551 
before the beginning of the plan year 
to make such designation. 
‘‘(ii) FORM OF NOTICE.—The require-
ments of clauses (i) and (ii) of section 
401(k)(12)(D) of the Internal Revenue 
Code of 1986 shall apply with respect to 
the notices described in this subpara-
graph.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan years beginning after 
December 31, 2006. 
(2) REGULATIONS.—Final regulations under 
section 404(c)(5)(A) of the Employee Retirement In-
come Security Act of 1974 (as added by this section) 
shall be issued no later than 6 months after the date 
of the enactment of this Act. 
SEC. 625. CLARIFICATION OF FIDUCIARY RULES. 
(a) IN GENERAL.—Not later than 1 year after the 
date of the enactment of this Act, the Secretary of Labor 
shall issue final regulations clarifying that the selection 
of an annuity contract as an optional form of distribution 
from an individual account plan to a participant or bene-
ficiary— 
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ccoleman on PROD1PC71 with BILLS
552 
(1) is not subject to the safest available annuity 
standard under Interpretive Bulletin 95–1 (29 
C.F.R. 2509.95–1), and 
(2) is subject to all otherwise applicable fidu-
ciary standards. 
(b) EFFECTIVE DATE.—This section shall take effect 
on the date of enactment of this Act. 
TITLE VII—BENEFIT ACCRUAL 
STANDARDS 
SEC. 701. BENEFIT ACCRUAL STANDARDS. 
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.— 
(1) RULES RELATING TO REDUCTION IN RATE 
OF BENEFIT ACCRUAL.—Section 204(b) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1054(b)) is amended by adding at the end 
the following new paragraph: 
‘‘(5) SPECIAL RULES RELATING TO AGE.— 
‘‘(A) COMPARISON
TO
SIMILARLY
SITU-
ATED YOUNGER INDIVIDUAL.— 
‘‘(i) IN GENERAL.—A plan shall not 
be treated as failing to meet the require-
ments of paragraph (1)(H)(i) if a partici-
pant’s accrued benefit, as determined as of 
any date under the terms of the plan, 
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553 
would be equal to or greater than that of 
any similarly situated, younger individual 
who is or could be a participant. 
‘‘(ii) SIMILARLY SITUATED.—For pur-
poses of this subparagraph, a participant 
is similarly situated to any other individual 
if such participant is identical to such 
other individual in every respect (including 
period of service, compensation, position, 
date of hire, work history, and any other 
respect) except for age. 
‘‘(iii) DISREGARD
OF
SUBSIDIZED 
EARLY RETIREMENT BENEFITS.—In deter-
mining the accrued benefit as of any date 
for purposes of this clause, the subsidized 
portion of any early retirement benefit or 
retirement-type 
subsidy 
shall 
be 
dis-
regarded. 
‘‘(iv) ACCRUED
BENEFIT.—For pur-
poses of this subparagraph, the accrued 
benefit may, under the terms of the plan, 
be expressed as an annuity payable at nor-
mal retirement age, the balance of a hypo-
thetical account, or the current value of 
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554 
the accumulated percentage of the employ-
ee’s final average compensation. 
‘‘(B) 
APPLICABLE
DEFINED
BENEFIT 
PLANS.— 
‘‘(i) INTEREST CREDITS.— 
‘‘(I) IN GENERAL.—An applicable 
defined benefit plan shall be treated 
as failing to meet the requirements of 
paragraph (1)(H) unless the terms of 
the plan provide that any interest 
credit (or an equivalent amount) for 
any plan year shall be at a rate which 
is not greater than a market rate of 
return. A plan shall not be treated as 
failing to meet the requirements of 
this subclause merely because the plan 
provides for a reasonable minimum 
guaranteed rate of return or for a 
rate of return that is equal to the 
greater of a fixed or variable rate of 
return. 
‘‘(II) PRESERVATION
OF
CAP-
ITAL.—An interest credit (or an 
equivalent amount) of less than zero 
shall in no event result in the account 
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555 
balance or similar amount being less 
than the aggregate amount of con-
tributions credited to the account. 
‘‘(III) MARKET
RATE
OF
RE-
TURN.—The Secretary of the Treas-
ury may provide by regulation for 
rules governing the calculation of a 
market rate of return for purposes of 
subclause (I) and for permissible 
methods of crediting interest to the 
account (including fixed or variable 
interest rates) resulting in effective 
rates of return meeting the require-
ments of subclause (I). 
‘‘(ii) SPECIAL RULE FOR PLAN CON-
VERSIONS.—If, after June 29, 2005, an 
applicable plan amendment is adopted, the 
plan shall be treated as failing to meet the 
requirements of paragraph (1)(H) unless 
the requirements of clause (iii) are met 
with respect to each individual who was a 
participant in the plan immediately before 
the adoption of the amendment. 
‘‘(iii) RATE OF BENEFIT ACCRUAL.— 
Subject to clause (iv), the requirements of 
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ccoleman on PROD1PC71 with BILLS
556 
this clause are met with respect to any 
participant if the accrued benefit of the 
participant under the terms of the plan as 
in effect after the amendment is not less 
than the sum of— 
‘‘(I) the participant’s accrued 
benefit for years of service before the 
effective date of the amendment, de-
termined under the terms of the plan 
as in effect before the amendment, 
plus 
‘‘(II) the participant’s accrued 
benefit for years of service after the 
effective date of the amendment, de-
termined under the terms of the plan 
as in effect after the amendment. 
‘‘(iv) SPECIAL RULES FOR EARLY RE-
TIREMENT
SUBSIDIES.—For purposes of 
clause (iii)(I), the plan shall credit the ac-
cumulation account or similar amount with 
the amount of any early retirement benefit 
or retirement-type subsidy for the plan 
year in which the participant retires if, as 
of such time, the participant has met the 
age, years of service, and other require-
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