I 
114TH CONGRESS 
1ST SESSION H. R. 3922 
To amend the Internal Revenue Code of 1986 and the Employee Retirement 
Income and Security Act of 1974 to provide for a best interest standard 
for advice fiduciaries, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 4, 2015 
Mr. KELLY of Pennsylvania (for himself and Mr. SAM JOHNSON of Texas) in-
troduced the following bill; which was referred to the Committee on Edu-
cation and the Workforce, and in addition to the Committee on Ways and 
Means, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 and the Em-
ployee Retirement Income and Security Act of 1974 to 
provide for a best interest standard for advice fiduciaries, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Retirement Choice 
Protection Act of 2015’’. 
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SEC. 2. TRANSFER TO SECRETARY OF THE TREASURY OF 
AUTHORITIES REGARDING INDIVIDUAL RE-
TIREMENT PLANS. 
(a) IN GENERAL.—Section 102 of Reorganization 
Plan No. 4 of 1978 (ratified and affirmed as law by Public 
Law 98–532 (98 Stat. 2705)) is amended— 
(1) in subsection (a)— 
(A) by striking ‘‘and’’ at the end of clause 
(ii); 
(B) by striking ‘‘and’’ at the end of clause 
(iii); and 
(C) by inserting after clause (iii) the fol-
lowing: 
‘‘(iv) regulations, rulings, opinions, 
and exemptions relating to individual re-
tirement accounts described in section 
408(a) of the Code and individual retire-
ment annuities described in section 408(b) 
of the Code, including simplified employee 
pensions under section 408(k) of the Code 
and simple retirement accounts under sec-
tion 408(p) of the Code; and 
‘‘(v) regulations described in section 
103(b) of this Plan;’’; and 
(2) by adding at the end the following new 
flush sentence: ‘‘The Secretary of the Treasury shall 
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consult with the Securities and Exchange Commis-
sion in prescribing regulations, rulings, opinions, 
and exemptions under subsection (a)(iv) that provide 
guidance of general application as to the professional 
standards of care (whether involving fiduciary, suit-
ability, or other standards) owed by brokers and in-
vestment advisors to owners and account holders of 
accounts and annuities described in such sub-
section.’’. 
(b) JOINT AUTHORITY.—Section 103 of such Plan is 
amended— 
(1) by striking ‘‘In the case of’’ and inserting: 
‘‘(a) In the case of’’; and 
(2) by adding at the end the following: 
‘‘(b)(1) The Secretary of the Treasury and the Sec-
retary of Labor shall have joint authority to issue regula-
tions described in this subsection, and any such regula-
tions shall be issued jointly by such Secretaries. 
‘‘(2) A regulation is described in this subsection if 
(i) the regulation is not described in clause (i), (ii), (iii), 
or (iv) of section 102(a) of this Plan and (ii) defines or 
interprets a term or requirement that is included in sec-
tion 4975 of the Code or section 406 of ERISA. The de-
termination of whether any regulation is described in this 
subsection shall be made without regard to whether any 
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such term or requirement is also used or defined in any 
other provision of the Code or ERISA.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to regulations, rulings, opin-
ions, and exemptions which have not been finalized 
as of July 8, 2013. 
(2) TRANSITION.—Any final regulation, ruling, 
opinion, or exemption described in section 102(a)(iv) 
or 103(b) of Reorganization Plan No. 4 of 1978 (as 
added by the amendments made by this section) 
which was issued by the Secretary of Labor before 
July 9, 2013, shall apply until such time as such 
regulation, ruling, opinion, or exemption is revoked 
or modified pursuant to such amendments. 
SEC. 3. BEST INTEREST STANDARD FOR ADVICE FIDU-
CIARIES. 
(a) AMENDMENTS
TO
THE INTERNAL REVENUE 
CODE OF 1986.— 
(1) BEST INTEREST STANDARD FOR ADVICE FI-
DUCIARIES
REGARDING
IRAS
AND
NON-ERISA 
PLANS.—Section 4975(c) of the Internal Revenue 
Code of 1986 is amended by adding the following 
new paragraph (7): 
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‘‘(7) BEST INTEREST RECOMMENDATION RULE 
FOR ADVICE FIDUCIARIES TO IRAS AND NON-ERISA 
PLANS.— 
‘‘(A) BEST INTEREST PROHIBITED TRANS-
ACTION.—For purposes of this section and with 
respect to plans not subject to section 404 of 
title I, subtitle B of the Employee Retirement 
Income Security Act of 1974 (relating to fidu-
ciary obligations), the term ‘prohibited trans-
action’ includes the receipt of any consideration 
for his own personal account by any disqualified 
person who is a fiduciary by reason of providing 
investment advice (within the meaning of sec-
tion 4975(e)(3)(B)) from the plan or any party 
in connection with a transaction involving the 
investment of income or assets of the plan re-
sulting from the recommendation of such per-
son, unless such investment advice constitutes a 
best interest recommendation. This paragraph 
shall not apply to any transaction unless such 
transaction is described in subparagraph (E) or 
(F) of subsection (c)(1) (without regard to any 
exemption from the prohibitions of subsection 
(c)). 
