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(c) ASSUMPTIONS USED
IN COMPUTING PRESENT
VALUE OF ACCRUED BENEFIT.—
(1) AMENDMENT OF ERISA.—Section 205(g)(3) of
such Act (29 U.S.C. 1055(g)(3)), is amended—
(A) by striking ‘‘or (B)’’ in subparagraph
(A)(i) and inserting ‘‘, (B), or (C)’’, and
(B) by adding at the end the following new
subparagraph:
‘‘(C) PRESENT VALUE OF ACCRUED BENEFIT
UNDER CASH BALANCE PLAN.—Except as pro-
vided in regulations, in the case of a qualified
cash balance plan (as defined in section
204(g)(6)(B)), the present value of the accrued
benefit of any participant shall, for purposes of
paragraphs (1) and (2), be equal to the balance
in the participant’s accumulation account (or its
equivalent) as of the time the present value deter-
mination is being made.’’.
(2) 
AMENDMENT
OF
INTERNAL
REVENUE
CODE.—Section 417(e)(3) of such Code, is amended—
(A) by striking ‘‘or (B)’’ in subparagraph
(A)(i) and inserting ‘‘, (B), or (C)’’, and
(B) by adding at the end the following new
subparagraph:
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‘‘(C) PRESENT VALUE OF ACCRUED BENEFIT
UNDER CASH BALANCE PLAN.—Except as pro-
vided in regulations, in the case of a qualified
cash balance plan (as defined in section
411(d)(7)(B)), the present value of the accrued
benefit of any participant shall, for purposes of
paragraphs (1) and (2), be equal to the balance
in the participant’s accumulation account (or its
equivalent) as of the time the present value deter-
mination is being made.’’
(d) NO INFERENCE.—Nothing in the amendments
made by this section shall be construed to infer the proper
treatment of cash balance plans or conversions to cash bal-
ance plans under sections 204(b)(1)(H) of the Employee Re-
tirement Income Security Act of 1974, 4(i)(1) of the Age
Discrimination in Employment Act of 1967, and
411(b)(1)(H) of the Internal Revenue Code of 1986, as in
effect before such amendments.
(e) EFFECTIVE DATES.—
(1) AGE DISCRIMINATION AND LUMP-SUM DIS-
TRIBUTIONS.—
(A) IN GENERAL.—The amendments made
by subsections (a) and (c) shall apply to periods
after July 31, 2005.
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(B) VESTING
AND
INTEREST
CREDIT
RE-
QUIREMENTS.—In the case of a plan in existence
on July 31, 2005, the requirements of clauses (ii)
and (iii) of section 411(b)(5)(B) of the Internal
Revenue Code of 1986, and of clauses (ii) and
(iii) of 204(b)(5)(B) of the Employee Retirement
Income Security Act of 1974 shall, for purposes
of applying the amendments made by subsections
(a) and (c), apply to years beginning after De-
cember 31, 2006, unless the plan sponsor elects
the application of such requirements for any pe-
riod after July 31, 2005, and before the first
year beginning after December 31, 2006.
(C) SPECIAL RULE FOR COLLECTIVELY BAR-
GAINED PLANS.—In the case of a plan main-
tained pursuant to 1 or more collective bar-
gaining agreements between employee representa-
tives and 1 or more employers ratified on or be-
fore the date of the enactment of this Act, the re-
quirements described in subparagraph (B) shall,
for purposes of applying the amendments made
by subsections (a) and (c), not apply to plan
years beginning before—
(i) the earlier of—
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(I) the date on which the last of
such collective bargaining agreements
terminates (determined without regard
to any extension thereof on or after
such date of enactment), or
(II) January 1, 2007, or
(ii) January 1, 2009.
(2) CONVERSIONS.—The amendments made by
subsection (b) shall apply to plan amendments adopt-
ed after, and taking effect after, July 31, 2005, except
that the plan sponsor may elect to have such amend-
ments apply to plan amendments adopted before, and
taking effect after, such date.
SEC. 602. REGULATIONS RELATING TO MERGERS AND AC-
QUISITIONS.
The Secretary of the Treasury or his delegate shall, not
later than 12 months after the date of the enactment of this
Act, prescribe regulations for the application of the amend-
ments made by, and the provisions of, this title in cases
where the conversion of a plan to a cash balance plan is
made with respect to a group of employees who become em-
ployees by reason of a merger, acquisition, or similar trans-
action.
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TITLE 
VII—DIVERSIFICATION
RIGHTS AND OTHER PARTICI-
PANT PROTECTIONS UNDER
DEFINED 
CONTRIBUTION
PLANS
SEC. 701. DEFINED CONTRIBUTION PLANS REQUIRED TO
PROVIDE EMPLOYEES WITH FREEDOM TO IN-
VEST THEIR PLAN ASSETS.
(a) AMENDMENTS OF INTERNAL REVENUE CODE.—
(1) 
QUALIFICATION
REQUIREMENT.—Section
401(a) of the Internal Revenue Code of 1986 (relating
to qualified pension, profit-sharing, and stock bonus
plans), as amended by section 115 of this Act, is
amended by inserting after paragraph (34) the fol-
lowing new paragraph:
‘‘(35) DIVERSIFICATION
REQUIREMENTS
FOR
CERTAIN DEFINED CONTRIBUTION PLANS.—
‘‘(A) IN GENERAL.—A trust which is part of
an applicable defined contribution plan shall not
be treated as a qualified trust unless the plan
meets the diversification requirements of sub-
paragraphs (B), (C), and (D).
‘‘(B) EMPLOYEE CONTRIBUTIONS AND ELEC-
TIVE DEFERRALS INVESTED IN EMPLOYER SECU-
RITIES OR REAL PROPERTY.—In the case of the