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SEC. 704. NOTICE TO PARTICIPANTS OR BENEFICIARIES OF
BLACKOUT PERIODS.
(a) AMENDMENTS OF ERISA.—
(1) IN
GENERAL.—Section 101(i) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1021(i)) is amended—
(A) by striking clauses (i) through (iv) of
paragraph (8)(B) and inserting:
‘‘(i) on the first day of the plan year—
‘‘(I) covered only one individual
(or the individual and the individual’s
spouse) and the individual (or the in-
dividual and the individual’s spouse)
owned 100 percent of the plan sponsor
(whether or not incorporated), or
‘‘(II) covered only one or more
partners 
(or 
partners 
and 
their
spouses) in the plan sponsor, and’’,
and
(B) in paragraph (8)(B), by redesignating
clause (v) as clause (ii).
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect as if included in
the provisions of section 306 of Public Law 107–204
(116 Stat. 745 et seq.).
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SEC. 705. ALLOWANCE OF, AND CREDIT FOR, ADDITIONAL
IRA PAYMENTS IN CERTAIN BANKRUPTCY
CASES.
(a) 
ALLOWANCE
OF
CONTRIBUTIONS.—Section
219(b)(5) of the Internal Revenue Code of 1986 (relating
to deductible amount) is amended by redesignating sub-
paragraph (C) as subparagraph (D) and by inserting after
subparagraph (B) the following new subparagraph:
‘‘(C) CATCHUP
CONTRIBUTIONS
FOR
CER-
TAIN INDIVIDUALS.—
‘‘(i) IN GENERAL.—In the case of an
applicable individual who elects to make a
qualified retirement contribution in addi-
tion to the deductible amount determined
under subparagraph (A)—
‘‘(I) the deductible amount for
any taxable year shall be increased by
an amount equal to 3 times the appli-
cable amount determined under sub-
paragraph (B) for such taxable year,
and
‘‘(II) subparagraph (B) shall not
apply.
‘‘(ii) APPLICABLE
INDIVIDUAL.—For
purposes of this subparagraph, the term
‘applicable individual’ means, with respect
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to any taxable year, any individual who
was a qualified participant in a qualified
cash or deferred arrangement (as defined in
section 401(k)) of an employer described in
clause (iii) under which the employer
matched at least 50 percent of the employ-
ee’s contributions to such arrangement with
stock of such employer.
‘‘(iii) EMPLOYER DESCRIBED.—An em-
ployer is described in this clause if, in any
taxable year preceding the taxable year de-
scribed in clause (ii)—
‘‘(I) such employer (or any con-
trolling corporation of such employer)
was a debtor in a case under title 11
of the United States Code, or similar
Federal or State law, and
‘‘(II) such employer (or any other
person) was subject to an indictment
or conviction resulting from business
transactions related to such case.
‘‘(iv) QUALIFIED
PARTICIPANT.—For
purposes of clause (ii), the term ‘qualified
participant’ means any applicable indi-
vidual who was a participant in the cash or
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deferred arrangement described in clause (i)
on the date that is 6 months before the fil-
ing of the case described in clause (iii).
‘‘(v) 
TERMINATION.—This 
subpara-
graph shall not apply to taxable years be-
ginning after December 31, 2009.’’
(b) SAVER’S CREDIT EXPANDED TO INCLUDE CATCH-
UP CONTRIBUTIONS.—
(1) IN GENERAL.—Section 25B of the Internal
Revenue Code of 1986 (relating to credit for elective
deferrals and IRA contributions by certain individ-
uals) is amended by redesignating subsection (h) as
subsection (i) and by inserting after subsection (g) the
following new subsection:
‘‘(h) ADDITIONAL CREDIT
FOR CERTAIN CATCHUP
CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—In the case of an eligible in-
dividual who is an applicable individual under sec-
tion 219(b)(5)(C) for any taxable year, the amount of
the credit allowable under subsection (a) for the tax-
able year shall be increased by 50 percent of so much
of the qualified retirement contributions (as defined
in section 219(e)) of the individual for the taxable
year as exceeds the deductible amount for the taxable
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year under section 219(b)(5) (without regard to sub-
paragraphs (B) and (C) thereof).
‘‘(2) COORDINATION
WITH
OTHER
CONTRIBU-
TIONS.—For purposes of this section—
‘‘(A) any contribution to which this sub-
section applies shall not be taken into account in
determining the amount of the credit allowable
under subsection (a) without regard to this sub-
section, and
‘‘(B) in applying any reduction in qualified
retirement savings contributions under sub-
section (d)(2), the reduction shall be applied first
to qualified retirement savings contributions
other than contributions to which this subsection
applies.’’.
(2) EXTENSION
OF
TERMINATION
DATE
FOR
CATCHUP CREDIT.—Section 25B(i) of such Code, as
redesignated by paragraph (1), is amended by insert-
ing ‘‘(December 31, 2007, in the case of the portion
of the credit allowed under subsection (h))’’ after
‘‘2006’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2004.
