SECTION 1. 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)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(14)(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 
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-
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, to undo the transaction 
to the extent possible, but in any case to make
good to the plan or affected account any losses 
resulting from the transaction and 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) is amended by striking ‘‘or’’ at the 
end of paragraph (14), by striking the period at the 
end of paragraph (15) and inserting ‘‘, or’’, and by 
adding at the end the following new paragraph: 
‘‘(16) except as provided in subsection (f)(7), 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) 
is amended by adding at the end the following new 
paragraph: 
‘‘(7) CORRECTION PERIOD.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (d)(16), 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)(16)) constitute a pro-
hibited transaction. 
‘‘(B) EXCEPTIONS.— 
‘‘(i) EMPLOYER
SECURITIES.—Sub-
section (d)(16) does not apply to any 
transaction between a plan and a plan 
sponsor or its affiliates that involves the 
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)(16) 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-