‘‘(ii) which is a change to the plan 
which provides for a regularly scheduled 
suspension, limitation, or restriction which 
is disclosed to participants or beneficiaries 
through any summary of material modi-
fications, any materials describing specific 
investment alternatives under the plan, or 
any changes thereto, or 
‘‘(iii) which applies to 1 or more indi-
viduals, each of whom is the participant, 
an alternate payee (as defined in section 
414(p)(8)), or any other beneficiary pursu-
ant to a qualified domestic relations order 
(as defined in section 414(p)(1)). 
‘‘(8) APPLICABLE INDIVIDUAL.—For purposes 
of this section, the term ‘applicable 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 
order 
(within 
the 
meaning 
of 
section 
414(p)(1)(A)), and
‘‘(C) any beneficiary of a deceased partici-
pant or alternate payee, 
who has an accrued benefit under the plan and who 
is entitled to direct the investment (or hypothetical 
investment) of some or all of such accrued benefit. 
‘‘(9) APPLICABLE
PENSION
PLAN.—For pur-
poses of this subsection, the term ‘applicable pension 
plan’ means—
‘‘(A) 
a 
plan 
described 
in 
section 
219(g)(5)(A) (other than in clause (iii) thereof), 
and 
‘‘(B) an eligible deferred compensation 
plan (as defined in section 457(b)) of an eligible 
employer described in section 457(e)(1)(A), 
which permits any participant to direct the invest-
ment of some or all of his account in the plan or 
under which the accrued benefit of any participant 
depends in whole or in part on hypothetical invest-
ments directed by the participant.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 43 of such Code is amended by adding at the 
end the following new item:
‘‘Sec. 4980H. Failure of applicable plans to provide notice of 
transaction restriction periods.’’.
(c) EFFECTIVE DATE AND RELATED RULES.—
(1) EFFECTIVE DATE.—The amendments made 
by this section shall take effect 180 days after the 
date of the enactment of this Act. Good faith compli-
ance with the requirements of such amendments in 
advance of the issuance of applicable regulations 
thereunder shall be treated as compliance with such 
provisions. 
(2) ISSUANCE
OF
INITIAL
GUIDANCE
AND 
MODEL
NOTICE.—The Secretary of the Treasury 
shall, in consultation with the Secretary of Labor, 
issue initial guidance and a model notice pursuant to 
section 4980H(e)(6) of the Internal Revenue Code of 
1986 (as added by this section) not later than Janu-
ary 1, 2005. Not later than 75 days after the date 
of the enactment of this Act, the Secretary shall pro-
mulgate interim final rules necessary to carry out 
the amendments made by this section. 
(3) PLAN
AMENDMENTS.—If any amendment 
made by this section requires an amendment to any 
plan, such plan amendment shall not be required to 
be made before the first plan year beginning on or 
after the effective date of this section, if—
(A) during the period after such amend-
ment made by this section takes effect and be-
fore such first plan year, the plan is operated
in good faith compliance with the requirements 
of such amendment made by this section, and 
(B) such plan amendment applies retro-
actively to the period after such amendment 
made by this section takes effect and before 
such first plan year. 
TITLE V—INVESTMENT ADVICE 
FOR 
PARTICIPANTS 
AND 
BENEFICIARIES
SEC. 501. INDEPENDENT INVESTMENT ADVICE. 
(a) IN GENERAL.—Section 404(c)(1) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1104(c)(1)) (as amended by section 102(c)) is 
amended further—
(1) by redesignating subparagraphs (A) and 
(B) as clauses (i) and (ii), respectively, and by in-
serting ‘‘(A)’’ after ‘‘(c)(1)’’; and 
(2) by adding at the end the following new sub-
paragraphs: 
‘‘(B)(i) In the case of a pension plan described in sub-
paragraph (A) which provides investment in employer se-
curities as at least one option for investment of plan assets 
at the direction of the participant or beneficiary, such plan 
shall make available to the participant or beneficiary the 
services of a qualified fiduciary adviser for purposes of
providing 
investment 
advice 
described 
in 
section 
3(21)(A)(ii) regarding investment in such securities. 
