I
107TH CONGRESS
2D SESSION
H. R. 3677
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to provide new protections
under applicable fiduciary rules for participants and beneficiaries under
401(k) plans and to provide for 3-year vesting of elective deferrals
under such plans.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 5, 2002
Mr. ENGLISH introduced he following bill; which was referred to the Com-
mittee on Education and the Workforce, and in addition to the Com-
mittee 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 jurisdiction of the committee concerned
A BILL
To amend title I of the Employee Retirement Income Secu-
rity Act of 1974 and the Internal Revenue Code of
1986 to provide new protections under applicable fidu-
ciary rules for participants and beneficiaries under
401(k) plans and to provide for 3-year vesting of elective
deferrals under such plans.
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 ‘‘Safeguarding Amer-
ica’s Retirement Act of 2002’’.
SEC. 2. NEW PROTECTIONS UNDER ERISA FIDUCIARY
RULES 
FOR 
PARTICIPANTS 
AND 
BENE-
FICIARIES UNDER 401(k) PLANS.
Section 404(a)(2) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1104(a)(2)) is
amended—
(1) by striking ‘‘In the case’’ and inserting ‘‘(A)
Subject to subparagraph (B), in the case’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(B)(i) In the case of any individual account plan
which includes a qualified cash or deferred arrangement
(as defined in section 401(k) of the Internal Revenue Code
of 1986)—
‘‘(I) the requirements of clauses (ii), (iii), (iv),
and (v) shall be met in connection with such plan,
and
‘‘(II) subparagraph (A) shall apply in connec-
tion with the plan for any plan year only if the plan,
as in effect for such plan year, provides for compli-
ance with such requirements.
‘‘(ii) The requirements of this clause are met in con-
nection with a plan described in clause (i) only if, under
the plan, assets attributable to employee contributions are
invested in employer securities only to the extent elected
by the employee.
‘‘(iii) The requirements of this clause are met in con-
nection with a plan described in clause (i) only if, under
the plan—
‘‘(I) in the case of a participant who has not
completed 3 years of participation (as defined in sec-
tion 204(b)(4)) under the plan, not more than 20
percent of the participant’s accrued benefit derived
from employee contributions may be invested in em-
ployer securities, and
‘‘(II) in the case of a participant who has com-
pleted 3 years of participation (as so defined) under
the plan, not more than 20 percent of the partici-
pant’s entire nonforfeitable accrued benefit may be
invested in employer securities
‘‘(iv) The requirements of this clause are met in con-
nection with a plan described in clause (i) only if, under
the plan, a participant or beneficiary whose nonforfeitable
accrued benefit attributable to employee contributions is
invested in whole or in part in employer securities is peri-
odically given a reasonable opportunity (on at least a quar-
terly basis) to invest such accrued benefit in investment
vehicles, other than employer securities, selected so as to
or order issued under such clause, or of terms of the plan
required under any such clause, regulation, or order
caused by such person in connection with the plan acting
in the capacity of plan sponsor, plan administrator, or
other fiduciary of the plan until such violation is corrected.
For purposes of this paragraph, each instance of such vio-
lation in connection with any participant or beneficiary
shall be treated as a separate instance of such violation.’’.
(2) 
CONFORMING
AMENDMENT.—Section
502(a)(6) of such Act (29 U.S.C. 1132(a)(6)) is
amended by striking ‘‘(5), or (6)’’ and inserting
‘‘(5), (6), or (7)’’.
SEC. 4. NONFORFEITABILITY AFTER 3 YEARS OF PARTICI-
PATION.
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—Section 203(a) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1053(a)) is amended—
(1) in the matter preceding paragraph (1), by
inserting before the period the following: ‘‘, and, as
applicable, paragraph (5) of this subsection’’; and
(2) by adding at the end the following new
paragraph:
‘‘(5) An individual account plan which includes
a cash or deferred arrangement (as defined in sec-
tion 401(k)(2) of the Internal Revenue Code of
1986) satisfies the requirements of this paragraph
if, under the plan, a participant who has completed
3 years of participation (as defined in section
204(b)(4)) has a nonforfeitable right to 100 percent
of the participant’s accrued benefit to the extent it
consists of elective deferrals (as defined in section
402(g)(3)(A) of such Code) made pursuant to such
arrangement.’’.
(b) AMENDMENTS
TO
THE INTERNAL REVENUE
CODE OF 1986.—Subsection (a) of section 411 of the In-
ternal Revenue Code of 1986 (relating to minimum vesting
standards) is amended—
(1) in the matter preceding paragraph (1), by
inserting ‘‘,
the requirements of paragraph (12) of
this subsection (as applicable),’’ after ‘‘paragraphs
(1), (2), and (11) of this subsection’’; and
(2) by adding at the end the following new
paragraph:
‘‘(12) ELECTIVE DEFERRALS UNDER CASH OR
DEFERRED
ARRANGEMENTS.—A defined contribu-
tion plan which includes a cash or deferred arrange-
ment (as defined in section 401(k)(2)) satisfies the
requirements of this paragraph if, under the plan, a
participant who has completed 3 years of participa-
tion (as defined in subsection (b)(4)) has a non-
forfeitable right to 100 percent of the participant’s
accrued benefit to the extent it consists of elective
deferrals (as defined in section 402(g)(3)(A)) made
pursuant to such arrangement.’’.
SEC. 5. EFFECTIVE DATE AND RELATED RULES.
(a) IN GENERAL.—Subject to subsection (b), the
amendments made by this Act shall apply with respect to
plan years beginning on or after January 1, 2003.
(b) SPECIAL RULE FOR COLLECTIVELY BARGAINED
PLANS.—In the case of a plan maintained pursuant to 1
or more collective bargaining agreements between em-
ployee representatives and 1 or more employers ratified
on or before the date of the enactment of this Act, sub-
section (a) shall be applied to benefits pursuant to, and
individuals covered by, any such agreement by substituting
for ‘‘January 1, 2003’’ the date of the commencement of
the first plan year beginning on or after the earlier of—
(1) the later of—
(A) January 1, 2004, or
(B) the date on which the last of such col-
lective bargaining agreements terminates (de-
termined without regard to any extension there-
of after the date of the enactment of this Act),
or
(2) January 1, 2005.
(c) PLAN AMENDMENTS.—If the amendments made
by this Act require an amendment to any plan, such plan
amendment shall not be required to be made before the
first plan year beginning on or after January 1, 2005, if—
(1) during the period after such amendments
made by this Act take effect and before such first
plan year, the plan is operated in accordance with
the requirements of such amendments made by this
Act, and
(2) such plan amendment applies retroactively
to the period after such amendments made by this
Act take effect and before such first plan year.
Æ