I
105TH CONGRESS
1ST SESSION
H. R. 818
To require that employees who participate in cash or deferred arrangements
are free to determine whether to be invested in employer real property
and employer securities, and if not, to protect such employees by applying
the same prohibited transaction rules that apply to traditional defined
benefit pension plans, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 25, 1997
Mr. CONDIT (for himself, Mr. MCDERMOTT, and Mr. FOGLIETTA) introduced
the following bill; which was referred to the Committee on Education and
the Workforce
A BILL
To require that employees who participate in cash or deferred
arrangements are free to determine whether to be in-
vested in employer real property and employer securities,
and if not, to protect such employees by applying the
same prohibited transaction rules that apply to tradi-
tional defined benefit pension plans, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘401(k) Pension Protec-
tion Act of 1997’’.
SEC. 2. SECTION 401(k) INVESTMENT PROTECTION.
(a) LIMITATIONS ON INVESTMENT IN EMPLOYER SE-
CURITIES AND EMPLOYER REAL PROPERTY BY CASH OR
DEFERRED ARRANGEMENTS.—Paragraph (3) of section
407(d) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1107(d)) is amended by adding at the
end the following new subparagraph:
‘‘(D) The term ‘eligible individual account plan’
does not include that portion of an individual ac-
count plan that consists of elective deferrals (as de-
fined in section 402(g)(3) of the Internal Revenue
Code of 1986) pursuant to a qualified cash or de-
ferred arrangement as defined in section 401(k) of
the Internal Revenue Code of 1986 (and earnings
thereon), if such elective deferrals (or earnings
thereon) are required to be invested in qualifying
employer securities or qualifying employer real prop-
erty or both pursuant to the documents and instru-
ments governing the plan or at the direction of a
person other than the participant (or the partici-
pant’s beneficiary) on whose behalf such elective de-
ferrals are made to the plan. For the purposes of
subsection (a), such portion shall be treated as a
separate plan. This subparagraph shall not apply to
an individual account plan if the fair market value
of the assets of all individual account plans main-
tained by the employer equals not more than 10 per-
cent of the fair market value of the assets of all pen-
sion plans maintained by the employer.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall take effect on the date of the en-
actment of this Act.
(2) TRANSITION
RULE
FOR
PLANS
HOLDING
EXCESS SECURITIES OR PROPERTY.—
(A) IN GENERAL.—In the case of a plan
which on the date of the enactment of this Act,
has holdings of employer securities and em-
ployer real property (as defined in section
407(d) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1107(d)) in ex-
cess of the amount specified in such section
407, the amendment made by this section ap-
plies to any acquisition of such securities and
property on or after such date, but does not
apply to the specific holdings which constitute
such excess during the period of such excess.
(B) SPECIAL RULE FOR CERTAIN ACQUISI-
TIONS.—Employer securities and employer real
property acquired pursuant to a binding written
contract to acquire such securities and real
property entered into and in effect on the date
of the enactment of this Act, shall be treated as
acquired immediately before such date.
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