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regarded for purposes of calculating the 50 percent 
threshold. An entity shall be considered to hold plan assets 
only to the extent of the percentage of the equity interest 
owned by benefit plan investors. For purposes of this para-
graph, the term ‘benefit plan investor’ means an employee 
benefit plan subject to this part and any plan to which 
section 4975 of the Internal Revenue Code of 1986 ap-
plies.’’. 
SEC. 306. CORRECTION PERIOD FOR CERTAIN TRANS-
ACTIONS INVOLVING SECURITIES AND COM-
MODITIES. 
(a) AMENDMENT OF EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.—Section 408(b) of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1108(b)), as amended by sections 304 and 601, 
is further amended by adding at the end the following new 
paragraph: 
‘‘(19)(A) Except as provided in subparagraphs 
(B) and (C), a transaction described in section 
406(a) in connection with the acquisition, holding, 
or disposition of any security or commodity, if the 
transaction is corrected before the end of the correc-
tion period. 
‘‘(B) Subparagraph (A) does not apply to any 
transaction between a plan and a plan sponsor or its
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affiliates that involves the acquisition or sale of an 
employer security (as defined in section 407(d)(1)) 
or the acquisition, sale, or lease of employer real 
property (as defined in section 407(d)(2)). 
‘‘(C) In the case of any fiduciary or other party 
in interest (or any other person knowingly partici-
pating in such transaction), subparagraph (A) does 
not apply to any transaction if, at the time the 
transaction occurs, such fiduciary or party in inter-
est (or other person) knew (or reasonably should 
have known) that the transaction would (without re-
gard to this paragraph) constitute a violation of sec-
tion 406(a). 
‘‘(D) For purposes of this paragraph, the term 
‘correction period’ means, in connection with a fidu-
ciary or party in interest (or other person knowingly 
participating in the transaction), the 14-day period 
beginning on the date on which such fiduciary or 
party in interest (or other person) discovers, or rea-
sonably should have discovered, that the transaction 
would (without regard to this paragraph) constitute 
a violation of section 406(a). 
‘‘(E) For purposes of this paragraph— 
‘‘(i) The term ‘security’ has the meaning 
given such term by section 475(c)(2) of the In-
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ternal Revenue Code of 1986 (without regard to 
subparagraph (F)(iii) and the last sentence 
thereof). 
‘‘(ii) The term ‘commodity’ has the mean-
ing given such term by section 475(e)(2) of 
such Code (without regard to subparagraph 
(D)(iii) thereof). 
‘‘(iii) The term ‘correct’ means, with re-
spect to a transaction— 
‘‘(I) to undo the transaction to the ex-
tent possible and in any case to make good 
to the plan or affected account any losses 
resulting from the transaction, and 
‘‘(II) to restore to the plan or affected 
account any profits made through the use 
of assets of the plan.’’. 
(b) AMENDMENT OF INTERNAL REVENUE CODE OF 
1986.— 
(1) IN
GENERAL.—Subsection (d) of section 
4975 of the Internal Revenue Code of 1986 (relating 
to exemptions), as amended by this Act, is amended 
by striking ‘‘or’’ at the end of paragraph (16), by 
striking the period at the end of paragraph (17) and 
inserting ‘‘, or’’, and by adding at the end the fol-
lowing new paragraph:
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‘‘(18) except as provided in subsection (f)(9), a 
transaction described in subparagraph (A), (B), (C), 
or (D) of subsection (c)(1) in connection with the 
acquisition, holding, or disposition of any security or 
commodity, if the transaction is corrected before the 
end of the correction period.’’. 
(2) SPECIAL RULES RELATING TO CORRECTION 
PERIOD.—Subsection (f) of section 4975 of such 
Code (relating to other definitions and special rules), 
as amended by this Act, is amended by adding at 
the end the following new paragraph: 
‘‘(9) CORRECTION PERIOD.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (d)(18), the term ‘correction period’ 
means the 14-day period beginning on the date 
on which the disqualified person discovers, or 
reasonably should have discovered, that the 
transaction would (without regard to this para-
graph and subsection (d)(18)) constitute a pro-
hibited transaction. 
