I 
108TH CONGRESS 
2D SESSION 
H. R. 5397 
To improve the retirement security of American families. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 19, 2004 
Mr. ANDREWS introduced the following bill; which was referred to the 
Committee on Education and the Workforce 
A BILL 
To improve the retirement security of American families. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Retirement Enhancement Act of 2004’’. 
(b) TABLE OF CONTENTS.—The table of contents is 
as follows: 
Sec. 1. Short title and table of contents. 
TITLE I—IMPROVED PARTICIPATION AND VESTING 
Sec. 101. Minimum coverage requirements. 
Sec. 102. Minimum participation requirements. 
Sec. 103. Faster vesting of benefits under defined contribution plans. 
Sec. 104. Prohibition of requests by plan sponsors for waiver of employee 
rights. 
Sec. 105. Model small employer group pension plan.
Sec. 106. Enforcement under ERISA of requirements for simplified employee 
pensions. 
TITLE II—IMPROVED PENSION PROTECTIONS FOR WOMEN 
Sec. 201. Elimination of integration with workers’ compensation and similar 
benefits. 
Sec. 202. Spousal consent required for distributions from defined contribution 
plans. 
Sec. 203. Modification of joint and survivor annuity requirements. 
Sec. 204. Division of pension benefits upon divorce. 
Sec. 205. Periods of family and medical leave treated as hours of service for 
pension participation and vesting. 
Sec. 206. Right of spouse to know distribution information. 
Sec. 207. Repeal of reduction in military Survivor Benefit Plan annuities at age 
62. 
Sec. 208. Survivor annuities for widows, widowers, and former spouses of Fed-
eral employees who die before attaining age for deferred annu-
ity under Civil Service Retirement System. 
Sec. 209. Order of precedence for disposition of amounts remaining in the 
thrift savings account of a Federal employee (or former em-
ployee) who dies before making an effective election controlling 
such disposition. 
Sec. 210. Amendments relating to effective date provision of the Civil Service 
Retirement Spouse Equity Act of 1984. 
Sec. 211. Entitlement of divorced spouses to railroad retirement annuities inde-
pendent of actual entitlement of employee. 
Sec. 212. Extension of tier II railroad retirement benefits to surviving former 
spouses pursuant to divorce agreements. 
TITLE III—SIMPLIFIED INVESTMENT STANDARDS 
Sec. 301. Exemption from prohibited transaction rules for certain aborted 
emergent transactions. 
Sec. 302. Prohibited transaction exemption for the provision of investment ad-
vice. 
Sec. 303. Participation of participants in trusteeship of single-employer plans 
providing for employee contributions. 
Sec. 304. Diversification of investment of account assets held under individual 
account plans. 
Sec. 305. Removal of $500,000 cap on bonding requirement. 
Sec. 306. Disclosure regarding investments and voting of proxies. 
Sec. 307. Immediate warning of excessive stock holdings. 
Sec. 308. Report to participants and beneficiaries of trades in employer securi-
ties. 
TITLE IV—IMPROVEMENTS IN PENSION INFORMATION AND 
ENFORCEMENT 
Sec. 401. Pension benefit information. 
Sec. 402. Disclosures to Secretary of Labor relating to plan termination and re-
lating to plan sponsors after acquisition or merger of plans. 
Sec. 403. Disclosure of operating income of employers adjusted so as to exclude 
certain components mandated in FASB rules governing ac-
counting for defined benefit pension plans.
Sec. 404. Specific information regarding multiemployer plans included in an-
nual report. 
Sec. 405. Limited scope audits. 
Sec. 406. Reporting and enforcement requirements for employee benefit plans. 
Sec. 407. Study of pension trends and characteristics. 
Sec. 408. Early resolution program for pension benefit claims. 
Sec. 409. Review of benefit determinations. 
Sec. 410. Allowable relief. 
Sec. 411. Assessment by Secretary of Labor of penalties for failures to meet 
disclosure requirements. 
Sec. 412. Missing participants and unclaimed benefits. 
Sec. 413. Fiduciary duties with respect to changes in investment options. 
Sec. 414. Office of Pension Participant Advocacy. 
Sec. 415. Exclusivity of powers and procedures applicable to rights or claims. 
TITLE V—IMPROVED PENSION PROTECTIONS FOR THE 
CHANGING WORKFORCE 
Sec. 501. Loans from retirement plans for health insurance and job training ex-
penses. 
Sec. 502. Automatic rollover upon mandatory distribution in excess of $1,000. 
Sec. 503. Prompt distribution from defined contribution plans upon termination 
of participant’s covered employment. 
TITLE VI—GENERAL PROVISIONS 
Sec. 601. General effective date. 
Sec. 602. Plan amendments. 
TITLE I—IMPROVED 
PARTICIPATION AND VESTING 
SEC. 101. MINIMUM COVERAGE REQUIREMENTS. 
(a) IN GENERAL.—Part 2 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 201 et seq.) is amended by inserting after sec-
tion 201 the following new section: 
‘‘MINIMUM COVERAGE REQUIREMENTS 
‘‘SEC. 201A. (a) GENERAL RULE.—Each pension 
plan maintained by an employer shall benefit all employees 
of the employer. 
