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)(16)(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-
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-
ciary adviser or affiliates thereof in
the security or other property,
‘‘(III) of any limitation placed on
the scope of the investment advice to
be provided by the fiduciary adviser
with respect to any such sale, acquisi-
tion, 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 in-
vestment advice by the fiduciary ad-
viser,
‘‘(V) that the adviser is acting as
a fiduciary of the plan in connection
with the provision of the advice, and
‘‘(VI) that a recipient of the ad-
vice may separately arrange for the
provision of advice by another adviser,
that could have no material affiliation
with and receive no fees or other com-
pensation in connection with the secu-
rity or other property,
‘‘(ii) the fiduciary adviser provides ap-
propriate disclosure, in connection with the
sale, acquisition, 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 direction of the recipi-
ent of the advice,
‘‘(iv) the compensation received by the
fiduciary adviser and affiliates thereof in
connection with the sale, acquisition, or
holding of the security or other property is
reasonable, and
‘‘(v) 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.
‘‘(C) STANDARDS FOR PRESENTATION OF
INFORMATION.—The notification required to be
provided to participants and beneficiaries under
subparagraph (B)(i) shall be written in a clear
and conspicuous manner and in a manner cal-
culated 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 provided in the notification.
‘‘(D) EXEMPTION CONDITIONED ON MAK-
ING REQUIRED INFORMATION AVAILABLE ANNU-
ALLY, ON REQUEST, AND IN THE EVENT OF MA-
TERIAL
CHANGE.—The requirements of sub-
paragraph (B)(i) shall be deemed not to have
been met in connection with the initial or any
subsequent provision of advice described in sub-
paragraph (B) to the plan, participant, or bene-
ficiary if, at any time during the provision of
advisory services to the plan, participant, or
beneficiary, the fiduciary adviser fails to main-
tain the information described in subclauses (I)
through (IV) of subparagraph (B)(i) in cur-
rently accurate form and in the manner re-
quired by subparagraph (C), or fails—
‘‘(i) to provide, without charge, such
currently accurate information to the re-
cipient 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 ad-
vice, or
‘‘(iii) in the event of a material
change to the information described in
subclauses (I) through (IV) of subpara-
graph (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
information.
‘‘(E) MAINTENANCE FOR 6 YEARS OF EVI-
DENCE OF COMPLIANCE.—A fiduciary adviser
referred to in subparagraph (B) who has pro-
vided 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 determining whether the
requirements of the preceding provisions of this
paragraph 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 destroyed
prior to the end of the 6-year period due to cir-
cumstances beyond the control of the fiduciary
adviser.
‘‘(F) EXEMPTION FOR PLAN SPONSOR AND
CERTAIN OTHER FIDUCIARIES.—A plan sponsor
or other person who is a fiduciary (other than
a fiduciary adviser) shall not be treated as fail-
ing to meet the requirements of this section
solely by reason of the provision of investment
advice referred to in subsection (e)(3)(B) (or
solely by reason of contracting for or otherwise
arranging for the provision of the advice), if—
‘‘(i) the advice is provided by a fidu-
ciary adviser pursuant to an arrangement
between the plan sponsor or other fidu-
ciary and the fiduciary adviser for the pro-
vision by the fiduciary adviser of invest-
ment advice referred to in such section,
‘‘(ii) the terms of the arrangement re-
quire compliance by the fiduciary adviser
with the requirements of this paragraph,
‘‘(iii) the terms of the arrangement
include a written acknowledgment by the
fiduciary adviser that the fiduciary adviser
is a fiduciary of the plan with respect to
the provision of the advice, and
‘‘(iv) the requirements of part 4 of
subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 are
met in connection with the provision of
such advice.
‘‘(G) 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 beneficiary and who
is—
‘‘(I) registered as an investment
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 maintains its prin-
cipal office and place of business,
‘‘(II) a bank or similar financial
institution referred to in subsection
(d)(4), but only if the advice is pro-
vided through a trust department of
the bank or similar financial institu-
tion which is subject to periodic exam-
ination and review by Federal or
State banking authorities,
‘‘(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 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) who satisfies the require-
ments of applicable insurance, bank-
ing, and securities laws relating to the
provision of the advice.
‘‘(ii) AFFILIATE.—The term ‘affiliate’
of another entity means an affiliated per-
son 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 representa-
tive’ of another entity means a person de-
scribed in section 3(a)(18) of the Securi-
ties Exchange Act of 1934 (15 U.S.C.
78c(a)(18)) (substituting the entity for the
broker or dealer referred to in such sec-
tion) or a person described in section
202(a)(17) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b–2(a)(17)) (sub-
stituting the entity for the investment ad-
viser referred to in such section).’’.
SEC. 106. STUDY REGARDING IMPACT ON RETIREMENT
SAVINGS 
OF 
PARTICIPANTS 
AND 
BENE-
FICIARIES BY REQUIRING CONSULTANTS TO
ADVISE PLAN FIDUCIARIES OF INDIVIDUAL
ACCOUNT PLANS.
(a) STUDY.—As soon as practicable after the date of
the enactment of this Act, the Secretary of Labor shall
undertake a study of the costs and benefits to participants
and beneficiaries of requiring independent consultants to
advise plan fiduciaries in connection with individual ac-
count plans. In conducting such study, the Secretary shall
consider—
(1) the benefits to plan participants and bene-
ficiaries of engaging independent advisers to provide
investment and other advice regarding the assets of
the plan to persons who have fiduciary duties with
respect to the management or disposition of such as-
sets,
(2) the extent to which independent advisers
are currently retained by plan fiduciaries,
(3) the availability of assistance to fiduciaries
from appropriate Federal agencies,
(4) the availability of qualified independent con-
sultants to serve the needs of individual account
plan fiduciaries in the United States,
SEC. 108. INSIDER TRADES DURING PENSION FUND BLACK-
OUT PERIODS PROHIBITED.
(a) PROHIBITION.—It shall be unlawful for any per-
son who is directly or indirectly the beneficial owner of
more than 10 percent of any class of any equity security
(other than an exempted security) which is registered
under section 12 of the Securities Exchange Act of 1934
(15 U.S.C. 78l) or who is a director or an officer of the
issuer of such security, directly or indirectly, to purchase
(or otherwise acquire) or sell (or otherwise transfer) any
equity security of any issuer (other than an exempted se-
curity), during any blackout period with respect to such
equity security.