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SEC. 706. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LI-
ABILITY DURING SUSPENSION OF ABILITY OF
PARTICIPANT OR BENEFICIARY TO DIRECT
INVESTMENTS.
(a) IN GENERAL.—Section 404(c)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1104(c)(1)) is amended—
(1) by redesignating subparagraphs (A) and (B)
as clauses (i) and (ii), respectively, and by inserting
‘‘(A)’’ after ‘‘(c)(1)’’,
(2) in subparagraph (A)(ii) (as redesignated by
paragraph (1)), by inserting before the period the fol-
lowing: ‘‘, except that this clause shall not apply in
connection with such participant or beneficiary for
any blackout period during which the ability of such
participant or beneficiary to direct the investment of
the assets in his or her account is suspended by a
plan sponsor or fiduciary’’, and
(3) by adding at the end the following new sub-
paragraphs:
‘‘(B)(i) If a person referred to in subparagraph (A)(ii)
meets the requirements of this title in connection with au-
thorizing and implementing the blackout period, any person
who is otherwise a fiduciary shall not be liable under this
title for any loss occurring during such period as a result
of any exercise by the participant or beneficiary of control
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over assets in his or her account before the period. Matters
to be considered in determining whether such person has
satisfied the requirements of this title include, but are not
limited to, whether such person—
‘‘(I) has considered the reasonableness of the ex-
pected blackout period,
‘‘(II) has provided the notice required under sec-
tion 101(i)(1), and
‘‘(III) has acted in accordance with the require-
ments of subsection (a) in determining whether to
enter into the blackout period.
‘‘(ii) For purposes of this subsection, if a blackout pe-
riod arises in connection with a change in the investment
options offered under the plan, a participant or beneficiary
shall be deemed to have exercised control over the assets in
his or her account prior to the blackout period if, after no-
tice of the change in investment options is given to such
participant or beneficiary, assets in the account of the par-
ticipant or beneficiary are transferred—
‘‘(I) to plan investment options in accordance
with the affirmative election of the participant or
beneficiary; or
‘‘(II) in the absence of such an election and in
the case in which fiduciary relief was provided under
this subsection for the prior investment options, to
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plan investment options in the manner set forth in
such notice.
‘‘(C) For purposes of this paragraph, the term ‘black-
out period’ has the meaning given such term by section
101(i)(7).’’
(b) GUIDANCE.—Not later than 180 days after the date
of enactment of this Act, the Secretary of Labor, in con-
sultation with the Secretary of the Treasury, shall issue in-
terim final regulations providing guidance, including safe
harbors, on how plan sponsors or any other affected fidu-
ciaries can satisfy their fiduciary responsibilities during
any blackout period during which the ability of a partici-
pant or beneficiary to direct the investment of assets in his
or her individual account is suspended.
(c) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to plan years beginning after
December 31, 2005.
(2) SPECIAL
RULE
FOR
COLLECTIVELY
BAR-
GAINED AGREEMENTS.—In the case of a plan main-
tained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or
more employers ratified on or before the date of the
enactment of this Act, paragraph (1) shall be applied
to benefits pursuant to, and individuals covered by,
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any such agreement by substituting for ‘‘December 31,
2005’’ the earlier of—
(A) the later of—
(i) December 31, 2006, or
(ii) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any exten-
sion thereof after such date of enactment),
or
(B) December 31, 2007.
SEC. 707. INCREASE IN MAXIMUM BOND AMOUNT.
(a) IN GENERAL.—Section 412(a) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1112) is
amended by adding at the end the following: ‘‘In the case
of a plan that holds employer securities (within the mean-
ing of section 407(d)(1)), this subsection shall be applied
by substituting ‘$1,000,000’ for ‘$500,000’ each place it ap-
pears.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to plan years beginning after December
31, 2005.
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TITLE 
VIII—INFORMATION 
TO
ASSIST PENSION PLAN PAR-
TICIPANTS
SEC. 801. DEFINED CONTRIBUTION PLANS REQUIRED TO
PROVIDE 
ADEQUATE 
INVESTMENT 
EDU-
CATION TO PARTICIPANTS.
(a) ADEQUATE INVESTMENT EDUCATION.—
(1) IN GENERAL.—Section 101 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1024), as amended by this Act, is amended by redes-
ignating subsection (n) as subsection (o) and by in-
serting after subsection (m) the following:
‘‘(n) BASIC INVESTMENT GUIDELINES.—
‘‘(1) IN GENERAL.—The administrator of an in-
dividual account plan (other than a one-participant
retirement plan described in subsection (i)(8)(B))
shall furnish at least once each year to each partici-
pant or beneficiary who has the right to direct the in-
vestment of assets in his or her account the model
form relating to basic investment guidelines which is
described in paragraph (2).