‘‘(b) EXCLUSION OF CERTAIN EMPLOYEES.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
in determining, in the case of any plan, whether the 
requirements of subsection (a) are met with respect 
to the employees of the employer maintaining the 
plan, there shall be excluded from consideration— 
‘‘(A) employees who are included in a unit 
of employees covered by an agreement which, as 
determined in accordance with regulations 
issued by the Secretary, constitutes a collective 
bargaining agreement between employee rep-
resentatives and the employer or 2 or more em-
ployers including the employer, if there is evi-
dence that retirement benefits were the subject 
of good faith bargaining between the employee 
representatives and the employer or employers, 
‘‘(B) in the case of a trust, forming a part 
of the plan, which is established or maintained 
pursuant to an agreement which, as determined 
in accordance with regulations issued by the 
Secretary, constitutes a collective bargaining 
agreement between airline pilots represented in 
accordance with title II of the Railway Labor 
Act and the employer or 2 or more employers 
including the employer, all employees not cov-
ered by the agreement, and
‘‘(C) employees who are nonresident aliens 
and who receive no earned income (within the 
meaning of section 911(d)(2) of the Internal 
Revenue Code of 1986) from the employer 
which constitutes income from sources within 
the United States (within the meaning of sec-
tion 861(a)(3) of such Code). 
‘‘(2) SPECIAL RULES.— 
‘‘(A) TREATMENT
OF
EMPLOYEES
IN 
UNITS COVERED BY COLLECTIVE BARGAINING 
AGREEMENTS.—Subsection (a) shall apply sepa-
rately with respect to employees (of an em-
ployer referred to in paragraph (1)(A)) who are 
in a unit of employees described in paragraph 
(1)(A). 
‘‘(B) TREATMENT
OF
CERTAIN
AIRLINE 
EMPLOYEES.—Paragraph (1)(B) shall not apply 
in the case of any plan (of which the trust re-
ferred to in paragraph (1)(B) forms a part) if 
the plan provides for contributions or benefits 
for employees whose principal duties are not 
customarily performed aboard aircraft in flight. 
‘‘(c) EXCLUSION OF EMPLOYEES NOT MEETING AGE 
AND SERVICE REQUIREMENTS.— 
‘‘(1) IN GENERAL.—If a plan—
‘‘(A) prescribes, consistent with section 
202(a), minimum age and service requirements 
as a condition of participation, and 
‘‘(B) excludes all employees not meeting 
such requirements from participation, 
then such employees shall be excluded from consider-
ation for purposes of this section. 
‘‘(2) REQUIREMENTS MAY BE MET SEPARATELY 
WITH RESPECT TO EXCLUDED GROUP.—If employees 
not meeting the minimum age or service require-
ments of section 202(a)(1) (without regard to sub-
paragraph (B) thereof) are covered under a plan of 
the employer which meets the requirements of sub-
section (a) separately with respect to such employ-
ees, such employees may be excluded from consider-
ation in determining whether any plan of the em-
ployer meets the requirements of subsection (a). 
‘‘(3) REQUIREMENTS NOT TREATED AS BEING 
MET BEFORE ENTRY DATE.—An employee shall not 
be treated as meeting the age and service require-
ments described in this subsection until the first 
date on which, under the plan, any employee with 
the same age and service would be eligible to com-
mence participation in the plan. 
‘‘(d) LINE OF BUSINESS EXCEPTION.—
‘‘(1) IN GENERAL.—If, under section 414(r) of 
the Internal Revenue Code of 1986, an employer is 
treated as operating separate lines of business for a 
year, the employer may apply the requirements of 
this section for such year separately with respect to 
employees in each separate line of business. 
‘‘(2) PLAN
MUST
BE
NONDISCRIMINATORY.— 
Paragraph (1) shall not apply with respect to any 
plan maintained by an employer unless such plan 
benefits such employees as qualify under a classifica-
tion set up by the employer and found by the Sec-
retary of the Treasury not to be discriminatory in 
favor of highly compensated employees. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) HIGHLY COMPENSATED EMPLOYEE.—The 
term ‘highly compensated employee’ has the mean-
ing given such term by section 414(q) of the Inter-
nal Revenue Code of 1986. 
‘‘(2) AGGREGATION RULES.—An employer may 
elect to designate— 
‘‘(A) 2 or more trusts, 
‘‘(B) 1 or more trusts and 1 or more annu-
ity plans, or 
‘‘(C) 2 or more annuity plans,
as part of 1 plan to determine whether the require-
ments of this section are met with respect to such 
plan. 
‘‘(3) SPECIAL
RULES
FOR
CERTAIN
DISPOSI-
TIONS OR ACQUISITIONS.— 
‘‘(A) IN GENERAL.—If a person becomes, 
or ceases to be, a member of a group described 
in subsection (b), (c), (m), or (o) of section 414 
of such Code, then the requirements of this sec-
tion shall be treated as having been met during 
the transition period with respect to any plan 
covering employees of such person or any other 
member of such group if— 
‘‘(i) such requirements were met im-
mediately before each such change, and 
‘‘(ii) the coverage under such plan is 
not significantly changed during the transi-
tion period (other than by reason of the 
change in members of a group) or such 
plan meets such other requirements as the 
Secretary of the Treasury may prescribe 
by regulation. 
‘‘(B) TRANSITION PERIOD.—For purposes 
of subparagraph (A), the term ‘transition pe-
riod’ means the period—
‘‘(i) beginning on the date of the 
change in members of a group, and 
‘‘(ii) ending on the last day of the 1st 
plan year beginning after the date of such 
change. 
‘‘(4) ELIGIBILITY
TO
CONTRIBUTE.—In the 
case of contributions which are subject to section 
401(k) or 401(m) of the Internal Revenue Code of 
1986, employees who are eligible to contribute (or 
elect to have contributions made on their behalf) 
shall be treated as benefiting under the plan. 
‘‘(5) REGULATIONS.—The Secretary of the 
Treasury shall prescribe such regulations as may be 
necessary or appropriate to carry out the purposes 
of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of contents 
in section 1 of such Act is amended by inserting after the 
item relating to section 201 the following new item: 
‘‘Sec. 201A. Minimum coverage requirements.’’. 
SEC. 102. MINIMUM PARTICIPATION REQUIREMENTS. 