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‘‘(B) 
BEST
INTEREST
RECOMMENDA-
TION.— 
‘‘(i) For purposes of this paragraph, 
the term ‘best interest recommendation’ 
means a recommendation provided by a 
person acting with the care, skill, pru-
dence, 
and 
diligence 
under 
the 
cir-
cumstances then prevailing that a prudent 
person would exercise based on the infor-
mation obtained through the reasonable 
diligence of the person regarding factors 
such as the advice recipient’s age, and any 
other information that the advice recipient 
discloses to the person in connection with 
receiving such recommendation, where the 
person does not subordinate the interests 
of the plan or advice recipient, as applica-
ble, to its own. 
‘‘(ii) Best interest recommendations 
may 
include, 
without 
limitation, 
rec-
ommendations that— 
‘‘(I) are based on a limited range 
of products, providers or offerings (in-
cluding recommendations that include, 
or are limited only to, proprietary 
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products and providers), where such 
limits are clearly disclosed to the ad-
vice recipient at any time prior to a 
transaction based on the recommenda-
tion, or 
‘‘(II) may result in variable com-
pensation to the person (or its affil-
iate), such as transaction, services, 
placement, or other types of com-
pensation that differ by product or 
service, where the receipt of such com-
pensation is clearly disclosed to the 
advice recipient. 
‘‘(iii) For purposes of this paragraph, 
clear disclosure of variable compensation 
means notification at any time prior to a 
transaction based on the person’s rec-
ommendation, in a manner calculated to be 
understood by the average individual, of 
the following information, which can be 
provided in one or more statements or doc-
uments: 
‘‘(I) The person (or its affiliate) 
may receive varying amounts of fees 
or other compensation or consider-
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ation with respect to recommended 
transactions. 
‘‘(II) The amount of any fee or 
other compensation or consideration 
that is directly payable to the person 
(or its affiliate) from the plan or ad-
vice recipient with respect to rec-
ommended transactions, provided that 
any such amount may be expressed in 
terms of a monetary amount, formula, 
percentage 
of 
assets, 
per 
capita 
charge, or estimate or range of such 
compensation or consideration. 
‘‘(III) A description of the types 
and ranges of indirect compensation 
that may be paid to the person (or its 
affiliate) by any third party in connec-
tion with recommended transactions, 
provided that any such ranges may be 
expressed in terms of a monetary 
amount, formula, percentage of as-
sets, per capita charge, or estimate of 
such compensation or consideration. 
‘‘(IV) Upon the advice recipient’s 
request prior to the transaction, a dis-
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closure of the specific amounts of 
compensation described in subclause 
(II) or (III) that the person will re-
ceive in connection with the particular 
transaction, provided that any such 
amounts may be expressed in terms of 
a monetary amount, formula, percent-
age of assets, per capita charge, or es-
timate of such compensation or con-
sideration. 
No recommendation will fail to be a best 
interest recommendation solely because the 
person, acting in good faith and with rea-
sonable diligence, makes an error or omis-
sion in disclosing the information specified 
in this subparagraph, provided that the 
person discloses the correct information to 
the advice recipient as soon as practicable, 
but not later than 30 days from the date 
on which the person knows of such error or 
omission. 
‘‘(C) CORRECTION.—For purposes of this 
section and notwithstanding subsection (f)(5) to 
the contrary, the terms ‘correction’ and ‘cor-
rect’ mean, with respect to this prohibited 
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transaction only, the payment to, or reimburse-
ment of, actual damages of the plan resulting 
directly from the plan’s reliance on such invest-
ment advice, if any, that have not otherwise 
been paid or reimbursed to the plan, including 
payments and reimbursements made pursuant 
to subsection (f)(5). Any such damages shall be 
determined in a manner consistent with the 
damages that would be payable with respect to 
such prohibited transaction under the Employee 
Retirement Income Security Act of 1974. 
