the 6-year period due to circumstances beyond
the control of the fiduciary adviser.
‘‘(C) DEFINITIONS.—For purposes of this
paragraph and subsection (d)(17)—
‘‘(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 such 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),
‘‘(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).
‘‘(ii) AFFILIATE.—The term ‘affiliate’
means an affiliated person, 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’ means a person described in section
3(a)(18) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(18)) or section
202(a)(17) of the Investment Advisers Act
of 1940 (15 U.S.C 80b–2(a)(17)).’’.
(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 or section 4975(e)(3)(B) of the
Internal Revenue Code of 1986 provided on or after Janu-
ary 1, 2001.
SEC. 4. DEFINITION OF PARTY IN INTEREST.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—Section 3(14) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(14)) is amended—
(1) by striking subparagraphs (A) and (B) and
inserting the following:
‘‘(A) a person who is an administrator, officer,
counsel, or employee of the plan;
‘‘(B) in connection with a transaction described
in section 406(a), a fiduciary not otherwise described
in subparagraph (A) who personally directed or ac-
tively participated in the plan’s entry into such
transaction;’’;
(2) in subparagraph (G), by adding ‘‘or’’ at the
end;
(3) by striking subparagraphs (H) and (I) and
inserting the following:
‘‘(H) an officer or director (or an individual
having powers or responsibilities similar to those of
officers and directors) of a person described in sub-
paragraph (C), (D), (E), or (G), or of the employee
benefit plan.’’; and
(4) in the matter following subparagraph (I)
(as in effect before the amendments made by this
subsection), by striking ‘‘and lower than 10 percent
for subparagraph (H) or (I)’’.
(b) AMENDMENTS
TO
THE INTERNAL REVENUE
CODE OF 1986.—Paragraph (2) of section 4975(e) of the
Internal Revenue Code of 1986 (relating to disqualified
person) is amended—
(1) by striking subparagraphs (A) and (B) and
inserting the following:
‘‘(A) a person who is an administrator, of-
ficer, counsel, or employee of the plan;
‘‘(B) in connection with a transaction de-
scribed in subparagraph (A), (B), (C), or (D)
of subsection (c)(1), a fiduciary not otherwise
described in subparagraph (A) of this para-
graph who personally directed or actively par-
ticipated in the plan’s entry into such trans-
action;’’;
(2) in subparagraph (G), by adding ‘‘or’’ at the
end;
(3) by striking subparagraphs (H) and (I) and
inserting the following:
‘‘(H) an officer or director (or an indi-
vidual having powers or responsibilities similar
to those of officers and directors) of a person
described in subparagraph (C), (D), (E), or
(G), or of the plan.’’; and
(4) in the matter following subparagraph (I)
(as in effect before the amendments made by this
subsection), by striking ‘‘and lower than 10 percent
for subparagraph (H) or (I)’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to transactions, acts,
or omissions occurring on or after January 1, 2001.
SEC. 5. STANDARDS FOR ISSUING EXEMPTIVE RELIEF.
(a) IN GENERAL.—Section 408(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1108(a)) is amended—
(1) by striking the third sentence;
(2) by adding ‘‘and’’ at the end of paragraph
(1), by striking paragraph (2), and by redesignating
paragraph (3) as paragraph (2); and
(3) in the matter following paragraph (3) (as in
effect before the amendments made by this sub-
section)—
(A) by striking ‘‘Before granting’’ and in-
serting the following:
‘‘The issuance of an exemption by the Secretary from any
restriction under section 406 or 407(a) does not exempt
a fiduciary who enters into a transaction subject to such
exemption from the fiduciary duties of section 404 with
respect to the plan or any other provision of this Act with
respect to the plan. In any case in which the Secretary
deems it appropriate, before granting’’;
(B) by striking ‘‘shall’’ each place it ap-
pears and inserting ‘‘may’’;
(C) by inserting ‘‘or provide such other no-
tice as the Secretary deems appropriate’’ after
‘‘pendency of the exemption’’;
(D) by striking ‘‘paragraphs (1), (2), and
(3)’’ and inserting ‘‘paragraphs (1) and (2)’’;
and
(E) by adding at the end the following new
sentence: ‘‘The Secretary may not grant an ex-
emption under this section unless the Secretary
finds that the conditions or requirements set
forth in the exemption are necessary additions
to the existing Federal and State laws and reg-
ulations and the protections they afford to ad-
dress concerns unique to employee benefit
plans.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to transactions occur-
ring on or after January 1, 2001.
