373
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to advice referred to 
in section 3(21)(A)(ii) of the Employee Retirement In-
come Security Act of 1974 provided on or after January 
1, 2006. 
SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 
1986 PROVIDING PROHIBITED TRANSACTION 
EXEMPTION FOR PROVISION OF INVESTMENT 
ADVICE. 
(a) 
EXEMPTION
FROM
PROHIBITED
TRANS-
ACTIONS.—Subsection (d) of section 4975 of the Internal 
Revenue Code of 1986 (relating to exemptions from tax 
on prohibited transactions), as amended by this Act, is 
amended—
(1) in paragraph (17), by striking ‘‘or’’ at the 
end; 
(2) in paragraph (18), by striking the period at 
the end and inserting ‘‘; or’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(19) any transaction described in subsection 
(f)(10)(A) in connection with the provision of invest-
ment advice described in subsection (e)(3)(B)(i), in 
any case in which—
374
‘‘(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 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 
‘‘(C) 
the 
requirements 
of 
subsection 
(f)(10)(B) are met in connection with the provi-
sion of the advice.’’. 
(b) 
ALLOWED
TRANSACTIONS
AND
REQUIRE-
MENTS.—Subsection (f) of such section 4975 (relating to 
other definitions and special rules), as amended by this 
Act, is amended by adding at the end the following new 
paragraph: 
‘‘(10) PROVISIONS RELATING TO INVESTMENT 
ADVICE PROVIDED BY FIDUCIARY ADVISERS.—
‘‘(A) TRANSACTIONS ALLOWABLE IN CON-
NECTION WITH INVESTMENT ADVICE PROVIDED 
BY FIDUCIARY ADVISERS.—The transactions re-
ferred to in subsection (d)(19), in connection 
with the provision of investment advice by a fi-
duciary adviser, are the following:
375
‘‘(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 lending of money or other extension of 
credit associated with the sale, acquisition, 
or holding of a security or other property) 
pursuant to the advice; and 
‘‘(iii) the direct or indirect receipt of 
fees or other compensation by the fiduciary 
adviser or an affiliate thereof (or any em-
ployee, agent, or registered representative 
of the fiduciary adviser or affiliate) in con-
nection with the provision of the advice or 
in connection with a sale, acquisition, or 
holding of a security or other property pur-
suant to the advice. 
‘‘(B) REQUIREMENTS RELATING TO PROVI-
SION OF INVESTMENT ADVICE BY FIDUCIARY 
ADVISERS.—The requirements of this subpara-
graph (referred to in subsection (d)(19)(C)) are 
met in connection with the provision of invest-
ment advice referred to in subsection (e)(3)(B), 
provided to a plan or a participant or bene-
ficiary of a plan by a fiduciary adviser with re-
376
spect 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—
‘‘(i) 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 fi-
duciary adviser provides to the recipient of 
the advice, at a time reasonably contem-
poraneous with the initial provision of the 
advice, a written notification (which may 
consist of notification by means of elec-
tronic communication)—
‘‘(I) of all fees or other com-
pensation relating to the advice that 
the fiduciary adviser or any affiliate 
thereof is to receive (including com-
pensation 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 fidu-