‘‘(2) MODEL FORM.—
‘‘(A) IN GENERAL.—The Secretary shall, in
consultation with the Secretary of Treasury, de-
velop and make available to individual account
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plans for distribution under paragraph (1) a
model form containing basic guidelines for in-
vesting for retirement. Except as otherwise pro-
vided by the Secretary, such guidelines shall
include—
‘‘(i) information on the benefits of di-
versification,
‘‘(ii) information on the essential dif-
ferences, in terms of risk and return, of pen-
sion plan investments, including stocks,
bonds, mutual funds, and money market in-
vestments,
‘‘(iii) information on how an individ-
ual’s pension plan investment allocations
may differ depending on the individual’s
age and years to retirement and on other
factors determined by the Secretary,
‘‘(iv) sources of information where in-
dividuals may learn more about pension
rights, individual investing, and investment
advice, and
‘‘(v) such other information related to
individual investing as the Secretary deter-
mines appropriate.
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‘‘(B) 
CALCULATION
INFORMATION.—The
model form under subparagraph (A) shall in-
clude addresses for Internet sites, and a work-
sheet, which a participant or beneficiary may
use to calculate—
‘‘(i) the retirement age value of the
participant’s or beneficiary’s nonforfeitable
pension benefits under the plan (expressed
as an annuity amount and determined by
reference to varied historical annual rates of
return and annuity interest rates), and
‘‘(ii) other important amounts relating
to retirement savings, including the amount
which a participant or beneficiary would be
required to save annually to provide a re-
tirement income equal to various percent-
ages of their current salary (adjusted for ex-
pected growth prior to retirement).
The Secretary shall develop an Internet site
which an individual may use in making such
calculations and the address for such site shall be
included with the form.
‘‘(C) PUBLIC COMMENT.—The Secretary of
Labor shall provide at least 90 days for public
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comment before publishing final notice of the
model form.
‘‘(3) RULES
RELATING
TO
FORM
AND
STATE-
MENT.—The model form under paragraph (2)—
‘‘(A) shall be written in a manner cal-
culated to be understood by the average plan
participant, and
‘‘(B) may be delivered in written, electronic,
or other appropriate form to the extent such form
is reasonably accessible to participants and bene-
ficiaries.’’
(2) ENFORCEMENT.—Section 502(c)(7) of such
Act (29 U.S.C. 1132(c)(7)), as amended by this Act,
is amended by striking ‘‘or (l)’’ and inserting ‘‘, (l),
or (n)’’.
(c) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to plan years beginning after
December 31, 2006.
(2) SPECIAL
RULE
FOR
COLLECTIVELY
BAR-
GAINED AGREEMENTS.—In the case of a plan main-
tained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or
more employers ratified on or before the date of the
enactment of this Act, paragraph (1) shall be applied
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to benefits pursuant to, and individuals covered by,
any such agreement by substituting for ‘‘December 31,
2006’’ the earlier of—
(A) the later of—
(i) December 31, 2007, or
(ii) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any exten-
sion thereof after such date of enactment),
or
(B) December 31, 2008.
SEC. 802. INDEPENDENT INVESTMENT ADVICE PROVIDED
TO PLAN PARTICIPANTS.
(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 subsection:
‘‘(e) INDEPENDENT INVESTMENT ADVISER.—
‘‘(1) IN GENERAL.—In the case of an individual
account plan which permits a plan participant or
beneficiary to direct the investment of the assets in
his or her account, if a plan sponsor or other person
who is a fiduciary designates and monitors a quali-
fied investment adviser pursuant to the requirements
of paragraph (3), such fiduciary—
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‘‘(A) shall be deemed to have satisfied the
requirements under this section for the prudent
designation and periodic review of an investment
adviser with whom the plan sponsor or other
person who is a fiduciary enters into an ar-
rangement for the provision of advice referred to
in section 3(21)(A)(ii),
‘‘(B) shall not be liable under this section
for any loss, or by reason of any breach, with re-
spect to the provision of investment advice given
by such adviser to any plan participant or bene-
ficiary, and
‘‘(C) shall not be liable for any co-fiduciary
liability under subsections (a)(2) and (b) of sec-
tion 405 with respect to the provision of invest-
ment advice given by such adviser to any plan
participant or beneficiary.