‘‘(B) EXCEPTIONS.— 
‘‘(i) EMPLOYER
SECURITIES.—Sub-
section (d)(18) does not apply to any 
transaction between a plan and a plan 
sponsor or its affiliates that involves the
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acquisition or sale of an employer security 
(as defined in section 407(d)(1)) or the ac-
quisition, sale, or lease of employer real 
property (as defined in section 407(d)(2)). 
‘‘(ii) KNOWING
PROHIBITED
TRANS-
ACTION.—In the case of any disqualified 
person, subsection (d)(18) does not apply 
to a transaction if, at the time the trans-
action is entered into, the disqualified per-
son knew (or reasonably should have 
known) that the transaction would (with-
out regard to this paragraph) constitute a 
prohibited transaction. 
‘‘(C) ABATEMENT OF TAX WHERE THERE 
IS
A
CORRECTION.—If a transaction is not 
treated as a prohibited transaction by reason of 
subsection (d)(18), then no tax under sub-
section (a) and (b) shall be assessed with re-
spect to such transaction, and if assessed the 
assessment shall be abated, and if collected 
shall be credited or refunded as an overpay-
ment. 
‘‘(D) DEFINITIONS.—For purposes of this 
paragraph and subsection (d)(18)—
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‘‘(i) SECURITY.—The term ‘security’ 
has the meaning given such term by sec-
tion 475(c)(2) (without regard to subpara-
graph (F)(iii) and the last sentence there-
of). 
‘‘(ii) COMMODITY.—The term ‘com-
modity’ has the meaning given such term 
by section 475(e)(2) (without regard to 
subparagraph (D)(iii) thereof). 
‘‘(iii) CORRECT.—The term ‘correct’ 
means, with respect to a transaction— 
‘‘(I) to undo the transaction to 
the extent possible and in any case to 
make good to the plan or affected ac-
count any losses resulting from the 
transaction, and 
‘‘(II) to restore to the plan or af-
fected account any profits made 
through the use of assets of the 
plan.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to any transaction which the fidu-
ciary or disqualified person discovers, or reasonably should 
have discovered, after the date of the enactment of this 
Act constitutes a prohibited transaction.
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SEC. 307. RECOVERY BY REIMBURSEMENT OR SUBROGA-
TION WITH RESPECT TO PROVIDED BENE-
FITS. 
(a) IN GENERAL.—Section 502(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1132(a)) is amended by adding, after and below para-
graph (9), the following new sentence: 
‘‘Actions described under paragraph (3) include an action 
by a fiduciary for recovery of amounts on behalf of the 
plan enforcing terms of the plan that provide a right of 
recovery by reimbursement or subrogation with respect to 
benefits provided to or for a participant or beneficiary.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on January 1, 2006. 
SEC. 308. EXERCISE OF CONTROL OVER PLAN ASSETS IN 
CONNECTION WITH QUALIFIED CHANGES IN 
INVESTMENT OPTIONS. 
(a) IN GENERAL.—Section 404(c) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1104(c)) is amended by adding at the end the following 
new paragraph: 
‘‘(4)(A) In any case in which a qualified change in 
investment options occurs in connection with an individual 
account plan, a participant or beneficiary shall not be 
treated for purposes of paragraph (1) as not exercising 
control over the assets in his account in connection with
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such change if the requirements of subparagraph (C) are 
met in connection with such change. 
‘‘(B) For purposes of subparagraph (A), the term 
‘qualified change in investment options’ means, in connec-
tion with an individual account plan, a change in the in-
vestment options offered to the participant or beneficiary 
under the terms of the plan, under which— 
‘‘(i) the participant’s account is reallocated 
among one or more new investment options which 
are offered in lieu of one or more investment options 
offered immediately prior to the effective date of the 
change, and 
‘‘(ii) the characteristics of the new investment 
options, including characteristics relating to risk and 
rate of return, are, as of immediately after the 
change, reasonably similar to those of the existing 
investment options as of immediately before the 
change. 
