‘‘(B) QUALIFICATIONS.—A person meets 
the qualifications of this subparagraph if such 
person— 
‘‘(i) is registered as an investment ad-
viser under the Investment Advisers Act of 
1940 (15 U.S.C. 80b–1 et seq.), 
‘‘(ii) if not registered as an invest-
ment adviser under such Act by reason of 
section 203A(a)(1) of such Act (15 U.S.C. 
80b–3a(a)(1)), is registered under the laws 
of the State in which the fiduciary main-
tains its principal office and place of busi-
ness, and, at the time the fiduciary last 
filed the registration form most recently 
filed by the fiduciary with such State in 
order to maintain the fiduciary’s registra-
tion under the laws of such State, also 
filed a copy of such form with the Sec-
retary, 
‘‘(iii) is registered as a broker or deal-
er under the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.), 
‘‘(iv) is a bank or similar financial in-
stitution referred to in section 408(b)(4),
‘‘(v) is an insurance company quali-
fied to do business under the laws of a 
State, or 
‘‘(vi) is any other comparable entity 
which satisfies such criteria as the Sec-
retary determines appropriate. 
‘‘(C) ADDITIONAL
REQUIREMENTS
WITH 
RESPECT TO CERTAIN EMPLOYEES OR OTHER 
AGENTS
OF
CERTAIN
ADVISERS.—A person 
meets the additional requirements of this sub-
paragraph if every individual who is employed 
(or otherwise compensated) by such person and 
whose scope of duties includes the provision of 
qualified investment advice on behalf of such 
person to any participant or beneficiary is— 
‘‘(i) a registered representative of 
such person, 
‘‘(ii) an individual described in sub-
clause (I), (II), or (III) of subparagraph 
(A)(ii), or 
‘‘(iii) such other comparable qualified 
individual as may be designated in regula-
tions of the Secretary. 
‘‘(9) ADDITIONAL DEFINITIONS.—For purposes 
of this subsection and subsection (b)(14)—
‘‘(A) QUALIFIED INVESTMENT ADVICE.— 
The term ‘qualified investment advice’ means, 
in connection with a participant or beneficiary, 
investment 
advice 
referred 
to 
in 
section 
3(21)(A)(ii) which— 
‘‘(i) consists of an individualized rec-
ommendation to the participant or bene-
ficiary with respect to the purchase, sale, 
or retention of securities or other property 
for the individual account of the partici-
pant or beneficiary, in accordance with 
generally accepted investment management 
principles, and 
‘‘(ii) takes into account all investment 
options under the plan. 
‘‘(B) AFFILIATE.—The term ‘affiliate’ of 
another entity means an affiliated person of 
such entity (as defined in section 2(a)(3) of the 
Investment 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 such
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 
such entity for the investment adviser referred 
to in such section).’’. 
(b) ENFORCEMENT.— 
(1) LIABILITY FOR BREACH.— 
(A) LIABILITY IN CONNECTION WITH INDI-
VIDUAL ACCOUNT PLANS.—Section 409 of such 
Act (29 U.S.C. 1109) is amended by adding at 
the end the following new subsection: 
‘‘(c)(1) In any case in which the provision by a fidu-
ciary adviser of qualified investment advice to a partici-
pant or beneficiary regarding any security or other prop-
erty consists of a breach described in subsection (a), the 
fiduciary adviser shall be personally liable to make good 
to the individual account of the participant or beneficiary 
any losses to the individual account resulting from the 
breach, and to restore to the individual account any profits 
of the fiduciary adviser which have been made through use 
of assets of the individual account by— 
‘‘(A) the fiduciary adviser, or 
‘‘(B) any other party with respect to whom a 
material affiliation or contractual relationship of the
fiduciary adviser resulted in a violation of section 
408(g)(1)(A) in connection with the advice. 