(b) REMEDY.—Any profit realized by such beneficial
owner, director, or officer from any purchase (or other ac-
quisition) or sale (or other transfer) in violation of this
section shall inure to and be recoverable by the issuer irre-
spective of any intention on the part of such beneficial
owner, director, or officer in entering into the transaction.
Suit to recover such profit may be instituted at law or
in equity in any court of competent jurisdiction by the
issuer, or by the owner of any security of the issuer in
the name and in behalf of the issuer if the issuer shall
fail or refuse to bring such suit within 60 days after re-
quest or shall fail diligently to prosecute the same there-
after; but no such suit shall be brought more than 2 years
after the date such profit was realized. This subsection
shall not be construed to cover any transaction where such
beneficial owner was not such both at the time of the pur-
chase and sale, or the sale and purchase, of the security
or security-based swap (as defined in section 206B of the
Gramm-Leach-Bliley Act) involved, or any transaction or
transactions which the Commission by rules and regula-
tions may exempt as not comprehended within the pur-
poses of this subsection.
(c) RULEMAKING
PERMITTED.—The Commission
may issue rules to clarify the application of this sub-
section, to ensure adequate notice to all persons affected
by this subsection, and to prevent evasion thereof.
(d) As used in this section:
(1) BENEFICIAL OWNER.—The term ‘‘beneficial
owner’’ has the meaning provided such term in rules
or regulations issued by the Commission under sec-
tion 16 of the Securities Exchange Act of 1934 (15
U.S.C. 78p).
(2) BLACKOUT PERIOD.—The term ‘‘blackout
period’’ with respect to the equity securities of any
issuer—
(A) means any period during which the
ability of at least fifty percent of the partici-
pants or beneficiaries under all applicable indi-
vidual account plans maintained by the issuer
to purchase (or otherwise acquire) or sell (or
otherwise transfer) an interest in any equity of
such issuer is suspended by the issuer or a fidu-
ciary of the plan; but
(B) does not include—
(i) a period in which the employees of
an issuer may not allocate their interests
in the individual account plan due to an
express investment restriction—
(I) incorporated into the indi-
vidual account plan; and
(II) timely disclosed to employees
before joining the individual account
plan or as a subsequent amendment
to the plan;
(ii) any suspension described in sub-
paragraph (A) that is imposed solely in
connection with persons becoming partici-
pants or beneficiaries, or ceasing to be par-
ticipants or beneficiaries, in an applicable
individual account plan by reason of a cor-
porate merger, acquisition, divestiture, or
similar transaction.
(3) COMMISSION.—The term ‘‘Commission’’
means the Securities and Exchange Commission.
(4) INDIVIDUAL
ACCOUNT
PLAN.—The term
‘‘individual account plan’’ has the meaning provided
such term in section 3(34) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C.
1002(34)).
(5) ISSUER.—The term ‘‘issuer’’ shall have the
meaning set forth in section 2(a)(4) of the Securities
Act of 1933 (15 U.S.C. 77b(a)(4)).
SEC. 109. EFFECTIVE DATES OF TITLE AND RELATED
RULES.
(a) IN GENERAL.—Except as otherwise provided in
this title or in subsection (b), the amendments made by
this title shall apply with respect to plan years beginning
on or after January 1, 2003.
(b) SPECIAL RULE FOR COLLECTIVELY BARGAINED
PLANS.—In the case of a plan maintained pursuant to 1
or more collective bargaining agreements between em-
ployee representatives and 1 or more employers ratified
on or before the date of the enactment of this Act, sub-
section (a) shall be applied to benefits pursuant to, and
individuals covered by, any such agreement by substituting
for ‘‘January 1, 2003’’ the date of the commencement of
the first plan year beginning on or after the earlier of—
(1) the later of—
(A) January 1, 2004, or
(B) the date on which the last of such col-
lective bargaining agreements terminates (de-
termined without regard to any extension there-
of after the date of the enactment of this Act),
or
(2) January 1, 2005.
(c) PLAN AMENDMENTS.—If the amendments made
by sections 101, 102, 103, and 104 of this Act require
an amendment to any plan, such plan amendment shall
not be required to be made before the first plan year be-
ginning on or after January 1, 2005, if—
(1) during the period after such amendments
made by such sections take effect and before such
first plan year, the plan is operated in accordance
with the requirements of such amendments made by
such sections, and
(2) such plan amendment applies retroactively
to the period after such amendments made by such
sections take effect and before such first plan year.
(d) AMENDMENTS RELATING TO INVESTMENT AD-
VICE.—The amendments made by section 104 shall apply
with respect to advice referred to in section 3(21)(A)(ii)
of the Employee Retirement Income Security Act of 1974
or section 4975(c)(3)(B) of the Internal Revenue Code of
1986 provided on or after January 1, 2003.
TITLE II—OTHER PROVISIONS
RELATING TO PENSIONS
SEC. 201. AMENDMENTS TO RETIREMENT PROTECTION ACT
OF 1994.
(a) TRANSITION RULE MADE PERMANENT.—Para-
graph (1) of section 769(c) of the Retirement Protection
Act of 1994 is amended—
(1) by striking ‘‘transition’’ each place it ap-
pears in the heading and the text, and
(2) by striking ‘‘for any plan year beginning
after 1996 and before 2010’’.
(b) SPECIAL RULES.—Paragraph (2) of section
769(c) of the Retirement Protection Act of 1994 is amend-
ed to read as follows:
‘‘(2) SPECIAL RULES.—The rules described in
this paragraph are as follows:
‘‘(A) For purposes of section 412(l)(9)(A)
of the Internal Revenue Code of 1986 and sec-
tion 302(d)(9)(A) of the Employee Retirement
Income Security Act of 1974, the funded cur-
rent liability percentage for any plan year shall
be treated as not less than 90 percent.
‘‘(B) For purposes of section 412(m) of
the Internal Revenue Code of 1986 and section
302(e) of the Employee Retirement Income Se-
curity Act of 1974, the funded current liability
percentage for any plan year shall be treated as
not less than 100 percent.
‘‘(C) For purposes of determining un-
funded 
vested 
benefits 
under 
section
4006(a)(3)(E)(iii) of the Employee Retirement
Income Security Act of 1974, the mortality
table shall be the mortality table used by the
plan.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to plan years beginning after De-
cember 31, 2001.