‘‘(C) The requirements of this subparagraph are met 
in connection with a qualified change in investment op-
tions if— 
‘‘(i) at least 60 days prior to the effective date 
of the change, the plan administrator furnishes writ-
ten notice of the change to the participants and 
beneficiaries, including information comparing the
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existing and new investment options and an expla-
nation that, in the absence of affirmative investment 
instructions from the participant or beneficiary to 
the contrary, the account of the participant or bene-
ficiary will be invested in the manner described in 
subparagraph (B), 
‘‘(ii) the participant has not provided to the 
plan administrator, in advance of the effective date 
of the change, affirmative investment instructions 
contrary to the change, and 
‘‘(iii) the investments under the plan of the par-
ticipant or beneficiary as in effect immediately prior 
to the effective date of the change was the product 
of the exercise by such participant or beneficiary of 
control over the assets of the account within the 
meaning of paragraph (1).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply with respect to changes in in-
vestment options taking effect on or after January 1, 
2006. 
SEC. 309. CLARIFICATION OF FIDUCIARY RULES. 
Not later than 1 year after the date of the enactment 
of this Act, the Secretary of Labor shall issue final regula-
tions clarifying that the selection of an annuity contract
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as an optional form of distribution from an individual ac-
count plan to a participant or beneficiary— 
(1) is not subject to the safest available annuity 
standard under Interpretive Bulletin 95–1 (29 
C.F.R. 2509.95–1), and 
(2) is subject to all otherwise applicable fidu-
ciary standards. 
SEC. 310. GOVERNMENT ACCOUNTABILITY OFFICE PEN-
SION FUNDING REPORT. 
(a) IN GENERAL.—The Comptroller General of the 
Government Accountability Office shall transmit to the 
Congress a pension funding report not later than one year 
after the date of the enactment of this Act. 
(b) REPORT CONTENT.—The pension funding report 
required under subsection (a) shall include an analysis of 
the feasibility, advantages, and disadvantages of— 
(1) requiring an employee pension benefit plan 
to insure a portion of such plan’s total investments; 
(2) requiring an employee pension benefit plan 
to adhere to uniform solvency standards set by the 
Pension Benefit Guaranty Corporation, which are 
similar to those applied on a State level in the insur-
ance industry; and 
(3) amortizing a single-employer defined benefit 
pension plan’s shortfall amortization base (referred
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to in section 303(c)(3) of the Employee Retirement 
Income Security Act of 1974 (as amended by this 
Act)) over various periods of not more than 7 years. 
TITLE IV—IMPROVEMENTS IN 
PBGC GUARANTEE PROVISIONS 
SEC. 401. INCREASES IN PBGC PREMIUMS. 
(a) FLAT-RATE PREMIUMS.—Section 4006(a)(3) of 
the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1306(a)(3)) is amended— 
(1) by striking clause (i) of subparagraph (A) 
and inserting the following: 
‘‘(i) in the case of a single-employer plan, an 
amount equal to— 
‘‘(I) for plan years beginning after Decem-
ber 31, 1990, and before January 1, 2006, $19, 
or 
‘‘(II) for plan years beginning after De-
cember 31, 2005, the amount determined under 
subparagraph (F), 
plus the additional premium (if any) determined 
under subparagraph (E) for each individual who is 
a participant in such plan during the plan year;’’; 
and 
(2) by adding at the end the following new sub-
paragraph:
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‘‘(F)(i) Except as otherwise provided in this subpara-
graph, for purposes of determining the annual premium 
rate payable to the corporation by a single-employer plan 
for basic benefits guaranteed under this title, the amount 
determined under this subparagraph is the greater of $30 
or the adjusted amount determined under clause (ii). 
‘‘(ii) For plan years beginning after 2006, the ad-
justed amount determined under this clause is the product 
derived by multiplying $30 by the ratio of— 
‘‘(I) the national average wage index (as de-
fined in section 209(k)(1) of the Social Security Act) 
for the first of the 2 calendar years preceding the 
calendar year in which the plan year begins, to 
‘‘(II) the national average wage index (as so de-
fined) for 2004, 
with such product, if not a multiple of $1, being rounded 
to the next higher multiple of $1 where such product is 
a multiple of $0.50 but not of $1, and to the nearest mul-
tiple of $1 in any other case. 
‘‘(iii) For purposes of determining the annual pre-
mium rate payable to the corporation by a single-employer 
plan for basic benefits guaranteed under this title for any 
plan year beginning after 2005 and before 2010— 
‘‘(I) except as provided in subclause (II), the 
premium amount referred to in subparagraph