181 
of each contributing sponsor of the plan). Such notice 
shall also set forth— 
‘‘(A) the number of single-employer plans 
covered by this title which are in at-risk status 
and are maintained by contributing sponsors of 
such plan (and by members of their controlled 
groups) with respect to which the funding target 
attainment percentage for the preceding plan 
year of each plan is less than 60 percent; 
‘‘(B) the value of the assets of each of the 
plans described in subparagraph (A) for the plan 
year, the funding target for each of such plans 
for the plan year, and the funding target attain-
ment percentage of each of such plans for the 
plan year; and 
‘‘(C) taking into account all single-employer 
plans maintained by the contributing sponsor 
and the members of its controlled group as of the 
end of such plan year— 
‘‘(i) the aggregate total of the values of 
plan assets of such plans as of the end of 
such plan year, 
‘‘(ii) the aggregate total of the funding 
targets of such plans, as of the end of such 
plan year, taking into account only benefits
182 
to which participants and beneficiaries have 
a nonforfeitable right, and 
‘‘(iii) the aggregate funding targets at-
tainment percentage with respect to the con-
tributing sponsor for the preceding plan 
year. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) VALUE OF PLAN ASSETS.—The term 
‘value of plan assets’ means the value of plan as-
sets, as determined under section 303(g)(3). 
‘‘(B) FUNDING TARGET.—The term ‘funding 
target’ has the meaning provided under section 
303(d)(1). 
‘‘(C) FUNDING TARGET ATTAINMENT PER-
CENTAGE.—The term ‘funding target attainment 
percentage’ has the meaning provided in section 
303(d)(2). 
‘‘(D) AGGREGATE
FUNDING
TARGETS
AT-
TAINMENT
PERCENTAGE.—The term ‘aggregate 
funding targets attainment percentage’ with re-
spect to a contributing sponsor for a plan year 
is the percentage, taking into account all plans 
maintained by the contributing sponsor and the
183 
members of its controlled group as of the end of 
such plan year, which 
‘‘(i) the aggregate total of the values of 
plan assets, as of the end of such plan year, 
of such plans, is of 
‘‘(ii) the aggregate total of the funding 
targets of such plans, as of the end of such 
plan year, taking into account only benefits 
to which participants and beneficiaries have 
a nonforfeitable right. 
‘‘(E) AT-RISK STATUS.—The term ‘at-risk 
status’ has the meaning provided in section 
303(i)(3). 
‘‘(3) COMPLIANCE.— 
‘‘(A) IN GENERAL.—Any notice required to 
be provided under paragraph (1) may be pro-
vided in written, electronic, or other appropriate 
form to the extent such form is reasonably acces-
sible to individuals to whom the information is 
required to be provided. 
‘‘(B) LIMITATIONS.—In no case shall a par-
ticipant or beneficiary be entitled under this sub-
section to receive more than one notice described 
in paragraph (1) during any one 12-month pe-
riod. The person required to provide such notice
184 
may make a reasonable charge to cover copying, 
mailing, and other costs of furnishing such no-
tice pursuant to paragraph (1). The corporation 
may by regulations prescribe the maximum 
amount which will constitute a reasonable charge 
under the preceding sentence. 
‘‘(4) NOTICE
TO
CONGRESS.—Concurrent with 
the provision of any notice under paragraph (1), such 
person shall provide such notice to the Committee on 
Education and the Workforce of the House of Rep-
resentatives and the Committee on Health, Education, 
Labor, and Pensions of the Senate, which shall be 
treated as materials provided in executive session.’’. 
(c) EFFECTIVE DATE.—The amendment made by this 
section shall apply with respect to plan years beginning 
after 2006. 
TITLE VI—INVESTMENT ADVICE 
SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974 PROVIDING 
PROHIBITED TRANSACTION EXEMPTION FOR 
PROVISION OF INVESTMENT ADVICE. 
(a) EXEMPTION FROM PROHIBITED TRANSACTIONS.— 
Section 408(b) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1108(b)) is amended by adding at 
the end the following new paragraph:
185 
‘‘(14)(A) Any transaction described in subpara-
graph (B) in connection with the provision of invest-
ment advice described in section 3(21)(A)(ii), in any 
case in which— 
‘‘(i) the investment of assets of the plan is 
subject to the direction of plan participants or 
beneficiaries, 
‘‘(ii) the advice is provided to the plan or 
a participant or beneficiary of the plan by a fi-
duciary adviser in connection with any sale, ac-
quisition, or holding of a security or other prop-
erty for purposes of investment of plan assets, 
and 
‘‘(iii) the requirements of subsection (g) are 
met in connection with the provision of the ad-
vice. 
‘‘(B) The transactions described in this subpara-
graph are the following: 
‘‘(i) the provision of the advice to the 
plan, participant, or beneficiary; 
‘‘(ii) the sale, acquisition, or holding of 
a security or other property (including any 
lending of money or other extension of cred-
it associated with the sale, acquisition, or
186 
holding of a security or other property) 
pursuant to the advice; and 
‘‘(iii) the direct or indirect receipt of 
fees or other compensation by the fiduciary 
adviser or an affiliate thereof (or any em-
ployee, agent, or registered representative of 
the fiduciary adviser or affiliate) in connec-
tion with the provision of the advice or in 
connection with a sale, acquisition, or hold-
ing of a security or other property pursuant 
to the advice.’’. 