‘‘(D) 
CALCULATION
OF
AMOUNT
IN-
VOLVED.—For purposes of this section and not-
withstanding subsection (f)(4) to the contrary, 
the term ‘amount involved’ means, with respect 
to this prohibited transaction only, the amount 
of such consideration received by the disquali-
fied person with respect to the transaction that 
has not otherwise been paid or reimbursed to 
the plan, including payments and reimburse-
ments made pursuant to subsection (f)(5).’’. 
(2) MODIFICATION
OF
EXISTING
STATUTORY 
EXEMPTIONS TO APPLY THE BEST INTEREST STAND-
ARD TO ADVICE FIDUCIARIES OF IRAS AND NON- 
ERISA PLANS THROUGH SECTION 4975(c)(7).—Sec-
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tion 4975(d) of such Code is amended by deleting 
the language preceding paragraph (1) and replacing 
it with the following: 
‘‘(d) EXEMPTIONS.—Except as provided in sub-
section (f)(6), the prohibitions provided in subsection 
(c)(1) shall not apply to—’’. 
(3) DEFINITION
OF
INVESTMENT
ADVICE.— 
Subparagraph (B) of subsection 4975(e)(3) of such 
Code is amended to read as follows: 
‘‘(B) renders investment advice for a fee or 
other compensation, direct or indirect, with re-
spect to moneys or other property of such plan, 
or has any authority or responsibility to do so. 
Investment advice means a recommendation— 
‘‘(i) as to the advisability of acquiring, 
holding, disposing, or exchanging securities 
or other investment property, including a 
recommendation to take a distribution of 
benefits or a recommendation as to the in-
vestment of securities or other property to 
be rolled over or otherwise distributed from 
the plan; 
‘‘(ii) as to the management of securi-
ties or other property, including rec-
ommendations as to the management of se-
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curities or other property to be rolled over 
or otherwise distributed from the plan; or 
‘‘(iii) of a person who is also going to 
receive a fee or other compensation for 
providing any of the types of advice de-
scribed in clause (i) or (ii); 
Provided that, such recommendation is rendered 
pursuant to a mutual agreement, arrangement, 
or understanding between such person and the 
plan, plan fiduciary, or advice recipient that 
such advice is individualized to the plan and 
such plan, fiduciary, or advice recipient intends 
to materially rely on such recommendation in 
making investment or management decisions 
with respect to moneys, securities, or other in-
vestment property of the plan. A person shall 
not be considered to be providing investment 
advice if such recommendation is provided in 
conjunction with full and fair disclosure to the 
recipient, which can be written or verbal, that 
the person is providing or making the rec-
ommendation of services or property in its mar-
keting, sales, or educational capacity, and that 
the person is not undertaking to provide impar-
tial investment advice or to give advice as a fi-
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duciary (within the meaning of this subpara-
graph). In addition, a person shall not be a fi-
duciary under this subparagraph with respect to 
the terms and conditions of engagement of the 
person, including the scope of the obligation to 
provide advice, the products or services with re-
spect to which advice is provided and the com-
pensation payable to the person, provided the 
recipient has consented to the terms and condi-
tions of the engagement after disclosure of all 
material aspects of such terms and conditions, 
including fee disclosure that satisfies subclauses 
(I), (II), and (III) of paragraph (7)(B)(i). Ex-
cept as otherwise provided in subparagraph (D) 
and notwithstanding subparagraph (E), invest-
ment advice shall include a recommendation 
under this subparagraph provided pursuant to a 
written acknowledgment of fiduciary status with 
respect to the provision of such recommenda-
tion. For purposes of this subparagraph, ‘prop-
erty’ means moneys and investment property, 
and ‘management of securities’ means exer-
cising rights or obligations with respect to secu-
rities or other property,’’. 
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(4) DEFINITION
OF
INVESTMENT
ADVICE.— 
Section 4975(e)(3) of such Code is amended by 
striking the period at the end of subparagraph (C) 
and inserting a comma and by adding the following 
new subparagraphs (D) and (E): 
‘‘(D) The extent of a fiduciary’s obliga-
tions as such can be defined and limited pursu-
ant to a mutual agreement, arrangement, or 
understanding between the person and the 
party engaging the person as a fiduciary to the 
plan. Such limitations can include limits on 
scope, timing, and responsibility to provide on-
going monitoring or advice services. 
