IB 

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 


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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] 


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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. 


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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 2009’’. 

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

7 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. 


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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 PLANS.— 

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

18 plan administrator of an individual account plan (or 

19 any other plan official with contracting authority 

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

21 contract or arrangement for services to the plan (in22 cluding, for purposes of this section, the offering of 

23 any investment option to the plan) unless such plan 

24 administrator or other official has received, reason25 ably in advance of entering into the contract or arVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 rangement, a single written statement from the serv2 ice provider which— 

3 ‘‘(A) specifies such services for the plan that 

4 will be provided in connection with the contract 

5 or arrangement, and 

6 ‘‘(B) provides the expected total annual 

7 charges for such services for the plan that will be 

8 provided in connection with the contract or ar9 rangement, including a reasonable allocation of 

10 such total annual charges among all relevant 

11 component charges specified in paragraph (2) 

12 (regardless of how the charges are actually as13 sessed). 

14 The description of the services and specification of the 

15 charges for the services shall be displayed prominently 

16 in the written statement and shall be presented in a 

17 format which is understandable to the typical plan 

18 administrator. 

19 ‘‘(2) MINIMUM ALLOCATION REQUIREMENTS.— 

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

21 connection with the services provided under each con22 tract or arrangement shall specify component charges 

23 (to the extent such services for the plan are provided 

24 under the contract or arrangement) as follows: 


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1 ‘‘(A) charges for administration and record2 keeping, 

3 ‘‘(B) transaction based charges, 

4 ‘‘(C) charges for investment management, 

5 and 

6 ‘‘(D) all such charges not described in sub7 paragraph (A), (B), or (C). 

8 The Secretary may by regulation provide for the ap9 propriate allocation of component charges among the 

10 categories of charges provided in subparagraphs (A), 

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

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

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

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

15 presented in the written statement as an aggregate 

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

17 total charges may also be presented as a percentage 

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

19 shall be itemized separately as dollar amounts or as 

20 percentages of the applicable base amounts. 

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

22 the statement required under this subsection in con23 nection with any service, the service provider may 

24 provide a reasonable and representative estimate of 

25 the charges required to be specified under paragraph 


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

2 such an estimate. Any such estimate shall be based on 

3 reasonable assumptions specified in the statement 

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

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

6 estimate, taking into account the plan’s participants 

7 and beneficiaries). 

8 ‘‘(5) DISCLOSURE OF FINANCIAL RELATION9 SHIPS.— 

10 ‘‘(A) IN GENERAL.—The statement required 

11 under paragraph (1) shall include a written dis12 closure of— 

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

14 the amount representing the value of any 

15 services to be provided) to the service pro16 vider (or any affiliate thereof) from any en17 tity other than the plan or the accounts of 

18 participants or beneficiaries pursuant to, or 

19 in connection with, the contract or arrange20 ment described in paragraph (1) and the 

21 amount and type of any payment to be 

22 made or credit to be received for such serv23 ices (irrespective of whether the service pro24 vider (or affiliate thereof) or other person 

25 providing such services is affiliated or unafVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 filiated with the plan, the plan sponsor, the 

2 plan administrator, or any other plan offi3 cial), and 

4 ‘‘(ii) such other similar arrangements 

5 benefitting the service provider (or any af6 filiate thereof) as may be specified by the 

7 Secretary. 

8 In any case in which the contract or arrange9 ment described in paragraph (1) provides for the 

10 payments described in clause (i) in terms of a 

11 formula, the requirements of such clause may be 

12 met by specifying the formula to be used in con13 nection with such payments and describing the 

14 application of such formula. 

15 ‘‘(B) INCLUSIONS.— 

16 ‘‘(i) IN GENERAL.—Disclosures de17 scribed under subparagraph (A)(ii) shall in18 clude the extent to which the service pro19 vider (or any affiliate thereof) may benefit 

20 from the offering of its own proprietary in21 vestment products or those of third parties, 

22 including (but not limited to) cross-selling 

23 of affiliated products or services to the plan 

24 sponsor or participants. 


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1 ‘‘(ii) APPLICABLE PROHIBITED TRANS2 ACTION EXEMPTION.—Disclosures under this 

3 paragraph may include a description of 

4 any applicable prohibited transaction ex5 emption under section 408 related to the 

6 services described in the statement required 

7 under paragraph (1). 

8 ‘‘(6) DISCLOSURE OF IMPACT OF SHARE CLASS9 ES.—The statement required under paragraph (1) 

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

11 prices of certain mutual fund investments that are 

12 available to the plan may be different from the share 

13 prices outside of the plan due to the existence of dif14 ferent share classes and provide the basis for these dif15 ferences. 

16 ‘‘(7) DISCLOSURE OF CERTAIN ARRANGEMENTS

17 IN CONNECTION WITH FREE OR DISCOUNTED SERV18 ICES OR REIMBURSEMENTS BY SERVICE PRO19 VIDERS.—In any case in which services are provided 

20 to the plan, or to the plan sponsor in connection with 

21 the plan, by any service provider without explicit 

22 charge or for charges set at a discounted rate or sub23 ject to rebate, the statement required under paragraph 

24 (1) shall specify the manner in which, the extent to 

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1 erwise obtained by the service provider (or any affil2 iate thereof), the plan, or the plan sponsor for such 

3 services, directly or indirectly, by means of any 

4 charges against the plan. 

5 ‘‘(8) REVIEW BY THE SECRETARY.—The Sec6 retary shall, from time to time as determined appro7 priate by the Secretary, review the accuracy and suf8 ficiency of statements provided pursuant to this sub9 section. 

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

11 provide to the plan administrator an updated written 

12 statement described in paragraph (1) describing any 

13 material change in the information included in the 

14 statement provided pursuant to paragraph (1) as 

15 soon as is reasonable after the occurrence of the 

16 change is known. Such an updated written statement, 

17 or, in the case of a plan year in which no material 

18 change in the information included in the statement 

19 provided pursuant to paragraph (1) has occurred, a 

20 written statement setting forth such fact, shall be pro21 vided by the service provider not less often than annu22 ally. 

23 ‘‘(10) LIMITATIONS.— 

24 ‘‘(A) DOLLAR LIMITATION.— 


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1 ‘‘(i) IN GENERAL.—The requirements 

2 of this subsection shall apply with respect to 

3 any contract or arrangement for services 

4 provided during any plan year only if the 

5 total charged for such services under such 

6 contract or arrangement is reasonably ex7 pected to equal or exceed $5,000. 

8 ‘‘(ii) ADJUSTMENTS BY THE SEC9 RETARY.—The Secretary may be regulation 

10 adjust the dollar amount specified in this 

11 subparagraph to a lesser amount for small 

12 plans and to a greater amount for other 

13 plans and provide for appropriate annual 

14 adjustments in such adjusted amounts 

15 ‘‘(B) GENERAL APPLICABILITY OF REQUIRE16 MENTS WITH RESPECT TO SERVICES.—Nothing 

17 in this subsection shall be construed to require 

18 any service provider to provide any service with 

19 respect to any particular plan sponsor. 

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

21 Nothing in the preceding provisions of this subsection 

22 affects the obligations of fiduciaries under part 4 of 

23 this subtitle. 

24 ‘‘(b) DISCLOSURES TO PARTICIPANTS AND BENE25 FICIARIES.— 


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1 ‘‘(1) ADVANCE NOTICE OF AVAILABLE INVEST2 MENT OPTIONS.—The plan administrator of an indi3 vidual account plan that permits participants or 

4 beneficiaries to direct the investment of assets in their 

5 individual accounts shall provide to the participant 

6 or beneficiary notice of the investment options avail7 able for election under the plan before a reasonable 

8 period prior to— 

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

10 plan for the participant’s initial investment of 

11 any contribution made on behalf of such partici12 pant, and 

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

14 change in investment options. 