‘‘(2) In the case of any action under this title by a 
participant or beneficiary against a fiduciary adviser for 
relief under this subsection in connection with the provi-
sion of any qualified investment advice— 
‘‘(A) if the participant or beneficiary shows that 
the fiduciary adviser had any interest in, or had any 
affiliation or contractual relationship with a third 
party having an interest in, the security or other 
property, there shall be a presumption (rebuttable by 
a preponderance of the evidence) that the fiduciary 
adviser failed to meet the requirements of subpara-
graphs (A) and (B) of section 404(a)(1) in connec-
tion with the provision of the advice, and 
‘‘(B) the dispute may be settled by arbitration, 
but only pursuant to terms and conditions estab-
lished by agreement entered into voluntarily by both 
parties after the commencement of the dispute. 
‘‘(3) For purposes of this subsection, the terms ‘fidu-
ciary adviser’ and ‘qualified investment advice’ shall have 
the meanings provided such terms in subparagraphs (A) 
and (B), respectively, of section 406(g)(7).’’.
(B) LIMITATION ON EXEMPTION FROM LI-
ABILITY.—Section 403(c) of such Act (29 
U.S.C. 1104(c)) is amended— 
(i) by redesignating paragraph (2) as 
paragraph (3) (and by adjusting the 
margination of such paragraph to full 
measure and adjusting the margination of 
subparagraphs (A) through (B) thereof ac-
cordingly); and 
(ii) by inserting after paragraph (1) 
the following new paragraph: 
‘‘(2)(A) In any case in which— 
‘‘(i) a participant or beneficiary exercises con-
trol over the assets in his or her account by means 
of a sale, acquisition, or holding of a security or 
other property with regard to which qualified invest-
ment advice was provided by a fiduciary adviser, and 
‘‘(ii) any transaction in connection with the ex-
ercise of such control is not a prohibited transaction 
solely by reason of section 408(b)(14), paragraph 
(1) shall not apply with respect to the fiduciary ad-
viser in connection with the provision of the advice. 
‘‘(B) For purposes of this subsection, the terms ‘fidu-
ciary adviser’ and ‘qualified investment advice’ shall have
the meanings provided such terms in subparagraphs (A) 
and (B), respectively, of section 408(g)(7).’’. 
(2) ATTORNEY’S FEES.—Section 502(g) of such 
Act (29 U.S.C. 1132(g)) is amended— 
(A) in paragraph (1), by inserting ‘‘or (3)’’ 
after ‘‘paragraph (2)’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) In any action under this title by the participant 
or beneficiary against a fiduciary adviser for relief under 
section 409(c) in which the plaintiff prevails, the court 
shall allow a reasonable attorney’s fee and costs of action 
to the prevailing plaintiff.’’. 
(3) APPLICABILITY OF STATE FRAUD LAWS.— 
Section 514(b) of such Act (29 U.S.C. 1144(b)) is 
amended— 
(A) by redesignating paragraph (9) as 
paragraph (10); and 
(B) by inserting after paragraph (8) the 
following new paragraph: 
‘‘(9) Nothing in this title shall be construed to super-
sede any State action for fraud against a fiduciary adviser 
for any act or failure to act by the fiduciary adviser consti-
tuting a violation of section 409(c).’’.
(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. 303. PARTICIPATION OF PARTICIPANTS IN TRUSTEE-
SHIP OF SINGLE-EMPLOYER PLANS PRO-
VIDING FOR EMPLOYEE CONTRIBUTIONS. 
(a) IN GENERAL.—Section 403(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1103(a)) is amended— 
(1) by redesignating paragraphs (1) and (2) as 
subparagraphs (A) and (B), respectively; 
(2) by inserting ‘‘(1)’’ after ‘‘(a)’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2)(A) Subject to subparagraph (B), the assets of 
a pension plan which is a single-employer plan and under 
which some or all of the assets are derived from employee 
contributions shall be held in trust by a joint board of 
trustees, which shall consist of two or more trustees rep-
resenting on an equal basis the interests of the employer 
or employers maintaining the plan and the interests of the 
participants and their beneficiaries.