(a) IN GENERAL.—Sections 202(a)(3), 203(b)(2), 
and 204(b)(4) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1052(a)(3), 1053(b)(2), and 
1054(b)(4)) are each amended by striking ‘‘1,000 hours’’ 
each place it appears and inserting ‘‘750 hours’’. 
(b) CONFORMING AMENDMENTS.—
(1) Sections 202(a)(3)(D), 203(b)(2)(D), and 
204(b)(4)(E) 
(29 
U.S.C. 
1052(a)(3)(D), 
1053(b)(2)(D), and 1054(b)(4)(E)) are each amend-
ed by striking ‘‘125 days’’ and inserting ‘‘94 days’’. 
(2) Sections 202(b)(5)(B) and 203(b)(3)(E)(ii) 
(29 U.S.C. 1052(b)(5)(B) and 1053(b)(3)(E)(ii)) 
are each amended by striking ‘‘501 hours’’ and in-
serting ‘‘376 hours’’. 
(3) 
Section 
203(b)(3)(A) 
(29 
U.S.C. 
1053(b)(3)(A)) is amended by striking ‘‘500 hours’’ 
and inserting ‘‘375 hours’’. 
SEC. 103. FASTER VESTING OF BENEFITS UNDER DEFINED 
CONTRIBUTION PLANS. 
Section 203(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1053(a)) is amended— 
(1) by striking paragraph (2)(A) and inserting 
the following: 
‘‘(A) A plan satisfies the requirements of 
this subparagraph if an employee has a non-
forfeitable right to 100 percent of the employ-
ee’s accrued benefit derived from employer con-
tributions— 
‘‘(i) in the case of a defined benefit 
plan, as of completion by the employee of 
at least 5 years of service, or
‘‘(ii) in the case of a defined contribu-
tion plan, as of completion by the employee 
of at least 3 years of service.’’; 
(2) in paragraph (2)(B), by inserting after ‘‘if’’ 
the following: ‘‘the plan is a defined benefit plan 
and, under the plan,’’; and 
(3) in paragraph (4), by striking ‘‘paragraph 
(2) shall be applied—’’ and all that follows through 
‘‘subparagraph (B):’’ and inserting ‘‘paragraph 
(2)(B) shall be applied by substituting for the table 
contained therein the following table:’’. 
SEC. 104. PROHIBITION OF REQUESTS BY PLAN SPONSORS 
FOR WAIVER OF EMPLOYEE RIGHTS. 
(a) IN GENERAL.—Part 2 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1051 et seq.) is amended— 
(1) by redesignating section 211 as section 212; 
and 
(2) by inserting after section 210 the following 
new section: 
‘‘PROHIBITION OF REQUESTS BY PLAN SPONSORS FOR 
WAIVER OF EMPLOYEE RIGHTS 
‘‘SEC. 211. A plan sponsor may not request any indi-
vidual to waive any right of coverage under, or participa-
tion in, any pension plan which is granted by this title.’’.
(b) CLERICAL AMENDMENT.—The table of contents 
in section 1 of such Act is amended— 
(1) by striking the item relating to section 211; 
and 
(2) by inserting after the item relating to sec-
tion 210 the following new items: 
‘‘Sec. 211. Prohibition of requests by plan sponsors for waiver of employee 
rights. 
‘‘Sec. 212. Effective dates.’’. 
SEC. 105. MODEL SMALL EMPLOYER GROUP PENSION 
PLAN. 
(a) IN GENERAL.—Section 206 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1056) 
is amended by adding at the end the following new sub-
section: 
‘‘(g) MODEL SIMPLIFIED GROUP PENSION PLANS.— 
‘‘(1) ESTABLISHMENT OF MODEL PLAN.—The 
Secretary, in consultation with the Secretary of the 
Treasury, shall prescribe by regulations one or more 
model simplified group pension plans which would— 
‘‘(A) provide simplicity and minimal ad-
ministrative responsibilities to employers and 
provide adequate retirement benefits to employ-
ees upon adoption by an employer, including 
models which could be established by a group of 
small employers, an employee association, an 
employer association, or a financial institution,
‘‘(B) cover all employees of the employer, 
‘‘(C) accept contributions from successive 
employers, 
‘‘(D) readily permit and accept rollovers to 
and from other qualified plans (as defined in 
section 203(e)(2)), and 
‘‘(E) constitute a plan meeting the require-
ments of this Act and Internal Revenue Code of 
1986. 
In devising a model pension plan, the Secretary shall 
consider the adequacy of existing simplified em-
ployee pension plan alternatives and may make rec-
ommendations to adopt such plans as model sim-
plified plans. 
‘‘(2) ADVERTISEMENT OF MODEL PLAN.—The 
Secretary, in consultation with the Secretary of the 
Treasury and the Administrator of the Small Busi-
ness Administration, shall advertise the model plans 
developed pursuant to paragraph (1), including 
through contracts (to the extent provided in appro-
priation Acts) with applicable organizations, to en-
sure that small employers and their employees are 
apprised of the availability of administratively simple 
single and group pension plans.’’.
(b) EXEMPTION OF PLAN SPONSOR FROM FIDU-
CIARY LIABILITY.—Section 404(a) of such Act (29 U.S.C. 
1104(a)) is amended by adding at the end the following 
new paragraph: 
‘‘(3) A plan sponsor of an employee benefit plan shall 
not be liable under this part in connection with such plan 
for any act or practice by such plan sponsor consistent 
with the requirements of such plan if such plan conforms 
to the terms of a model simplified group pension plan pre-
scribed pursuant to section 206(g).’’. 
(c) INITIAL REGULATIONS.—Regulations under sec-
tion 206(g) of the Employee Retirement Income Security 
Act of 1974 (added by this section) for the first model 
simplified pension plans shall be issued within 12 months 
after the date of the enactment of this Act. 