15 In the case of a plan that provides for immediate eli16 gibility or that contains an automatic contribution 

17 arrangement (as defined in subparagraphs (A) and 

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

19 subparagraph (A) may be provided within any rea20 sonable period prior to such initial investment. With 

21 respect to any notice required under this paragraph, 

22 the Secretary shall prescribe regulations creating spe23 cific requirements for periods of advance notice to be 

24 treated as reasonable under this paragraph (of not 

25 less than 10 days) in circumstances similar to those 


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1 described in section 101(i)(2)(C), and such notice 

2 may be combined with any similar notice that may 

3 be required under section 404(c)(5) or under this sec4 tion. 

5 ‘‘(2) INFORMATION INCLUDED IN NOTICE.—The 

6 notice required under paragraph (1) shall— 

7 ‘‘(A) include a prominent statement, in lan8 guage presented in a manner which is easily un9 derstandable by the typical participant, indi10 cating which components of the charges (both di11 rect and indirect) for each investment option are 

12 payable by the participant or beneficiary and 

13 how such components are to be paid, 

14 ‘‘(B) set forth, with respect to each available 

15 investment option— 

16 ‘‘(i) the name of the option, 

17 ‘‘(ii) information effectively describing 

18 the investment objectives of the option (such 

19 as a description of a broadly recognized 

20 asset class), 

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

22 option, 

23 ‘‘(iv) whether the option is diversified 

24 among various classes of assets so as to 

25 minimize the risk of large losses or should 


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1 be combined with other options so as to ob2 tain such diversification, 

3 ‘‘(v) whether the investment option is 

4 actively managed or passively managed in 

5 relation to an index and the difference be6 tween active management and passive man7 agement, 

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

9 additional plan-specific, option-specific, 

10 and generally available investment informa11 tion regarding the option may be obtained, 

12 and 

13 ‘‘(vii) a statement explaining that in14 vestment options should not be evaluated 

15 solely on the basis of the charges for each 

16 option but should also be based on careful 

17 consideration of other key factors, including 

18 the risk level of the option, the investment 

19 objectives of the option, the principal invest20 ment strategies of the option, and historical 

21 returns of the option, and 

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

23 relating to the charges described in paragraph 

24 (3) in connection with all investment options 


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1 available under the plan, as provided in para2 graph (3). 

3 ‘‘(3) PLAN FEE COMPARISON CHART.— 

4 ‘‘(A) IN GENERAL.— 

5 ‘‘(i) IN GENERAL.—The notice provided 

6 under this subsection shall include a plan 

7 fee comparison chart consisting of a com8 parison of actual service and investment 

9 charges (including, for purposes of this 

10 clause, charges for the offering of an invest11 ment option) that will or could be assessed 

12 against the account of the participant or 

13 beneficiary with respect to the plan year. 

14 The plan fee comparison chart shall be pre15 sented in a manner which is easily under16 stood by the typical participant and include 

17 such information as the Secretary deter18 mines necessary to permit participants and 

19 beneficiaries to assess the services for which 

20 charges will or could be assessed against the 

21 account. 

22 ‘‘(ii) FORM.—For purposes of this 

23 paragraph, the potential service charges 

24 shall be provided in the form of a dollar 

25 amount or as a formula (such as a percentVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 age of assets), as appropriate. The form of 

2 the potential service charges shall be pre3 sented in a manner which is easily under4 standable by the typical participant, in5 cluding examples that demonstrate how the 

6 charges will be assessed against the account 

7 of the participant or beneficiary. 

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

9 plan fee comparison chart shall provide informa10 tion in relation to the following categories of 

11 charges that will or could be assessed against the 

12 account of the participant or beneficiary: 

13 ‘‘(i) ASSET-BASED CHARGES SPECIFIC

14 TO INVESTMENT.—Charges that vary de15 pending on the investment options selected 

16 by the participant or beneficiary, including 

17 expense ratios and investment-specific asset18 based charges. The information relating to 

19 such charges shall include a statement not20 ing any charges for 1 or more investment 

21 options which pay for services other than 

22 investment management. 

23 ‘‘(ii) ASSET-BASED CHARGES NOT SPE24 CIFIC TO INVESTMENT.—Charges that are 

25 assessed as a percentage of the total assets 


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1 in the account of the participant or bene2 ficiary, regardless of the investment option 

3 selected. 

4 ‘‘(iii) ADMINISTRATIVE AND TRANS5 ACTION-BASED CHARGES.—Administration 

6 and transaction-based charges, including 

7 fees charged to participants to cover plan 

8 administration, compliance, and record9 keeping costs, plan loan origination fees, 

10 possible redemption fees, and possible sur11 render charges, that are not assessed as a 

12 percentage of the total assets in the account 

13 and are either automatically deducted each 

14 year or result from certain transactions en15 gaged in by the participant or beneficiary. 

16 ‘‘(iv) OTHER CHARGES.—Any other 

17 charges which may be deducted from par18 ticipants’ or beneficiaries’ accounts and 

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

20 and (iii). 

21 ‘‘(C) DESCRIPTION OF PURPOSE FOR

22 CHARGES.—The notice shall indicate the extent 

23 to which each charge is for investment manage24 ment, transactions, plan administration and rec25 ordkeeping, or other identified services. 


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1 ‘‘(D) FEES AND HISTORICAL RETURNS.—In 

2 connection with each investment option listed in 

3 the plan fee comparison chart, the chart shall 

4 also include, as determined periodically by the 

5 Secretary in consultation with the Securities and 

6 Exchange Commission, appropriate and con7 sistent benchmarks, indices, or other points of 

8 comparison that may be used by beneficiaries to 

9 compare each investment option’s historical re10 turns, net of fees and expenses, for the previous 

11 year, 5 years, and 10 years (or for the period 

12 since inception, if shorter) as shown in the chart 

13 pursuant to this paragraph, including a sepa14 rate point of comparison with respect to each 

15 such time period. 

16 ‘‘(4) MODEL NOTICES.—The Secretary shall pre17 scribe one or more model notices that may be used for 

18 purposes of satisfying the requirements of this sub19 section, including model plan fee comparison charts. 

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

21 the notice required under this subsection, the plan ad22 ministrator may provide a reasonable and representa23 tive estimate for any charges or percentages disclosed 

24 under paragraph (2) or (3) and shall indicate any 

25 such estimate as being such an estimate. Any such esVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 timate shall be based on reasonable assumptions stat2 ed in the notice (such as the previous year’s experi3 ence or, in the case of a new plan, a reasonable esti4 mate, taking into account the plan’s participants and 

5 beneficiaries). 

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

7 under this section may be provided through an electronic 

8 medium under such rules as shall be prescribed by the Sec9 retary not later than 1 year after the date of the enactment 

10 of the 401(k) Fair Disclosure and Pension Security Act of 

11 2009. Such rules shall be similar to those applicable under 

12 the Internal Revenue Code of 1986 with respect to notices 

13 to participants in pension plans. The Secretary shall regu14 larly modify such rules as appropriate to take into account 

15 new developments, including new forms of electronic media, 

16 and to fairly take into consideration the interests of plan 

17 sponsors, service providers, and participants. The rules pre18 scribed by the Secretary pursuant to this subsection shall 

19 provide for a method for the typical participant or bene20 ficiary to obtain without undue burden any such disclosure 

21 in writing on paper in lieu of receipt through an electronic 

22 medium. 

23 ‘‘(d) REGULATIONS REGARDING CERTAIN PROD24 UCTS.—The Secretary may by regulation identify certain 

25 types of investment options, such as an option that provides 


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1 a guaranteed rate of return and that does not identify spe2 cific fees, and prescribe alternative disclosures of cost and 

3 performance measures that correspond to the particular cir4 cumstances of such options. 

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

6 ‘‘(1) CHARGE.—The term ‘charge’ means, in con7 nection with any service provided to a plan or any 

8 financial product provided to the plan in which plan 

9 assets are to be invested, any fee, credit, or other com10 pensation charged or paid for such service or product, 

11 including money and any other thing of monetary 

12 value to be received by the provider of the service or 

13 product, or its affiliate, in connection with the service 

14 or product. 

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

16 connection with a plan, a service provided directly or 

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

18 provided directly or indirectly in connection with a 

19 financial product in which plan assets are to be in20 vested. 

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

22 ‘contract or arrangement’ means, in connection with 

23 any 2 or more parties, any contract or arrangement 

24 entered into between or among such parties, and any 

25 extension or renewal thereof. 