‘‘(E) A person shall not be deemed to be 
a fiduciary on account of section 4975(e)(3)(B) 
if such person meets one or more of the fol-
lowing: 
‘‘(i) COUNTERPARTIES AND SERVICES 
PROVIDERS.—In such person’s capacity as 
a counterparty, service provider, or rep-
resentative thereof, the person provides ad-
vice to a plan fiduciary who is independent 
of such person and who is independent of 
the plan sponsor, with respect to an arm’s- 
length service arrangement, sale, purchase, 
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loan, or bilateral contract between the plan 
and person, each a ‘transaction’ for pur-
poses of this subclause, if, prior to entering 
into the transaction, the plan fiduciary 
represents that it understands that the 
person has a financial interest in the mat-
ter, and that the person is not undertaking 
to provide impartial financial advice or to 
give advice as a fiduciary (within the 
meaning of this paragraph); provided such 
person has not acknowledged in writing 
that it is acting as a fiduciary (within the 
meaning of this paragraph) with respect to 
the transaction. 
‘‘(ii) SWAP TRANSACTIONS.—The per-
son is a counterparty, service provider or 
representative thereof in connection with a 
swap or security-based swap, as defined in 
section 1(a) of the Commodity Exchange 
Act (7 U.S.C. 1(a)) and section 3(a) of the 
Securities 
Exchange 
Act 
(15 
U.S.C. 
78c(a)), if: the plan is represented by a fi-
duciary independent of the person; the per-
son is a swap clearing firm or other service 
provider in relation to a swap, swap dealer, 
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security-based swap dealer, major swap 
participant, or major security-based swap 
participant; the person (if a swap dealer, 
security-based swap dealer, clearing firm, 
or other similar service provider) is not 
acting as an advisor to the plan (within the 
meaning of section 4s(h) of the Commodity 
Exchange Act or section 15F(h) of the Se-
curities Exchange Act of 1934) in connec-
tion with the transaction; and in advance 
of providing any recommendations with re-
spect to the transaction, the person obtains 
a written representation from the inde-
pendent plan fiduciary, that the fiduciary 
will not rely on recommendations provided 
by the person. 
‘‘(iii) EMPLOYEES.—In his or her ca-
pacity as an employee of any employer or 
employee organization sponsoring the plan 
or an affiliate of such plan sponsor, the 
person provides the advice (directly or indi-
rectly) to the plan, plan fiduciary, partici-
pant, or beneficiary, and he or she receives 
no fee or other compensation, direct or in-
direct, in connection with the advice be-
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yond the employee’s normal compensation 
for work performed for the employer or 
employee organization or an affiliate. In 
such cases, such an employee is not ren-
dering investment advice for a fee or other 
compensation. No inference is intended 
with respect to whether any other person 
shall be treated as rendering investment 
advice for a fee or other compensation. 
‘‘(iv) PLATFORM
PROVIDERS.—The 
person merely markets and makes available 
to a plan (including its participants, bene-
ficiaries, and fiduciaries (which includes an 
owner of an individual retirement plan (as 
defined in section 7701(a)(37)))), without 
regard to the individualized needs of the 
plan, its participants, or beneficiaries, se-
curities or other property through a plat-
form or similar mechanism (which may 
consist of or include one or more annuity 
contracts) from which a plan fiduciary may 
select or monitor investment alternatives, 
including qualified default investment al-
ternatives, into which plan participants or 
beneficiaries may direct the investment of 
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assets held in, or contributed to, their indi-
vidual accounts, if the person discloses in 
writing to the plan fiduciary that the per-
son is not undertaking to provide impartial 
investment advice or to give advice as a fi-
duciary (within the meaning of this para-
graph) when establishing or maintaining 
the platform. 
‘‘(v) SELECTION AND MONITORING AS-
SISTANCE.—The person merely identifies 
investment alternatives that meet objective 
criteria specified by the plan fiduciary (in-
cluding an owner of an individual retire-
ment 
plan 
(as 
defined 
in 
section 
7701(a)(37))), participant, or beneficiary 
(e.g., stated parameters concerning ex-
pense ratios, size of fund, type of asset, or 
credit quality); or merely provides objective 
financial data and comparisons with inde-
pendent benchmarks to the plan fiduciary, 
participant or beneficiary. 
‘‘(vi) FINANCIAL REPORTS AND VALU-
ATIONS.—The person provides or reports 
valuation information, but does not rep-
resent in writing that it is undertaking to 
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provide such valuation information as a fi-
duciary (within the meaning of this sub-
section). 