(b) REQUIREMENTS.—Section 408 of such Act is 
amended further by adding at the end the following new 
subsection: 
‘‘(g) REQUIREMENTS RELATING TO PROVISION OF IN-
VESTMENT ADVICE BY FIDUCIARY ADVISERS.— 
‘‘(1) IN GENERAL.—The requirements of this sub-
section are met in connection with the provision of 
investment advice referred to in section 3(21)(A)(ii), 
provided to an employee benefit plan or a participant 
or beneficiary of an employee benefit plan by a fidu-
ciary adviser with respect 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—
187 
‘‘(A) 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 fiduciary adviser 
provides to the recipient of the advice, at a time 
reasonably contemporaneous with the initial pro-
vision of the advice, a written notification 
(which may consist of notification by means of 
electronic communication)— 
‘‘(i) of all fees or other compensation 
relating to the advice that the fiduciary ad-
viser or any affiliate thereof is to receive 
(including compensation 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 fiduciary ad-
viser or affiliates thereof in the security or 
other property, 
‘‘(iii) of any limitation placed on the 
scope of the investment advice to be pro-
vided by the fiduciary adviser with respect
188 
to any such sale, acquisition, 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 investment advice by the fi-
duciary adviser, 
‘‘(v) that the adviser is acting as a fi-
duciary of the plan in connection with the 
provision of the advice, and 
‘‘(vi) that a recipient of the advice 
may separately arrange for the provision of 
advice by another adviser, that could have 
no material affiliation with and receive no 
fees or other compensation in connection 
with the security or other property, 
‘‘(B) the fiduciary adviser provides appro-
priate disclosure, in connection with the sale, ac-
quisition, or holding of the security or other 
property, in accordance with all applicable secu-
rities laws, 
‘‘(C) the sale, acquisition, or holding occurs 
solely at the direction of the recipient of the ad-
vice, 
‘‘(D) the compensation received by the fidu-
ciary adviser and affiliates thereof in connection
189 
with the sale, acquisition, or holding of the secu-
rity or other property is reasonable, and 
‘‘(E) 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. 
‘‘(2) STANDARDS FOR PRESENTATION OF INFOR-
MATION.— 
‘‘(A) IN
GENERAL.—The notification re-
quired to be provided to participants and bene-
ficiaries under paragraph (1)(A) shall be written 
in a clear and conspicuous manner and in a 
manner calculated to be understood by the aver-
age plan participant and shall be sufficiently ac-
curate and comprehensive to reasonably apprise 
such participants and beneficiaries of the infor-
mation required to be provided in the notifica-
tion. 
‘‘(B) MODEL
FORM
FOR
DISCLOSURE
OF 
FEES
AND
OTHER
COMPENSATION.—The Sec-
retary shall issue a model form for the disclosure 
of fees and other compensation required in para-
graph (1)(A)(i) which meets the requirements of 
subparagraph (A).
190 
‘‘(3) EXEMPTION CONDITIONED ON MAKING RE-
QUIRED INFORMATION AVAILABLE ANNUALLY, ON RE-
QUEST, AND IN THE EVENT OF MATERIAL CHANGE.— 
The requirements of paragraph (1)(A) shall be deemed 
not to have been met in connection with the initial 
or any subsequent provision of advice described in 
paragraph (1) to the plan, participant, or beneficiary 
if, at any time during the provision of advisory serv-
ices to the plan, participant, or beneficiary, the fidu-
ciary adviser fails to maintain the information de-
scribed in clauses (i) through (iv) of subparagraph 
(A) in currently accurate form and in the manner de-
scribed in paragraph (2) or fails— 
‘‘(A) to provide, without charge, such cur-
rently accurate information to the recipient of 
the advice no less than annually, 
‘‘(B) to make such currently accurate infor-
mation available, upon request and without 
charge, to the recipient of the advice, or 
‘‘(C) in the event of a material change to 
the information described in clauses (i) through 
(iv) of paragraph (1)(A), to provide, without 
charge, such currently accurate information to 
the recipient of the advice at a time reasonably
191 
contemporaneous to the material change in in-
formation. 
‘‘(4) MAINTENANCE FOR 6 YEARS OF EVIDENCE 
OF COMPLIANCE.—A fiduciary adviser referred to in 
paragraph (1) who has provided advice referred to in 
such paragraph shall, for a period of not less than 6 
years after the provision of the advice, maintain any 
records necessary for determining whether the require-
ments of the preceding provisions of this subsection 
and of subsection (b)(14) have been met. A trans-
action prohibited under section 406 shall not be con-
sidered to have occurred solely because the records are 
lost or destroyed prior to the end of the 6-year period 
due to circumstances beyond the control of the fidu-
ciary adviser. 