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

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

3 service, a person directly or indirectly providing such 

4 service. 

5 ‘‘(5) REGULATIONS.—The Secretary shall pro6 vide by regulation such definitions of other terms used 

7 in this section as the Secretary determines appro8 priate.’’. 

9 (b) QUARTERLY BENEFIT STATEMENTS.—Section 105 

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

11 (1) in subsection (a)(2)— 

12 (A) by redesignating subparagraph (C) as 

13 subparagraph (H); 

14 (B) in subparagraph (B)(ii)— 

15 (i) in subclause (II), by striking ‘‘di16 versified, and’’ and inserting ‘‘diversified,’’; 

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

18 period and inserting ‘‘, and’’; 

19 (iii) by adding after subclause (III) the 

20 following new subclause: 

21 ‘‘(IV) with respect to the portion 

22 of a participant’s account for which 

23 the participant has the right to direct 

24 the investment of assets, the informaVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 tion described in subparagraph (C).’’; 

2 and 

3 (C) by inserting after subparagraph (B) the 

4 following new subparagraphs: 

5 ‘‘(C) PERIODIC ACCOUNT INFORMATION FOR

6 PARTICIPANTS AND BENEFICIARIES.—For pur7 poses of subparagraph (B)(ii)(IV), the informa8 tion described in this subparagraph consists of 

9 the following, indicating the portion of each 

10 amount described in clauses (i) though (vii) at11 tributable to each investment option elected in 

12 connection with the participant’s account: 

13 ‘‘(i) the starting balance of the partici14 pant’s account, 

15 ‘‘(ii) contributions made during the 

16 quarter, itemizing separately totals for em17 ployer and totals for employee contribu18 tions, 

19 ‘‘(iii) investment earnings or losses on 

20 the account balance during the quarter (if 

21 any), 

22 ‘‘(iv) actual or estimated charges 

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

24 which reduce the account during the quar25 ter, expressed in dollars or, if estimated, 


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1 such estimated dollar charges as are derived 

2 from an expense ratio (which may be ex3 pressed as a specific date estimate based on 

4 reasonable assumptions stated in the disclo5 sure (such as the previous year’s expense 

6 ratio). 

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

8 participant or beneficiary in connection 

9 with the participant’s account, 

10 ‘‘(vi) the ending balance of the account, 

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

12 to each investment option, expressed as an 

13 amount and as a percentage, and 

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

15 updated version of the plan fee comparison 

16 chart prepared for purposes of section 

17 111(b)(3). 

18 ‘‘(D) OTHER INFORMATION.—The plan ad19 ministrator may include in the quarterly pen20 sion benefit statement information relating to the 

21 historical return and risk of each investment op22 tion and the estimated amount that the partici23 pant needs to contribute each month or year so 

24 as to retire at retirement age (as defined in sec25 tion 216(l) of the Social Security Act). 


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1 ‘‘(E) ESTIMATIONS.—For purposes of mak2 ing the disclosure of actual charges or percent3 ages as required under this paragraph, the plan 

4 administrator may provide a reasonable and 

5 representative estimate of such charges or per6 centages and shall indicate any such estimate as 

7 being such an estimate. Any such estimate shall 

8 be based on reasonable assumptions included in 

9 the statement (such as the previous year’s experi10 ence). 

11 ‘‘(F) MODEL STATEMENTS.—The Secretary 

12 shall prescribe one or more model pension benefit 

13 statements that may be used for purposes of sat14 isfying the requirements of subparagraphs 

15 (B)(ii) and (C). 

16 ‘‘(G) ANNUAL COMPLIANCE FOR SMALL

17 PLANS AND WITH RESPECT TO CERTAIN INFOR18 MATION.—In the case of a plan providing for in19 vestment as described in paragraph (1)(A)(i)— 

20 ‘‘(i) if the plan has 100 or fewer par21 ticipants and beneficiaries, the plan may 

22 provide the pension benefit statement under 

23 paragraph (1) on an annual rather than a 

24 quarterly basis, and 


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1 ‘‘(ii) the plan may comply with the re2 quirements of subparagraph (B)(ii)(IV) on 

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

4 and 

5 (2) by adding at the end the following new sub6 sections: 

7 ‘‘(d) ASSISTANCE TO SMALL EMPLOYERS.—The Sec8 retary shall make available to employers with 100 or fewer 

9 employees— 

10 ‘‘(1) educational and compliance materials de11 signed to assist such employers in selecting and moni12 toring service providers for individual account plans 

13 which permit a participant or beneficiary to exercise 

14 control over the assets in the account of the partici15 pant or beneficiary, investment options under such 

16 plans, and charges relating to such options, and 

17 ‘‘(2) services designed to assist such employers in 

18 finding and understanding affordable investment op19 tions for such plans and in comparing the investment 

20 performance of, and charges for, such options on an 

21 ongoing basis against appropriate benchmarks or 

22 other appropriate measures. 

23 ‘‘(e) ASSISTANCE TO PLAN SPONSORS AND PLAN PAR24 TICIPANTS AND BENEFICIARIES.—The Secretary shall pro25 vide assistance to plan sponsors of individual account plans 


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1 and participants and beneficiaries under such plans with 

2 any questions or problems regarding compliance with the 

3 requirements of this section. 

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

5 under this section may be provided through an electronic 

6 medium under such rules as shall be prescribed by the Sec7 retary not later than 1 year after the date of the enactment 

8 of the 401(k) Fair Disclosure and Pension Security Act of 

9 2009. Such rules shall be similar to those applicable under 

10 the Internal Revenue Code of 1986 with respect to notices 

11 to participants in pension plans. The Secretary shall regu12 larly modify such rules as appropriate to take into account 

13 new developments, including new forms of electronic media, 

14 and to fairly take into consideration the interests of plan 

15 sponsors, service providers, and participants. The rules pre16 scribed by the Secretary pursuant to this subsection shall 

17 provide for a method for the typical participant or bene18 ficiary to obtain without undue burden any such disclosure 

19 in writing on paper in lieu of receipt through an electronic 

20 medium. 

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

22 ‘‘(1) CHARGE.—The term ‘charge’ means, in con23 nection with any service provided to a plan or any 

24 financial product provided to the plan in which plan 

25 assets are to be invested, any fee, credit, or other comVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 pensation charged or paid for such service or product, 

2 including money and any other thing of monetary 

3 value to be received by the provider of the service or 

4 product, or its affiliate, in connection with the service 

5 or product. 

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

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

8 service (as defined in section 111(e)(2)), a person di9 rectly or indirectly providing such service. 

10 ‘‘(3) REGULATIONS.—The Secretary shall pro11 vide by regulation such definitions of other terms used 

12 in this section as the Secretary determines appro13 priate.’’. 

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

15 U.S.C. 1132) is amended— 

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

17 paragraph (2)’’ and all that follows through ‘‘sub18 section (c)’’ and inserting ‘‘under paragraph (2), (4), 

19 (5), (6), (7), (8), (9), (10), or (11) of subsection (c)’’; 

20 and 

21 (2) in subsection (c), by redesignating the second 

22 paragraph (10) as paragraph (12), and by inserting 

23 after the first paragraph (10) the following new para24 graph: 


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1 ‘‘(11)(A) In the case of any violation of section 111(a) 

2 by a service provider (as defined in section 111(e)(4)), the 

3 service provider may be assessed by the Secretary a civil 

4 penalty of up to $1,000 a day with respect to each such 

5 violation from the date of the initial violation until the date 

6 on which such violation is corrected, subject to a total max7 imum penalty of 10 percent of the amount involved, as de8 termined by the Secretary. 

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

10 who fails or refuses to provide a statement to participants 

11 and beneficiaries in accordance with section 

12 105(a)(2)(B)(ii) or 111(b) may be assessed by the Secretary 

13 a civil penalty of up to $100 a day from the date of the 

14 failure or refusal to the date on which such statement or 

15 notice is so provided. 