‘‘(2) QUALIFIED INVESTMENT ADVISER.—
‘‘(A) IN
GENERAL.—For purposes of this
subsection, the term ‘qualified investment ad-
viser’ means, with respect to a plan, a person—
‘‘(i) who is a fiduciary of the plan by
reason of the provision of investment advice
by such person to a plan participant or
beneficiary;
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‘‘(ii) who—
‘‘(I) is registered as an investment
adviser under the Investment Advisers
Act of 1940 (15 U.S.C. 80b–1 et seq.),
‘‘(II) is registered as an invest-
ment adviser under the laws of the
State in which such adviser maintains
the principal office and place of busi-
ness of such adviser, but only if such
State laws are consistent with section
203A of the Investment Advisers Act of
1940 (15 U.S.C. 80b–3a),
‘‘(III) is a bank or similar finan-
cial institution referred to in section
408(b)(4),
‘‘(IV) is an insurance company
qualified to do business under the laws
of a State, or
‘‘(V) is any other comparably
qualified entity which satisfies such
criteria as the Secretary determines
appropriate, consistent with the pur-
poses of this subsection, and
‘‘(iii) who meets the requirements of
subparagraph (B).
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‘‘(B) ADVISER
REQUIREMENTS.—The re-
quirements of this subparagraph are met if every
individual employed (or otherwise compensated)
by a person described in subparagraph (A)(ii)
who provides investment advice on behalf of such
person to any plan participant or beneficiary
is—
‘‘(i) an individual described in sub-
clause (I) of subparagraph (A)(ii),
‘‘(ii) an individual described in sub-
clause (II) of subparagraph (A)(ii), but
only if such State has an examination re-
quirement to qualify for registration,
‘‘(iii) registered as a broker or dealer
under the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.),
‘‘(iv) a registered representative as de-
scribed 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 In-
vestment Advisers Act of 1940 (15 U.S.C.
80b–2(a)(17)), or
‘‘(v) any other comparably qualified
individual who satisfies such criteria as the
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Secretary 
determines 
appropriate, 
con-
sistent with the purposes of this subsection.
‘‘(3) VERIFICATION
REQUIREMENTS.—The re-
quirements of this paragraph are met if—
‘‘(A) the plan sponsor or other person who
is a fiduciary in designating a qualified invest-
ment adviser receives at the time of the designa-
tion, 
and 
annually 
thereafter, 
a 
written
verification from the qualified investment ad-
viser that the investment adviser—
‘‘(i) is and remains a qualified invest-
ment adviser,
‘‘(ii) acknowledges that the investment
adviser is a fiduciary with respect to the
plan and is solely responsible for its invest-
ment advice,
‘‘(iii) has reviewed the plan documents
(including investment options) and has de-
termined that its relationship with the plan
and the investment advice provided to any
plan participant or beneficiary, including
any fees or other compensation it will re-
ceive, will not constitute a violation of sec-
tion 406,
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‘‘(iv) will, in providing investment ad-
vice to any participant or beneficiary, con-
sider any employer securities or employer
real property allocated to his or her ac-
count, and
‘‘(v) has the necessary insurance cov-
erage (as determined by the Secretary) for
any claim by any plan participant or bene-
ficiary,
‘‘(B) the plan sponsor or other person who
is a fiduciary in designating a qualified invest-
ment adviser reviews the documents described in
paragraph (4) provided by such adviser and de-
termines that there is no material reason not to
enter into an arrangement for the provision of
advice by such qualified investment adviser, and
‘‘(C) the plan sponsor or other person who
is a fiduciary in designating a qualified invest-
ment adviser, within 30 days of having informa-
tion brought to its attention that the investment
adviser is no longer qualified or that a substan-
tial number of plan participants or beneficiaries
have raised concerns about the services being
provided by the investment adviser—
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‘‘(i) investigates such information and
concerns, and
‘‘(ii) determines that there is no mate-
rial reason not to continue the designation
of the adviser as a qualified investment ad-
viser.
‘‘(4) DOCUMENTATION.—A qualified investment
adviser shall provide the following documents to the
plan sponsor or other person who is a fiduciary in
designating the adviser:
‘‘(A) The contract with the plan sponsor or
other person who is a fiduciary for the services
to be provided by the investment adviser to the
plan participants and beneficiaries.
‘‘(B) A disclosure as to any fees or other
compensation that will be received by the invest-
ment adviser for the provision of such investment
advice and as to any fees and other compensa-
tion that will be received as a result of a partici-
pant’s investment election.
‘‘(C) The Uniform Application for Invest-
ment Adviser Registration as filed with the Secu-
rities and Exchange Commission or a substan-
tially similar disclosure application as deter-
mined by and filed with the Secretary.
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‘‘(5) TREATMENT AS FIDUCIARY.—Any qualified
investment adviser that acknowledges it is a fiduciary
pursuant to paragraph (3)(A)(ii) shall be deemed a
fiduciary under this part with respect to the provi-
sion of investment advice to a plan participant or
beneficiary.’’
(b) FIDUCIARY LIABILITY.—Section 404(c)(1)(B) of
such Act is amended by inserting ‘‘(other than a qualified
investment adviser)’’ after ‘‘fiduciary’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply with respect to investment advisers des-
ignated after the date of the enactment of this Act.
SEC. 803. TREATMENT OF QUALIFIED RETIREMENT PLAN-
NING SERVICES.