‘‘(vii) EDUCATION.—The person pro-
vides the information— 
‘‘(I) described in Department of 
Labor Interpretive Bulletin 96–1 (29 
C.F.R. 2509.96–1, as in effect on 
January 1, 2015); 
‘‘(II) described in Department of 
Labor Interpretive Bulletin 96–1 (29 
C.F.R. 2509.96–1, as in effect on 
January 1, 2015) but for the fact that 
such education is provided to a plan 
or plan fiduciary; 
‘‘(III) described in Department 
of Labor Interpretive Bulletin 96–1 
(29 C.F.R. 2509.96–1, as in effect on 
January 1, 2015) but for the fact that 
such education is provided to an 
owner of an individual retirement plan 
(as defined in section 7701(a)(37)); 
‘‘(IV) to participants and bene-
ficiaries regarding the factors to con-
sider in deciding whether to elect to 
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receive a distribution from a plan or 
an individual retirement plan (as de-
fined in section 7701(a)(37)) and 
whether to roll over such distribution 
to a plan or an individual retirement 
plan 
(as 
defined 
in 
section 
7701(a)(37)); such education can in-
clude examples of different distribu-
tion and rollover alternatives, so long 
as all material facts and assumptions 
on which the examples are based ac-
company the examples; or 
‘‘(V) any additional information 
treated as education by the Secretary 
of Labor.’’. 
(5) 
EXEMPTION
TO
PRESERVE
INVESTOR 
CHOICE.—Section 4975(d) of such Code is amended 
by adding at the end thereof the following new para-
graph: 
‘‘(24) with respect to transactions described in 
section 4975(c)(1) (A)–(F), any transaction or serv-
ice in connection with the provision of investment 
advice described in section 4975(e)(3)(B) if the con-
ditions under subparagraphs (A), (B), and (C) are 
satisfied: 
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uct or service, where the receipt of such 
compensation is clearly disclosed to the ad-
vice recipient. 
‘‘(D) For purposes of this paragraph, clear 
disclosure of variable compensation means noti-
fication at any time prior to a transaction based 
on the person’s recommendation, in a manner 
calculated to be understood by the average indi-
vidual, of the following information, which can 
be provided in one or more statements or docu-
ments: 
‘‘(i) The person (or its affiliate) may 
receive varying amounts of fees or other 
compensation or consideration with respect 
to recommended transactions. 
‘‘(ii) The amount of any fee or other 
compensation or consideration that is di-
rectly payable to the person (or its affil-
iate) from the plan or advice recipient with 
respect to recommended transactions, pro-
vided that any such amount may be ex-
pressed in terms of a monetary amount, 
formula, percentage of assets, per capita 
charge, or estimate or range of such com-
pensation or consideration. 
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‘‘(iii) A description of the types and 
ranges of indirect compensation that may 
be paid to the person (or its affiliate) by 
any third party in connection with the rec-
ommended transaction, provided that any 
such range may be expressed in terms of 
a monetary amount, formula, percentage of 
assets, per capita charge or estimate of 
such compensation or consideration. 
‘‘(iv) Upon the advice recipient’s re-
quest prior to the transaction, a disclosure 
of the specific amounts of compensation 
described in clause (ii) or (iii) that the per-
son will receive in connection with the par-
ticular transaction, provided that any such 
amounts may be expressed in terms of a 
monetary amount, formula, percentage of 
assets, per capita charge, or estimate of 
such compensation or consideration. 
The disclosure requirements described in this 
subparagraph will not fail to be met solely be-
cause the person, acting in good faith and with 
reasonable diligence, makes an error or omis-
sion in disclosing the information specified in 
this subsection, provided that the person dis-
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closes the correct information to the advice re-
cipient as soon as practicable, but not later 
than 30 days from the date on which the person 
knows of such error or omission.’’. 
(6) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply on or after the 1st day 
of the 36th month after the date of the enactment 
of this Act, but the exemption added under section 
4975(d)(24) of such Code shall be available imme-
diately upon enactment of this Act for persons meet-
ing its conditions (including the conditions of a best 
interest recommendation which may not be effective 
at such time). The Secretary of Labor is prohibited 
from amending any rules or administrative positions 
promulgated under section 3(21) of ERISA or sec-
tion 4975(e)(3) of such Code (including Department 
of Labor Interpretive Bulletin 96–1 (29 C.F.R. 
2509.96–1) and Department of Labor Advisory 
Opinion 2005–23A) prior to the effective date of this 
Act, and no such rules or positions promulgated by 
the Secretary of Labor prior to the date of the en-
actment of this Act, but not yet effective or applica-
ble, may become effective prior to the effective date 
of this Act. 