SEC. 202. REPORTING SIMPLIFICATION.
(a) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
OWNERS AND THEIR SPOUSES.—
(1) IN GENERAL.—The Secretary of the Treas-
ury and the Secretary of Labor shall modify the re-
quirements for filing annual returns with respect to
one-participant retirement plans to ensure that such
plans with assets of $250,000 or less as of the close
of the plan year need not file a return for that year.
(2) ONE-PARTICIPANT RETIREMENT PLAN DE-
FINED.—For purposes of this subsection, the term
‘‘one-participant retirement plan’’ means a retire-
ment plan that—
(A) on the first day of the plan year—
(i) covered only the employer (and the
employer’s spouse) and the employer
owned the entire business (whether or not
incorporated); or
(ii) covered only one or more partners
(and their spouses) in a business partner-
ship (including partners in an S or C cor-
poration);
(B) meets the minimum coverage require-
ments of section 410(b) of the Internal Revenue
Code of 1986 without being combined with any
other plan of the business that covers the em-
ployees of the business;
(C) does not provide benefits to anyone ex-
cept the employer (and the employer’s spouse)
or the partners (and their spouses);
(D) does not cover a business that is a
member of an affiliated service group, a con-
trolled group of corporations, or a group of
businesses under common control; and
(E) does not cover a business that leases
employees.
(3) OTHER DEFINITIONS.—Terms used in para-
graph (2) which are also used in section 414 of the
Internal Revenue Code of 1986 shall have the re-
spective meanings given such terms by such section.
(4) EFFECTIVE DATE.—The provisions of this
subsection shall apply to plan years beginning on or
after January 1, 2002.
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
PLANS WITH FEWER THAN 25 EMPLOYEES.—In the case
of plan years beginning after December 31, 2003, the Sec-
retary of the Treasury and the Secretary of Labor shall
provide for the filing of a simplified annual return for any
retirement plan which covers less than 25 employees on
the first day of a plan year and which meets the require-
ments described in subparagraphs (B), (D), and (E) of
subsection (a)(2).
SEC. 203. IMPROVEMENT OF EMPLOYEE PLANS COMPLI-
ANCE RESOLUTION SYSTEM.
The Secretary of the Treasury shall continue to up-
date and improve the Employee Plans Compliance Resolu-
tion System (or any successor program) giving special at-
tention to—
(1) increasing the awareness and knowledge of
small employers concerning the availability and use
of the program;
(2) taking into account special concerns and
circumstances that small employers face with respect
to compliance and correction of compliance failures;
(3) extending the duration of the self-correction
period under the Self-Correction Program for signifi-
cant compliance failures;
(4) expanding the availability to correct insig-
nificant compliance failures under the Self-Correc-
tion Program during audit; and
(5) assuring that any tax, penalty, or sanction
that is imposed by reason of a compliance failure is
not excessive and bears a reasonable relationship to
the nature, extent, and severity of the failure.
The Secretary of the Treasury shall have full authority
to effectuate the foregoing with respect to the Employee
Plans Compliance Resolution System (or any successor
program) and any other employee plans correction poli-
cies, including the authority to waive income, excise, or
other taxes to ensure that any tax, penalty, or sanction
is not excessive and bears a reasonable relationship to the
nature, extent, and severity of the failure.
SEC. 204. FLEXIBILITY IN NONDISCRIMINATION, COV-
ERAGE, AND LINE OF BUSINESS RULES.
(a) NONDISCRIMINATION.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall, by regulation, provide that a plan shall be
deemed to satisfy the requirements of section
401(a)(4) of the Internal Revenue Code of 1986 if
such plan satisfies the facts and circumstances test
under section 401(a)(4) of such Code, as in effect
before January 1, 1994, but only if—
(A) the plan satisfies conditions prescribed
by the Secretary to appropriately limit the
availability of such test; and
(B) the plan is submitted to the Secretary
for a determination of whether it satisfies such
test.
Subparagraph (B) shall only apply to the extent pro-
vided by the Secretary.
(2) EFFECTIVE DATES.—
(A) REGULATIONS.—The regulation re-
quired by paragraph (1) shall apply to years be-
ginning after December 31, 2003.
(B) CONDITIONS OF AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under paragraph (1)(A) shall not apply
before the first year beginning not less than
120 days after the date on which such condition
is prescribed.
(b) COVERAGE TEST.—
(1) IN GENERAL.—Section 410(b)(1) of the In-
ternal Revenue Code of 1986 (relating to minimum
coverage requirements) is amended by adding at the
end the following:
‘‘(D) In the case that the plan fails to
meet the requirements of subparagraphs (A),
(B) and (C), the plan—
‘‘(i) satisfies subparagraph (B), as in
effect immediately before the enactment of
the Tax Reform Act of 1986,
‘‘(ii) is submitted to the Secretary for
a determination of whether it satisfies the
requirement described in clause (i), and
‘‘(iii) satisfies conditions prescribed by
the Secretary by regulation that appro-
priately limit the availability of this sub-
paragraph.
Clause (ii) shall apply only to the extent pro-
vided by the Secretary.’’.
(2) EFFECTIVE DATES.—
(A) IN GENERAL.—The amendment made
by paragraph (1) shall apply to years beginning
after December 31, 2003.
(B) CONDITIONS OF AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under regulations prescribed by the Sec-
retary under section 410(b)(1)(D) of the Inter-
nal Revenue Code of 1986 shall not apply be-
fore the first year beginning not less than 120
days after the date on which such condition is
prescribed.
(c) LINE OF BUSINESS RULES.—The Secretary of
the Treasury shall, on or before December 31, 2003, mod-
ify the existing regulations issued under section 414(r) of
the Internal Revenue Code of 1986 in order to expand
(to the extent that the Secretary determines appropriate)
the ability of a pension plan to demonstrate compliance
with the line of business requirements based upon the
facts and circumstances surrounding the design and oper-
ation of the plan, even though the plan is unable to satisfy
the mechanical tests currently used to determine compli-
ance.
SEC. 205. EXTENSION TO ALL GOVERNMENTAL PLANS OF
MORATORIUM ON APPLICATION OF CERTAIN
NONDISCRIMINATION RULES APPLICABLE TO
STATE AND LOCAL PLANS.
(a) IN GENERAL.—
(1) Subparagraph (G) of section 401(a)(5) of
the Internal Revenue Code of 1986 and subpara-
graph (H) of section 401(a)(26) of such Code are
each amended by striking ‘‘section 414(d))’’ and all
that follows and inserting ‘‘section 414(d)).’’.
