(ii) to the plan or the participant or bene14 ficiary unless the investment adviser is an independent in15 vestment adviser (as defined in section 3(43)). 

16 ‘‘(B) The independent investment adviser providing 

17 investment advice to a plan or to a participant or bene18 ficiary shall provide, before a reasonable period prior to 

19 the initial provision of the advice, a written notification— 

20 ‘‘(i) of the past performance and historical 

21 rates of return of the investment options available 

22 with respect to the plan and comparisons of such op23 tions to relevant benchmarks, and 


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1 ‘‘(ii) that the investment adviser is acting as a 

2 fiduciary of the plan in connection with the provision 

3 of the advice. 

4 ‘‘(C) Nothing in this paragraph shall be construed to 

5 exempt a plan sponsor or other person who is a fiduciary 

6 from any requirement of this part for the prudent selec7 tion and periodic review of an independent investment ad8 viser with whom the plan sponsor or other person enters 

9 into an arrangement for the provision of investment advice 

10 referred to in section 3(21)(A)(ii), except that any such 

11 requirement shall not be construed to preclude reasonable 

12 reliance by the plan sponsor or other person on the rep13 resentation of any person that such person making the 

14 representation meets the requirements of section 

15 3(43)(A). The plan sponsor and any other person who is 

16 a fiduciary (other than the independent investment ad17 viser) has no duty under this part to monitor the specific 

18 investment advice given by the independent investment ad19 viser to any particular recipient of the advice and shall 

20 not be liable under this title for any loss, or by reason 

21 of any breach, which results from such specific investment 

22 advice given by the independent investment adviser. 

23 ‘‘(D) Nothing in this part shall be construed to pre24 clude the use of plan assets to pay for reasonable expenses 


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1 in providing investment advice referred to in section 

2 3(21)(A)(ii). 

3 ‘‘(E)(i) This paragraph shall not apply to a fiduciary 

4 of an individual account plan that permits a participant 

5 or beneficiary to direct the investment of assets in their 

6 individual account in any case in which the fiduciary ap7 points, contracts with, or otherwise arranges for an invest8 ment adviser to provide investment advice referred to in 

9 section 3(21)(A)(ii) to the plan or the participant or bene10 ficiary if, in such case, such advice— 

11 ‘‘(I) is provided under an arrangement that 

12 meets the requirements set forth in Advisory Opin13 ion 2001-09A issued under ERISA Procedure 76–1 

14 (41 Fed. Reg. 36281 (Aug. 27, 1976)), or 

15 ‘‘(II) is provided under an arrangement that 

16 meets the requirements of any Advisory Opinion 

17 issued under ERISA Procedure 76–1 or any exemp18 tion issued by the Secretary under section 408(a), as 

19 determined under the law in effect immediately prior 

20 to the enactment of the Pension Protection Act of 

21 2006. 

22 ‘‘(ii) The Secretary shall prescribe rules requiring 

23 such reporting and disclosure as the Secretary considers 

24 appropriate with respect to investment advice arrange25 ments permitted by reason of this subparagraph.’’. 


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1 (2) REPORT ON PRIOR ADVISORY OPINIONS AND

2 EXCEPTIONS.—The Secretary of Labor shall, as 

3 soon as practicable after the date of the enactment 

4 of this Act— 

5 (A) review each Advisory Opinion and ex6 ception described in section 404(a)(3)(E)(i) of 

7 the Employee Retirement Income Security Act 

8 of 1974 (as added by this paragraph (1)) to de9 termine the extent to which such Advisory 

10 Opinion or exception fails to adequately serve 

11 the interests of participants and beneficiaries 

12 and to be adequately protective of the rights of 

13 participants and beneficiaries, and 

14 (B) submit a report to each House of the 

15 Congress describing the extent of any such fail16 ure by any such Advisory Opinion or exception. 

17 (c) CONFORMING AMENDMENTS.—Section 408 of 

18 such Act (29 U.S.C. 1108) is amended— 

19 (1) by striking subsection (g); and 

20 (2) by striking subsection (b)(14)(B) and in21 serting the following: 

22 ‘‘(B) the investment advice is provided by 

23 an independent investment adviser (as defined 

24 in section 3(43)).’’. 


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1 (d) REGULATORY AUTHORITY.—The Secretary of 

2 Labor may issue regulations providing that an investment 

3 adviser can still be considered as meeting the requirements 

4 of section 3(43)(B) of the Employee Retirement Income 

5 Security Act of 1974 despite the receipt of a de minimus 

6 amount of compensation that fails to meet the require7 ments of section 3(43)(B)(iii) of such Act due to the exist8 ence of previously existing contracts. 

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

10 this section shall apply to plan years beginning after one 

11 year after the date of the enactment of this Act. 