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(7) 
GRANDFATHERED
TRANSACTIONS
AND 
SERVICES.—The 
amendments 
made 
to 
section 
4975(e)(3)(B) of such Code by this Act shall not 
apply to any services if such services— 
(A) were rendered prior to the effective 
date of this Act, 
(B) relate to a transaction entered into 
prior to the effective date of this Act, 
(C) were paid for prior to the effective date 
of this Act, or 
(D) are not described in subparagraph (A), 
(B), or (C) but the person performing the serv-
ices does not receive more compensation (either 
as a fixed dollar amount or as a percentage of 
assets) as a result of the services than the per-
son is contractually eligible to receive for such 
services prior to the effective date of this Act. 
(b) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.— 
(1) DEFINITION
OF
INVESTMENT
ADVICE.— 
Subparagraph (A) of section 3(21) of the Employee 
Retirement Security Act of 1974 is amended by 
amending clause (ii) to read as follows: 
‘‘(ii) renders investment advice for a 
fee or other compensation, direct or indi-
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rect, with respect to moneys or other prop-
erty of such plan, or has any authority or 
responsibility to do so. Investment advice 
means a recommendation— 
‘‘(I) as to the advisability of ac-
quiring, holding, disposing, or ex-
changing securities or other invest-
ment 
property, 
including 
a 
rec-
ommendation to take a distribution of 
benefits or a recommendation as to 
the investment of securities or other 
property to be rolled over or otherwise 
distributed from the plan; 
‘‘(II) as to the management of 
securities or other property, including 
recommendations as to the manage-
ment of securities or other property to 
be rolled over or otherwise distributed 
from the plan; or 
‘‘(III) of a person who is also 
going to receive a fee or other com-
pensation for providing any of the 
types of advice described in subclause 
(I) or (II); 
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Provided that, such recommendation is ren-
dered pursuant to a mutual agreement, ar-
rangement, or understanding between such 
person and the plan, plan fiduciary, or ad-
vice recipient that such advice is individ-
ualized to the plan and such plan, fidu-
ciary, or advice recipient intends to materi-
ally rely on such recommendation in mak-
ing investment or management decisions 
with respect to moneys, securities, or other 
investment property of the plan. A person 
shall not be considered to be providing in-
vestment advice if such recommendation is 
provided in conjunction with full and fair 
disclosure to the recipient, which can be 
written or verbal, that the person is pro-
viding or making the recommendation of 
services or property in its marketing, sales, 
or educational capacity, and that the per-
son is not undertaking to provide impartial 
investment advice or to give advice as a fi-
duciary (within the meaning of this sub-
paragraph). In addition, a person shall not 
be a fiduciary under this subparagraph 
with respect to the terms and conditions of 
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engagement of the person, including the 
scope of the obligation to provide advice, 
the products or services with respect to 
which advice is provided and the com-
pensation payable to the person, provided 
the recipient has consented to the terms 
and conditions of the engagement after 
disclosure of all material aspects of such 
terms and conditions, including fee disclo-
sure that satisfies clauses (i), (ii), and (iii) 
of section 408(b)(21)(C). Except as other-
wise provided in subparagraph (C) and 
notwithstanding subparagraph (D), invest-
ment advice shall include a recommenda-
tion under this subparagraph provided pur-
suant to a written acknowledgment of fidu-
ciary status with respect to the provision 
of such recommendation. For purposes of 
this clause, ‘property’ means moneys and 
investment property, and ‘management of 
securities’ means exercising rights or obli-
gations with respect to securities or other 
property.’’. 
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(2) DEFINITION
OF
INVESTMENT
ADVICE.— 
Subsection 3(21) of such Act is amended by adding 
the following new subparagraphs (C) and (D): 
‘‘(C) The extent of a fiduciary’s obligations 
as such can be defined and limited pursuant to 
a mutual agreement, arrangement, or under-
standing between the person and the party en-
gaging the person as a fiduciary to the plan. 
Such limitations can include limits on scope, 
timing, and responsibility to provide ongoing 
monitoring or advice services. 
‘‘(D) A person shall not be deemed to be 
a fiduciary on account of subparagraph (A)(ii) 
if such person meets one or more of the fol-
lowing: 
‘‘(i) COUNTERPARTIES AND SERVICES 
PROVIDERS.—In such person’s capacity as 
a counterparty, service provider, or rep-
resentative thereof, the person provides ad-
vice to a plan fiduciary who is independent 
of such person and who is independent of 
the plan sponsor, with respect to an arm’s- 
length service arrangement, sale, purchase, 
loan, or bilateral contract between the plan 
and person, each a ‘transaction’ for pur-
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poses of this clause if, prior to entering 
into the transaction, the plan fiduciary 
represents that it understands that the 
person has a financial interest in the mat-
ter, and that the person is not undertaking 
to provide impartial financial advice or to 
give advice as a fiduciary (within the 
meaning of this subsection); provided such 
person has not acknowledged in writing 
that it is acting as a fiduciary (within the 
meaning of this subsection) with respect to 
the transaction. 