(a) IN GENERAL.—Subsection (m) of section 132 of the
Internal Revenue Code of 1986 (defining qualified retire-
ment services) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) NO CONSTRUCTIVE RECEIPT.—
‘‘(A) IN GENERAL.—No amount shall be in-
cluded in the gross income of any employee solely
because the employee may choose between any
qualified retirement planning services provided
by an eligible investment advisor and compensa-
tion which would otherwise be includible in the
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gross income of such employee. The preceding
sentence shall apply to highly compensated em-
ployees only if the choice described in such sen-
tence is available on substantially the same
terms to each member of the group of employees
normally provided education and information
regarding the employer’s qualified employer
plan.
‘‘(B) LIMITATION.—The maximum amount
which may be excluded under subparagraph (A)
with respect to any employee for any taxable
year shall not exceed $1,000.
‘‘(C) ELIGIBLE INVESTMENT ADVISER.—For
purposes of this paragraph, the term ‘eligible in-
vestment adviser’ means, with respect to a plan,
a person—
‘‘(i) who—
‘‘(I) is registered as an investment
adviser under the Investment Advisers
Act of 1940 (15 U.S.C. 80b–1 et seq.),
‘‘(II) is registered as an invest-
ment adviser under the laws of the
State in which such adviser maintains
the principal office and place of busi-
ness of such adviser, but only if such
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State laws are consistent with section
203A of the Investment Advisers Act of
1940 (15 U.S.C. 80b–3a),
‘‘(III) is a bank or similar finan-
cial institution referred to in section
408(b)(4),
‘‘(IV) is an insurance company
qualified to do business under the laws
of a State, or
‘‘(V) is any other comparably
qualified entity which satisfies such
criteria as the Secretary determines
appropriate, consistent with the pur-
poses of this subsection, and
‘‘(ii) who meets the requirements of
subparagraph (D).
‘‘(D) ADVISER
REQUIREMENTS.—The re-
quirements of this subparagraph are met if every
individual employed (or otherwise compensated)
by a person described in subparagraph (C)(i)
who provides investment advice on behalf of such
person to any plan participant or beneficiary
is—
‘‘(i) an individual described in sub-
clause (I) of subparagraph (C)(i),
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‘‘(ii) an individual described in sub-
clause (II) of subparagraph (C)(i), but only
if such State has an examination require-
ment to qualify for registration,
‘‘(iii) registered as a broker or dealer
under the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.),
‘‘(iv) a registered representative as de-
scribed 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 In-
vestment Advisers Act of 1940 (15 U.S.C.
80b–2(a)(17)), or
‘‘(v) any other comparably qualified
individual who satisfies such criteria as the
Secretary 
determines 
appropriate, 
con-
sistent with the purposes of this paragraph.
‘‘(E) TERMINATION.—This paragraph shall
not apply to taxable years beginning after De-
cember 31, 2010.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 403(b)(3)(B) of such Code is amend-
ed by inserting ‘‘132(m)(4),’’ after ‘‘132(f)(4),’’.
(2) Section 414(s)(2) of such Code is amended by
inserting ‘‘132(m)(4),’’ after ‘‘132(f)(4),’’.
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(3) Section 415(c)(3)(D)(ii) of such Code is
amended by inserting ‘‘132(m)(4),’’ after ‘‘132(f)(4),’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2005.
SEC. 804. INCREASE IN PENALTIES FOR COERCIVE INTER-
FERENCE WITH EXERCISE OF ERISA RIGHTS.
(a) IN GENERAL.—Section 511 of the Employment Re-
tirement Income Security Act of 1974 (29 U.S.C. 1141) is
amended—
(1) 
by 
striking 
‘‘$10,000’’ 
and 
inserting
‘‘$100,000’’, and
(2) by striking ‘‘one year’’ and inserting ‘‘10
years’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to violations occurring on and after the
date of the enactment of this Act.
SEC. 805. ADMINISTRATIVE PROVISION.
The Secretary of the Treasury shall have the authority
to prescribe rules applicable to the statements required
under sections 101(j) and 101(m) of the Employee Retire-
ment Income Security Act of 1974 (as added by this Act).
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TITLE IX—PROVISIONS RELAT-
ING TO SPOUSAL PENSION
PROTECTION
SEC. 901. REGULATIONS ON TIME AND ORDER OF ISSUANCE
OF DOMESTIC RELATIONS ORDERS.
Not later than 1 year after the date of the enactment
of this Act, the Secretary of Labor shall issue regulations
under section 206(d)(3) of the Employee Retirement Secu-
rity Act of 1974 and section 414(p) of the Internal Revenue
Code of 1986 which clarify that—
(1) a domestic relations order otherwise meeting
the requirements to be a qualified domestic relations
order, 
including 
the 
requirements 
of 
section
206(d)(3)(D) of such Act and section 414(p)(3) of
such Code, shall not fail to be treated as a qualified
domestic relations order solely because—
(A) the order is issued after, or revises, an-
other domestic relations order or qualified do-
mestic relations order; or
(B) of the time at which it is issued; and
(2) any order described in paragraph (1) shall
be subject to the same requirements and protections
which apply to qualified domestic relations orders, in-
cluding the provisions of section 206(d)(3)(H) of such
Act and section 414(p)(7) of such Code.