(d) STUDY.—Not later than 3 years after the date 
of the enactment of this Act, the Secretary of Labor and 
the Secretary of the Treasury shall conduct a joint study 
to determine the feasibility of permitting non-highly com-
pensated employees whose employer does not cover them 
under a pension plan, and other non-covered individuals, 
to seek an automatic payroll deduction or other deferral 
mechanism to make contributions to a pension plan con-
forming to the the requirements of a model simplified 
group pension plan developed pursuant to section 206(g)
of the Employee Retirement Income Security Act of 1974 
or to similar pension plans. Such Secretaries shall submit 
a joint report to the Congress describing the results of 
such study and making such recommendations as the Sec-
retaries determine necessary or appropriate. 
SEC. 106. ENFORCEMENT UNDER ERISA OF REQUIREMENTS 
FOR SIMPLIFIED EMPLOYEE PENSIONS. 
Subtitle A of title III of the Employee Retirement 
Income Security Act of 1974 is amended by adding after 
section 3004 (29 U.S.C. 1204) the following new section: 
‘‘TREATMENT OF SIMPLIFIED EMPLOYEE PENSIONS 
‘‘SEC. 3005. For purposes of part 5 of subtitle B of 
title I, the requirements of section 408(k) of the Internal 
Revenue Code of 1986 relating to simplified employee pen-
sions (as defined in section 408(k)(1) of such Code) shall 
be treated as requirements of title I applicable to employee 
pension benefit plans (as defined in section 3(2)) which 
are such simplified employee pensions.’’. 
TITLE II—IMPROVED PENSION 
PROTECTIONS FOR WOMEN 
SEC. 201. ELIMINATION OF INTEGRATION WITH WORKERS’ 
COMPENSATION AND SIMILAR BENEFITS. 
Section 206 of the Employee Retirement Income Se-
curity Act of 1974 (as amended by section 105(a)) is 
amended further by adding at the end the following new 
subsection:
‘‘(h) INTEGRATION WITH WORKERS’ COMPENSATION 
AND SIMILAR BENEFITS PRECLUDED.—Benefits under an 
employee pension benefit plan may not vary based on the 
amount of benefits received by a participant or beneficiary 
under an applicable worker’s compensation law, unemploy-
ment compensation law, or disability insurance law, or on 
whether the participant or beneficiary is entitled to such 
benefits.’’. 
SEC. 202. SPOUSAL CONSENT REQUIRED FOR DISTRIBU-
TIONS 
FROM 
DEFINED 
CONTRIBUTION 
PLANS. 
(a) IN GENERAL.—Section 205(b) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1055(b)) is amended to read as follows: 
‘‘(b)(1) This section shall apply to any defined benefit 
plan and to any individual account plan. 
‘‘(2) Notwithstanding paragraph (1), this section 
shall not apply to a plan which the Secretary of the Treas-
ury or his delegate has determined is a plan described in 
section 404(c) of the Internal Revenue Code of 1986 (or 
a continuation thereof) in which participation is substan-
tially limited to individuals who, before January 1, 1976, 
ceased employment covered by the plan.’’.
(b) HARDSHIP DISTRIBUTION.—Section 205 of such 
Act (29 U.S.C. 1055) is amended by adding at the end 
the following new subsection: 
‘‘(m) This section shall not apply to a hardship dis-
tribution under section 401(k)(2)(B)(i)(IV) of the Internal 
Revenue Code of 1986.’’. 
(c) SPECIAL RULE FOR CASH-OUTS.—Section 205(g) 
of such Act (29 U.S.C. 1055(g)) is amended— 
(1) by adjusting the margination of paragraph 
(3) so as to align such paragraph with the 
margination of paragraphs (1) and (2); and 
(2) by adding at the end the following new 
paragraph: 
‘‘(4) SPECIAL RULE FOR DEFINED CONTRIBUTION 
PLANS.— 
‘‘(A) IN
GENERAL.—In the case of an indi-
vidual account plan, notwithstanding paragraph (2), 
if the present value of the qualified joint and sur-
vivor annuity or the qualified preretirement survivor 
annuity exceeds $10,000, the plan shall immediately 
distribute 50 percent of the present value of such 
annuity to each spouse, unless otherwise elected in 
advance by the spouse in writing in accordance with 
such regulations as the Secretary may prescribe. 
Section 211 shall apply with respect to each spouse’s
rights under this paragraph as if such spouse were 
an employee referred to in such section. 
‘‘(B) EXCEPTION.—The plan may distribute a 
different percentage of the present value of an annu-
ity to each spouse if a court order or contractual 
agreement between the spouses provides for such 
different percentage.’’. 
SEC. 203. MODIFICATION OF JOINT AND SURVIVOR ANNU-
ITY REQUIREMENTS. 
(a) OPTION
TO ELECT QUALIFIED ALTERNATIVE 
JOINT AND SURVIVOR ANNUITY FORM OF BENEFIT UPON 
WAIVER OF QUALIFIED JOINT AND SURVIVOR ANNUITY 
FORM OF BENEFIT.— 
(1) IN GENERAL.—Section 205(c)(1)(A) of the 
Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1055(c)(1)(A)) is amended to read as 
follows: 
‘‘(A) under the plan, each participant— 
‘‘(i) may elect at any time during the 
applicable election period to waive the 
qualified joint and survivor annuity form 
of benefit, 
‘‘(ii) may elect at any time during the 
applicable election period to waive the
qualified preretirement survivor annuity 
form of benefit, 
‘‘(iii) may elect at any time during the 
applicable election period, in any case in 
which the qualified joint and survivor an-
nuity form of benefit is not provided by 
reason of a waiver under clause (i), to be 
provided a qualified alternative joint and 
survivor annuity form of benefit, and 
‘‘(iv) may revoke any such election at 
any time during the applicable election pe-
riod, and’’. 