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

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

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

19 (d) CONFORMING AMENDMENT.—The table of contents 

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

21 relating to section 111 and inserting the following new 

22 items: 

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

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

23 (e) EFFECTIVE DATES.— 


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

2 Income Security Act of 1974 (as added by subsection 

3 (a) of this section) shall apply with respect to con4 tracts or arrangements for services entered into after 

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

6 (2) Section 111(b) of such Act (as added by sub7 section (a) of this section) shall apply with respect to 

8 plan years beginning after one year after the date of 

9 the enactment of this Act. 

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

11 this section shall apply with respect to pension benefit 

12 statements for calendar quarters beginning after one 

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

14 (4) The Secretary shall issue final regulations 

15 under the amendments made by this section not later 

16 than 270 days after the date of the enactment of this 

17 Act. Any act or practice in advance of the issuance 

18 of final regulations under the amendments made by 

19 this section which is in good faith compliance with 

20 the requirements of such amendments shall be treated 

21 as in compliance with any such final regulations. 

22 (f) STUDY REGARDING USE OF BENCHMARKS, INDI23 CES, AND OTHER POINTS OF COMPARISON IN PLAN FEE

24 COMPARISON CHARTS.— 


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

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

3 Labor shall study the efficacy of including bench4 marks, indices, and other points of comparison in 

5 plan fee comparison charts provided to participants 

6 and beneficiaries pursuant to section 111(b)(3) of the 

7 Employee Retirement Income Security Act of 1974 

8 (as added by this Act). 

9 (2) MATTERS TO BE STUDIED.—In the study re10 quired under paragraph (1), the Secretary shall in11 vestigate whether, and the extent to which, bench12 marks, indices, and other points of comparison in13 cluded in plan fee comparison charts— 

14 (A) help participants and beneficiaries un15 derstand the charges with respect to their indi16 vidual account plans, 

17 (B) help participants and beneficiaries 

18 make more informed decisions on which invest19 ment options to choose under such plans, and 

20 (C) bias participants and beneficiaries 

21 against particular investment options under 

22 such plans, types of investment, or individual 

23 account plans as a whole. 

24 (3) REPORT.—Not later than 180 days after the 

25 date of the enactment of this Act, the Secretary shall 


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1 report to each House of the Congress regarding the re2 sults of the study conducted pursuant to this sub3 section, together with such recommendations as the 

4 Secretary may consider appropriate. 

5 SEC. 102. MINIMUM INVESTMENT OPTION REQUIREMENT 

6 FOR INDIVIDUAL ACCOUNT PLANS. 

7 (a) IN GENERAL.—Section 404(c) of the Employee Re8 tirement Income Security Act of 1974 (29 U.S.C. 1104(c)) 

9 is amended by adding at the end the following new para10 graph: 

11 ‘‘(6) MINIMUM INVESTMENT OPTION REQUIRE12 MENT FOR INDIVIDUAL ACCOUNT PLANS.—Paragraph 

13 (1)(A)(ii) shall not apply in connection with any in14 dividual account plan which permits a participant or 

15 beneficiary to exercise control over the assets in the 

16 account of the participant or beneficiary unless the 

17 plan includes at least one investment option— 

18 ‘‘(A) which is a passively managed invest19 ment with a portfolio of securities that is de20 signed to be representative of the United States 

21 investable equity market (including representa22 tion of small, mid, and large cap stocks) or the 

23 United States investment grade bond market (in24 cluding Treasury, agency, non-agency, and cor25 porate 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 is 

10 designed to approximate in a reasonable manner the 

11 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 later 

22 than 270 days after the date of the enactment of this 

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

24 of final regulations under the amendments made by 

25 this section which is in good faith compliance with 


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1 the requirements of such amendments shall be treated 

2 as in compliance with any such final regulations. 

3 SEC. 103. ENFORCEMENT COORDINATION AND REVIEW BY 

4 THE DEPARTMENT OF LABOR. 

5 (a) IN GENERAL.—Section 502 of the Employee Re6 tirement Income Security Act of 1974 (29 U.S.C. 1132) is 

7 amended by adding at the end the following new subsection: 

8 ‘‘(n) ENFORCEMENT COORDINATION OF CERTAIN DIS9 CLOSURE REQUIREMENTS AND REVIEW BY THE DEPART10 MENT OF LABOR.— 

11 ‘‘(1) IN GENERAL.— 

12 ‘‘(A) NOTIFICATION AND ACTION.—The Sec13 retary shall notify the applicable regulatory au14 thority in any case in which the Secretary deter15 mines that a service provider is engaged in a 

16 pattern or practice that precludes compliance by 

17 plan administrators with section 111. The Sec18 retary shall, in consultation with the applicable 

19 authority, take such timely enforcement action 

20 under this title as is necessary to assure that 

21 such pattern or practice ceases and desists and 

22 assess any appropriate penalties. 

23 ‘‘(B) DISSEMINATION.—The Secretary shall 

24 widely disseminate to employee pension benefit 

25 plans covered by this title and their participants 


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1 and beneficiaries the identity of any service pro2 viders with respect to such plans found to be en3 gaged in any pattern or practice described in 

4 subparagraph (A) with the intent to preclude 

5 compliance by plan administrators with section 

6 111 and the particulars of such pattern or prac7 tice. Prior to the dissemination of the identity of 

8 any service providers identified and determined 

9 by the Secretary to be engaged in such a pattern 

10 or practice, such service provider shall receive a 

11 notice of intent to disseminate, an opportunity 

12 to request an administrative hearing, and a 

13 timely appeal to the Secretary. 

14 ‘‘(2) ANNUAL AUDIT OF REPRESENTATIVE SAM15 PLING OF INDIVIDUAL ACCOUNT PLANS.—The Sec16 retary shall annually audit a representative sampling 

17 of individual account plans covered by this title to de18 termine compliance with the requirements of section 

19 111. The Secretary shall annually report the results 

20 of such audit and any related recommendations of the 

21 Secretary to the Committee on Education and Labor 

22 of the House of Representatives and the Committee on 

23 Health, Education, Labor, and Pensions of the Sen24 ate.’’. 


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1 (b) REVIEW AND REPORT TO THE CONGRESS BY SEC2 RETARY OF LABOR RELATING TO REPORTING AND DISCLO3 SURE REQUIREMENTS.— 

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

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

6 Labor shall review the reporting and disclosure re7 quirements of part 1 of subtitle B of title I of the Em8 ployee Retirement Income Security Act of 1974 and 

9 related provisions of the Pension Protection Act of 

10 2006. 

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

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

13 Labor, in consultation with the Secretary of the 

14 Treasury, shall make such recommendations as the 

15 Secretary of Labor considers appropriate to the ap16 propriate committees of the Congress to consolidate, 

17 simplify, standardize, and improve the applicable re18 porting and disclosure requirements so as to simplify 

19 reporting for employee pension benefit plans and en20 sure that needed understandable information is pro21 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 Office, 

10 $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 es13 timates, the value of pension funds and retirement ac14 counts 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 percent 

17 in the first nine months of 2008, according to an Em18 ployee Benefit Research Institute analysis of 2.2 mil19 lion retirements account participants. 

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

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

22 19 percent. With over two-thirds of the assets in 

23 401(k)-style defined contribution plans invested in eq24 uities, either directly or through mutual funds, par25 ticipants are exposed to increased risk and lack 


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1 meaningful access to independent investment advise 

2 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 ad5 viser. 

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 contribu9 tion 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 paragraph: 

15 ‘‘(43) INDEPENDENT INVESTMENT ADVISER.— 

16 ‘‘(A) IN GENERAL.—The term ‘independent 

17 investment adviser’ means, with respect to an in18 dividual account plan that permits a partici19 pant or beneficiary to direct the investment of 

20 assets in their individual account, a person 

21 who— 

22 ‘‘(i) is a fiduciary of the plan by rea23 son of the provision of investment advice re24 ferred to in section 3(21)(A)(ii) by the per25 son to the plan or a participant or beneVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00038 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 ficiary of the plan (irrespective of the man2 ner in which such advice is provided or the 

3 extent to which such advice is based on a 

4 computer model), and 

5 ‘‘(ii) meets the requirements of either 

6 subparagraph (B) or (C). 