‘‘(ii) No person who is otherwise a fiduciary shall be 
liable by reason of any investment advice provided by a 
qualified fiduciary adviser pursuant to a request under 
clause (i) if—
‘‘(I) the plan provides for selection and moni-
toring of such adviser in a prudent and effective 
manner, and 
‘‘(II) such adviser is a named fiduciary under 
the plan in connection with the provision of such ad-
vice. 
‘‘(C) For purposes of subparagraph (B)—
‘‘(i) The term ‘qualified fiduciary adviser’ 
means, with respect to a plan, a person who—
‘‘(I) is a fiduciary of the plan by reason of 
the provision of qualified investment advice by 
such person to a participant or beneficiary, 
‘‘(II) has no material interest in, and no 
material affiliation or contractual relationship 
with any third party having a material interest 
in, the security or other property with respect 
to which the person is providing the advice, 
‘‘(III) meets the qualifications of clause 
(ii), and
‘‘(V) is an insurance company quali-
fied to do business under the laws of a 
State, or 
‘‘(VI) is any other comparable entity 
which satisfies such criteria as the Sec-
retary determines appropriate. 
‘‘(iii) A person meets the additional re-
quirements of this clause if every individual who 
is employed (or otherwise compensated) by such 
person and whose scope of duties includes the 
provision of qualified investment advice on be-
half of such person to any participant or bene-
ficiary is—
‘‘(I) a registered representative of 
such person, 
‘‘(II) an individual described in sub-
clause (I), (II), or (III) of clause (i), or 
‘‘(III) such other comparable qualified 
individual as may be designated in regula-
tions of the Secretary.’’. 
(b) MAINTENANCE OF FIDUCIARY LIABILITY.—Sec-
tion 404(c)(1)(B) of such Act (29 U.S.C. 1104(c)(1)(B)) 
is amended by inserting before the period the following: 
‘‘, except that this subparagraph shall not be construed
to exempt any fiduciary from liability for any violation of 
this section’’. 
SEC. 502. TAX TREATMENT OF QUALIFIED RETIREMENT 
PLANNING SERVICES. 
(a) IN GENERAL.—Subsection (m) of section 132 of 
the Internal Revenue Code of 1986 (defining qualified re-
tirement services) is amended by adding at the end the 
following new paragraph: 
‘‘(4) NO CONSTRUCTIVE RECEIPT.—No amount 
shall be included in the gross income of any em-
ployee solely because the employee may choose be-
tween any qualified retirement planning services pro-
vided by a qualified investment advisor and com-
pensation which would otherwise be includible in the 
gross income of such employee. The preceding sen-
tence shall apply to highly compensated employees 
only if the choice described in such sentence is avail-
able on substantially the same terms to each mem-
ber of the group of employees normally provided 
education and information regarding the employer’s 
qualified employer plan.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 403(b)(3)(B) of such Code is 
amended 
by 
inserting 
‘‘132(m)(4),’’ 
after 
‘‘132(f)(4),’’.
(2) Section 414(s)(2) of such Code is amended 
by inserting ‘‘132(m)(4),’’ after ‘‘132(f)(4),’’. 
(3) Section 415(c)(3)(D)(ii) of such Code is 
amended 
by 
inserting 
‘‘132(m)(4),’’ 
after 
‘‘132(f)(4),’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2003. 
TITLE VI—PARITY IN EMPLOYEE 
BENEFITS
SEC. 601. INCLUSION IN GROSS INCOME OF FUNDED DE-
FERRED COMPENSATION OF CORPORATE IN-
SIDERS IF CORPORATION FUNDS DEFINED 
CONTRIBUTION 
PLAN 
WITH 
EMPLOYER 
STOCK. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new section: 
‘‘SEC. 409A. DENIAL OF DEFERRAL FOR FUNDED DEFERRED 
COMPENSATION OF CORPORATE INSIDERS IF 
CORPORATION FUNDS DEFINED CONTRIBU-
TION PLAN WITH EMPLOYER STOCK. 
‘‘(a) IN GENERAL.—If an employer maintains a de-
fined contribution plan to which employer contributions
are made in the form of employer stock and such employer 
maintains a funded deferred compensation plan—
‘‘(1) compensation of any corporate insider 
which is deferred under such funded deferred com-
pensation plan shall be included in the gross income 
of the insider or beneficiary for the 1st taxable year 
in which there is no substantial risk of forfeiture of 
the rights to such compensation, and 
‘‘(2) the tax treatment of any amount made 
available under the plan to a corporate insider or 
beneficiary shall be determined under section 72 (re-
lating to annuities, etc.). 