(2) Subparagraph (G) of section 401(k)(3) of
the Internal Revenue Code of 1986 and paragraph
(2) of section 1505(d) of the Taxpayer Relief Act of
1997 are each amended by striking ‘‘maintained by
a State or local government or political subdivision
thereof (or agency or instrumentality thereof)’’.
(b) CONFORMING AMENDMENTS.—
(1) The heading for subparagraph (G) of sec-
tion 401(a)(5) of such Code is amended to read as
follows: ‘‘GOVERNMENTAL PLANS.—’’.
(2) The heading for subparagraph (H) of sec-
tion 401(a)(26) of such Code is amended to read as
follows: 
‘‘EXCEPTION
FOR
GOVERNMENTAL
PLANS.—’’.
(3) Subparagraph (G) of section 401(k)(3) of
such Code is amended by inserting ‘‘GOVERN-
MENTAL PLANS.—’’ after ‘‘(G)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 2002.
SEC. 206. NOTICE AND CONSENT PERIOD REGARDING DIS-
TRIBUTIONS.
(a) EXPANSION OF PERIOD.—
(1) AMENDMENT
OF
INTERNAL
REVENUE
CODE.—
(A) IN
GENERAL.—Subparagraph (A) of
section 417(a)(6) of the Internal Revenue Code
of 1986 is amended by striking ‘‘90-day’’ and
inserting ‘‘180-day’’.
(B) MODIFICATION
OF
REGULATIONS.—
The Secretary of the Treasury shall modify the
regulations under sections 402(f), 411(a)(11),
and 417 of the Internal Revenue Code of 1986
to substitute ‘‘180 days’’ for ‘‘90 days’’ each
place it appears in Treasury Regulations sec-
tions 1.402(f)–1, 1.411(a)–11(c), and 1.417(e)–
1(b).
(2) AMENDMENT OF ERISA.—
(A) IN GENERAL.—Section 205(c)(7)(A) of
the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1055(c)(7)(A)) is amended
by striking ‘‘90-day’’ and inserting ‘‘180-day’’.
(B) MODIFICATION
OF
REGULATIONS.—
The Secretary of the Treasury shall modify the
regulations under part 2 of subtitle B of title
I of the Employee Retirement Income Security
Act of 1974 to the extent that they relate to
sections 203(e) and 205 of such Act to sub-
stitute ‘‘180 days’’ for ‘‘90 days’’ each place it
appears.
(3) EFFECTIVE DATE.—The amendments made
by paragraphs (1)(A) and (2)(A) and the modifica-
tions required by paragraphs (1)(B) and (2)(B)
shall apply to years beginning after December 31,
2002.
(b) CONSENT REGULATION INAPPLICABLE TO CER-
TAIN DISTRIBUTIONS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall modify the regulations under section
411(a)(11) of the Internal Revenue Code of 1986
and under section 205 of the Employee Retirement
Income Security Act of 1974 to provide that the de-
scription of a participant’s right, if any, to defer re-
ceipt of a distribution shall also describe the con-
sequences of failing to defer such receipt.
(2) EFFECTIVE DATE.—
(A) IN GENERAL.—The modifications re-
quired by paragraph (1) shall apply to years be-
ginning after December 31, 2002.
(B) REASONABLE NOTICE.—In the case of
any description of such consequences made be-
fore the date that is 90 days after the date on
which the Secretary of the Treasury issues a
safe harbor description under paragraph (1), a
plan shall not be treated as failing to satisfy the
requirements of section 411(a)(11) of such
Code or section 205 of such Act by reason of
the failure to provide the information required
by the modifications made under paragraph (1)
if the Administrator of such plan makes a rea-
sonable attempt to comply with such require-
ments.
SEC. 207. ANNUAL REPORT DISSEMINATION.
(a) REPORT AVAILABLE THROUGH ELECTRONIC
MEANS.—Section 104(b)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) is
amended by adding at the end the following new sentence:
‘‘The requirement to furnish information under the pre-
vious sentence with respect to an employee pension benefit
plan shall be satisfied if the administrator makes such in-
formation reasonably available through electronic means
or other new technology.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to reports for years beginning after
December 31, 2002.
SEC. 208. TECHNICAL CORRECTIONS TO SAVER ACT.
Section 517 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1147) is amended—
(1) in subsection (a), by striking ‘‘2001 and
2005 on or after September 1 of each year involved’’
and inserting ‘‘2002, 2006, and 2010’’;
(2) in subsection (b), by adding at the end the
following new sentence: ‘‘To effectuate the purposes
of this paragraph, the Secretary may enter into a co-
operative agreement, pursuant to the Federal Grant
and Cooperative Agreement Act of 1977 (31 U.S.C.