‘‘(5) EXEMPTION FOR PLAN SPONSOR AND CER-
TAIN OTHER FIDUCIARIES.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a plan sponsor or other person who 
is a fiduciary (other than a fiduciary adviser) 
shall not be treated as failing to meet the re-
quirements of this part solely by reason of the 
provision of investment advice referred to in sec-
tion 3(21)(A)(ii) (or solely by reason of con-
192 
tracting for or otherwise arranging for the provi-
sion of the advice), if— 
‘‘(i) the advice is provided by a fidu-
ciary adviser pursuant to an arrangement 
between the plan sponsor or other fiduciary 
and the fiduciary adviser for the provision 
by the fiduciary adviser of investment ad-
vice referred to in such section, 
‘‘(ii) the terms of the arrangement re-
quire compliance by the fiduciary adviser 
with the requirements of this subsection, 
and 
‘‘(iii) the terms of the arrangement in-
clude a written acknowledgment by the fidu-
ciary adviser that the fiduciary adviser is a 
fiduciary of the plan with respect to the 
provision of the advice. 
‘‘(B) CONTINUED DUTY OF PRUDENT SELEC-
TION OF ADVISER AND PERIODIC REVIEW.—Noth-
ing in subparagraph (A) shall be construed to 
exempt a plan sponsor or other person who is a 
fiduciary from any requirement of this part for 
the prudent selection and periodic review of a fi-
duciary adviser with whom the plan sponsor or 
other person enters into an arrangement for the
193 
provision of advice referred to in section 
3(21)(A)(ii). The plan sponsor or other person 
who is a fiduciary has no duty under this part 
to monitor the specific investment advice given 
by the fiduciary adviser to any particular re-
cipient of the advice. 
‘‘(C) AVAILABILITY OF PLAN ASSETS FOR 
PAYMENT
FOR
ADVICE.—Nothing in this part 
shall be construed to preclude the use of plan as-
sets to pay for reasonable expenses in providing 
investment 
advice 
referred 
to 
in 
section 
3(21)(A)(ii). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section and subsection (b)(14)— 
‘‘(A) FIDUCIARY ADVISER.—The term ‘fidu-
ciary adviser’ means, with respect to a plan, a 
person who is a fiduciary of the plan by reason 
of the provision of investment advice by the per-
son to the plan or to a participant or beneficiary 
and who is— 
‘‘(i) registered as an investment ad-
viser 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
194 
maintains its principal office and place of 
business, 
‘‘(ii) a bank or similar financial insti-
tution referred to in section 408(b)(4) or a 
savings association (as defined in section 
3(b)(1) of the Federal Deposit Insurance Act 
(12 U.S.C. 1813(b)(1))), but only if the ad-
vice is provided through a trust department 
of the bank or similar financial institution 
or savings association which is subject to 
periodic examination 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 described 
in any of clauses (i) through (iv), or 
‘‘(vi) an employee, agent, or registered 
representative of a person described in any 
of clauses (i) through (v) who satisfies the 
requirements of applicable insurance, bank-
ing, and securities laws relating to the pro-
vision of the advice.
195 
‘‘(B) AFFILIATE.—The term ‘affiliate’ of 
another entity means an affiliated person of the 
entity (as defined in section 2(a)(3) of the In-
vestment Company Act of 1940 (15 U.S.C. 80a– 
2(a)(3))). 
‘‘(C) REGISTERED REPRESENTATIVE.—The 
term ‘registered representative’ of another entity 
means a person described in section 3(a)(18) of 
the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(18)) (substituting the entity for the broker 
or dealer referred to in such section) or a person 
described in section 202(a)(17) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–2(a)(17)) 
(substituting the entity for the investment ad-
viser referred to in such section).’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply with respect to advice referred to in sec-
tion 3(21)(A)(ii) of the Employee Retirement Income Secu-
rity Act of 1974 provided on or after January 1, 2006. 
SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 
1986 PROVIDING PROHIBITED TRANSACTION 
EXEMPTION FOR PROVISION OF INVESTMENT 
ADVICE. 
[See introduced bill, page 287, line 15 through page 
298, line 23]
196 
TITLE VII—BENEFIT ACCRUAL 
STANDARDS 
SEC. 701. IMPROVEMENTS IN BENEFIT ACCRUAL STAND-
ARDS. 
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.— 
(1) RULES
RELATING
TO
REDUCTION
IN
AC-
CRUED BENEFITS BECAUSE OF ATTAINMENT OF ANY 
AGE.—Section 204(b)(1)(H) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1054(b)(1)(H)) is amended by adding at the end the 
following new clauses: 
‘‘(vii)(I) A plan shall not be treated as failing to meet 
the requirements of clause (i) if a participant’s entire ac-
crued benefit, as determined as of any date under the for-
mula for determining benefits as set forth in the text of the 
plan documents, would be equal to or greater than that of 
any similarly situated, younger individual. 
‘‘(II) For purposes of this clause, an individual is 
similarly situated to a participant if such individual is 
identical to such participant in every respect (including pe-
riod of service, compensation, position, date of hire, work 
history, and any other respect) except for age. 
‘‘(III) In determining the entire accrued benefit for 
purposes of this clause, the subsidized portion of any early