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SEC. 902. ENTITLEMENT OF DIVORCED SPOUSES TO RAIL-
ROAD 
RETIREMENT 
ANNUITIES 
INDE-
PENDENT OF ACTUAL ENTITLEMENT OF EM-
PLOYEE.
(a) IN GENERAL.—Section 2 of the Railroad Retire-
ment Act of 1974 (45 U.S.C. 231a) is amended—
(1) in subsection (c)(4)(i), by striking ‘‘(A) is en-
titled to an annuity under subsection (a)(1) and
(B)’’; and
(2) in subsection (e)(5), by striking ‘‘or divorced
wife’’ the second place it appears.
(b) EFFECTIVE DATE.—The amendments made by this
section shall take effect 1 year after the date of the enact-
ment of this Act.
SEC. 903. EXTENSION OF TIER II RAILROAD RETIREMENT
BENEFITS TO SURVIVING FORMER SPOUSES
PURSUANT TO DIVORCE AGREEMENTS.
(a) IN GENERAL.—Section 5 of the Railroad Retire-
ment Act of 1974 (45 U.S.C. 231d) is amended by adding
at the end the following:
‘‘(d) Notwithstanding any other provision of law, the
payment of any portion of an annuity computed under sec-
tion 3(b) to a surviving former spouse in accordance with
a court decree of divorce, annulment, or legal separation
or the terms of any court-approved property settlement inci-
dent to any such court decree shall not be terminated upon
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the death of the individual who performed the service with
respect to which such annuity is so computed unless such
termination is otherwise required by the terms of such court
decree.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect 1 year after the date of the enact-
ment of this Act.
SEC. 904. REQUIREMENT FOR ADDITIONAL SURVIVOR AN-
NUITY OPTION.
(a) AMENDMENTS TO INTERNAL REVENUE CODE.—
(1) ELECTION OF SURVIVOR ANNUITY.—Section
417(a)(1)(A) of the Internal Revenue Code of 1986 is
amended—
(A) in clause (i), by striking ‘‘, and’’ and
inserting a comma;
(B) by redesignating clause (ii) as clause
(iii); and
(C) by inserting after clause (i) the fol-
lowing:
‘‘(ii) if the participant elects a waiver
under clause (i), may elect the qualified optional
survivor annuity at any time during the appli-
cable election period, and’’.
(2) DEFINITION.—Section 417 of such Code is
amended by adding at the end the following:
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‘‘(g) DEFINITION OF QUALIFIED OPTIONAL SURVIVOR
ANNUITY.—
‘‘(1) IN GENERAL.—For purposes of this section,
the term ‘qualified optional survivor annuity’ means
an annuity—
‘‘(A) for the life of the participant with a
survivor annuity for the life of the spouse which
is equal to the applicable percentage of the
amount of the annuity which is payable during
the joint lives of the participant and the spouse,
and
‘‘(B) which is the actuarial equivalent of a
single annuity for the life of the participant.
Such term also includes any annuity in a form hav-
ing the effect of an annuity described in the preceding
sentence.
‘‘(2) APPLICABLE PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), if the survivor annuity percentage—
‘‘(i) is less than 75 percent, the appli-
cable percentage is 75 percent, and
‘‘(ii) is greater than or equal to 75 per-
cent, the applicable percentage is 50 per-
cent.
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‘‘(B) SURVIVOR
ANNUITY
PERCENTAGE.—
For purposes of subparagraph (A), the term ‘sur-
vivor annuity percentage’ means the percentage
which the survivor annuity under the plan’s
qualified joint and survivor annuity bears to the
annuity payable during the joint lives of the
participant and the spouse.’’.
(3) NOTICE.—Section 417(a)(3)(A)(i) of such
Code is amended by inserting ‘‘and of the qualified
optional survivor annuity’’ after ‘‘annuity’’.
(b) AMENDMENTS TO ERISA.—
(1) ELECTION OF SURVIVOR ANNUITY.—Section
205(c)(1)(A) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1055(c)(1)(A)) is
amended—
(A) in clause (i), by striking ‘‘, and’’ and
inserting a comma;
(B) by redesignating clause (ii) as clause
(iii); and
(C) by inserting after clause (i) the fol-
lowing:
‘‘(ii) if the participant elects a waiver
under clause (i), may elect the qualified optional
survivor annuity at any time during the appli-
cable election period, and’’.