(2) QUALIFIED ALTERNATIVE JOINT AND SUR-
VIVOR ANNUITY DEFINED.—Section 205(d) of such 
Act (29 U.S.C. 1055(d)) is amended— 
(A) by redesignating paragraphs (1) and 
(2) as subparagraphs (A) and (B), respectively; 
(B) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(2)(A) For purposes of this section, the term ‘quali-
fied alternative joint and survivor annuity’ means an an-
nuity— 
‘‘(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 (determined under 
subparagraph (B)) of (and not greater than 100 
percent of) the amount of the annuity which is pay-
able during the joint lives of the participant and the 
spouse, and 
‘‘(ii) which is the actuarial equivalent of a sin-
gle annuity for the life of the participant. 
Such term also includes any annuity form having the ef-
fect of an annuity described in the preceding sentence. 
‘‘(B)(i) For purposes of subparagraph (A)— 
‘‘(I) if the base survivor annuity percent-
age is less than 75 percent, the applicable per-
centage is 75 percent, and 
‘‘(II) if the base survivor annuity percent-
age is equal to at least 75 percent, the applica-
ble percentage is 50 percent. 
‘‘(ii) For purposes of clause (i), the term ‘survivor 
annuity percentage’ means the percentage which the sur-
vivor annuity under the plan’s qualified joint and survivor 
annuity form of benefit bears to the annuity payable dur-
ing the joint lives of the participant and the spouse under 
such form of benefit.’’. 
(b) EXEMPTION IN THE CASE OF PLANS OFFERING 
FULLY SUBSIDIZED QUALIFIED JOINT AND SURVIVOR
ANNUITIES.—Section 205(c)(5) of such Act (29 U.S.C. 
1055(c)(5)) is amended— 
(1) by redesignating subparagraph (B) as sub-
paragraph (C); and 
(2) by inserting after subparagraph (A) the fol-
lowing new subparagraph: 
‘‘(B) The requirements of this subsection shall not 
apply with respect to the qualified alternative joint and 
survivor annuity form of benefit if the plan fully subsidizes 
the costs of the qualified joint and survivor annuity form 
of benefit.’’. 
(c) ILLUSTRATION REQUIREMENT.—Clause (i) of 
section 
205(c)(3)(A) 
of 
such 
Act 
(29 
U.S.C. 
1055(c)(3)(A)) is amended to read as follows: 
‘‘(i) the terms and conditions of the qualified 
joint and survivor annuity form of benefit offered by 
the plan, the terms and conditions of the qualified 
preretirement survivor annuity form of benefit of-
fered by the plan, and the terms and conditions of 
the qualified alternative joint and survivor annuity 
form of benefit offered by the plan, accompanied by 
an illustration of the benefits under each such form 
of benefit for the particular participant and spouse 
and an acknowledgement form to be signed by the 
participant and the spouse that they have read and
considered the illustration before any election is 
made pursuant to clause (i) or (ii) of subsection 
(c)(1)(A).’’. 
(d) RULE OF CONSTRUCTION.—For purposes of sec-
tion 204(g) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1054(g)), a plan shall not be treat-
ed as having decreased the accrued benefit of a participant 
solely by reason of the adoption of a plan amendment 
under which a qualified alternative joint and survivor an-
nuity form of benefit is added to the plan in accordance 
with section 205(c)(1)(A)(ii) of such Act (as amended by 
this section). 
SEC. 204. DIVISION OF PENSION BENEFITS UPON DIVORCE. 
(a) IN GENERAL.—Section 206(d)(3) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1056(d)(3)) is amended by redesignating subpara-
graph (N) as subparagraph (O) and by inserting after 
subparagraph (M) the following new subparagraph: 
‘‘(N) SPECIAL RULES AND PROCEDURES FOR DO-
MESTIC RELATIONS ORDERS NOT SPECIFYING DIVISION 
OF PENSION BENEFITS.— 
‘‘(i) IN GENERAL.—In any case in which— 
‘‘(I) a domestic relations order (including 
an annulment or other order of marital dissolu-
tion) relates to provision of marital property
with respect to a marriage of at least 5 years 
duration between an individual who is a partici-
pant in a pension plan and such individual’s 
former spouse, 
‘‘(II) such order, and all prior orders (if 
any) described in subclause (I) relating to such 
marriage, do not specifically provide that pen-
sion benefits were considered by the parties and 
that no division of such benefits is intended, 
‘‘(III) such order is not a qualified domes-
tic relations order (as determined without re-
gard to this subparagraph) and there is no 
other prior qualified domestic relations order 
issued in connection with the dissolution of the 
marriage to which such order relates, and 
‘‘(IV) the former spouse notifies the plan 
within the period prescribed under clause (vii) 
that the former spouse is entitled to benefits 
under the plan in accordance with the provi-
sions of this subparagraph, 
such domestic relations order shall be treated as a 
qualified domestic relations order for purposes of 
this paragraph. 
‘‘(ii) AMOUNT OF BENEFIT.—Any domestic re-
lations order treated as a qualified domestic rela-
tions order under clause (i) shall be treated as speci-
fying that the former spouse is entitled to the appli-
cable percentage of the marital share of the partici-
pant’s accrued benefit. 
‘‘(iii) MARITAL SHARE.—For purposes of clause 
(ii), the marital share of a participant’s accrued ben-
efit is an amount equal to the product of— 
‘‘(I) such benefit as of the date of the first 
payment under the plan (to the extent such ac-
crued benefit is vested on the date of the dis-
solution of the marriage or any later date), and 
‘‘(II) a fraction, the numerator of which is 
the period of participation by the participant 
under the plan starting with the date of mar-
riage and ending with the date of dissolution of 
marriage, and the denominator of which is the 
total period of participation by the participant 
under the plan. 