12 SEC. 203. EXPANSION OF OUTREACH TO PROMOTE RETIRE13 MENT INCOME SAVINGS TO INCLUDE PRO14 MOTION OF EDUCATION ON FINANCIAL LIT15 ERACY WITH RESPECT TO INVESTMENT FOR 

16 RETIREMENT. 

17 (a) IN GENERAL.—Section 516 of the Employee Re18 tirement Income Security Act of 1974 (29 U.S.C. 1146) 

19 is amended— 

20 (1) in subsection (b), by inserting after ‘‘cre21 ation of educational materials,’’ the following: ‘‘pro22 motion of education in financial literacy with respect 

23 to investment for retirement as provided in sub24 section (e),’’; 


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1 (2) by redesignating subsection (e) as sub2 section (f); and 

3 (3) by inserting after subsection (d) the fol4 lowing new subsection: 

5 ‘‘(e) PROMOTION OF EDUCATION IN FINANCIAL LIT6 ERACY WITH RESPECT TO INVESTMENT FOR RETIRE7 MENT.—The Secretary, in consultation with the Secretary 

8 of Education and the Secretary of the Treasury, shall es9 tablish a program under which— 

10 ‘‘(1) employees are provided with information 

11 and materials— 

12 ‘‘(A) informing them about resources avail13 able for attaining financial literacy with respect 

14 to investment for retirement, 

15 ‘‘(B) effectively educating them about the 

16 importance of, and appropriate techniques with 

17 respect to, personal finance, saving for retire18 ment, and choosing independent investment ad19 visers when managing their accounts under in20 dividual account plans, and 

21 ‘‘(C) effectively educating them about debt 

22 obligations, the relationship of debt to savings, 

23 and the potential consequences of debt with re24 spect to saving for retirement, 


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1 ‘‘(2) employers are enlisted to participate in 

2 such program so as to assist in the attainment of 

3 the goals described in subparagraphs (A), (B), and 

4 (C) of paragraph (1) with respect to their employees, 

5 and 

6 ‘‘(3) appropriate standards of financial literacy 

7 of employees with respect to investment for retire8 ment are developed and published for utilization 

9 under such program.’’. 

10 (4) STUDY AND REPORT TO THE CONGRESS.— 

11 (A) IN GENERAL.—The Secretary of Labor 

12 shall conduct a survey of ongoing efforts by the 

13 Federal Government to assist employees with 

14 attainment of financial literacy with respect to 

15 investment for retirement and to educate them 

16 about the importance of, and appropriate tech17 niques with respect to, personal finance, debt 

18 obligations, saving for retirement, and choosing 

19 independent investment advisers when man20 aging their accounts under individual account 

21 plans. 

22 (B) REPORT.—Not later than 180 days 

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

24 Secretary shall submit a report to each House 

25 of the Congress setting forth the results of the 


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1 Secretary’s survey conducted pursuant to sub2 paragraph (A), together with such recommenda3 tions as the Secretary considers appropriate for 

4 improvement in efforts by the Federal Govern5 ment in assisting employees with attainment of 

6 financial literacy in connection with investment 

7 for retirement and educating them about the 

8 importance of, and appropriate techniques with 

9 respect to, personal finance, debt obligations, 

10 saving for retirement, and choosing independent 

11 investment advisers when managing their ac12 counts under individual account plans. 

13 TITLE III—TRANSITIONAL FUND14 ING RELIEF FOR DEFINED 

15 BENEFIT PLANS 

16 SEC. 301. ELECTION TO USE YIELD CURVE. 

17 (a) AMENDMENT TO ERISA.—The last sentence of 

18 clause (ii) of section 303(h)(2)(D) of the Employee Retire19 ment Income Security Act of 1974 (29 U.S.C. 

20 1083(h)(2)(D)(ii)) is amended to read as follows: ‘‘Such 

21 election, once made, may be revoked only with the consent 

22 of the Secretary, except that any election in effect for a 

23 plan with respect to a plan year beginning in 2009 may 

24 be revoked for the plan year beginning in 2010 without 

25 such consent.’’. 


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1 (b) AMENDMENT TO IRC.—The last sentence of 

2 clause (ii) of section 430(h)(2)(D) of the Internal Revenue 

3 Code of 1986 (relating to election to use yield curve) is 

4 amended to read as follows: ‘‘Such election, once made, 

5 may be revoked only with the consent of the Secretary, 

6 except that any election in effect for a plan with respect 

7 to a plan year beginning in 2009 may be revoked for the 

8 plan year beginning in 2010 without such consent.’’. 

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

10 this section shall apply to plan years beginning after De11 cember 31, 2009. 