‘‘(B) This paragraph shall apply for any plan year 
only if a majority of the participants of the plan indicates 
to the plan administrator, in such form and manner as 
shall be prescribed in regulations of the Secretary, its in-
tention to have this paragraph so apply. 
‘‘(C)(i) Except as provided in clause (ii), in any case 
in which the plan is maintained pursuant to one or more 
collective bargaining agreements between one or more em-
ployee organizations and one or more employers, the trust-
ees representing the interests of the participants and their 
beneficiaries shall be designated by such employee organi-
zations. 
‘‘(ii) Clause (i) shall not apply with respect to a plan 
described in such clause if the employee organization (or 
all employee organizations, if more than one) referred to 
in such clause file with the Secretary, in such form and 
manner as shall be prescribed in regulations of the Sec-
retary, a written waiver of their rights under clause (i). 
‘‘(iii) In any case in which clause (i) does not apply 
with respect to a single-employer plan because the plan 
is not described in clause (i) or because of a waiver filed 
pursuant to clause (ii), the trustee or trustees representing 
the interests of the participants and their beneficiaries 
shall be selected in accordance with regulations of the Sec-
retary. Such regulations may provide for selection of trust-
ees by the employer, but only from individuals who have 
been demonstrated to be independent and to have no con-
flict of interest. An individual shall not be treated as ineli-
gible for selection as trustee solely because such individual 
is an employee of the plan sponsor, except that the em-
ployee so selected may not be a highly compensated em-
ployee (as defined in section 414(q) of the Internal Rev-
enue Code of 1986). 
‘‘(iv) The Secretary shall provide by regulation for 
the appointment of a neutral, in accordance with the pro-
cedures under section 203(f) of the Labor Management 
Relations Act, 1947 (29 U.S.C. 173(f)), to cast votes as 
necessary to resolve tie votes by the trustees.’’. 
(b) REGULATIONS.—The Secretary of Labor shall 
prescribe the initial regulations necessary to carry out the 
provisions of such amendments not later than 90 days 
after the date of the enactment of this Act. 
SEC. 304. DIVERSIFICATION OF INVESTMENT OF ACCOUNT 
ASSETS HELD UNDER INDIVIDUAL ACCOUNT 
PLANS. 
(a) IN GENERAL.—Section 404 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1104) 
is amended by adding at the end the following new sub-
section:
‘‘(e) DIVERSIFICATION OF INVESTMENT OF ACCOUNT 
ASSETS HELD UNDER INDIVIDUAL ACCOUNT PLANS.— 
‘‘(1) IN GENERAL.—In the case of an individual 
account plan under which a participant or bene-
ficiary is permitted to exercise control over assets in 
his or her account, with respect to the assets in the 
account to which the participant or beneficiary has 
a nonforfeitable right and which consist of employer 
securities which are readily tradable on an estab-
lished securities market, the plan shall meet the re-
quirements of paragraphs (2), (3), (4), (5), (6), and 
(7). 
‘‘(2) ASSETS
ATTRIBUTABLE
TO
EMPLOYEE 
CONTRIBUTIONS.—In the case of any portion of the 
account assets described in paragraph (1) which is 
attributable to employee contributions, there shall be 
no restrictions on the right of a participant or bene-
ficiary to allocate the assets in such portion to any 
investment option provided under the plan. 
‘‘(3) ELECTIVE DEFERRALS INVESTED IN EM-
PLOYER SECURITIES.— 
‘‘(A) IN GENERAL.—In the case of the por-
tion of the account assets described in para-
graph (1) which is attributable to elective defer-
rals and is invested in employer securities, a
plan meets the requirements of this paragraph 
if each applicable individual in such plan may 
elect to direct the plan to divest any portion of 
such securities in the individual’s account and 
to reinvest an equivalent amount in other in-
vestment options which meet the requirements 
of paragraph (5). The preceding sentence shall 
apply to the extent that the amount attributable 
to such reinvested portion exceeds the amount 
to which a prior election under this paragraph 
or section 401(a)(28) of the Internal Revenue 
Code of 1986 applies. 