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(2) DEFINITION.—Section 205(d) of such Act (29
U.S.C. 1055(d)) is amended—
(A) by inserting ‘‘(1)’’ after ‘‘(d)’’;
(B) by redesignating paragraphs (1) and
(2) as subparagraphs (A) and (B), respectively;
and
(C) by adding at the end the following:
‘‘(2)(A) For purposes of this section, the term ‘qualified
optional survivor annuity’ means an annuity—
‘‘(i) for the life of the participant with a sur-
vivor annuity for the life of the spouse which is equal
to the applicable percentage of the amount of the an-
nuity which is payable during the joint lives of the
participant and the spouse, and
‘‘(ii) which is the actuarial equivalent of a single
annuity for the life of the participant.
Such term also includes any annuity in a form having the
effect of an annuity described in the preceding sentence.
‘‘(B)(i) For purposes of subparagraph (A), if the sur-
vivor annuity percentage—
‘‘(I) is less than 75 percent, the applicable per-
centage is 75 percent, and
‘‘(II) is greater than or equal to 75 percent, the
applicable percentage is 50 percent.
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‘‘(ii) For purposes of clause (i), the term ‘survivor an-
nuity percentage’ means the percentage which the survivor
annuity under the plan’s qualified joint and survivor annu-
ity bears to the annuity payable during the joint lives of
the participant and the spouse.’’.
(3) NOTICE.—Section 205(c)(3)(A)(i) of such Act
(29 U.S.C. 1055(c)(3)(A)(i)) is amended by inserting
‘‘and of the qualified optional survivor annuity’’ after
‘‘annuity’’.
(c) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to plan years beginning after
December 31, 2005.
(2) SPECIAL
RULE
FOR
COLLECTIVELY
BAR-
GAINED PLANS.—In the case of a plan maintained
pursuant to 1 or more collective bargaining agree-
ments between employee representatives and 1 or
more employers ratified on or before the date of the
enactment of this Act, the amendments made by this
section shall apply to the first plan year beginning on
or after the earlier of—
(A) the later of—
(i) January 1, 2006, or
(ii) the date on which the last of such
collective bargaining agreements terminates
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(determined without regard to any exten-
sion thereof after the date of enactment of
this Act), or
(B) January 1, 2007.
TITLE 
X—IMPROVEMENTS 
IN
PORTABILITY AND DISTRIBU-
TION RULES
SEC. 1001. CLARIFICATIONS REGARDING PURCHASE OF
PERMISSIVE SERVICE CREDIT.
(a) IN GENERAL.—Section 415(n) of the Internal Rev-
enue Code of 1986 (relating to special rules for the purchase
of permissive service credit) is amended—
(1) by striking ‘‘an employee’’ in paragraph (1)
and inserting ‘‘a participant’’, and
(2) by adding at the end of paragraph (3)(A) the
following new flush sentence:
‘‘Such term may include service credit for peri-
ods for which there is no performance of service,
and notwithstanding clause (ii), may include
service credited in order to provide an increased
benefit for service credit which a participant is
receiving under the plan.’’
(b) SPECIAL
RULES
FOR
TRUSTEE-TO-TRUSTEE
TRANSFERS.—Section 415(n)(3) of such Code is amended
by adding at the end the following new subparagraph:
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‘‘(D) SPECIAL
RULES
FOR
TRUSTEE-TO-
TRUSTEE TRANSFERS.—In the case of a trustee-
to-trustee transfer to which section 403(b)(13)(A)
or 457(e)(17)(A) applies (without regard to
whether the transfer is made between plans
maintained by the same employer)—
‘‘(i) the limitations of subparagraph
(B) shall not apply in determining whether
the transfer is for the purchase of permissive
service credit, and
‘‘(ii) the distribution rules applicable
under this title to the defined benefit gov-
ernmental plan to which any amounts are
so transferred shall apply to such amounts
and any benefits attributable to such
amounts.’’.
(c) NONQUALIFIED SERVICE.—Section 415(n)(3) of
such Code is amended—
(1) by striking ‘‘permissive service credit attrib-
utable to nonqualified service’’ each place it appears
in subparagraph (B) and inserting ‘‘nonqualified
service credit’’,
(2) by striking so much of subparagraph (C) as
precedes clause (i) and inserting:
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‘‘(C) NONQUALIFIED SERVICE CREDIT.—For
purposes of subparagraph (B), the term ‘non-
qualified service credit’ means permissive service
credit other than that allowed with respect to—
’’, and
(3) by striking ‘‘elementary or secondary edu-
cation (through grade 12), as determined under State
law’’ and inserting ‘‘elementary or secondary edu-
cation (through grade 12), or a comparable level of
education, as determined under the applicable law of
the jurisdiction in which the service was performed’’.
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendments made by
subsections (a) and (c) shall take effect as if included
in the amendments made by section 1526 of the Tax-
payer Relief Act of 1997.