‘‘(b) FUNDED DEFERRED COMPENSATION PLAN.—
For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘funded deferred 
compensation plan’ means any plan providing for the 
deferral of compensation unless—
‘‘(A) the employee’s rights to the com-
pensation deferred under the plan are no great-
er than the rights of a general creditor of the 
employer, 
‘‘(B) all amounts set aside (directly or in-
directly) for purposes of paying the deferred 
compensation, and all income attributable to 
such amounts, remain (until made available to
the participant or other beneficiary) solely the 
property of the employer (without being re-
stricted to the provision of benefits under the 
plan), and 
‘‘(C) the amounts referred to in subpara-
graph (B) are available to satisfy the claims of 
the employer’s general creditors at all times 
(not merely after bankruptcy or insolvency). 
Such term shall not include a qualified employer 
plan. 
‘‘(2) SPECIAL RULES.—
‘‘(A) EMPLOYEE’S RIGHTS.—A plan shall 
be treated as failing to meet the requirements 
of paragraph (1)(A) unless, under the written 
terms of the plan—
‘‘(i) the compensation deferred under 
the plan is paid only upon separation from 
service, death, or at a specified time (or 
pursuant to a fixed schedule), and 
‘‘(ii) the plan does not permit the ac-
celeration of the time such deferred com-
pensation is paid by reason of any event. 
If the employer and employee agree to a modi-
fication of the plan that accelerates the time for 
payment of any deferred compensation, then all
compensation previously deferred under the 
plan shall be includible in gross income for the 
taxable year during which such modification 
takes effect and the taxpayer shall pay interest 
at the underpayment rate on the underpay-
ments that would have occurred had the de-
ferred compensation been includible in gross in-
come in the taxable years deferred. 
‘‘(B) CREDITOR’S RIGHTS.—A plan shall 
be treated as failing to meet the requirements 
of paragraph (1)(B) with respect to amounts 
set aside in a trust unless—
‘‘(i) the employee has no beneficial in-
terest in the trust, 
‘‘(ii) assets in the trust are available 
to satisfy claims of general creditors at all 
times (not merely after bankruptcy or in-
solvency), and 
‘‘(iii) there is no factor (such as the 
location of the trust outside the United 
States) that would make it more difficult 
for general creditors to reach the assets in 
the trust than it would be if the trust as-
sets were held directly by the employer in 
the United States.
‘‘(c) CORPORATE INSIDER.—For purposes of this sec-
tion, the term ‘corporate insider’ means, with respect to 
a corporation, any individual who is subject to the require-
ments of section 16(a) of the Securities Exchange Act of 
1934 with respect to such corporation. 
‘‘(d) OTHER DEFINITIONS.—For purposes of this sec-
tion—
‘‘(1) PLAN INCLUDES ARRANGEMENTS, ETC.—
The term ‘plan’ includes any agreement or arrange-
ment. 
‘‘(2) SUBSTANTIAL RISK OF FORFEITURE.—The 
rights of a person to compensation are subject to a 
substantial risk of forfeiture if such person’s rights 
to such compensation are conditioned upon the fu-
ture performance of substantial services by any indi-
vidual.’’
(b) CLERICAL AMENDMENT.—The table of sections 
for such subpart A is amended by adding at the end the 
following new item:
‘‘Sec. 409A. Denial of deferral for funded deferred compensation 
of corporate insiders if corporation funds defined 
contribution plan with employer stock.’’
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts deferred after the date 
of the enactment of this Act.
SEC. 602. PERFORMANCE-BASED COMPENSATION EXCEP-
TION TO $1,000,000 LIMITATION ON DEDUCT-
IBLE COMPENSATION NOT TO APPLY IN CER-
TAIN CASES. 
(a) IN GENERAL.—Paragraph (4) of section 162(m) 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new subparagraph: 
‘‘(G) CERTAIN FACTORS NOT PERMITTED 
TO BE TAKEN INTO ACCOUNT IN DETERMINING 
WHETHER PERFORMANCE GOALS ARE MET.—
Subparagraph (C) shall not apply if, in deter-
mining whether the performance goals are met, 
any of the following are taken into account: 
‘‘(i) Cost savings as a result of 
changes to any qualified employer plan (as 
defined in section 4972(d)). 