‘‘(iv) APPLICABLE PERCENTAGE.—For purposes 
of clause (ii), the applicable percentage is— 
‘‘(I) except as provided in subclause (II), 
50 percent, and 
‘‘(II) in the case of a participant who fails 
to provide the plan with notice of a domestic re-
lations order within the time prescribed under 
clause (v), 67 percent. 
‘‘(v) NOTICE BY PARTICIPANT.—Each partici-
pant in a pension plan shall, within 60 days after 
the dissolution of the marriage of the participant— 
‘‘(I) notify the plan administrator of the 
plan of such dissolution, and 
‘‘(II) provide to the plan administrator a 
copy of the domestic relations order (including 
an annulment or other order of marital dissolu-
tion) providing for such dissolution and the last 
known address of the participant’s former 
spouse. 
‘‘(vi) NOTICE BY PLAN ADMINISTRATOR.—Each 
plan administrator receiving notice under clause (v) 
shall promptly notify the former spouse of a partici-
pant of such spouse’s rights under this subpara-
graph, including the time period within which such 
spouse is required to notify the plan of the spouse’s 
intention to claim rights under this subparagraph. 
‘‘(vii) NOTICE BY FORMER SPOUSE.—A former 
spouse may notify the plan administrator of such 
spouse’s intent to claim rights under this subpara-
graph at any time before the last day of the 1-year 
period following receipt of notice under clause (vi).
‘‘(viii) COORDINATION
WITH
PLAN
PROCE-
DURES.—The determination under subparagraph 
(G)(i)(II) with respect to a domestic relations order 
to which this subparagraph applies shall be made 
within a reasonable period of time after the plan ad-
ministrator receives the notice described in clause 
(vii). 
‘‘(ix) INTERPRETATION AS QUALIFIED DOMES-
TIC RELATIONS ORDER.—Each plan shall establish 
reasonable rules for determining how any such 
deemed domestic relations order is to be interpreted 
under the plan so as to constitute a qualified domes-
tic relations order that satisfies subparagraphs (C) 
through (E) (and a copy of such rules shall be pro-
vided to such former spouse promptly after delivery 
of the divorce decree). Such rules— 
‘‘(I) may delay the effect of such an order 
until the earlier of the date the participant is 
fully vested or has terminated employment, 
‘‘(II) may allow distribution to the former 
spouse to be made immediately, 
‘‘(III) shall permit the former spouse to be 
paid not later than the earliest retirement age 
under the plan or the participant’s death,
‘‘(IV) may require the submitter of the di-
vorce decree to present a marriage certificate or 
other evidence of the marriage date to assist in 
benefit calculations, and 
‘‘(V) may conform to the rules applicable 
to qualified domestic relations orders regarding 
form or type of benefit.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to notifications made 
by former spouses pursuant to section 206(d)(3)(N)(vii) 
of the Employee Retirement Income Security Act of 1974 
(added by this section) after December 31, 2005. 
SEC. 205. PERIODS OF FAMILY AND MEDICAL LEAVE 
TREATED AS HOURS OF SERVICE FOR PEN-
SION PARTICIPATION AND VESTING. 
(a) PARTICIPATION.— 
(1) IN
GENERAL.—Paragraph (3) of section 
202(a) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1052(a)(3)) is amended by 
adding at the end the following new subparagraph: 
‘‘(E)(i) For purposes of this subsection, in the case 
of an individual who is absent from work on leave required 
to be given to such individual under the Family and Med-
ical Leave Act of 1993, the plan shall treat as hours of 
service—
‘‘(I) the hours of service which otherwise would 
normally have been credited to such individual but 
for such absence, or 
‘‘(II) in any case in which the plan is unable to 
determine the hours described in subclause (I), 8 
hours of service per day of absence. 
‘‘(ii) The hours described in clause (i) shall be treated 
as hours of service as provided in this subparagraph— 
‘‘(I) only in the year in which the absence from 
work begins, if section 203(b)(2)(E)(ii)(I) requires 
hours to be credited to the year in which the absence 
from work begins, or 
‘‘(II) in any other case, in the immediately fol-
lowing year.’’. 
(2) COORDINATION WITH TREATMENT OF MA-
TERNITY AND PATERNITY ABSENCES UNDER BREAK 
IN SERVICE RULES.—Subparagraph (A) of section 
202(b)(5) of such Act (29 U.S.C. 1052(b)(5)(A)) is 
amended by adding at the end the following new 
sentence: ‘‘The preceding sentence shall apply to an 
absence from work only if no part of such absence 
is required to be given under the Family and Med-
ical Leave Act of 1993.’’. 
(b) VESTING.—
(1) IN
GENERAL.—Paragraph (2) of section 
203(b) of such Act (29 U.S.C. 1053(b)(2)) is 
amended by adding at the end the following new 
subparagraph: 
‘‘(E)(i) For purposes of this subsection, in the case 
of an individual who is absent from work on leave required 
to be given to such individual under the Family and Med-
ical Leave Act of 1993, the plan shall treat as hours of 
service— 
‘‘(I) the hours of service which otherwise would 
normally have been credited to such individual but 
for such absence, or 
‘‘(II) in any case in which the plan is unable to 
determine the hours described in subclause (I), 8 
hours of service per day of absence. 
‘‘(ii) The hours described in clause (i) shall be treated 
as hours of service as provided in this subparagraph— 
‘‘(I) only in the year in which the absence from 
work begins, if the participant’s rights in his ac-
crued benefit derived from employer contributions 
are to any extent not nonforfeitable and the partici-
pant would have a year of service solely because the 
period of absence is treated as hours of service as 
provided in clause (i); or
‘‘(II) in any other case, in the immediately fol-
lowing year.’’. 
