IB
Union Calendar No. 174
107TH CONGRESS
1ST SESSION
H. R. 2269
[Report No. 107–262, Parts I and II]
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to promote the provision of
retirement investment advice to workers managing their retirement in-
come assets.
IN THE HOUSE OF REPRESENTATIVES
JUNE 21, 2001
Mr. BOEHNER (for himself, Mr. ARMEY, Mr. SAM JOHNSON of Texas, Mr.
TANCREDO, Mr. BAIRD, Mr. LUCAS of Kentucky, Mr. MCINNIS, Mr.
FOLEY, Mr. SMITH of Washington, Mr. OXLEY, Mr. DICKS, Mrs. ROU-
KEMA, Mr. BAKER, Mr. CAMP, Mr. ENGLISH, Mr. GUTKNECHT, Mr.
KIRK, Mrs. TAUSCHER, and Mr. HOLT) introduced the following bill;
which was referred to the Committee on Education and the Workforce,
and in addition to the Committee on Ways and Means, for a period to
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
OCTOBER 31, 2001
Reported from the Committee on Education and the Workforce with an
amendment
[Strike out all after the enacting clause and insert the part printed in italic]
OCTOBER 31, 2001
Referral to the Committee on Ways and Means extended for a period ending
not later than November 9, 2001
NOVEMBER 9, 2001
Referral to the Committee on Ways and Means extended for a period ending
not later than November 13, 2001
NOVEMBER 13, 2001
Additional sponsors: Mr. SHAW, Mr. PAUL, Mr. CRANE, Mr. FROST, Mr.
CHAMBLISS, Mr. TIBERI, Mr. MCCRERY, Mr. BALLENGER, Mr. FLETCH-
ER, Mr. MCKEON, Mr. SHAYS, Mr. CANTOR, Mrs. BIGGERT, Mr. PLATTS,
Mr. GRAHAM, Mr. NUSSLE, Mr. ROGERS of Michigan, Mr. BLUNT, Mr.
NEY, Mr. PORTMAN, Ms. DUNN, Mr. GREENWOOD, Ms. PRYCE of Ohio,
Mr. CLEMENT, Mr. MATHESON, Mr. CANNON, Mr. KELLER, Mr. BASS,
Mr. JONES of North Carolina, Mr. BURR of North Carolina, Mr.
OSBORNE, Mr. LATHAM, Mr. CALVERT, Mr. RYUN of Kansas, Mr.
CULBERSON, Mr. BROWN of South Carolina, Mr. MORAN of Virginia, Mr.
SESSIONS, Mr. HERGER, and Mr. GRUCCI
Deleted sponsors: Mr. BROWN of Ohio (added July 23, 2001; deleted Sep-
tember 24, 2001), and Mr. PASCRELL (added July 30, 2001; deleted Sep-
tember 10, 2001)
NOVEMBER 13, 2001
Reported from the Committee on Ways and Means with an amendment; com-
mitted to the Committee of the Whole House on the State of the Union,
and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in boldface roman]
[For text of introduced bill, see copy of bill as introduced on June 21, 2001]
A BILL
To amend title I of the Employee Retirement Income Secu-
rity Act of 1974 and the Internal Revenue Code of
1986 to promote the provision of retirement investment
advice to workers managing their retirement income as-
sets.
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 ‘‘Retirement Security Ad-
vice Act of 2001’’.
SEC. 2. PROHIBITED TRANSACTION EXEMPTION FOR THE
PROVISION OF INVESTMENT ADVICE.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—
(1) EXEMPTION
FROM
PROHIBITED
TRANS-
ACTIONS.—Section 408(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1108(b)) is
amended by adding at the end the following new
paragraph:
‘‘(14)(A) Any transaction described in subpara-
graph (B) in connection with the provision of invest-
ment advice described in section 3(21)(A)(ii), in any
case in which—
‘‘(i) the investment of assets of the plan are
subject to the direction of plan participants or
beneficiaries,
‘‘(ii) the advice is provided to the plan or
a participant or beneficiary of the plan by a fi-
duciary adviser in connection with any sale, ac-
quisition, or holding of a security or other prop-
erty for purposes of investment of plan assets,
and
‘‘(iii) the requirements of subsection (g) are
met in connection with the provision of the ad-
vice.