‘‘(ii) Excess assets of such a plan or 
earnings thereon. 
‘‘(iii) Any excess of the amount as-
sumed to be the return on the assets of 
such a plan over the actual return on such 
assets.’’
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act.
TITLE VII—PROTECTION OF 
RETIREMENT EXPECTATIONS 
SEC. 701. PROTECTION OF PARTICIPANTS FROM CONVER-
SIONS TO HYBRID DEFINED BENEFIT PLANS. 
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—
(1) ELECTION TO MAINTAIN RATE OF ACCRUAL 
IN
EFFECT
BEFORE
PLAN
AMENDMENT.—Section 
204(b)(1) of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1054(b)(1)) is amended 
by adding at the end the following new subpara-
graph: 
‘‘(I)(i) Notwithstanding the preceding subpara-
graphs, in the case of a plan amendment to a defined ben-
efit plan—
‘‘(I) which has the effect of converting the plan 
to a plan under which the accrued benefit is ex-
pressed to participants and beneficiaries as an 
amount other than an annual benefit commencing at 
normal retirement age (or which has a similar effect 
as determined under regulations issued under clause 
(iii)), and 
‘‘(II) which has the effect of reducing the rate 
of future benefit accrual of 1 or more participants,
such plan shall be treated as not satisfying the require-
ments of this paragraph unless such plan meets the re-
quirements of clause (ii). 
‘‘(ii) A plan meets the requirements of this clause if 
the plan provides each participant who has attained 10 
years of service (as determined under section 203) under 
the plan at the time such amendment takes effect with—
‘‘(I) notice of the plan amendment indicating 
that it has such effect, including a comparison of the 
present and projected values of the accrued benefit 
determined both with and without regard to the plan 
amendment, and 
‘‘(II) an election, on the date of the conversion, 
to either receive benefits under the terms of the plan 
as in effect on or after the effective date of such 
plan amendment or to receive benefits under the 
terms of the plan as in effect immediately before the 
effective date of such plan amendment (taking into 
account all benefit accruals under such terms since 
such date). 
‘‘(iii) The Secretary shall issue regulations under 
which any plan amendment which has an effect similar 
to the effect described in clause (i)(I) shall be treated as 
a plan amendment described in clause (i)(I). Such regula-
tions may provide that if a plan sponsor represents in com-
munications to participants and beneficiaries that a plan 
amendment has an effect described in the preceding sen-
tence, such plan amendment shall be treated as a plan 
amendment described in clause (i)(I).’’. 
(2) EARLY RETIREMENT SUBSIDY TAKEN INTO 
ACCOUNT FOR PURPOSES OF OPENING BALANCE OF 
HYBRID DEFINED BENEFIT PLAN.—Section 204(g) 
of such Act (29 U.S.C. 1054(g)) is amended by add-
ing at the end the following new paragraph: 
‘‘(6) In the case of a plan amendment to a defined 
benefit plan which has the effect of converting the plan 
to a plan under which the accrued benefit is expressed to 
participants and beneficiaries as an amount other than an 
annual benefit commencing at normal retirement age (or 
a plan amendment to such plan having a similar effect 
as determined under regulations issued under subsection 
(b)(1)(I)(iii)), such amendment shall not be treated as re-
ducing accrued benefits merely because under such 
amendment any early retirement benefit or retirement-
type subsidy (within the meaning of paragraph (2)(A)) is 
taken into account for purposes of the opening balance 
of the amended plan.’’. 