(2) COORDINATION WITH TREATMENT OF MA-
TERNITY AND PATERNITY ABSENCES UNDER BREAK 
IN
SERVICE
RULES.—Clause 
(i) 
of 
section 
203(b)(3)(E) 
of 
such 
Act 
(29 
U.S.C. 
1053(b)(3)(E)(i)) is amended by adding at the end 
the following new sentence: ‘‘The preceding sentence 
shall apply to an absence from work only if no part 
of such absence is required to be given under the 
Family and Medical Leave Act of 1993.’’. 
(c) APPLICATION TO CURRENT EMPLOYEES.—The 
amendments made by this section shall not apply to any 
employee who does not have at least 1 hour of service in 
any plan year beginning after December 31, 2005. 
SEC. 206. RIGHT OF SPOUSE TO KNOW DISTRIBUTION IN-
FORMATION. 
Paragraph (3) of section 205(c) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 
1055(c)(3)) is amended by adding at the end the following 
new subparagraph: 
‘‘(C) At the time a plan provides a participant with 
a written explanation under subparagraph (A) or (B), 
such plan shall provide a copy of such explanation to such 
participant’s spouse. If the last known address of the
spouse is the same as the last known address of the partic-
ipant, the requirement of the preceding sentence shall be 
treated as met if the copy referred to in the preceding 
sentence is included in a single mailing made to such ad-
dress and addressed to both such participant and 
spouse.’’. 
SEC. 207. REPEAL OF REDUCTION IN MILITARY SURVIVOR 
BENEFIT PLAN ANNUITIES AT AGE 62. 
(a) COMPUTATION
OF ANNUITY
FOR
A SPOUSE, 
FORMER SPOUSE, OR CHILD.—Subsection (a) of section 
1451 of title 10, United States Code, is amended— 
(1) in paragraph (1), by striking ‘‘shall be de-
termined as follows:’’ and all that follows and insert-
ing the following: ‘‘shall be the amount equal to 55 
percent of the base amount.’’; 
(2) in paragraph (2), by striking ‘‘shall be de-
termined as follows:’’ and all that follows and insert-
ing the following: ‘‘shall be the amount equal to a 
percentage of the base amount that is less than 55 
percent and is determined under subsection (f).’’. 
(b) ANNUITIES FOR SURVIVORS OF CERTAIN PER-
SONS DYING DURING A PERIOD OF SPECIAL ELIGIBILITY 
FOR SBP.—Subsection (c)(1) of such section is amended 
by striking ‘‘shall be determined as follows:’’ and all that 
follows and inserting the following: ‘‘shall be the amount
equal to 55 percent of the retired pay to which the member 
or former member would have been entitled if the member 
or former member had been entitled to that pay based 
upon his years of active service when he died determined 
as follows: 
‘‘(A) In the case of an annuity provided under 
section 1448(d) of this title (other than in a case 
covered by subparagraph (B)), such retired pay shall 
be computed as if the member had been retired 
under section 1201 of this title on the date of the 
member’s death with a disability rated as total. 
‘‘(B) In the case of an annuity provided under 
section 1448(d)(1)(A) of this title by reason of the 
death of a member not in line of duty, such retired 
pay shall be computed based upon the member’s 
years of active service when he died. 
‘‘(C) In the case of an annuity provided under 
section 1448(f) of this title, such retired pay shall be 
computed based upon the member or former mem-
ber’s years of active service when he died computed 
under section 12733 of this title.’’. 
(c) REPEAL OF REQUIREMENT FOR REDUCTION.— 
Such section is further amended by striking subsection 
(d).
(d) REPEAL
OF
UNNECESSARY
SUPPLEMENTAL 
SBP.—(1) Subchapter III of chapter 73 of title 10, 
United States Code, is repealed. 
(2) The table of subchapters at the beginning of such 
chapter is amended by striking the item relating to sub-
chapter III. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on October 1, 2005, and shall 
apply with respect to annuity payments for months begin-
ning on or after that date. 
SEC. 208. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS, 
AND FORMER SPOUSES OF FEDERAL EM-
PLOYEES WHO DIE BEFORE ATTAINING AGE 
FOR 
DEFERRED 
ANNUITY 
UNDER 
CIVIL 
SERVICE RETIREMENT SYSTEM. 
(a) BENEFITS FOR WIDOW OR WIDOWER.—Section 
8341(f) of title 5, United States Code, is amended— 
(1) in the matter preceding paragraph (1)— 
(A) by inserting ‘‘a former employee sepa-
rated from the service with title to deferred an-
nuity from the Fund dies before having estab-
lished a valid claim for annuity and is survived 
by a spouse, or if’’ before ‘‘a Member’’; and 
(B) by inserting ‘‘of such former employee 
or Member’’ after ‘‘the surviving spouse’’;
(2) in paragraph (1)— 
(A) by inserting ‘‘former employee or’’ be-
fore ‘‘Member commencing’’; and 
(B) by inserting ‘‘former employee or’’ be-
fore ‘‘Member dies’’; and 
(3) in the undesignated sentence following para-
graph (2)— 
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘former employee or’’ before 
‘‘Member’’; and 
(B) in subparagraph (B), by inserting 
‘‘former employee or’’ before ‘‘Member’’. 
(b) BENEFITS
FOR
FORMER
SPOUSE.—Section 
8341(h) of title 5, United States Code, is amended— 
(1) in paragraph (1), by inserting ‘‘former em-
ployee entitled to a deferred annuity under section 
8338(a) of this title,’’ after ‘‘employee, Member, an-
nuitant,’’; and 
(2) in paragraph (2)— 
(A) in subparagraph (A)(ii) by striking ‘‘or 
annuitant,’’ and inserting ‘‘annuitant, or former 
employee’’; and 
(B) in subparagraph (B)(iii) by inserting 
‘‘former employee or’’ before ‘‘Member’’.