‘‘(B) The transactions described in this subpara-
graph are the following:
‘‘(i) the provision of the advice to the plan,
participant, or beneficiary;
‘‘(ii) the sale, acquisition, or holding of a
security or other property (including any lend-
ing of money or other extension of credit associ-
ated with the sale, acquisition, or holding of a
security or other property) pursuant to the ad-
vice; and
‘‘(iii) the direct or indirect receipt of fees or
other compensation by the fiduciary adviser or
an affiliate thereof (or any employee, agent, or
registered representative of the fiduciary adviser
or affiliate) in connection with the provision of
the advice or in connection with a sale, acquisi-
tion, or holding of a security or other property
pursuant to the advice.’’.
(2) REQUIREMENTS.—Section 408 of such Act is
amended further by adding at the end the following
new subsection:
‘‘(g) REQUIREMENTS RELATING TO PROVISION OF IN-
VESTMENT ADVICE BY FIDUCIARY ADVISERS.—
‘‘(1) IN GENERAL.—The requirements of this sub-
section are met in connection with the provision of
investment advice referred to in section 3(21)(A)(ii)
provided to an employee benefit plan or a participant
or beneficiary of an employee benefit plan by a fidu-
ciary adviser with respect to the plan in connection
with any sale, acquisition, or holding of a security or
other property for purposes of investment of amounts
held by the plan, if—
‘‘(A) in the case of the initial provision of
the advice with regard to the security or other
property by the fiduciary adviser to the plan,
participant, or beneficiary, the fiduciary adviser
provides to the recipient of the advice, at a time
reasonably contemporaneous with the initial pro-
vision of the advice, a written notification
(which may consist of notification by means of
electronic communication)—
‘‘(i) of all fees or other compensation
relating to the advice that the fiduciary ad-
viser or any affiliate thereof is to receive
(including compensation provided by any
third party) in connection with the provi-
sion of the advice or in connection with the
sale, acquisition, or holding of the security
or other property,
‘‘(ii) of any material affiliation or
contractual relationship of the fiduciary ad-
viser or affiliates thereof in the security or
other property,
‘‘(iii) of any limitation placed on the
scope of the investment advice to be pro-
vided by the fiduciary adviser with respect
to any such sale, acquisition, or holding of
a security or other property,
‘‘(iv) of the types of services provided
by the fiduciary adviser in connection with
the provision of investment advice by the fi-
duciary adviser, and
‘‘(v) that the adviser is acting as a fi-
duciary of the plan in connection with the
provision of the advice,
‘‘(B) the fiduciary adviser provides appro-
priate disclosure, in connection with the sale, ac-
quisition, or holding of the security or other
property, in accordance with all applicable secu-
rities laws,
‘‘(C) the sale, acquisition, or holding occurs
solely at the direction of the recipient of the ad-
vice,
‘‘(D) the compensation received by the fidu-
ciary adviser and affiliates thereof in connection
with the sale, acquisition, or holding of the secu-
rity or other property is reasonable, and
‘‘(E) the terms of the sale, acquisition, or
holding of the security or other property are at
least as favorable to the plan as an arm’s length
transaction would be.
‘‘(2) STANDARDS FOR PRESENTATION OF INFOR-
MATION.—The notification required to be provided to
participants and beneficiaries under paragraph
(1)(A) shall be written in a clear and conspicuous
manner and in a manner calculated to be understood
by the average plan participant and shall be suffi-
ciently accurate and comprehensive to reasonably ap-
prise such participants and beneficiaries of the infor-
mation required to be provided in the notification.
‘‘(3) EXEMPTION CONDITIONED ON CONTINUED
AVAILABILITY
OF
REQUIRED
INFORMATION
ON
RE-
QUEST FOR 1 YEAR.—The requirements of paragraph
(1)(A) shall be deemed not to have been met in con-
nection with the initial or any subsequent provision
of advice described in paragraph (1) to the plan, par-
ticipant, or beneficiary if, at any time during the 1-
year period following the provision of the advice, the
fiduciary adviser fails to maintain the information
described in clauses (i) through (iv) of subparagraph
(A) in currently accurate form or to make the infor-
mation available, upon request and without charge, to
the recipient of the advice.