6301 et seq.), with any appropriate, qualified enti-
ty.’’;
(3) in subsection (e)(2)—
(A) by striking ‘‘Committee on Labor and
Human Resources’’ in subparagraph (D) and
inserting ‘‘Committee on Health, Education,
Labor, and Pensions’’;
(B) by striking subparagraph (F) and in-
serting the following:
‘‘(F) the Chairman and Ranking Member
of the Subcommittee on Labor, Health and
Human Services, and Education of the Com-
mittee on Appropriations of the House of Rep-
resentatives and the Chairman and Ranking
Member of the Subcommittee on Labor, Health
and Human Services, and Education of the
Committee on Appropriations of the Senate;’’;
(C) by redesignating subparagraph (G) as
subparagraph (J); and
(D) by inserting after subparagraph (F)
the following new subparagraphs:
‘‘(G) the Chairman and Ranking Member
of the Committee on Finance of the Senate;
‘‘(H) the Chairman and Ranking Member
of the Committee on Ways and Means of the
House of Representatives;
‘‘(I) the Chairman and Ranking Member
of the Subcommittee on Employer-Employee
Relations of the Committee on Education and
the Workforce of the House of Representatives;
and’’;
(4) in subsection (e)(3)—
(A) by striking ‘‘There shall be not more
than 200 additional participants.’’ in subpara-
graph (A) and inserting ‘‘The participants in
the National Summit shall also include addi-
tional participants appointed under this sub-
paragraph.’’;
(B) by striking ‘‘one-half shall be ap-
pointed by the President,’’ in subparagraph
(A)(i) and inserting ‘‘not more than 100 par-
ticipants shall be appointed under this clause by
the President,’’;
(C) by striking ‘‘one-half shall be ap-
pointed by the elected leaders of Congress’’ in
subparagraph (A)(ii) and inserting ‘‘not more
than 100 participants shall be appointed under
this clause by the elected leaders of Congress’’;
(D) by redesignating subparagraph (B) as
subparagraph (C); and
(E) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) PRESIDENTIAL AUTHORITY FOR AD-
DITIONAL
APPOINTMENTS.—The President, in
consultation with the elected leaders of Con-
gress referred to in subsection (a), may appoint
under this subparagraph additional participants
to the National Summit. The number of such
additional participants appointed under this
subparagraph may not exceed the lesser of 3
percent of the total number of all additional
participants appointed under this paragraph, or
10. Such additional participants shall be ap-
pointed from persons nominated by an organi-
zation referred to in subsection (b) which is
made up of private sector businesses and asso-
ciations partnered with Government entities to
promote long term financial security in retire-
ment through savings and with which the Sec-
retary is required thereunder to consult and co-
operate and shall not be Federal, State, or local
government employees.’’;
(5) in subsection (e)(3)(C) (as redesignated), by
striking ‘‘January 31, 1998’’ and inserting ‘‘3
months before the convening of each summit;’’;
(6) in subsection (f)(1)(C), by inserting ‘‘, no
later than 90 days prior to the date of the com-
mencement of the National Summit,’’ after ‘‘com-
ment’’;
(7) in subsection (g), by inserting ‘‘, in con-
sultation with the congressional leaders specified in
subsection (e)(2),’’ after ‘‘report’’ the first place it
appears;
(8) in subsection (i)—
(A) by striking ‘‘for fiscal years beginning
on or after October 1, 1997,’’; and
(B) by adding at the end the following new
paragraph:
‘‘(3) RECEPTION
AND
REPRESENTATION
AU-
THORITY.—The Secretary is hereby granted recep-
tion and representation authority limited specifically
to the events at the National Summit. The Secretary
shall use any private contributions accepted in con-
nection with the National Summit prior to using
funds appropriated for purposes of the National
Summit pursuant to this paragraph.’’; and
(9) in subsection (k)—
(A) by striking ‘‘shall enter into a contract
on a sole-source basis’’ and inserting ‘‘may
enter into a contract on a sole-source basis’’;
and
(B) by striking ‘‘in fiscal year 1998’’.
SEC. 209. MISSING PARTICIPANTS.
(a) IN GENERAL.—Section 4050 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1350)
is amended by redesignating subsection (c) as subsection
(e) and by inserting after subsection (b) the following new
subsections:
‘‘(c) MULTIEMPLOYER
PLANS.—The corporation
shall prescribe rules similar to the rules in subsection (a)
for multiemployer plans covered by this title that termi-
nate under section 4041A.
‘‘(d) PLANS NOT OTHERWISE SUBJECT TO TITLE.—
‘‘(1) TRANSFER TO CORPORATION.—The plan
administrator of a plan described in paragraph (4)
may elect to transfer a missing participant’s benefits
to the corporation upon termination of the plan.
‘‘(2) INFORMATION TO THE CORPORATION.—To
the extent provided in regulations, the plan adminis-
trator of a plan described in paragraph (4) shall,
upon termination of the plan, provide the corpora-
tion information with respect to benefits of a miss-
ing participant if the plan transfers such benefits—
‘‘(A) to the corporation, or
‘‘(B) to an entity other than the corpora-
tion or a plan described in paragraph (4)(B)(ii).
‘‘(3) PAYMENT BY THE CORPORATION.—If ben-
efits of a missing participant were transferred to the
corporation under paragraph (1), the corporation
shall, upon location of the participant or beneficiary,
pay to the participant or beneficiary the amount
transferred (or the appropriate survivor benefit)
either—
‘‘(A) in a single sum (plus interest), or
‘‘(B) in such other form as is specified in
regulations of the corporation.
‘‘(4) PLANS DESCRIBED.—A plan is described
in this paragraph if—
‘‘(A) the plan is a pension plan (within the
meaning of section 3(2))—
‘‘(i) to which the provisions of this
section do not apply (without regard to
this subsection), and
‘‘(ii) which is not a plan described in
paragraphs (2) through (11) of section
4021(b), and
‘‘(B) at the time the assets are to be dis-
tributed upon termination, the plan—
‘‘(i) has missing participants, and
‘‘(ii) has not provided for the transfer
of assets to pay the benefits of all missing
participants to another pension plan (with-
in the meaning of section 3(2)).
‘‘(5) CERTAIN PROVISIONS NOT TO APPLY.—
Subsections (a)(1) and (a)(3) shall not apply to a
plan described in paragraph (4).’’.
100
(b) CONFORMING AMENDMENTS.—Section 206(f) of
such Act (29 U.S.C. 1056(f)) is amended—
(1) by striking ‘‘title IV’’ and inserting ‘‘section
4050’’; and
(2) by striking ‘‘the plan shall provide that,’’.
(c) EFFECTIVE DATE.—The amendment made by
this section shall apply to distributions made after final
regulations implementing subsections (c) and (d) of sec-
tion 4050 of the Employee Retirement Income Security
Act of 1974 (as added by subsection (a)), respectively, are
prescribed.
SEC. 210. REDUCED PBGC PREMIUM FOR NEW PLANS OF
SMALL EMPLOYERS.
(a) IN GENERAL.—Subparagraph (A) of section
4006(a)(3) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1306(a)(3)(A)) is amended—
(1) in clause (i), by inserting ‘‘other than a new
single-employer plan (as defined in subparagraph
(F)) maintained by a small employer (as so de-
fined),’’ after ‘‘single-employer plan,’’,
(2) in clause (iii), by striking the period at the
end and inserting ‘‘, and’’, and
(3) by adding at the end the following new
clause:
101
‘‘(iv) in the case of a new single-employer plan
(as defined in subparagraph (F)) maintained by a
small employer (as so defined) for the plan year, $5
for each individual who is a participant in such plan
during the plan year.’’.