SEC. 6. REGULATIONS RELATING TO DEFINITION OF PLAN
ASSETS.
(a) IN GENERAL.—Section 401 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1101)
is amended by adding at the end the following new sub-
section:
‘‘(d)(1)(A) Not later than March 31, 2001, the Sec-
retary shall issue proposed regulations (including proposed
amendments to existing regulations) to provide additional
guidance for the purpose of determining when the assets
of an entity in which an employee benefit plan has invested
will constitute assets of the plan for purposes of this part.
‘‘(B) The proposed regulations issued pursuant to
subparagraph (A) shall be subject to public notice and
comment until June 30, 2001.
‘‘(C) The Secretary shall issue final regulations pro-
viding the guidance described in subparagraph (A) not
later than September 30, 2001.
‘‘(D) Except as otherwise determined by the Sec-
retary, such regulations shall apply only to investments
in an entity made by an employee benefit plan after Sep-
tember 30, 2001. No inference shall be drawn from the
preceding sentence with respect to the interpretation of
any existing regulations prior to such effective date.
‘‘(2) The Secretary shall ensure that the regulations
issued under paragraph (1)—
‘‘(A) are administratively feasible; and
‘‘(B) protect the interests and rights of the plan
and of its participants and beneficiaries (including
meeting the requirements of paragraph (3)).
‘‘(3) The regulations prescribed by the Secretary pur-
suant to paragraph (1) shall provide—
‘‘(A) that an entity in whose assets investment
by an employee benefit plan is not significant will
not be treated as holding the plan assets of such
plan;
‘‘(B) that participation by an employee benefit
plan will not be treated as significant unless such
plan owns 25 percent or more of any class of inter-
ests in the entity;
‘‘(C) that, for purposes of determining whether
investment by an employee benefit plan in an entity
is significant, interests in the entity which are owned
by other entities that are deemed to hold assets of
employee benefit plans shall be treated as held by
such plans only to the extent proportionate to the in-
terests in such entities that are owned by such
plans;
‘‘(D) that an entity that has made no invest-
ments, or that has made only short-term invest-
ments pending long-term commitment, shall be per-
mitted to qualify for the exception (as in effect
under existing regulations) from plan asset status as
a ‘venture capital operating company’ on a tentative
basis for purposes of accepting capital contributions
of employee benefit plans for a period not to exceed
30 days prior to the entity’s first investment that
would permit it to qualify as a ‘venture capital oper-
ating company’ pursuant to such exception;
‘‘(E) that a startup or other early stage com-
pany is eligible to qualify as an ‘operating company’
for purposes of the definition of a ‘venture capital
operating company’ under the exception described in
subparagraph (D); and
‘‘(F) that an entity which, for a prior period,
has not qualified or has failed to qualify for the ex-
ception described in subparagraph (D) may never-
theless qualify for such exception prospectively if it
satisfies the requirements for the exception on a pro-
spective basis.
‘‘(4) For purposes of this subsection—
‘‘(A) The term ‘existing regulations’ means the
regulations issued under this section which were in
effect immediately before the date of the enactment
of this subsection.
‘‘(B) Any reference to an employee benefit plan
includes a reference to any employee benefit plan to
which the existing regulations apply.’’.
(b) CONFORMING AMENDMENT.—Subsection (f) of
section 4975 of the Internal Revenue Code of 1986 (relat-
ing to other definitions and special rules) (as amended by
the preceding provisions of this Act) is amended further
by adding at the end the following new paragraph:
‘‘(9) REGULATIONS RELATING TO DEFINITION
OF PLAN ASSETS.—Section 401(d) of the Employee
Retirement Income Security Act of 1974 shall apply
with respect to regulations issued under this section.
For purposes of this paragraph, references in such
section 401(d) to employee benefit plans shall be
deemed to include references to plans referred to in
this section.’’.
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