‘‘(4) MAINTENANCE FOR 6 YEARS OF EVIDENCE
OF COMPLIANCE.—A fiduciary adviser referred to in
paragraph (1) who has provided advice referred to in
such paragraph shall, for a period of not less than 6
years after the provision of the advice, maintain any
records necessary for determining whether the require-
ments of the preceding provisions of this subsection
and of subsection (b)(14) have been met. A trans-
action prohibited under section 406 shall not be con-
sidered to have occurred solely because the records are
lost or destroyed prior to the end of the 6-year period
due to circumstances beyond the control of the fidu-
ciary adviser.
‘‘(5) EXEMPTION FOR PLAN SPONSOR AND CER-
TAIN OTHER FIDUCIARIES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a plan sponsor or other person who
is a fiduciary (other than a fiduciary adviser)
shall not be treated as failing to meet the re-
quirements of this part solely by reason of the
provision of investment advice referred to in sec-
tion 3(21)(A)(ii) (or solely by reason of con-
tracting for or otherwise arranging for the provi-
sion of the advice), if—
‘‘(i) the advice is provided by a fidu-
ciary adviser pursuant to an arrangement
between the plan sponsor or other fiduciary
and the fiduciary adviser for the provision
by the fiduciary adviser of investment ad-
vice referred to in such section,
‘‘(ii) the terms of the arrangement re-
quire compliance by the fiduciary adviser
with the requirements of this subsection,
and
‘‘(iii) the terms of the arrangement in-
clude a written acknowledgment by the fidu-
ciary adviser that the fiduciary adviser is a
fiduciary of the plan with respect to the
provision of the advice.
‘‘(B) CONTINUED DUTY OF PRUDENT SELEC-
TION OF ADVISER AND PERIODIC REVIEW.—Noth-
ing in subparagraph (A) shall be construed to
exempt a plan sponsor or other person who is a
fiduciary from any requirement of this part for
the prudent selection and periodic review of a fi-
laws of the State in which the fiduciary
maintains its principal office and place of
business,
‘‘(ii) a bank or similar financial insti-
tution referred to in section 408(b)(4),
‘‘(iii) an insurance company qualified
to do business under the laws of a State,
‘‘(iv) a person registered as a broker or
dealer under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.),
‘‘(v) an affiliate of a person described
in any of clauses (i) through (iv), or
‘‘(vi) an employee, agent, or registered
representative of a person described in any
of clauses (i) through (v) who satisfies the
requirements of applicable insurance, bank-
ing, and securities laws relating to the pro-
vision of the advice.
‘‘(B) AFFILIATE.—The term ‘affiliate’ of
another entity means an affiliated person of the
entity (as defined in section 2(a)(3) of the In-
vestment Company Act of 1940 (15 U.S.C. 80a-
2(a)(3))).
‘‘(C) REGISTERED REPRESENTATIVE.—The
term ‘registered representative’ of another entity
means a person described in section 3(a)(18) of
the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(18)) (substituting the entity for the broker
or dealer referred to in such section) or a person
described in section 202(a)(17) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(17))
(substituting the entity for the investment ad-
viser referred to in such section).’’.
(b) AMENDMENTS TO THE INTERNAL REVENUE CODE
OF 1986.—
(1) IN GENERAL.—Subsection (d) of section 4975
of the Internal Revenue Code of 1986 (relating to ex-
emptions from tax on prohibited transactions) is
amended—
(A) in paragraph (14), by striking ‘‘or’’ at
the end;
(B) in paragraph (15), by striking the pe-
riod at the end and inserting ‘‘; or’’; and
(C) by adding at the end the following new
paragraph:
‘‘(16) If the requirements of subsection (f)(7) are
met—
‘‘(A) the provision of investment advice re-
ferred to in subsection (e)(3)(B) provided by a fi-
duciary adviser (as defined in subsection
(f)(7)(C)(i)) to a plan or to a participant or
beneficiary of a plan,
‘‘(B) the sale, acquisition, or holding of se-
curities or other property (including any exten-
sion of credit associated with the sale, acquisi-
tion, or holding of securities or other property)
pursuant to such investment advice, and
‘‘(C) the direct or indirect receipt of fees or
other compensation by the fiduciary adviser or
an affiliate thereof (or any employee, agent, or
registered representative of the fiduciary adviser
or affiliate) in connection with the provision of
such investment advice.’’.