‘‘(ii) SWAP TRANSACTIONS.—The per-
son is a counterparty, service provider or 
representative thereof in connection with a 
swap or security-based swap, as defined in 
section 1(a) of the Commodity Exchange 
Act (7 U.S.C. 1(a)) and section 3(a) of the 
Securities 
Exchange 
Act 
(15 
U.S.C. 
78c(a)), if: the plan is represented by a fi-
duciary independent of the person; the per-
son is a swap clearing firm or other service 
provider in relation to a swap, swap dealer, 
security-based swap dealer, major swap 
participant, or major security-based swap 
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participant; the person (if a swap dealer, 
security-based swap dealer, clearing firm, 
or other similar service provider) is not 
acting as an advisor to the plan (within the 
meaning of section 4s(h) of the Commodity 
Exchange Act or section 15F(h) of the Se-
curities Exchange Act of 1934) in connec-
tion with the transaction; and in advance 
of providing any recommendations with re-
spect to the transaction, the person obtains 
a written representation from the inde-
pendent plan fiduciary, that the fiduciary 
will not rely on recommendations provided 
by the person. 
‘‘(iii) EMPLOYEES.—In his or her ca-
pacity as an employee of any employer or 
employee organization sponsoring the plan 
or an affiliate of such plan sponsor, the 
person provides the advice (directly or indi-
rectly) to the plan, plan fiduciary, partici-
pant, or beneficiary, and he or she receives 
no fee or other compensation, direct or in-
direct, in connection with the advice be-
yond the employee’s normal compensation 
for work performed for the employer or 
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smartinez on DSK4TPTVN1PROD with BILLS
employee organization or an affiliate. In 
such cases, such an employee is not ren-
dering investment advice for a fee or other 
compensation. No inference is intended 
with respect to whether any other person 
shall be treated as rendering investment 
advice for a fee or other compensation. 
‘‘(iv) PLATFORM
PROVIDERS.—The 
person merely markets and makes available 
to a plan (including its participants, bene-
ficiaries, and fiduciaries), without regard 
to the individualized needs of the plan, its 
participants, or beneficiaries, securities or 
other property through a platform or simi-
lar mechanism (which may consist of or in-
clude one or more annuity contracts) from 
which a plan fiduciary may select or mon-
itor 
investment 
alternatives, 
including 
qualified default investment alternatives, 
into which plan participants or bene-
ficiaries may direct the investment of as-
sets held in, or contributed to, their indi-
vidual accounts, if the person discloses in 
writing to the plan fiduciary that the per-
son is not undertaking to provide impartial 
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investment advice or to give advice as a fi-
duciary (within the meaning of this sub-
section) when establishing or maintaining 
the platform. 
‘‘(v) SELECTION AND MONITORING AS-
SISTANCE.—The person merely identifies 
investment alternatives that meet objective 
criteria specified by the plan fiduciary, 
participant, or beneficiary (e.g., stated pa-
rameters concerning expense ratios, size of 
fund, type of asset, or credit quality); or 
merely provides objective financial data 
and comparisons with independent bench-
marks to the plan fiduciary, participant or 
beneficiary. 
‘‘(vi) FINANCIAL REPORTS AND VALU-
ATIONS.—The person provides or reports 
valuation information, but does not rep-
resent in writing that it is undertaking to 
provide such valuation information as a fi-
duciary (within the meaning of this sub-
section). 
‘‘(vii) EDUCATION.—The person pro-
vides the information— 
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on which the examples are based ac-
company the examples; or 
‘‘(IV) any additional information 
treated as education by the Sec-
retary.’’. 
(3) 
EXEMPTION
TO
PRESERVE
INVESTOR 
CHOICE.—Section 408(b) of such Act is amended by 
adding at the end thereof the following new para-
graph: 
‘‘(21) with respect to transactions described in 
sections 406(a) and 406(b), any transaction or serv-
ice in connection with the provision of investment 
advice described in section 3(21)(A)(ii) if the condi-
tions under subparagraphs (A), (B), and (C) are 
satisfied: 
‘‘(A) The provision of investment advice 
with respect to the transaction is subject to sec-
tion 404. 