7 ‘‘(B) REQUIREMENTS APPLICABLE TO IN8 VESTMENT ADVISER.—An investment adviser 

9 meets the requirements of this subparagraph, 

10 if— 

11 ‘‘(i) such adviser is— 

12 ‘‘(I) registered as an investment 

13 adviser under the Investment Advisers 

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

15 or under the laws of the State in which 

16 the adviser maintains its principal of17 fice and place of business, or 

18 ‘‘(II) any other person, but only if 

19 every individual providing the invest20 ment advice referred to in section 

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

22 (or on behalf of any affiliate thereof) is 

23 a registered representative of a person 

24 described in subclause (I), 


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1 ‘‘(ii) such adviser is not the plan in2 vestment provider, 

3 ‘‘(iii) the fees or other compensation re4 ceived, directly or indirectly, by such ad5 viser (and any affiliate thereof) with respect 

6 to the provision of investment advice to any 

7 individual account plan or the participants 

8 or beneficiaries of such a plan either— 

9 ‘‘(I) are not received from any 

10 person or persons (or anyone affiliated 

11 with such persons) that market, sell, 

12 manage or provide investments in 

13 which plan assets of the individual ac14 count plan are invested, or 

15 ‘‘(II) do not vary depending on 

16 the basis of any investment option se17 lected, and are calculated pursuant to 

18 one or more of the following bases— 

19 ‘‘(aa) a flat-dollar basis, 

20 ‘‘(bb) a flat percentage of 

21 total plan assets basis, 

22 ‘‘(cc) a flat or sliding-scale 

23 percentage of the assets in a par24 ticipant’s or beneficiary’s account 

25 basis, or 


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1 ‘‘(dd) a per-participant or 

2 per-beneficiary account basis, and 

3 ‘‘(iv) such adviser provides the invest4 ment advice pursuant to a written arrange5 ment with the individual account plan 

6 that— 

7 ‘‘(I) provides that the investment 

8 adviser is a fiduciary of the plan with 

9 respect to the provision of the advice, 

10 ‘‘(II) requires that the advice be 

11 provided only by registered representa12 tives of the investment adviser or an 

13 affiliate thereof, 

14 ‘‘(III) discloses, before a reason15 able period prior to entering into such 

16 arrangement, whether the investment 

17 adviser or any affiliate thereof has any 

18 material financial, referral, or other 

19 relationship or arrangement with a 

20 money manager, broker, other client of 

21 the investment adviser or any affiliate 

22 thereof, other service provider to the 

23 plan, or any other entity that creates 

24 or may create a conflict of interest for 

25 the investment adviser in performing 


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1 services pursuant to the arrangement 

2 with the plan and, if so, includes a de3 scription of such relationship or ar4 rangement, 

5 ‘‘(IV) includes a representation by 

6 the investment adviser that, before the 

7 arrangement was entered into (or ex8 tended or renewed), the investment ad9 viser provided to the plan fiduciary 

10 that has authority to cause the em11 ployee benefit plan to enter into (or ex12 tend or renew) the arrangement a 

13 written statement disclosing all fees or 

14 other compensation that the investment 

15 adviser or any affiliate thereof antici16 pates to receive with respect to the ad17 vice during the first year, or other pe18 riod if less than a year, of the arrange19 ment, 

20 ‘‘(V) provides that the investment 

21 adviser will provide to such plan fidu22 ciary (and the participant and bene23 ficiary receiving the advice, if applica24 ble) a statement annually disclosing all 

25 fees or other compensation that the inVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 vestment adviser or any affiliate there2 of has received with respect to the ad3 vice during the prior year, and 

4 ‘‘(VI) provides that the terms of 

5 the arrangement required under this 

6 clause and any information provided 

7 under such arrangement pursuant to 

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

9 furnished by the investment adviser to 

10 the participant or beneficiary that is 

11 the recipient of the advice. 

12 ‘‘(C) ADVICE PROVIDED TO PARTICIPANTS

13 AND BENEFICIARIES UNDER AN INVESTMENT AD14 VICE COMPUTER PROGRAM MEETING REQUIRE15 MENTS.—An investment adviser meets the re16 quirements of this subparagraph if the invest17 ment advice provided by the adviser, to the ex18 tent that such advice is provided to participants 

19 and beneficiaries of individual account plans, is 

20 provided under an investment advice computer 

21 program with respect to which the requirements 

22 of clauses (i) through (x) are met. 

23 ‘‘(i) ADVISER REQUIREMENTS.—The 

24 requirements of this clause are met if the 


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1 investment adviser providing the investment 

2 advice under the program is— 

3 ‘‘(I) described in subclauses (I) or 

4 (II) of subparagraph (B)(i), 

5 ‘‘(II) an insurance company 

6 qualified to do business under the laws 

7 of a State, 

8 ‘‘(III) a person registered as a 

9 broker or dealer under the Securities 

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

11 et seq.), 

12 ‘‘(IV) an affiliate of a person de13 scribed in any of subclauses (I) 

14 through (III), or 

15 ‘‘(V) an employee, agent, or reg16 istered representative of a person de17 scribed in subclauses (I) through (IV) 

18 who satisfies the requirements of appli19 cable insurance, banking, and securi20 ties laws relating to the provision of 

21 the advice. 

22 ‘‘(ii) COMPUTER MODEL.—The require23 ments of this clause are met if the invest24 ment advice provided under the investment 


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•HR 2989 RH

1 advice computer program is provided pur2 suant to a computer model that— 

3 ‘‘(I) applies generally accepted in4 vestment theories that take into ac5 count the historic returns of different 

6 asset classes over defined periods of 

7 time, 

8 ‘‘(II) utilizes relevant information 

9 about the participant, which may in10 clude age, life expectancy, retirement 

11 age, risk tolerance, other assets or 

12 sources of income, and preferences as to 

13 certain types of investments, 

14 ‘‘(III) utilizes prescribed objective 

15 criteria to provide asset allocation 

16 portfolios comprised of investment op17 tions available under the plan, 

18 ‘‘(IV) operates in a manner that 

19 is not biased in favor of investments 

20 offered by the investment adviser or 

21 any person with a material affiliation 

22 or contractual relationship with the in23 vestment adviser, 

24 ‘‘(V) takes into account all invest25 ment options under the plan in speciVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00045 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 fying how a participant’s account bal2 ance should be invested and is not in3 appropriately weighted with respect to 

4 any investment option, 

5 ‘‘(VI) operates so that it does not, 

6 directly or indirectly, in any manner 

7 act to benefit the investment adviser 

8 (or any affiliate of the adviser or any 

9 person with a material affiliation or 

10 contractual relationship with the ad11 viser) at the expense of plan partici12 pants and beneficiaries, 

13 ‘‘(VII) takes into account the fees 

14 associated with each investment option, 

15 and 

16 ‘‘(VIII) conforms to such other re17 quirements as shall be prescribed by 

18 the Secretary to ensure that it operates 

19 in the best interest of plan participants 

20 and beneficiaries. 

21 ‘‘(iii) CERTIFICATION.— 

22 ‘‘(I) IN GENERAL.—The require23 ments of this clause are met with re24 spect to the program if an eligible in25 vestment expert certifies, prior to the 


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1 utilization of the computer model and 

2 in accordance with rules prescribed by 

3 the Secretary, that the computer model 

4 meets the requirements of clause (ii). 

5 ‘‘(II) RENEWAL OF CERTIFI6 CATIONS.—If, as determined under reg7 ulations prescribed by the Secretary, 

8 there are material modifications to the 

9 computer model, the requirements of 

10 this subparagraph are met only if a 

11 certification described in subclause (I) 

12 is obtained with respect to the com13 puter model as so modified. 

14 ‘‘(III) ELIGIBLE INVESTMENT EX15 PERT.—For purposes of this clause, the 

16 term ‘eligible investment expert’ means 

17 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 re23 lationship with any investment 

24 adviser or a related person thereof 

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1 istered representative of the in2 vestment 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 ben14 eficiary. 