(2) SUBSECTION (b).—The amendments made by
subsection (b) shall take effect as if included in the
amendments made by section 647 of the Economic
Growth and Tax Relief Reconciliation Act of 2001.
SEC. 1002. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN
ANNUITY CONTRACTS.
(a) IN
GENERAL.—Subparagraph (A) of section
402(c)(2) (relating to the maximum amount which may be
rolled over) is amended—
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(1) by striking ‘‘which is part of a plan which
is a defined contribution plan and which agrees to
separately account’’ and inserting ‘‘or to an annuity
contract described in section 403(b) and such trust or
contract provides for separate accounting’’; and
(2) by inserting ‘‘(and earnings thereon)’’ after
‘‘so transferred’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 2005.
SEC. 1003. CLARIFICATION OF MINIMUM DISTRIBUTION
RULES FOR GOVERNMENTAL PLANS.
The Secretary of the Treasury shall issue regulations
under which a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986) shall, for all
years to which section 401(a)(9) of such Code applies to
such plan, be treated as having complied with such section
401(a)(9) if such plan complies with a reasonable good faith
interpretation of such section 401(a)(9).
SEC. 1004. WAIVER OF 10 PERCENT EARLY WITHDRAWAL
PENALTY TAX ON CERTAIN DISTRIBUTIONS
OF PENSION PLANS FOR PUBLIC SAFETY EM-
PLOYEES.
(a) IN GENERAL.—Section 72(t) of the Internal Rev-
enue Code of 1986 (relating to subsection not to apply to
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certain distributions) is amended by adding at the end the
following new paragraph:
‘‘(10) DISTRIBUTIONS
TO
QUALIFIED
PUBLIC
SAFETY EMPLOYEES IN GOVERNMENTAL PLANS.—
‘‘(A) IN GENERAL.—In the case of a dis-
tribution to a qualified public safety employee
from a governmental plan (within the meaning
of section 414(d)) which is a defined benefit
plan, paragraph (2)(A)(v) shall be applied by
substituting ‘age 50’ for ‘age 55’.
‘‘(B) 
QUALIFIED
PUBLIC
SAFETY
EM-
PLOYEE.—For purposes of this paragraph, the
term ‘qualified public safety employee’ means
any employee of a State or political subdivision
of a State who provides police protection, fire-
fighting services, or emergency medical services
for any area within the jurisdiction of such
State or political subdivision.’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to distributions after the date of the en-
actment of this Act.
SEC. 1005. ALLOW ROLLOVERS BY NONSPOUSE BENE-
FICIARIES OF CERTAIN RETIREMENT PLAN
DISTRIBUTIONS.
(a) IN GENERAL.—
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(1) QUALIFIED PLANS.—Section 402(c) of the In-
ternal Revenue Code of 1986 (relating to rollovers
from exempt trusts) is amended by adding at the end
the following new paragraph:
‘‘(11) DISTRIBUTIONS TO INHERITED INDIVIDUAL
RETIREMENT PLAN OF NONSPOUSE BENEFICIARY.—
‘‘(A) IN GENERAL.—If, with respect to any
portion of a distribution from an eligible retire-
ment plan of a deceased employee, a direct trust-
ee-to-trustee transfer is made to an individual
retirement plan described in clause (i) or (ii) of
paragraph (8)(B) established for the purposes of
receiving the distribution on behalf of an indi-
vidual who is a designated beneficiary (as de-
fined by section 401(a)(9)(E)) of the employee
and who is not the surviving spouse of the
employee—
‘‘(i) the transfer shall be treated as an
eligible rollover distribution for purposes of
this subsection,
‘‘(ii) the individual retirement plan
shall be treated as an inherited individual
retirement account or individual retirement
annuity (within the meaning of section
408(d)(3)(C)) for purposes of this title, and
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‘‘(iii) section 401(a)(9)(B) (other than
clause (iv) thereof) shall apply to such plan.
‘‘(B) CERTAIN TRUSTS TREATED AS BENE-
FICIARIES.—For purposes of this paragraph, to
the extent provided in rules prescribed by the
Secretary, a trust maintained for the benefit of
one or more designated beneficiaries shall be
treated in the same manner as a designated ben-
eficiary.’’.
(2) SECTION 403(a) PLANS.—Subparagraph (B)
of section 403(a)(4) of such Code (relating to rollover
amounts) is amended by striking ‘‘and (9)’’ and in-
serting ‘‘, (9), and (11)’’.
(3) SECTION 403(b) PLANS.—Subparagraph (B)
of section 403(b)(8) of such Code (relating to rollover
amounts) is amended by striking ‘‘and (9)’’ and in-
serting ‘‘, (9), and (11)’’.
(4) SECTION 457 PLANS.—Subparagraph (B) of
section 457(e)(16) of such Code (relating to rollover
amounts) is amended by striking ‘‘and (9)’’ and in-
serting ‘‘, (9), and (11)’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to distributions after December 31, 2005.