(c) PROTECTION OF SURVIVOR BENEFIT RIGHTS.— 
Section 8339(j)(3) of title 5, United States Code, is 
amended by adding at the end the following: ‘‘The Office 
shall provide by regulation for the application of this sub-
section to the widow, widower, or surviving former spouse 
of a former employee who dies after having separated from 
the service with title to a deferred annuity under section 
8338(a) but before having established a valid claim for 
annuity.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act and shall apply only in the case of a former 
employee who dies on or after such date. 
SEC. 209. ORDER OF PRECEDENCE FOR DISPOSITION OF 
AMOUNTS REMAINING IN THE THRIFT SAV-
INGS ACCOUNT OF A FEDERAL EMPLOYEE 
(OR FORMER EMPLOYEE) WHO DIES BEFORE 
MAKING AN EFFECTIVE ELECTION CONTROL-
LING SUCH DISPOSITION. 
(a) IN GENERAL.—Section 8433(e) of title 5, United 
States Code, is amended— 
(1) by striking ‘‘(e)’’ and inserting ‘‘(e)(1)’’; 
(2) by striking all that follows ‘‘paid’’ and in-
serting ‘‘in accordance with paragraph (2).’’; and 
(3) by adding at the end the following:
‘‘(2) An amount under paragraph (1) shall be paid 
in a manner consistent with the provisions of section 
8424(d), except that, in applying the order of precedence 
under such provisions— 
‘‘(A) the widow or widower of the decedent shall 
be the first party entitled to receive (instead of any 
designated beneficiary); and 
‘‘(B) if there is no widow or widower, the party 
next entitled to receive shall be the beneficiary or 
beneficiaries designated by the employee or Member 
(or former employee or Member) in accordance with 
the procedures that would otherwise normally apply, 
subject to such additional conditions as the Execu-
tive Director shall by regulation prescribe based on 
section 205(c)(2) of the Employee Retirement In-
come Security Act of 1974 (relating to spousal con-
sent requirements).’’. 
(b) EFFECTIVE DATE.—This section and the amend-
ment made by this section shall take effect on the 90th 
day after the date of the enactment of this Act, and shall 
apply in the case of any individual who dies on or after 
such 90th day.
SEC. 210. AMENDMENTS RELATING TO EFFECTIVE DATE 
PROVISION OF THE CIVIL SERVICE RETIRE-
MENT SPOUSE EQUITY ACT OF 1984. 
(a) ELIMINATION
OF CERTAIN BARS
TO ELIGI-
BILITY.—Section 4(b) of the Civil Service Retirement 
Spouse Equity Act of 1984 (5 U.S.C. 8341 note) is 
amended— 
(1) in paragraph (1)(B)(i), by striking ‘‘after 
September 14, 1978, and’’; and 
(2) by repealing paragraph (4). 
(b) NEW DEADLINE FOR APPLICATIONS.— 
(1) IN GENERAL.—Section 4(b)(1)(B)(iv) of the 
Civil Service Retirement Spouse Equity Act of 1984 
is amended by striking ‘‘May 7, 1989’’ and inserting 
‘‘May 7th of the year following the year in which the 
Retirement Enhancement Act of 2004 is enacted’’. 
(2) AUTHORITY TO WAIVE DEADLINE.—Section 
4(b) of the Civil Service Retirement Spouse Equity 
Act of 1984 is amended by adding at the end the 
following: 
‘‘(6)(A) The Director of the Office of Personnel Man-
agement may waive the deadline under paragraph 
(1)(B)(iv) in any case in which the Director determines 
that the circumstances so warrant. 
‘‘(B) In making a determination under this para-
graph, one of the factors which may be taken into account
is whether the individual involved has previously submitted 
a timely application under this section— 
‘‘(i) which was denied; but 
‘‘(ii) which, based on criteria applied under this 
section pursuant to changes in law subsequent to the 
denial, would have been approved.’’. 
SEC. 211. 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 
entitled to an annuity under subsection (a)(1) and 
(B)’’; and 
(2) in subsection (e)(5), by striking ‘‘or di-
vorced 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 
enactment of this Act.
SEC. 212. 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 
incident to any such court decree shall not be terminated 
upon 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 
enactment of this Act. 
TITLE III—SIMPLIFIED 
INVESTMENT STANDARDS 
SEC. 301. EXEMPTION FROM PROHIBITED TRANSACTION 
RULES FOR CERTAIN ABORTED EMERGENT 
TRANSACTIONS. 
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—Section 408 of the
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1108) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(g)(1) Pursuant to regulations issued by the Sec-
retary, in the case of a qualifying transaction between an 
employee benefit plan and an eligible person which would, 
but for this subsection, be in violation of a restriction im-
posed by section 406 or 407(a), if— 
‘‘(A) the eligible person submits to the Sec-
retary, not later than 60 days after the date of the 
transaction, an application for an exemption under 
subsection (a) from such restriction in the case of 
such transaction, 
‘‘(B) the Secretary determines not to grant the 
exemption, and 
‘‘(C) the transaction is reversed within 60 days 
after the date of the Secretary’s determination, 
then the transaction shall be exempted under subsection 
(a) from treatment as a violation of such restriction. 
‘‘(2) For purposes of this subsection— 
‘‘(A) The term ‘qualifying transaction’ means, 
in connection with an eligible person, a transaction 
between an employee benefit plan and such eligible 
person constituting the purchase or sale of a finan-
cial product, if—