I
107TH CONGRESS
2D SESSION
H. R. 3669
To amend the Internal Revenue Code of 1986 to empower employees to
control their retirement savings accounts through new diversification
rights, new disclosure requirements, and new tax incentives for retirement
education.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 4, 2002
Mr. PORTMAN (for himself and Mr. CARDIN) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Education and the Workforce, for a period to
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To amend the Internal Revenue Code of 1986 to empower
employees to control their retirement savings accounts
through new diversification rights, new disclosure re-
quirements, and new tax incentives for retirement edu-
cation.
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 ‘‘Employee Retirement
Savings Bill of Rights’’.
SEC. 2. EXCISE TAX ON FAILURE OF PENSION PLANS TO
PROVIDE NOTICE OF GENERALLY ACCEPTED
INVESTMENT PRINCIPLES.
(a) IN GENERAL.—Chapter 43 of the Internal Rev-
enue Code of 1986 (relating to qualified pension, etc.,
plans) is amended by adding at the end the following new
section:
‘‘SEC. 4980G. FAILURE OF APPLICABLE PLANS TO PROVIDE
NOTICE OF GENERALLY ACCEPTED INVEST-
MENT PRINCIPLES.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
a tax on the failure of any applicable pension plan to meet
the requirements of subsection (e) with respect to any ap-
plicable individual.
‘‘(b) AMOUNT OF TAX.—The amount of the tax im-
posed by subsection (a) on any failure with respect to any
applicable individual shall be $100.
‘‘(c) LIMITATIONS ON AMOUNT OF TAX.—
‘‘(1) TAX NOT TO APPLY TO FAILURES COR-
RECTED WITHIN 30 DAYS.—No tax shall be imposed
by subsection (a) on any failure if—
‘‘(A) any person subject to liability for the
tax under subsection (d) exercised reasonable
diligence to meet the requirements of subsection
(e), and
‘‘(B) such person provides the notice de-
scribed in subsection (e) during the 30-day pe-
riod beginning on the first date such person
knew, or exercising reasonable diligence should
have known, that such failure existed.
‘‘(2) OVERALL
LIMITATION
FOR
UNINTEN-
TIONAL FAILURES.—
‘‘(A) IN GENERAL.—If the person subject
to liability for tax under subsection (d) exer-
cised reasonable diligence to meet the require-
ments of subsection (e) and paragraph (1) is
not otherwise applicable, the tax imposed by
subsection (a) for failures during the taxable
year of the employer (or, in the case of a multi-
employer plan, the taxable year of the trust
forming part of the plan) shall not exceed
$500,000. For purposes of the preceding sen-
tence, all multiemployer plans of which the
same trust forms a part shall be treated as 1
plan.
‘‘(B) TAXABLE
YEARS
IN
THE
CASE
OF
CERTAIN CONTROLLED GROUPS.—For purposes
of this paragraph, if all persons who are treated
as a single employer for purposes of this section
do not have the same taxable year, the taxable
years taken into account shall be determined
under principles similar to the principles of sec-
tion 1561.
‘‘(3) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of such tax would be excessive or
otherwise inequitable relative to the failure involved.
‘‘(d) LIABILITY FOR TAX.—The following shall be lia-
ble for the tax imposed by subsection (a):
‘‘(1) In the case of a plan other than a multi-
employer plan, the employer.
‘‘(2) In the case of a multiemployer plan, the
plan.
‘‘(e) NOTICE
OF GENERALLY ACCEPTED INVEST-
MENT PRINCIPLES.—
‘‘(1) IN GENERAL.—The plan administrator of
an applicable pension plan shall provide notice of
generally accepted investment principles, including
principles of risk management and diversification, to
each applicable individual.
‘‘(2) NOTICE.—The notice required by para-
graph (1) shall be written in a manner calculated to
be understood by the average plan participant and
shall provide sufficient information (as determined
in accordance with rules or other guidance adopted
by the Secretary) to allow applicable individuals to
understand generally accepted investment principles,
including principles of risk management and diver-
sification.
‘‘(3) TIMING OF NOTICE.—The notice required
by paragraph (1) shall be provided upon enrollment
of the applicable individual in such plan and at least
once per plan year thereafter.
‘‘(4) FORM AND MANNER OF NOTICE.—The no-
tice required by paragraph (1) shall be in writing,
except that such notice may be in electronic or other
form to the extent that such form is reasonably ac-
cessible to the applicable individual.
‘‘(f ) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) APPLICABLE INDIVIDUAL.—The term ‘ap-
plicable individual’ means—
‘‘(A) any participant in the applicable pen-
sion plan,
‘‘(B) any beneficiary who is an alternate
payee (within the meaning of section 414(p)(8))
under an applicable qualified domestic relations