(b) 
DEFINITION
OF
NEW
SINGLE-EMPLOYER
PLAN.—Section 4006(a)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1306(a)(3)) is
amended by adding at the end the following new subpara-
graph:
‘‘(F)(i) For purposes of this paragraph, a single-em-
ployer plan maintained by a contributing sponsor shall be
treated as a new single-employer plan for each of its first
5 plan years if, during the 36-month period ending on the
date of the adoption of such plan, the sponsor or any
member of such sponsor’s controlled group (or any prede-
cessor of either) did not establish or maintain a plan to
which this title applies with respect to which benefits were
accrued for substantially the same employees as are in the
new single-employer plan.
‘‘(ii)(I) For purposes of this paragraph, the term
‘small employer’ means an employer which on the first day
of any plan year has, in aggregation with all members of
the controlled group of such employer, 100 or fewer em-
ployees.
102
‘‘(II) In the case of a plan maintained by two or more
contributing sponsors that are not part of the same con-
trolled group, the employees of all contributing sponsors
and controlled groups of such sponsors shall be aggregated
for purposes of determining whether any contributing
sponsor is a small employer.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to plans first effective after Decem-
ber 31, 2002.
SEC. 211. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR
NEW AND SMALL PLANS.
(a) NEW PLANS.—Subparagraph (E) of section
4006(a)(3) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is amended by
adding at the end the following new clause:
‘‘(v) In the case of a new defined benefit plan, the
amount determined under clause (ii) for any plan year
shall be an amount equal to the product of the amount
determined under clause (ii) and the applicable percent-
age. For purposes of this clause, the term ‘applicable per-
centage’ means—
‘‘(I) 0 percent, for the first plan year.
‘‘(II) 20 percent, for the second plan year.
‘‘(III) 40 percent, for the third plan year.
‘‘(IV) 60 percent, for the fourth plan year.
103
‘‘(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as de-
fined in section 3(35)) maintained by a contributing spon-
sor shall be treated as a new defined benefit plan for each
of its first 5 plan years if, during the 36-month period
ending on the date of the adoption of the plan, the sponsor
and each member of any controlled group including the
sponsor (or any predecessor of either) did not establish
or maintain a plan to which this title applies with respect
to which benefits were accrued for substantially the same
employees as are in the new plan.’’.
(b) SMALL
PLANS.—Paragraph (3) of section
4006(a) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1306(a)), as amended by section
210(b), is amended—
(1) by striking ‘‘The’’ in subparagraph (E)(i)
and inserting ‘‘Except as provided in subparagraph
(G), the’’, and
(2) by inserting after subparagraph (F) the fol-
lowing new subparagraph:
‘‘(G)(i) In the case of an employer who has 25 or
fewer employees on the first day of the plan year, the addi-
tional premium determined under subparagraph (E) for
each participant shall not exceed $5 multiplied by the
104
number of participants in the plan as of the close of the
preceding plan year.
‘‘(ii) For purposes of clause (i), whether an employer
has 25 or fewer employees on the first day of the plan
year is determined by taking into consideration all of the
employees of all members of the contributing sponsor’s
controlled group. In the case of a plan maintained by two
or more contributing sponsors, the employees of all con-
tributing sponsors and their controlled groups shall be ag-
gregated for purposes of determining whether the 25-or-
fewer-employees limitation has been satisfied.’’.
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made
by subsection (a) shall apply to plans first effective
after December 31, 2002.
(2) SUBSECTION (b).—The amendments made
by subsection (b) shall apply to plan years beginning
after December 31, 2002.
SEC. 212. AUTHORIZATION FOR PBGC TO PAY INTEREST ON
PREMIUM OVERPAYMENT REFUNDS.
(a) IN GENERAL.—Section 4007(b) of the Employ-
ment Retirement Income Security Act of 1974 (29 U.S.C.
1307(b)) is amended—
(1) by striking ‘‘(b)’’ and inserting ‘‘(b)(1)’’,
and
105
(2) by inserting at the end the following new
paragraph:
‘‘(2) The corporation is authorized to pay, subject to
regulations prescribed by the corporation, interest on the
amount of any overpayment of premium refunded to a des-
ignated payor. Interest under this paragraph shall be cal-
culated at the same rate and in the same manner as inter-
est is calculated for underpayments under paragraph
(1).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to interest accruing for periods
beginning not earlier than the date of the enactment of
this Act.
SEC. 213. SUBSTANTIAL OWNER BENEFITS IN TERMINATED
PLANS.
(a) MODIFICATION OF PHASE-IN OF GUARANTEE.—
Section 4022(b)(5) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1322(b)(5)) is amended
to read as follows:
‘‘(5)(A) For purposes of this paragraph, the term
‘majority owner’ means an individual who, at any time
during the 60-month period ending on the date the deter-
mination is being made—
‘‘(i) owns the entire interest in an unincor-
porated trade or business,
106
‘‘(ii) in the case of a partnership, is a partner
who owns, directly or indirectly, 50 percent or more
of either the capital interest or the profits interest
in such partnership, or
‘‘(iii) in the case of a corporation, owns, directly
or indirectly, 50 percent or more in value of either
the voting stock of that corporation or all the stock
of that corporation.
For purposes of clause (iii), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of
1986 shall apply (determined without regard to section
1563(e)(3)(C)).
‘‘(B) In the case of a participant who is a majority
owner, the amount of benefits guaranteed under this sec-
tion shall equal the product of—
‘‘(i) a fraction (not to exceed 1) the numerator
of which is the number of years from the later of the
effective date or the adoption date of the plan to the
termination date, and the denominator of which is
10, and
‘‘(ii) the amount of benefits that would be guar-
anteed under this section if the participant were not
a majority owner.’’.
(b) MODIFICATION OF ALLOCATION OF ASSETS.—
107
(1) Section 4044(a)(4)(B) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C.
1344(a)(4)(B)) is amended by striking ‘‘section
4022(b)(5)’’ and inserting ‘‘section 4022(b)(5)(B)’’.
(2) Section 4044(b) of such Act (29 U.S.C.