15 ‘‘(v) EXPRESS AUTHORIZATION BY

16 SEPARATE FIDUCIARY.—The requirements of 

17 this clause are met with respect to the pro18 gram if the program is expressly authorized 

19 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 the 

24 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 to 

5 the program if an independent auditor, who 

6 has appropriate technical training or expe7 rience and proficiency and so represents in 

8 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 specific 

19 findings regarding compliance of the 

20 program with the requirements of this 

21 subsection. 

22 For purposes of this clause, an auditor is 

23 considered independent if it is not related to 

24 the person offering the program to the plan 


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1 and is not affiliated with any person pro2 viding investment options under the plan. 

3 ‘‘(vii) DISCLOSURE.—The requirements 

4 of this clause are met with respect to the 

5 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 an 

12 investment option, before providing the 

13 advice, a written notification (which 

14 may consist of notification by means of 

15 electronic communication)— 

16 ‘‘(aa) of the role of any party 

17 that has a material affiliation or 

18 contractual relationship with the 

19 investment adviser in the develop20 ment of the investment advice 

21 program and in the selection of 

22 investment options available 

23 under the plan, 

24 ‘‘(bb) of all fees or other com25 pensation relating to the advice 


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1 that the investment adviser or any 

2 affiliate thereof is to receive (in3 cluding compensation provided by 

4 any third party) in connection 

5 with the provision of the advice or 

6 in connection with the sale, acqui7 sition, or holding of the security 

8 or other property, 

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

11 of the investment adviser or affili12 ates thereof in the security or 

13 other property, 

14 ‘‘(dd) of the manner, and 

15 under what circumstances, any 

16 information relating to the partic17 ipant or beneficiary which is pro18 vided under the program will be 

19 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 for 

3 the provision of advice by another 

4 adviser, that could have no mate5 rial affiliation with, and could re6 ceive no fees or other compensa7 tion, in connection with the secu8 rity or other property, and 

9 ‘‘(II) at all times during the pro10 vision of advisory services to the par11 ticipant or beneficiary, the investment 

12 adviser— 

13 ‘‘(aa) maintains the infor14 mation described in subclause (I) 

15 in accurate form and in the man16 ner described in clause (ix), 

17 ‘‘(bb) provides, without 

18 charge, accurate information to 

19 the recipient of the advice no less 

20 frequently than annually, 

21 ‘‘(cc) provides, without 

22 charge, accurate information to 

23 the recipient of the advice upon 

24 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 in9 formation. 

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 pro19 gram, in accordance with all applica20 ble securities laws, 

21 ‘‘(II) the sale, acquisition, or hold22 ing occurs solely at the direction of the 

23 recipient of the advice, 

24 ‘‘(III) the compensation received 

25 by the investment adviser and affiliates 


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1 thereof in connection with the sale, ac2 quisition, or holding of the security or 

3 other property is reasonable, and 

4 ‘‘(IV) the terms of the sale, acqui5 sition, or holding of the security or 

6 other property are at least as favorable 

7 to the plan as an arm’s length trans8 action would be. 

9 ‘‘(ix) STANDARDS FOR PRESENTATION

10 OF INFORMATION.— 

11 ‘‘(I) IN GENERAL.—The require12 ments of this clause are met with re13 spect to the program if the notification 

14 required to be provided to participants 

15 and beneficiaries under clause (vii)(I) 

16 is written in a clear and conspicuous 

17 manner and in a manner calculated to 

18 be understood by the average plan par19 ticipant and is sufficiently accurate 

20 and comprehensive to reasonably ap21 prise such participants and bene22 ficiaries of the information required to 

23 be provided in the notification. 

24 ‘‘(II) MODEL FORM FOR DISCLO25 SURE OF FEES AND OTHER COMPENSAVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00054 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 TION.—The Secretary shall issue a 

2 model form for the disclosure of fees 

3 and other compensation required in 

4 clause (vii)(I)(bb) which meets the re5 quirements of subclause (I). 

6 ‘‘(x) MAINTENANCE FOR 6 YEARS OF

7 EVIDENCE OF COMPLIANCE.—The require8 ments of this clause are met with respect to 

9 the program if the investment adviser who 

10 provides advice under the program main11 tains, for a period of not less than 6 years 

12 after the provision of the advice, any 

13 records necessary for determining whether 

14 the requirements of the preceding provisions 

15 of this subparagraph and of subsection 

16 (b)(14) have been met. A failure to meet the 

17 requirements of this clause shall not be con18 sidered to have occurred solely because the 

19 records are lost or destroyed prior to the end 

20 of the 6-year period due to circumstances 

21 beyond the control of the investment adviser. 

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

23 paragraph— 

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

25 means, in connection with any other person, 


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1 any person directly or indirectly (through 

2 one or more intermediaries) controlling, 

3 controlled by, or under common control 

4 with such other person, or any officer, direc5 tor, agent, or employee of, or partner with, 

6 such other person. 

7 ‘‘(ii) REGISTERED REPRESENTA8 TIVE.—The term ‘registered representative’ 

9 of another entity means a person described 

10 in section 3(a)(18) of the Securities Ex11 change Act of 1934 (15 U.S.C. 78c(a)(18)) 

12 (substituting the entity for the broker or 

13 dealer referred to in such section) or a per14 son described in section 202(a)(17) of the 

15 Investment Advisers Act of 1940 (15 U.S.C. 

16 80b–2(a)(17)) (substituting the entity for 

17 the investment adviser referred to in such 

18 section). 

19 ‘‘(iii) PLAN INVESTMENT PROVIDER.— 

20 The term ‘plan investment provider’ means 

21 any person (or any person affiliated with 

22 such person) that creates or manages any 

23 investment in which any individual ac24 count plan invests. Such term does not in25 clude— 


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1 ‘‘(I) a plan sponsor (or an affil2 iate thereof) with respect to any invest3 ment created or managed by the plan 

4 sponsor (or affiliate), if only employee 

5 benefit plans maintained by such plan 

6 sponsor or an affiliate thereof invest in 

7 such investments, 

8 ‘‘(II) any person who makes the 

9 investment available to the plan, or 

10 any participant or beneficiary in the 

11 plan, as a part of a portfolio of invest12 ment options, to the extent that the in13 vestment options are created and man14 aged by a person who is not an affil15 iate of the person making such port16 folio available, and 

17 ‘‘(III) any person, solely by rea18 son of authorization by a participant 

19 or beneficiary in the plan of such per20 son to exercise control over the assets 

21 in the participant’s or beneficiary’s ac22 count in such plan, if such assets are 

23 not invested in any investments cre24 ated or managed by such person (or an 

25 affiliate thereof). 


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1 ‘‘(iv) FEES OR OTHER COMPENSA2 TION.—The term ‘fees or other compensa3 tion’ includes money or any other thing of 

4 monetary value (for example, gifts, awards, 

5 and trips) received, or to be received, di6 rectly from the plan or plan sponsor or in7 directly (i.e., from any source other than the 

8 plan or the plan sponsor) by the investment 

9 adviser or any affiliate thereof in connec10 tion with the advice to be provided pursu11 ant to the arrangement or because of the in12 vestment adviser’s or any affiliate’s position 

13 with the plan. Fees or other compensation 

14 may be expressed in terms of a monetary 

15 amount, percentage of the plan’s assets, or 

16 per capita charge for each participant or 

17 beneficiary of the plan. The manner in 

18 which compensation or fees are expressed 

19 shall contain sufficient information to en20 able the plan fiduciary to evaluate the rea21 sonableness of such compensation or fees.’’. 

22 (b) FIDUCIARY DUTIES WITH RESPECT TO INVEST23 MENT ADVICE.— 


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

2 (29 U.S.C. 1104(a)) is amended by adding at the end 

3 the following new paragraph: 

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

5 that permits a participant or beneficiary to direct the in6 vestment of assets in the individual account shall not ap7 point, contract with, or otherwise arrange for an investment 

8 adviser to provide investment advice referred to in section 

9 3(21)(A)(ii) to the plan or the participant or beneficiary 

10 unless the investment adviser is an independent investment 

11 adviser (as defined in section 3(43)). 