(2) REQUIREMENTS.—Subsection (f) of such sec-
tion 4975 (relating to other definitions and special
rules) is amended by adding at the end the following
new paragraph:
‘‘(7) REQUIREMENTS FOR EXEMPTION FOR IN-
VESTMENT ADVICE PROVIDED BY FIDUCIARY ADVIS-
ERS.—
‘‘(A) IN
GENERAL.—The requirements of
this paragraph are met in connection with the
provision of advice referred to in subsection
(e)(3)(B), provided to a plan or a participant or
beneficiary of a plan by a fiduciary adviser with
respect to such plan, in connection with any sale
or acquisition of a security or other property for
purposes of investment of amounts held by such
plan, if—
‘‘(i) in the case of the initial provision
of such advice by such fiduciary adviser to
such plan, participant, or beneficiary, the
fiduciary adviser provides to the plan, par-
ticipant, or beneficiary, at the time of or be-
fore the initial provision of such advice, a
description, in writing or by means of elec-
tronic communication, of—
‘‘(I) all fees or other compensation
relating to such advice that the fidu-
ciary adviser or any affiliate thereof is
to receive (including compensation
provided by any third party) in con-
nection with the provision of such ad-
vice or in connection with such acqui-
sition or sale,
‘‘(II) any material affiliation or
contractual relationship of the fidu-
ciary adviser or affiliates thereof in
such security or other property,
‘‘(III) any limitation placed on
the scope of the investment advice to be
provided by the fiduciary adviser with
respect to any such sale or acquisition,
and
‘‘(IV) the types of services offered
by the fiduciary advisor in connection
with the provision of investment advice
by the fiduciary adviser,
‘‘(ii) in the case of the initial or any
subsequent provision of such advice to such
plan, participant, or beneficiary, the fidu-
ciary adviser, throughout the 1-year period
following the provision of such advice,
maintains the information described in sub-
clauses (I) through (IV) of clause (i) in cur-
rently accurate form for availability, upon
request and without charge, to the recipient
of such advice,
‘‘(iii) the fiduciary adviser provides
appropriate disclosure, in connection with
any such acquisition or sale, in accordance
with all applicable securities laws,
‘‘(iv) such acquisition or sale occurs
solely at the discretion of the recipient of
such advice,
‘‘(v) the compensation received by the
fiduciary adviser and affiliates thereof in
connection with such acquisition or sale is
reasonable, and
‘‘(vi) the terms of such acquisition or
sale are at least as favorable to such plan
as an arm’s length transaction would be.
‘‘(B) MAINTENANCE OF RECORDS.—A fidu-
ciary adviser referred to in subparagraph (A)
who has provided advice referred to in such sub-
paragraph shall, for a period of not less than 6
years after the provision of such advice, main-
tain any records necessary for determining
whether the requirements of the preceding provi-
sions of this subsection and of subsection (d)(16)
have been met. A prohibited transaction de-
scribed in subsection (c)(1) shall not be consid-
ered to have occurred solely because the records
are lost or destroyed prior to the end of the 6-
year period due to circumstances beyond the con-
trol of the fiduciary adviser.
‘‘(V) an affiliate of a person de-
scribed in any of subclauses (I)
through (IV), or
‘‘(VI) an employee, agent, or reg-
istered representative of a person de-
scribed in any of subclauses (I)
through (V).
‘‘(ii) AFFILIATE.—The term ‘affiliate’
means an affiliated person, as defined in
section 2(a)(3) of the Investment Company
Act of 1940 (15 U.S.C. 80a-2(a)(3)).