12 SEC. 302. EFFECTIVE DATE OF REGULATIONS. 

13 The Secretary of the Treasury shall— 

14 (1) make the final regulations issued under sec15 tions 206(g) and 303 of the Employee Retirement 

16 Income Security Act of 1974 and sections 430 and 

17 436 of the Internal Revenue Code of 1986 effective 

18 no earlier than plan years beginning after December 

19 31, 2009; and 

20 (2) provide rules, for plan years beginning be21 fore the effective date of such final regulations, 

22 under which compliance with a reasonable interpre23 tation of an applicable provision under section 

24 206(g) or 303 of the Employee Retirement Income 

25 Security Act of 1974 or section 430 or 436 of the 


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1 Internal Revenue Code of 1986 shall be treated as 

2 compliance with such provision. 

3 SEC. 303. CLARIFICATION OF TREATMENT OF EXPENSES. 

4 (a) AMENDMENTS TO ERISA.— 

5 (1) IN GENERAL.—Clause (ii) of section 

6 303(b)(1)(A) of the Employee Retirement Income 

7 Security Act of 1974 (29 U.S.C. 1083(b)(1)(A)(ii)) 

8 is amended by striking ‘‘plan-related expenses’’ and 

9 inserting ‘‘plan-related administrative expenses’’. 

10 (2) CONFORMING AMENDMENT.—Subclause (II) 

11 of section 303(i)(2)(A)(i) of such Act (29 U.S.C. 

12 1083(i)(2)(A)(i)(II)) is amended by striking ‘‘plan13 related expenses’’ and inserting ‘‘plan-related admin14 istrative expenses’’. 

15 (b) AMENDMENTS TO IRC.— 

16 (1) IN GENERAL.—Clause (ii) of section 

17 430(b)(1)(A) of the Internal Revenue Code of 1986 

18 (relating to target normal cost) is amended by strik19 ing ‘‘plan-related expenses’’ and inserting ‘‘plan-re20 lated administrative expenses’’. 

21 (2) CONFORMING AMENDMENT.—Subclause (II) 

22 of section 430(i)(2)(A)(i) of such Code is amended 

23 by striking ‘‘plan-related expenses’’ and inserting 

24 ‘‘plan-related administrative expenses’’. 


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

2 this section shall take effect as if included in the enact3 ment of paragraphs (1)(A), (1)(F)(i), (2)(A), and 

4 (2)(F)(i) of section 101(b) of the Worker, Retiree, and 

5 Employer Recovery Act of 2008 (Public Law 110–458; 

6 122 Stat. 5093). 

7 SEC. 304. INFORMATION REPORTING. 

8 (a) IN GENERAL.—Paragraph (1) of section 4010(b) 

9 of the Employee Retirement Security Act of 1974 (29 

10 U.S.C. 1310(b)(1)) is amended to read as follows: 

11 ‘‘(1) either of the following requirements are 

12 met: 

13 ‘‘(A) the funding target attainment per14 centage (as defined in subsection (d)) at the 

15 end of the preceding plan year of a plan main16 tained by the contributing sponsor or any mem17 ber of its controlled group is less thqan 80 per18 cent; or 

19 ‘‘(B) the aggregate unfunded vested bene20 fits (as determined under section 

21 4006(a)(3)(E)(iii)) of plans maintained by the 

22 contributing sponsor and the members of its 

23 controlled group exceed $50,000,000 (dis24 regarding plans with no unfunded vested bene25 fits);’’. 


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

2 this section shall apply to years beginning after 2009. 

3 SEC. 305. FIVE-YEAR EXTENSION OF AUTOMATIC AMORTI4 ZATION EXTENSION PERIOD FOR MULTIEM5 PLOYER PLANS. 

6 (a) ERISA AMENDMENTS.—Section 304(d) of the 

7 Employee Retirement Income Security Act of 1974 (29 

8 U.S.C. 1084(d)) is amended— 

9 (1) in paragraph (1)(A), by striking ‘‘5 years’’ 

10 and inserting ‘‘10 years’’; and 

11 (2) in paragraph (2)(A), by striking ‘‘10 years’’ 

12 and inserting ‘‘15 years’’. 

13 (b) IRC AMENDMENTS.—Section 431(d) of the Inter14 nal Revenue Code of 1986 (relating to extension of amorti15 zation periods for multiemployer plans) is amended— 

16 (1) in paragraph (1)(A), by striking ‘‘5 years’’ 

17 and inserting ‘‘10 years’’; and 

18 (2) in paragraph (2)(A), by striking ‘‘10 years’’ 

19 and inserting ‘‘15 years’’. 

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

21 this section shall apply with respect to applications for ex22 tension filed on or after the date of the enactment of this 

23 Act. 

Æ 


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