12 ‘‘(B) The independent investment adviser providing 

13 investment advice to a plan or to a participant or bene14 ficiary shall provide, before a reasonable period prior to the 

15 initial provision of the advice, a written notification— 

16 ‘‘(i) of the past performance and historical rates 

17 of return of the investment options available with re18 spect to the plan and comparisons of such options to 

19 relevant benchmarks, and 

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

21 fiduciary of the plan in connection with the provision 

22 of the advice. 

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

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

25 from any requirement of this part for the prudent selection 


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1 and periodic review of an independent investment adviser 

2 with whom the plan sponsor or other person enters into an 

3 arrangement for the provision of investment advice referred 

4 to in section 3(21)(A)(ii), except that any such requirement 

5 shall not be construed to preclude reasonable reliance by the 

6 plan sponsor or other person on the representation of any 

7 person that such person making the representation meets 

8 the requirements of section 3(43)(A). The plan sponsor and 

9 any other person who is a fiduciary (other than the inde10 pendent investment adviser) has no duty under this part 

11 to monitor the specific investment advice given by the inde12 pendent investment adviser to any particular recipient of 

13 the advice and shall not be liable under this title for any 

14 loss, or by reason of any breach, which results from such 

15 specific investment advice given by the independent invest16 ment adviser. 

17 ‘‘(D) Nothing in this part shall be construed to pre18 clude the use of plan assets to pay for reasonable expenses 

19 in providing investment advice referred to in section 

20 3(21)(A)(ii).’’. 

21 (2) REPORT ON PRIOR ADVISORY OPINIONS AND

22 EXCEPTIONS.—The Secretary of Labor shall, as soon 

23 as practicable after the date of the enactment of this 

24 Act— 


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1 (A) review each Advisory Opinion and ex2 ception described in section 404(a)(3)(E)(i) of 

3 the Employee Retirement Income Security Act of 

4 1974 (as added by this paragraph (1)) to deter5 mine the extent to which such Advisory Opinion 

6 or exception fails to adequately serve the interests 

7 of participants and beneficiaries and to be ade8 quately protective of the rights of participants 

9 and beneficiaries, and 

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

11 Congress describing the extent of any such failure 

12 by any such Advisory Opinion or exception. 

13 (c) CONFORMING AMENDMENTS.—Section 408 of such 

14 Act (29 U.S.C. 1108) is amended— 

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

16 (2) by striking subsection (b)(14)(B) and insert17 ing the following: 

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

19 an independent investment adviser (as defined 

20 in section 3(43)).’’. 

21 (d) REGULATORY AUTHORITY.—The Secretary of 

22 Labor may issue regulations providing that an investment 

23 adviser can still be considered as meeting the requirements 

24 of section 3(43)(B) of the Employee Retirement Income Se25 curity Act of 1974 despite the receipt of a de minimus 


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1 amount of compensation that fails to meet the requirements 

2 of section 3(43)(B)(iii) of such Act due to the existence of 

3 previously existing contracts. 

4 (e) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to plan years beginning after one year 

6 after the date of the enactment of this Act. 

7 SEC. 203. EXPANSION OF OUTREACH TO PROMOTE RETIRE8 MENT INCOME SAVINGS TO INCLUDE PRO9 MOTION OF EDUCATION ON FINANCIAL LIT10 ERACY WITH RESPECT TO INVESTMENT FOR 

11 RETIREMENT. 

12 Section 516 of the Employee Retirement Income Secu13 rity Act of 1974 (29 U.S.C. 1146) is amended— 

14 (1) in subsection (b), by inserting after ‘‘creation 

15 of educational materials,’’ the following: ‘‘promotion 

16 of education in financial literacy with respect to in17 vestment for retirement as provided in subsection 

18 (e),’’; 

19 (2) by redesignating subsection (e) as subsection 

20 (f); and 

21 (3) by inserting after subsection (d) the following 

22 new subsection: 

23 ‘‘(e) PROMOTION OF EDUCATION IN FINANCIAL LIT24 ERACY WITH RESPECT TO INVESTMENT FOR RETIRE25 MENT.—The Secretary, in consultation with the Secretary 


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1 of Education and the Secretary of the Treasury, shall estab2 lish a program under which— 

3 ‘‘(1) employees and the general public are pro4 vided with information and materials— 

5 ‘‘(A) informing them about resources avail6 able for attaining financial literacy with respect 

7 to investment for retirement, 

8 ‘‘(B) effectively educating them about the 

9 importance of, and appropriate techniques with 

10 respect to, personal finance, saving for retire11 ment, and choosing independent investment ad12 visers when managing their accounts under indi13 vidual account plans, and 

14 ‘‘(C) effectively educating them about debt 

15 obligations, the relationship of debt to savings, 

16 and the potential consequences of debt with re17 spect to saving for retirement, 

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

19 such program so as to assist in the attainment of the 

20 goals described in subparagraphs (A), (B), and (C) of 

21 paragraph (1) with respect to their employees, and 

22 ‘‘(3) appropriate standards of financial literacy 

23 of employees and the general public with respect to 

24 investment for retirement are developed and published 

25 for utilization under such program.’’. 


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

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

3 shall conduct a survey of ongoing efforts by the 

4 Federal Government to assist employees and the 

5 general public with attainment of financial lit6 eracy with respect to investment for retirement 

7 and to educate them about the importance of, 

8 and appropriate techniques with respect to, per9 sonal finance, debt obligations, saving for retire10 ment, and choosing independent investment ad11 visers when managing their accounts under indi12 vidual account plans. 

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

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

15 Secretary shall submit a report to each House of 

16 the Congress setting forth the results of the Sec17 retary’s survey conducted pursuant to subpara18 graph (A), together with such recommendations 

19 as the Secretary considers appropriate for im20 provement in efforts by the Federal Government 

21 in assisting employees and the general public 

22 with attainment of financial literacy in connec23 tion with investment for retirement and edu24 cating them about the importance of, and appro25 priate techniques with respect to, personal fiVerDate Mar 15 2010 23:50 May 28, 2010 Jkt 089200 PO 00000 Frm 00064 Fmt 6652 Sfmt 6203 E:\BILLS\H2989.RH H2989

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1 nance, debt obligations, saving for retirement, 

2 and choosing independent investment advisers 

3 when managing their accounts under individual 

4 account plans. 

5 TITLE III—TRANSITIONAL FUND6 ING RELIEF FOR DEFINED 

7 BENEFIT PLANS 

8 SEC. 301. ELECTION TO USE YIELD CURVE. 

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

10 clause (ii) of section 303(h)(2)(D) of the Employee Retire11 ment Income Security Act of 1974 (29 U.S.C. 

12 1083(h)(2)(D)(ii)) is amended to read as follows: ‘‘Such 

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

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

15 with respect to a plan year beginning in 2009 may be re16 voked for the plan year beginning in 2010 without such con17 sent.’’. 

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

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

20 of 1986 (relating to election to use yield curve) is amended 

21 to read as follows: ‘‘Such election, once made, may be re22 voked only with the consent of the Secretary, except that 

23 any election in effect for a plan with respect to a plan year 

24 beginning in 2009 may be revoked for the plan year begin25 ning in 2010 without such consent.’’. 


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

2 section shall apply to plan years beginning after December 

3 31, 2009. 

4 SEC. 302. EFFECTIVE DATE OF REGULATIONS. 

5 The Secretary of the Treasury shall— 

6 (1) make the final regulations issued under sec7 tions 206(g) and 303 of the Employee Retirement In8 come Security Act of 1974 and sections 430 and 436 

9 of the Internal Revenue Code of 1986 effective no ear10 lier than plan years beginning after December 31, 

11 2009; and 

12 (2) provide rules, for plan years beginning before 

13 the effective date of such final regulations, under 

14 which compliance with a reasonable interpretation of 

15 an applicable provision under section 206(g) or 303 

16 of the Employee Retirement Income Security Act of 

17 1974 or section 430 or 436 of the Internal Revenue 

18 Code of 1986 shall be treated as compliance with such 

19 provision. 