‘‘(iii) 
REGISTERED
REPRESENTA-
TIVE.—The term ‘registered representative’
means 
a 
person 
described 
in 
section
3(a)(18) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(18)) or section
202(a)(17) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(17)).’’.
SEC. 3. EFFECTIVE DATE.
The amendments made by this Act shall apply with
respect to advice referred to in section 3(21)(A)(ii) of the
Employee Retirement Income Security Act of 1974 or sec-
tion 4975(e)(3)(B) of the Internal Revenue Code of 1986
provided on or after January 1, 2002.
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Retirement
Security Advice Act of 2001’’.
SEC. 2. PROHIBITED TRANSACTION EXEMPTION FOR THE
PROVISION OF INVESTMENT ADVICE.
(a) AMENDMENTS TO THE EMPLOYEE RETIRE-
MENT INCOME SECURITY ACT OF 1974.—
(1) IN GENERAL.—Section 408(b) of the
Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1108(b)) is amended
by adding at the end the following new
paragraph:
‘‘(14) If the requirements of sub-
section (g) are met—
‘‘(A) the provision of investment
advice 
referred 
to 
in 
section
3(21)(A)(ii) provided by a fiduciary
adviser (as defined in subsection
(g)(4)(A)) to an employee benefit plan
or to a participant or beneficiary of
an employee benefit plan,
‘‘(B) the sale, acquisition, or hold-
ing of securities or other property
(including any lending of money or
other extension of credit associated
with the sale, acquisition, or holding
of securities or other property) pur-
suant to such investment advice, and
‘‘(C) the direct or indirect receipt
of fees or other compensation by the
fiduciary adviser or an affiliate there-
of (or any employee, agent, or reg-
istered representative of the fidu-
ciary adviser or affiliate) in connec-
tion with the provision of such invest-
ment advice.’’.
(2) REQUIREMENTS.—Section 408 of
such Act is amended further by adding at
the end the following new subsection:
‘‘(g)(1) The requirements of this sub-
section are met in connection with the provi-
sion 
of 
advice 
referred 
to 
in 
section
3(21)(A)(ii), provided to an employee benefit
plan or a participant or beneficiary of an em-
ployee benefit plan by a fiduciary adviser
with respect to such plan, in connection with
any sale or acquisition of a security or other
property for purposes of investment of
amounts held by such plan, if—
‘‘(A) in the case of the initial provi-
sion of such advice with regard to a secu-
rity or other property, by such fiduciary
adviser to such plan, participant, or ben-
eficiary, the fiduciary adviser provides to
the recipient of such advice, at the time
of or before the initial provision of such
advice, a clear and conspicuous descrip-
tion, in writing (including by means of
electronic communication), of—
‘‘(i) all fees or other compensation
relating to such advice that the fidu-
ciary adviser or any affiliate thereof
is to receive (including compensation
provided by any third party) in con-
nection with the provision of such ad-
vice or in connection with such ac-
quisition or sale,
‘‘(ii) any material affiliation or
contractual relationship of the fidu-
ciary adviser or affiliates thereof in
such security or other property,
‘‘(iii) any limitation placed on the
scope of the investment advice to be
provided by the fiduciary adviser
with respect to any such sale or ac-
quisition, and
‘‘(iv) the types of services offered
by the fiduciary advisor in connec-
tion with the provision of investment
advice by the fiduciary adviser,
‘‘(B) in the case of the initial or any
subsequent provision of such advice to
such plan, participant, or beneficiary, the
fiduciary adviser, throughout the 1-year
period following the provision of such ad-
vice, maintains the information described
in clauses (i) through (iv) of subpara-
graph (A) in currently accurate form for
availability, upon request and without
charge, to the recipient of such advice,
‘‘(C) the fiduciary adviser provides
appropriate 
disclosure, 
in 
connection
with any such acquisition or sale, in ac-
cordance with all applicable securities
laws,
‘‘(D) such acquisition or sale occurs
solely at the direction of the recipient of
such advice,
‘‘(E) the compensation received by the
fiduciary adviser and affiliates thereof in
connection with such acquisition or sale
is reasonable, and
‘‘(F) the terms of such acquisition or
sale are at least as favorable to such plan
as an arm’s length transaction would be.