‘‘(B) The conditions of section 408(b)(2) 
are satisfied when otherwise applicable. 
‘‘(C) The investment advice may include 
recommendations that— 
‘‘(i) are based on a limited range of 
products, providers, or offerings (including 
recommendations that include, or are lim-
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ited only to, proprietary products and pro-
viders), where such limits are clearly dis-
closed to the advice recipient at any time 
prior to a transaction based on the rec-
ommendation, or 
‘‘(ii) may result in variable compensa-
tion to the person (or its affiliate), such as 
transaction, services, placement, or other 
types of compensation that differ by prod-
uct or service, where the receipt of such 
compensation is clearly disclosed to the ad-
vice recipient. 
‘‘(D) For purposes of this paragraph, clear 
disclosure of variable compensation means noti-
fication at any time prior to a transaction based 
on the person’s recommendation, in a manner 
calculated to be understood by the average indi-
vidual, of the following information, which can 
be provided in one or more statements or docu-
ments: 
‘‘(i) The person (or its affiliate) may 
receive varying amounts of fees or other 
compensation or consideration with respect 
to recommended transactions. 
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‘‘(ii) The amount of any fee or other 
compensation or consideration that is di-
rectly payable to the person (or its affil-
iate) from the plan or advice recipient with 
respect to recommended transactions, pro-
vided that any such amount may be ex-
pressed in terms of a monetary amount, 
formula, percentage of assets, per capita 
charge, or estimate or range of such com-
pensation or consideration. 
‘‘(iii) A description of the types and 
ranges of indirect compensation that may 
be paid to the person (or its affiliate) by 
any third party in connection with the rec-
ommended transaction, provided that any 
such ranges may be expressed in terms of 
a monetary amount, formula, percentage of 
assets, per capita charge or estimate of 
such compensation or consideration. 
‘‘(iv) Upon the advice recipient’s re-
quest prior to the transaction, a disclosure 
of the specific amounts of compensation 
described in clauses (ii) and (iii) that the 
person will receive in connection with the 
particular transaction, provided that any 
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such amounts may be expressed in terms 
of a monetary amount, formula, percentage 
of assets, per capita charge, or estimate of 
such compensation or consideration. 
The disclosure requirements described in this 
paragraph will not fail to be met solely because 
the person, acting in good faith and with rea-
sonable diligence, makes an error or omission in 
disclosing the information specified in this sub-
section, provided that the person discloses the 
correct information to the advice recipient as 
soon as practicable, but not later than 30 days 
from the date on which the person knows of 
such error or omission.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply on or after the 1st day 
of the 36th month after the date of the enactment 
of this Act, but the exemption added under section 
408(b)(21) of the Employee Retirement Security Act 
of 1974 shall be available immediately upon enact-
ment of this Act for persons meeting its conditions 
(including the conditions of a best interest rec-
ommendation which may not be effective at such 
time). The Secretary of Labor is prohibited from 
amending any rules or administrative positions pro-
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mulgated under section 3(21) of ERISA or section 
4975(e)(3) of the Internal Revenue Code of 1986 
(including Department of Labor Interpretive Bul-
letin 96–1 (29 C.F.R. 2509.96–1) and Department 
of Labor Advisory Opinion 2005–23A) prior to the 
effective date of this Act, and no such rules or posi-
tions promulgated by the Secretary of Labor prior to 
the date of the enactment of this Act, but not yet 
effective or applicable, may become effective prior to 
the effective date of this Act. 
(5) 
GRANDFATHERED
TRANSACTIONS
AND 
SERVICES.—The 
amendments 
made 
to 
section 
3(21)(A)(ii) by this Act shall not apply to any serv-
ices if such services— 
(A) were rendered prior to the effective 
date of this Act, 
(B) relate to a transaction entered into 
prior to the effective date of this Act, 
(C) were paid for prior to the effective date 
of this Act, or 
(D) are not described in subparagraph (A), 
(B), or (C) but the person performing the serv-
ices does not receive more compensation (either 
as a fixed dollar amount or as a percentage of 
assets) as a result of the services than the per-
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son is contractually eligible to receive for such 
services prior to the effective date of this Act. 
SEC. 4. REGULATIONS. 
The Secretary of the Treasury and the Secretary of 
Labor shall make rules, in accordance with subchapter II 
of chapter 5 of title 5, United States Code, to carry out 
this Act and the amendments made by this Act. 
Æ 
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