20 SEC. 303. CLARIFICATION OF TREATMENT OF EXPENSES. 

21 (a) AMENDMENTS TO ERISA.— 

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

23 303(b)(1)(A) of the Employee Retirement Income Se24 curity Act of 1974 (29 U.S.C. 1083(b)(1)(A)(ii)) is 


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1 amended by striking ‘‘plan-related expenses’’ and in2 serting ‘‘plan-related administrative expenses’’. 

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

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

5 1083(i)(2)(A)(i)(II)) is amended by striking ‘‘plan-re6 lated expenses’’ and inserting ‘‘plan-related adminis7 trative expenses’’. 

8 (b) AMENDMENTS TO IRC.— 

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

10 430(b)(1)(A) of the Internal Revenue Code of 1986 

11 (relating to target normal cost) is amended by strik12 ing ‘‘plan-related expenses’’ and inserting ‘‘plan-re13 lated administrative expenses’’. 

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

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

16 striking ‘‘plan-related expenses’’ and inserting ‘‘plan17 related administrative expenses’’. 

18 (c) EFFECTIVE DATE.—The amendments made by this 

19 section shall take effect as if included in the enactment of 

20 paragraphs (1)(A), (1)(F)(i), (2)(A), and (2)(F)(i) of sec21 tion 101(b) of the Worker, Retiree, and Employer Recovery 

22 Act of 2008 (Public Law 110-458; 122 Stat. 5093). 


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1 SEC. 304. INFORMATION REPORTING. 

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

3 of the Employee Retirement Income Security Act of 1974 

4 (29 U.S.C. 1310(b)(1)) is amended to read as follows: 

5 ‘‘(1) either of the following requirements are met: 

6 ‘‘(A) the funding target attainment percent7 age (as defined in subsection (d)) at the end of 

8 the preceding plan year of a plan maintained by 

9 the contributing sponsor or any member of its 

10 controlled group is less thqan 80 percent; or 

11 ‘‘(B) the aggregate unfunded vested benefits 

12 (as determined under section 4006(a)(3)(E)(iii)) 

13 of plans maintained by the contributing sponsor 

14 and the members of its controlled group exceed 

15 $50,000,000 (disregarding plans with no un16 funded vested benefits);’’. 

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

18 section shall apply to years beginning after 2009. 

19 SEC. 305. 5-YEAR EXTENSION OF AUTOMATIC AMORTIZA20 TION EXTENSION PERIOD FOR MULTIEM21 PLOYER PLANS. 

22 (a) ERISA AMENDMENTS.—Section 304(d) of the Em23 ployee Retirement Income Security Act of 1974 (29 U.S.C. 

24 1084(d)) is amended— 

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

26 and inserting ‘‘10 years’’; and 


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

2 and inserting ‘‘15 years’’. 

3 (b) IRC AMENDMENTS.—Section 431(d) of the Inter4 nal Revenue Code of 1986 (relating to extension of amorti5 zation periods for multiemployer plans) is amended— 

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

7 and inserting ‘‘10 years’’; and 

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

9 and inserting ‘‘15 years’’. 

10 (c) EFFECTIVE DATE.—The amendments made by this 

11 section shall apply with respect to applications for exten12 sion filed on or after the date of the enactment of this Act. 

13 SEC. 306. PENSION PLAN MAINTAINED BY CHRISTIAN 

14 SCHOOLS INTERNATIONAL TREATED AS 

15 CHURCH PLAN. 

16 (a) IN GENERAL.—For purposes of title I of the Em17 ployee Retirement Income Security Act of 1974 and the In18 ternal Revenue Code of 1986, any pension plan maintained 

19 by Christian Schools International as of January 1, 2009, 

20 shall be treated as a church plan within the meaning of 

21 section 3(33) of such Act and section 414(e) of such Code 

22 which is maintained by an organization described in sec23 tion 3(33)(C)(ii)(II) of such Act and section 

24 414(e)(3)(B)(ii) of such Code. 


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1 (b) EFFECTIVE DATE.—This section shall apply to 

2 plan years beginning on or after January 1, 2007. 

3 SEC. 307. SPECIAL RULE FOR DETERMINING ADEQUATE 

4 CONSIDERATION IN CONNECTION WITH THE 

5 PURCHASE AND SALE OF QUALIFYING EM6 PLOYER SECURITIES. 

7 (a) IN GENERAL.—Section 3(18) of the Employee Re8 tirement Income Security Act of 1974 (29 U.S.C. 1002(18)) 

9 is amended— 

10 (1) by redesignating clauses (i) and (ii) of sub11 paragraph (A) as subclauses (I) and (II), respectively, 

12 and by redesignating subparagraphs (A) and (B) as 

13 clauses (i) and (ii), respectively; 

14 (2) by inserting ‘‘(A)’’ after ‘‘(18)’’; and 

15 (3) by adding at the end the following new sub16 paragraph: 

17 ‘‘(B) In the case of a plan described in section 

18 407(d)(3)(A) which was in existence on the date of the en19 actment of this Act, if the valuation set for the purchase 

20 or sale by the plan of a qualifying employer security (as 

21 defined in section 407(d)(5)) is set at a price which has 

22 not been found by the Secretary to be in violation of this 

23 Act and which is book value computed annually in accord24 ance with generally accepted accounting principles and the 

25 provisions of the plan, and if the valuations set for all prior 


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1 purchases or sales by the plan of qualifying employer secu2 rities have been consistently so priced, then all such valu3 ations for qualifying employer securities shall be deemed 

4 to be adequate consideration within the meaning of sub5 paragraph (A).’’. 

6 (b) EFFECTIVE DATE.—The amendments made by this 

7 section shall apply to purchases and sales of qualifying em8 ployer securities on or after September 2, 1974. 

9 SEC. 308. EXTENDED PERIOD FOR SINGLE-EMPLOYER DE10 FINED BENEFIT PLANS TO AMORTIZE THE 

11 SHORTFALL AMORTIZATION BASE FOR 2009 

12 AND 2010. 

13 (a) AMENDMENTS TO ERISA.— 

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

15 303(c) of the Employee Retirement Income Security 

16 Act of 1974 is amended by adding at the end the fol17 lowing new subparagraph: 

18 ‘‘(D) SPECIAL RULE FOR 2009 AND 2010.—In 

19 the case of the shortfall amortization base of the 

20 plan for any plan year beginning in 2009 or 

21 2010 (hereafter in this subparagraph referred to 

22 as the ‘base year’)— 

23 ‘‘(i) DETERMINATION OF INSTALL24 MENTS.—The shortfall amortization install25 ments are— 


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1 ‘‘(I) in the case of the last 7 plan 

2 years in the 9-plan-year period begin3 ning with the base year, the amounts 

4 necessary to amortize the shortfall am5 ortization base of the plan for the base 

6 year in level annual installments over 

7 such last 7 plan years, and 

8 ‘‘(II) in the case of the first 2 

9 plan years in such 9-plan-year period, 

10 interest on such shortfall amortization 

11 base (determined as provided in sub12 paragraph (C)). 

13 ‘‘(ii) SHORTFALL INSTALLMENT.—The 

14 shortfall amortization installment for any 

15 plan year in the 9-plan-year period under 

16 clause (i) with respect to such shortfall am17 ortization base is the annual installment 

18 determined under clause (i) for that year 

19 for that base.’’. 

20 (2) CONFORMING AMENDMENT.—Paragraph (1) 

21 of section 303(c) of such Act is amended by striking 

22 ‘‘the shortfall amortization bases for such plan year 

23 and each of the 6 preceding plan years’’ and inserting 

24 ‘‘any shortfall amortization base which has not been 

25 fully amortized under this subsection’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to plan years beginning after December 

3 31, 2008. 


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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 Secuadded by the Pension Protection Act of 2006. tional relief under certain pension funding rules ternal Revenue Code of 1986 to provide transi- count plans, and to amend such Act and the In- ticipants and beneficiaries under individual ac- vide for independent investment advice for par- ment for such plans, to amend such Act to pro- to provide a minimum investment option require- disclosure rules for individual account plans and rity Act of 1974 to provide special reporting and 

MAY 28, 2010 

Discharged; committed to the Committee of the Whole 

printed House on the State of the Union and ordered to be 


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