‘‘(2) A fiduciary adviser referred to in
paragraph (1) who has provided advice re-
ferred to in such paragraph shall, for a period
of not less than 6 years after the provision of
such advice, maintain any records necessary
for determining whether the requirements of
the preceding provisions of this subsection
and of subsection (b)(14) have been met. A
transaction prohibited under section 406 shall
not be considered to have occurred solely be-
cause the records are lost or destroyed prior
to the end of the 6-year period due to cir-
cumstances beyond the control of the fidu-
ciary adviser.
‘‘(3)(A) Subject to subparagraph (B), a
plan sponsor or other person who is a fidu-
ciary shall not be treated as failing to meet
the requirements of this part solely by reason
of the provision of investment advice referred
to in section 3(21)(A)(ii) (or solely by reason
of contracting for or otherwise arranging for
the provision of such investment advice), if—
‘‘(i) such advice is provided by a fidu-
ciary adviser pursuant to an arrange-
ment between such plan sponsor or other
fiduciary and such fiduciary adviser for
the provision by such fiduciary adviser of
investment advice referred to in such sec-
tion, and
‘‘(ii) the terms of such arrangement
require compliance by the fiduciary ad-
viser with the requirements of this sub-
section.
‘‘(B) Nothing in subparagraph (A) shall be
construed to exempt a plan sponsor or other
person who is a fiduciary from any require-
ment of this part for the prudent selection
and periodic review of a fiduciary adviser
with whom the plan sponsor or other person
enters into an arrangement for the provision
of advice referred to in section 3(21)(A)(ii).
Such plan sponsor or other person who is a
fiduciary has no duty under this part to mon-
itor the specific investment advice given by
the fiduciary adviser to any particular recipi-
ent of such advice.
‘‘(C) Nothing in this part shall be con-
strued to preclude the use of plan assets to
pay for reasonable expenses in providing in-
vestment 
advice 
referred 
to 
in 
section
3(21)(A)(ii).
‘‘(4) For purposes of this subsection and
subsection (b)(14)—
‘‘(A) 
The 
term 
‘fiduciary 
adviser’
means, with respect to a plan, a person
who is a fiduciary of the plan by reason
of the provision of investment advice by
such person to the plan or to a partici-
pant or beneficiary and who is—
‘‘(i) registered as an investment
adviser under the Investment Advis-
ers Act of 1940 (15 U.S.C. 80b-1 et
seq.) or under the laws of the State in
which the fiduciary maintains its
principal office and place of business,
‘‘(ii) a bank or similar financial
institution referred to in section
408(b)(4),
‘‘(iii) an insurance company quali-
fied to do business under the laws of
a State,
‘‘(iv) a person registered as a
broker or dealer under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.),
‘‘(v) an affiliate of a person de-
scribed in any of clauses (i) through
(iv), or
‘‘(vi) an employee, agent, or reg-
istered representative of a person de-
scribed in any of clauses (i) through
(v).
‘‘(B) The term ‘affiliate’ means an af-
filiated person, as defined in section
2(a)(3) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a)(3)).
‘‘(C) The term ‘registered representa-
tive’ means a person described in section
3(a)(18) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(18)) or section
202(a)(17) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a)(17)).’’.
(b) AMENDMENTS TO THE INTERNAL REVENUE
CODE OF 1986.—
(1) 
EXEMPTION
FROM
PROHIBITED
TRANSACTIONS.—Subsection (d) of section
4975 of the Internal Revenue Code of
1986 (relating to exemptions from tax on
prohibited transactions) is amended—
(A) in paragraph (14), by striking
‘‘or’’ at the end;
(B) in paragraph (15), by striking
the period at the end and inserting
‘‘; or’’; and
(C) by adding at the end the fol-
lowing new paragraph:
‘‘(16) any transaction described in
subsection (f)(7)(A) in connection with
the provision of investment advice de-
scribed in subsection (e)(3)(B), in any
case in which—
‘‘(A) the investment of assets of
the plan is subject to the direction of
plan participants or beneficiaries,
‘‘(B) the advice is provided to the
plan or a participant or beneficiary of
the plan by a fiduciary adviser in
connection with any sale, acquisition,
or holding of a security or other
property for purposes of investment
of plan assets, and
‘‘(C) the requirements of sub-
section (f)(7)(B) are met in connection
with the provision of the advice.’’