‘‘(B) APPLICABLE INDIVIDUAL.—For pur-
poses of this paragraph, the term ‘applicable in-
dividual’ means— 
‘‘(i) any participant in the plan, 
‘‘(ii) any beneficiary who is an alter-
nate payee (within the meaning of section 
206(d)(3)(K)) under an applicable quali-
fied domestic relations order (within the 
meaning of section 206(d)(3)(B)(i)), and 
‘‘(iii) any beneficiary of a deceased 
participant or alternate payee. 
‘‘(4) OTHER EMPLOYER CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—In the case of the por-
tion of the account assets described in para-
graph (1) which is attributable to employer con-
tributions (other than elective deferrals) and is 
invested in employer securities, a plan meets 
the requirements of this paragraph if each 
qualified participant in the plan may elect to di-
rect the plan to divest any portion of such secu-
rities in the participant’s account and to rein-
vest an equivalent amount in other investment 
options which meet the requirements of para-
graph (6). The preceding sentence shall apply 
to the extent that the amount attributable to 
such reinvested portion exceeds the amount to 
which a prior election under this paragraph or 
section 401(a)(28) of such Code applies. 
‘‘(B) QUALIFIED PARTICIPANT.—For pur-
poses of this paragraph, the term ‘qualified par-
ticipant’ means— 
‘‘(i) any participant in the plan who 
has completed at least 3 years of service 
(as determined under section 203(a)) 
under the plan, 
‘‘(ii) any beneficiary who, with respect 
to a participant who met the service re-
quirement in clause (i), is an alternate 
payee (within the meaning of section 
206(d)(3)(K)) under an applicable quali-
fied domestic relations order (within the 
meaning of section 206(d)(3)(B)(i)), and 
‘‘(iii) any beneficiary of a deceased 
participant who met the service require-
ment in clause (i) or alternate payee de-
scribed in clause (ii). 
‘‘(5) INVESTMENT OPTIONS.—The requirements 
of this paragraph are met if, with respect to the ac-
count assets described in paragraph (1), the plan of-
fers not less than 3 investment options (not incon-
sistent with regulations prescribed by the Secretary) 
other than employer securities. 
‘‘(6) PROMPT COMPLIANCE WITH DIRECTIONS 
TO ALLOCATE INVESTMENTS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), a plan meets the require-
ments of this paragraph with respect to plan 
assets described in paragraph (1) if the plan 
provides that, within 5 days after the date of 
any election by a participant or beneficiary allo-
cating any such assets to any investment option 
provided under the plan, the plan administrator
shall take such actions as are necessary to ef-
fectuate such allocation. 
‘‘(B) SPECIAL RULE FOR PERIODIC ELEC-
TIONS.—In any case in which the plan provides 
for elections periodically during prescribed peri-
ods, the 5-day period described in subparagraph 
(A) shall commence at the end of each such 
prescribed period. 
‘‘(7) NOTICE OF RIGHTS AND OF IMPORTANCE 
OF
DIVERSIFICATION.—A plan meets the require-
ments of this paragraph if the plan provides that, 
not later than 30 days prior to the date on which 
the right of a participant under the plan to his or 
her accrued benefit becomes nonforfeitable, the plan 
administrator shall provide to such participant and 
his or her beneficiaries a written notice— 
‘‘(A) setting forth their rights under this 
section with respect to the accrued benefit, and 
‘‘(B) describing the importance of diversi-
fying the investment of account assets. 
‘‘(8) PRESERVATION OF AUTHORITY OF PLAN 
TO LIMIT INVESTMENT.—Nothing in this subsection 
shall be construed to limit the authority of a plan to 
impose limitations on the portion of plan assets in
any account which may be invested in employer se-
curities. 
‘‘(9) OTHER
DEFINITIONS
AND
RULES.—For 
purposes of this subsection— 
‘‘(A) EMPLOYER
SECURITIES.—The term 
‘employer securities’ shall have the meaning 
given such term by section 407(d)(1) of the 
Employee Retirement Income Security Act of 
1974. 