1344(b)) is amended—
(A) by striking ‘‘(5)’’ in paragraph (2) and
inserting ‘‘(4), (5),’’, and
(B) 
by 
redesignating 
paragraphs 
(3)
through (6) as paragraphs (4) through (7), re-
spectively, and by inserting after paragraph (2)
the following new paragraph:
‘‘(3) If assets available for allocation under
paragraph (4) of subsection (a) are insufficient to
satisfy in full the benefits of all individuals who are
described in that paragraph, the assets shall be allo-
cated first to benefits described in subparagraph (A)
of that paragraph. Any remaining assets shall then
be allocated to benefits described in subparagraph
(B) of that paragraph. If assets allocated to such
subparagraph (B) are insufficient to satisfy in full
the benefits described in that subparagraph, the as-
sets shall be allocated pro rata among individuals on
the basis of the present value (as of the termination
108
date) of their respective benefits described in that
subparagraph.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 4021 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1321) is
amended—
(A) in subsection (b)(9), by striking ‘‘as
defined in section 4022(b)(6)’’, and
(B) by adding at the end the following new
subsection:
‘‘(d) For purposes of subsection (b)(9), the term ‘sub-
stantial owner’ means an individual who, at any time dur-
ing the 60-month period ending on the date the determina-
tion is being made—
‘‘(1) owns the entire interest in an unincor-
porated trade or business,
‘‘(2) in the case of a partnership, is a partner
who owns, directly or indirectly, more than 10 per-
cent of either the capital interest or the profits inter-
est in such partnership, or
‘‘(3) in the case of a corporation, owns, directly
or indirectly, more than 10 percent in value of either
the voting stock of that corporation or all the stock
of that corporation.
109
For purposes of paragraph (3), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of
1986 shall apply (determined without regard to section
1563(e)(3)(C)).’’.
(2) Section 4043(c)(7) of such Act (29 U.S.C.
1343(c)(7)) is amended by striking ‘‘section 4022(b)(6)’’
and inserting ‘‘section 4021(d)’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to plan terminations—
(A) under section 4041(c) of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1341(c)) with respect to which notices
of intent to terminate are provided under sec-
tion 4041(a)(2) of such Act (29 U.S.C.
1341(a)(2)) after December 31, 2002, and
(B) under section 4042 of such Act (29
U.S.C. 1342) with respect to which proceedings
are instituted by the corporation after such
date.
(2) CONFORMING AMENDMENTS.—The amend-
ments made by subsection (c) shall take effect on
January 1, 2003.
110
SEC. 214. BENEFIT SUSPENSION NOTICE.
(a) MODIFICATION OF REGULATION.—The Secretary
of Labor shall modify the regulation under subparagraph
(B) of section 203(a)(3) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to
provide that the notification required by such regulation
in connection with any suspension of benefits described in
such subparagraph—
(1) in the case of an employee who returns to
service described in section 203(a)(3)(B)(i) or (ii) of
such Act after commencement of payment of bene-
fits under the plan, shall be made during the first
calendar month or the first 4 or 5-week payroll pe-
riod ending in a calendar month in which the plan
withholds payments, and
(2) in the case of any employee who is not de-
scribed in paragraph (1)—
(A) may be included in the summary plan
description for the plan furnished in accordance
with section 104(b) of such Act (29 U.S.C.
1024(b)), rather than in a separate notice, and
(B) need not include a copy of the relevant
plan provisions.
(b) EFFECTIVE
DATE.—The modification made
under this section shall apply to plan years beginning after
December 31, 2002.
111
SEC. 215. STUDIES.
(a) MODEL
SMALL
EMPLOYER
GROUP
PLANS
STUDY.—As soon as practicable after the date of the en-
actment of this Act, the Secretary of Labor, in consulta-
tion with the Secretary of the Treasury, shall conduct a
study to determine—
(1) the most appropriate form or forms of—
(A) employee pension benefit plans which
would—
(i) be simple in form and easily main-
tained by multiple small employers, and
(ii) provide for ready portability of
benefits for all participants and bene-
ficiaries,
(B) alternative arrangements providing
comparable benefits which may be established
by employee or employer associations, and
(C) alternative arrangements providing
comparable benefits to which employees may
contribute in a manner independent of employer
sponsorship, and
(2) appropriate methods and strategies for
making pension plan coverage described in para-
graph (1) more widely available to American work-
ers.
112
(b) MATTERS TO BE CONSIDERED.—In conducting
the study under subsection (a), the Secretary of Labor
shall consider the adequacy and availability of existing em-
ployee pension benefit plans and the extent to which exist-
ing models may be modified to be more accessible to both
employees and employers.
(c) REPORT.—Not later than 18 months after the
date of the enactment of this Act, the Secretary of Labor
shall report the results of the study under subsection (a),
together with the Secretary’s recommendations, to the
Committee on Education and the Workforce and the Com-
mittee on Ways and Means of the House of Representa-
tives and the Committee on Health, Education, Labor,
and Pensions and the Committee on Finance of the Sen-
ate. Such recommendations shall include one or more
model plans described in subsection (a)(1)(A) and model
alternative 
arrangements 
described 
in 
subsections
(a)(1)(B) and (a)(1)(C) which may serve as the basis for
appropriate administrative or legislative action.
(d) STUDY ON EFFECT OF LEGISLATION.—Not later
than 5 years after the date of the enactment of this Act,
the Secretary of Labor shall submit to the Committee on
Education and the Workforce of the House of Representa-
tives and the Committee on Health, Education, Labor,
and Pensions of the Senate a report on the effect of the
113
provisions of this Act and title VI of the Economic Growth
and Tax Relief Reconciliation Act of 2001 on pension plan
coverage, including any change in—
(1) the extent of pension plan coverage for low
and middle-income workers,
(2) the levels of pension plan benefits generally,
(3) the quality of pension plan coverage gen-
erally,
(4) workers’ access to and participation in pen-
sion plans, and
(5) retirement security.
SEC. 216. INTEREST RATE RANGE FOR ADDITIONAL FUND-
ING REQUIREMENTS.
(a) IN
GENERAL.—Subclause (III) of section
412(l)(7)(C)(i) of the Internal Revenue Code of 1986 is
amended—
(1) by striking ‘‘2002 or 2003’’ in the text and
inserting ‘‘2001, 2002, or 2003’’, and
(2) by striking ‘‘2002 AND 2003’’ in the heading
and inserting ‘‘2001, 2002, AND 2003’’.
(b) SPECIAL
RULE.—Subclause (III) of section
302(d)(7)(C)(i) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1082(d)(7)(C)(i)) is
amended—
114
(1) by striking ‘‘2002 or 2003’’ in the text and
inserting ‘‘2001, 2002, or 2003’’, and
(2) by striking ‘‘2002 AND 2003’’ in the heading
and inserting ‘‘2001, 2002, AND 2003’’.