(2) ALLOWED
TRANSACTIONS
AND
RE-
QUIREMENTS.—Subsection (f) of such sec-
tion 4975 (relating to other definitions
and special rules) is amended by adding
at the end the following new paragraph:
‘‘(7) PROVISIONS
RELATING
TO
INVEST-
MENT ADVICE PROVIDED BY FIDUCIARY ADVIS-
ERS.—
‘‘(A) TRANSACTIONS
ALLOWABLE
IN
CONNECTION
WITH
INVESTMENT
ADVICE
PROVIDED BY FIDUCIARY ADVISERS.—The
transactions referred to in subsection
(d)(16), in connection with the provi-
sion of investment advice by a fidu-
ciary adviser, are the following:
‘‘(i) the provision of the advice
to the plan, participant, or bene-
ficiary;
‘‘(ii) the sale, acquisition, or
holding of a security or other
property (including any lending
of money or other extension of
credit associated with the sale,
acquisition, or holding of a secu-
rity or other property) pursuant
to the advice; and
‘‘(iii) the direct or indirect re-
ceipt of fees or other compensa-
tion by the fiduciary adviser or
an affiliate thereof (or any em-
ployee, agent, or registered rep-
resentative of the fiduciary ad-
viser or affiliate) in connection
with the provision of the advice
or in connection with a sale, ac-
quisition, or holding of a security
or other property pursuant to the
advice.
‘‘(B) REQUIREMENTS
RELATING
TO
PROVISION OF INVESTMENT ADVICE BY FI-
DUCIARY ADVISERS.—The requirements
of this subparagraph (referred to in
subsection (d)(16)(C)) are met in con-
nection with the provision of invest-
ment advice referred to in subsection
(e)(3)(B), provided to a plan or a par-
ticipant or beneficiary of a plan by a
fiduciary adviser with respect to the
plan in connection with any sale, ac-
quisition, or holding of a security or
other property for purposes of invest-
ment of amounts held by the plan,
if—
‘‘(i) in the case of the initial
provision of the advice with re-
gard to the security or other
property by the fiduciary adviser
to the plan, participant, or bene-
ficiary, the fiduciary adviser pro-
vides to the recipient of the ad-
vice, at a time reasonably contem-
poraneous with the initial provi-
sion of the advice, a written noti-
fication (which may consist of no-
tification by means of electronic
communication)—
‘‘(I) of all fees or other
compensation relating to the
advice that the fiduciary ad-
viser or any affiliate thereof is
to 
receive 
(including 
com-
pensation provided by any
third 
party) 
in 
connection
with the provision of the ad-
vice or in connection with the
sale, acquisition, or holding of
the security or other prop-
erty,
‘‘(II) of any material affili-
ation or contractual relation-
ship of the fiduciary adviser
or affiliates thereof in the se-
curity or other property,
‘‘(III) 
of 
any 
limitation
placed on the scope of the in-
vestment advice to be pro-
vided by the fiduciary adviser
with respect to any such sale,
acquisition, or holding of a se-
curity or other property,
‘‘(IV) of the types of serv-
ices provided by the fiduciary
advisor in connection with
the provision of investment
advice by the fiduciary ad-
viser, and
‘‘(V) that the adviser is
acting as a fiduciary of the
plan in connection with the
provision of the advice,
‘‘(ii) the fiduciary adviser pro-
vides appropriate disclosure, in
connection with the sale, acquisi-
tion, or holding of the security or
other 
property, 
in 
accordance
with 
all 
applicable 
securities
laws,
‘‘(iii) the sale, acquisition, or
holding occurs solely at the direc-
tion of the recipient of the advice,
‘‘(iv) 
the 
compensation 
re-
ceived by the fiduciary adviser
and affiliates thereof in connec-
tion with the sale, acquisition, or
holding of the security or other
property is reasonable, and
‘‘(v) the terms of the sale, ac-
quisition, or holding of the secu-
rity or other property are at least
as favorable to the plan as an
arm’s length transaction would
be.