‘‘(B) ELECTIVE
DEFERRALS.—The term 
‘elective deferrals’ means an employer contribu-
tion described in section 402(g)(3)(A) of such 
Code and any employee contribution. 
‘‘(C) ELECTION.—Elections under this 
subsection shall be not less frequently than 
quarterly. 
‘‘(D) 
EMPLOYEE
STOCK
OWNERSHIP 
PLAN.—The term ‘employee stock ownership 
plan’ shall have the same meaning given to 
such term by section 4975(e)(7) of such Code.’’. 
(b) RECOMMENDATIONS RELATING
TO NON-PUB-
LICLY TRADED STOCK.—Within 1 year after the date of 
the enactment of this Act, the Secretary of Labor shall 
transmit to the Committee on Education and the Work-
force of the House of Representatives and the Committee
on Health, Education, Labor, and Pensions of the Senate 
the Secretary’s recommendations regarding legislative 
changes relating to treatment, under section 404(e) of the 
Employee Retirement Income Security Act of 1974 (added 
by this section), of individual account plans under which 
a participant or beneficiary is permitted to exercise control 
over assets in his or her account, in cases in which such 
assets do not include employer securities which are readily 
tradable under an established securities market. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply with respect to plan years beginning 
after December 31, 2005. 
(2) EXCEPTION.—The amendments made by 
this section shall not apply to employer securities 
held by an employee stock ownership plan which are 
not subject to section 401(a)(28) of the Internal 
Revenue Code of 1986 by reason of section 
1175(a)(2) of the Tax Reform Act of 1986 (100 
Stat. 2519). 
(3) DELAYED EFFECTIVE DATE OF EXISTING 
HOLDINGS.—In any case in which a portion of the 
nonforfeitable accrued benefit of a participant or 
beneficiary is held in the form of employer securities
(as defined in section 407(d)(1) of the Employee Re-
tirement Income Security Act of 1974) immediately 
before the first date of the first plan year to which 
the amendments made by this section apply, such 
portion shall be taken into account only with respect 
to plan years beginning on or after January 1, 2007. 
SEC. 305. REMOVAL OF $500,000 CAP ON BONDING REQUIRE-
MENT. 
Section 412(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1112(a)) is amended, in 
the matter following paragraph (2), by striking ‘‘nor more 
than $500,000’’ and all that follows through ‘‘preceding 
sentence’’. 
SEC. 306. DISCLOSURE REGARDING INVESTMENTS AND 
VOTING OF PROXIES. 
(a) IN GENERAL.—Section 101 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1021) 
is amended by inserting after subsection (e) the following 
new subsection: 
‘‘(f) DISCLOSURE REGARDING INVESTMENTS
AND 
VOTING OF PROXIES.— 
‘‘(1) IN GENERAL.—Within 30 days after re-
ceipt by the plan administrator of a written request 
by a participant or beneficiary for relevant and spe-
cific information regarding—
‘‘(A) the nature or extent of any particular 
investment of plan assets occurring on a par-
ticular date specified in the request, or 
‘‘(B) the manner in which any right to 
vote in connection with such investment has 
been exercised by or under the plan, 
the plan administrator shall furnish such informa-
tion in writing to such participant or beneficiary. 
The administrator may make a reasonable charge to 
cover the cost of furnishing such information. 
‘‘(2) STANDARDS AND REVIEW.—The Secretary 
shall by regulation prescribe— 
‘‘(A) standards which must be met by re-
quests made pursuant to this subsection, in-
cluding standards relating to relevancy and 
specificity of the information requested, the 
specificity by which the investment must be 
identified in the request, and the reasonableness 
of charges made for furnishing the information, 
and 
‘‘(B) procedures by which plan administra-
tors may rely on such standards in declining re-
quests for information which fail to meet such 
standards, including methods for obtaining 
timely and binding determinations by the Sec-