(c) 
PBGC.—Subclause 
(IV) 
of 
section
4006(a)(3)(E)(iii) 
of 
such 
Act 
(29 
U.S.C.
1306(a)(3)(E)(iii)) is amended to read as follows—
‘‘(IV) In the case of plan years beginning after
December 31, 2001, and before January 1, 2004,
subclause (II) shall be applied by substituting ‘100
percent’ for ‘85 percent’ and by substituting ‘115
percent’ for ‘100 percent’. Subclause (III) shall be
applied for such years without regard to the pre-
ceding sentence. Any reference to this clause or this
subparagraph by any other sections or subsections
(other than sections 4005, 4010, 4011 and 4043)
shall be treated as a reference to this clause or this
subparagraph without regard to this subclause.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the amend-
ments made by section 405 of the Job Creation and Work-
er Assistance Act of 2002.
SEC. 217. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) IN GENERAL.—If this section applies to any plan
or contract amendment—
115
(1) such plan or contract shall be treated as
being operated in accordance with the terms of the
plan during the period described in subsection
(b)(2)(A), and
(2) except as provided by the Secretary of the
Treasury, such plan shall not fail to meet the re-
quirements of section 411(d)(6) of the Internal Rev-
enue Code of 1986 and section 204(g) of the Em-
ployee Retirement Income Security Act of 1974 by
reason of such amendment.
(b) AMENDMENTS TO WHICH SECTION APPLIES.—
(1) IN GENERAL.—This section shall apply to
any amendment to any plan or annuity contract
which is made—
(A) pursuant to any amendment made by
this title or title VI of the Economic Growth
and Tax Relief Reconciliation Act of 2001, or
pursuant to any regulation issued by the Sec-
retary of the Treasury or the Secretary of
Labor under this title or such title VI, and
(B) on or before the last day of the first
plan year beginning on or after January 1,
2005.
In the case of a governmental plan (as defined in
section 414(d) of the Internal Revenue Code of
116
1986), this paragraph shall be applied by sub-
stituting ‘‘2007’’ for ‘‘2005’’.
(2) CONDITIONS.—This section shall not apply
to any amendment unless—
(A) during the period—
(i) beginning on the date the legisla-
tive or regulatory amendment described in
paragraph (1)(A) takes effect (or in the
case of a plan or contract amendment not
required by such legislative or regulatory
amendment, the effective date specified by
the plan), and
(ii) ending on the date described in
paragraph (1)(B) (or, if earlier, the date
the plan or contract amendment is adopt-
ed),
the plan or contract is operated as if such plan
or contract amendment were in effect; and
(B) such plan or contract amendment ap-
plies retroactively for such period.
TITLE III—STOCK OPTIONS
SEC. 301. EXCLUSION OF INCENTIVE STOCK OPTIONS AND
EMPLOYEE STOCK PURCHASE PLAN STOCK
OPTIONS FROM WAGES.
(a) EXCLUSION FROM EMPLOYMENT TAXES.—
117
(1) SOCIAL SECURITY TAXES.—
(A) Section 3121(a) of the Internal Rev-
enue Code of 1986 (relating to definition of
wages) is amended by striking ‘‘or’’ at the end
of paragraph (20), by striking the period at the
end of paragraph (21) and inserting ‘‘; or’’, and
by inserting after paragraph (21) the following
new paragraph:
‘‘(22) remuneration on account of—
‘‘(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incen-
tive stock option (as defined in section 422(b))
or under an employee stock purchase plan (as
defined in section 423(b)), or
‘‘(B) any disposition by the individual of
such stock.’’.
(B) Section 209(a) of the Social Security
Act is amended by striking ‘‘or’’ at the end of
paragraph (17), by striking the period at the
end of paragraph (18) and inserting ‘‘; or’’, and
by inserting after paragraph (18) the following
new paragraph:
‘‘(19) Remuneration on account of—
‘‘(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incen-
118
tive stock option (as defined in section 422(b)
of the Internal Revenue Code of 1986) or under
an employee stock purchase plan (as defined in
section 423(b) of such Code), or
‘‘(B) any disposition by the individual of
such stock.’’.
(2) 
RAILROAD
RETIREMENT
TAXES.—Sub-
section (e) of section 3231 of such Code is amended
by adding at the end the following new paragraph:
‘‘(11) QUALIFIED STOCK OPTIONS.—The term
‘compensation’ shall not include any remuneration
on account of—
‘‘(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incen-
tive stock option (as defined in section 422(b))
or under an employee stock purchase plan (as
defined in section 423(b)), or
‘‘(B) any disposition by the individual of
such stock.’’.
(3) UNEMPLOYMENT TAXES.—Section 3306(b)
of such Code (relating to definition of wages) 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 inserting after
paragraph (17) the following new paragraph:
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‘‘(18) remuneration on account of—
‘‘(A) a transfer of a share of stock to any
individual pursuant to an exercise of an incen-
tive stock option (as defined in section 422(b))
or under an employee stock purchase plan (as
defined in section 423(b)), or
‘‘(B) any disposition by the individual of
such stock.’’.
(b) WAGE WITHHOLDING NOT REQUIRED ON DIS-
QUALIFYING DISPOSITIONS.—Section 421(b) of such Code
(relating to effect of disqualifying dispositions) is amended
by adding at the end the following new sentence: ‘‘No
amount shall be required to be deducted and withheld
under chapter 24 with respect to any increase in income
attributable to a disposition described in the preceding
sentence.’’.
(c) WAGE WITHHOLDING NOT REQUIRED ON COM-
PENSATION WHERE OPTION PRICE IS BETWEEN 85 PER-
CENT AND 100 PERCENT OF VALUE OF STOCK.—Section
423(c) of such Code (relating to special rule where option
price is between 85 percent and 100 percent of value of
stock) is amended by adding at the end the following new
sentence: ‘‘No amount shall be required to be deducted
and withheld under chapter 24 with respect to any amount
treated as compensation under this subsection.’’.
120
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to stock acquired pursuant to op-
tions exercised after the date of the enactment of this Act.
TITLE 
IV—SOCIAL 
SECURITY
AND MEDICARE HELD HARM-
LESS
SEC. 401. PROTECTION OF SOCIAL SECURITY AND MEDI-
CARE.
The amounts transferred to any trust fund under the
Social Security Act shall be determined as if this Act had
not been enacted.
Passed the House of Representatives April 11, 2002.
Attest:
Clerk.