‘‘(C) STANDARDS FOR PRESENTATION
OF INFORMATION.—The notification re-
quired to be provided to participants
and 
beneficiaries 
under 
subpara-
graph (B)(i) shall be written in a clear
and conspicuous manner and in a
manner calculated to be understood
by the average plan participant and
shall be sufficiently accurate and
comprehensive to reasonably apprise
such participants and beneficiaries of
the information required to be pro-
vided in the notification.
‘‘(D) EXEMPTION
CONDITIONED
ON
MAKING REQUIRED INFORMATION AVAIL-
ABLE
ANNUALLY, ON
REQUEST, AND
IN
THE EVENT OF MATERIAL CHANGE.—The
requirements of subparagraph (B)(i)
shall be deemed not to have been met
in connection with the initial or any
subsequent provision of advice de-
scribed in subparagraph (B) to the
plan, participant, or beneficiary if, at
any time during the provision of advi-
sory services to the plan, participant,
or beneficiary, the fiduciary adviser
fails to maintain the information de-
scribed in subclauses (I) through (IV)
of subparagraph (B)(i) in currently
accurate form and in the manner re-
quired by subparagraph (C), or fails—
‘‘(i) 
to 
provide, 
without
charge, such currently accurate
information to the recipient of
the advice no less than annually,
‘‘(ii) to make such currently
accurate 
information 
available,
upon request and without charge,
to the recipient of the advice, or
‘‘(iii) in the event of a material
change to the information de-
scribed in subclauses (I) through
(IV) of subparagraph (B)(i), to
provide, 
without 
charge, 
such
currently accurate information to
the recipient of the advice at a
time reasonably contemporaneous
to the material change in infor-
mation.
‘‘(E) MAINTENANCE FOR 6 YEARS OF
EVIDENCE OF COMPLIANCE.—A fiduciary
adviser referred to in subparagraph
(B) who has provided advice referred
to in such subparagraph shall, for a
period of not less than 6 years after
the provision of the advice, maintain
any 
records 
necessary 
for 
deter-
mining whether the requirements of
the preceding provisions of this para-
graph and of subsection (d)(16) have
been met. A transaction prohibited
under subsection (c)(1) shall not be
considered to have occurred solely
because the records are lost or de-
stroyed prior to the end of the 6-year
period due to circumstances beyond
the control of the fiduciary adviser.
‘‘(F) DEFINITIONS.—For purposes
of this paragraph and subsection
(d)(16)—
‘‘(i) FIDUCIARY
ADVISER.—The
term ‘fiduciary adviser’ means,
with respect to a plan, a person
who is a fiduciary of the plan by
reason of the provision of invest-
ment advice by the person to the
plan or to a participant or bene-
ficiary and who is—
‘‘(I) registered as an in-
vestment adviser under the
Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.)
or under the laws of the State
in which the fiduciary main-
tains its principal office and
place of business,
‘‘(II) a bank or similar fi-
nancial institution referred to
in subsection (d)(4),
‘‘(III) an insurance com-
pany qualified to do business
under the laws of a State,
‘‘(IV) a person registered
as a broker or dealer under
the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.),
‘‘(V) an affiliate of a per-
son described in any of sub-
clauses (I) through (IV), or
‘‘(VI) an employee, agent,
or registered representative
of a person described in any
of subclauses (I) through (V)
who 
satisfies 
the 
require-
ments 
of 
applicable 
insur-
ance, banking, and securities
laws relating to the provision
of the advice.
‘‘(ii) AFFILIATE.—The term ‘af-
filiate’ of another entity means an
affiliated person of the entity (as
defined in section 2(a)(3) of the
Investment Company Act of 1940
(15 U.S.C. 80a-2(a)(3))).
‘‘(iii) REGISTERED REPRESENTA-
TIVE.—The term ‘registered rep-
resentative’ 
of 
another 
entity
means a person described in sec-
tion 3(a)(18) of the Securities Ex-