(3) INTEREST RATE FOR DETERMINATIONS RE-
LATING TO PLAN CONVERSIONS.—Section 204(g) of 
such Act (as amended by paragraph (2)) is amended
further by adding at the end the following new para-
graph: 
‘‘(7) For purposes of this subsection—
‘‘(A) in the case of an amendment described in 
paragraph (1) which takes effect on or after the en-
actment of this paragraph, the interest rate and 
mortality tables to be used in determining the 
present value of the accrued benefit under such 
amendment shall be the applicable rate and tables 
under section 417(e)(3) of the Internal Revenue 
Code of 1986 as of the date on which such amend-
ment takes effect, and 
‘‘(B) in the case of amendments described in 
paragraph (1) which took effect before the enact-
ment of this paragraph, the interest rate and mor-
tality tables to be used in determining the present 
value of the accrued benefit under such amendments 
shall be the applicable rate and tables which were in 
effect under section 412(l) of the Internal Revenue 
Code of 1986 as of the effective date of the respec-
tive amendment.’’. 
(b) AMENDMENTS
TO
THE INTERNAL REVENUE 
CODE OF 1986.—
(1) ELECTION TO MAINTAIN RATE OF ACCRUAL 
IN
EFFECT
BEFORE
PLAN
AMENDMENT.—Section
411(b)(1) of the Internal Revenue Code of 1986 (re-
lating to accrued benefit requirements for defined 
benefit plans) is amended by adding at the end the 
following new subparagraph: 
‘‘(I) ELECTION TO MAINTAIN RATE OF AC-
CRUAL
IN
EFFECT
BEFORE
CERTAIN
PLAN 
AMENDMENTS.—
‘‘(i) IN
GENERAL.—Notwithstanding 
the preceding subparagraphs, in the case 
of a plan amendment to a defined benefit 
plan—
‘‘(I) which has the effect of con-
verting the plan to a plan under which 
the accrued benefit is expressed to 
participants and beneficiaries as an 
amount other than an annual benefit 
commencing at normal retirement age 
(or which has a similar effect as de-
termined under regulations issued 
under clause (iii)), and 
‘‘(II) which has the effect of re-
ducing the rate of future benefit ac-
crual of 1 or more participants, 
such plan shall be treated as not satisfying 
the requirements of this paragraph unless
such plan meets the requirements of clause 
(ii). 
‘‘(ii) REQUIREMENTS.—A plan meets 
the requirements of this clause if the plan 
provides each participant who has attained 
10 years of service (as determined under 
section 203) under the plan at the time 
such amendment takes effect with—
‘‘(I) notice of the plan amend-
ment indicating that it has such ef-
fect, including a comparison of the 
present and projected values of the 
accrued benefit determined both with 
and without regard to the plan 
amendment, and 
‘‘(II) an election, on the date of 
the conversion, to either receive bene-
fits under the terms of the plan as in 
effect on or after the effective date of 
such plan amendment or to receive 
benefits under the terms of the plan 
as in effect immediately before the ef-
fective date of such plan amendment 
(taking into account all benefit accru-
als under such terms since such date).
‘‘(iii) REGULATIONS.—The Secretary 
shall issue regulations under which any 
plan amendment which has an effect simi-
lar to the effect described in clause (i)(I) 
shall be treated as a plan amendment de-
scribed in clause (i)(I). Such regulations 
may provide that if a plan sponsor rep-
resents in communications to participants 
and beneficiaries that a plan amendment 
has an effect described in the preceding 
sentence, such plan amendment shall be 
treated as a plan amendment described in 
clause (i)(I).’’. 
(2) EARLY RETIREMENT SUBSIDY TAKEN INTO 
ACCOUNT FOR PURPOSES OF OPENING BALANCE OF 
HYBRID DEFINED BENEFIT PLAN.—Paragraph (6) 
of section 411(d) (relating to accrued benefit not to 
be decreased by amendment) is amended by adding 
at the end the following new subparagraph: 
‘‘(F) EARLY RETIREMENT SUBSIDY TAKEN 
INTO
ACCOUNT
FOR
PURPOSES
OF
OPENING 
BALANCE
OF
HYBRID
DEFINED
BENEFIT 
PLAN.—In the case of a plan amendment to a 
defined benefit plan which has the effect of con-
verting the plan to a plan under which the ac-
crued benefit is expressed to participants and 
beneficiaries as an amount other than an an-
nual benefit commencing at normal retirement 
age (or a plan amendment to such plan having 
a similar effect as determined under regulations 
issued under subsection (b)(1)(I)(iii)), such 
amendment shall not be treated as reducing ac-
crued benefits merely because under such 
amendment any early retirement benefit or re-
tirement-type subsidy (within the meaning of 
section subparagraph (B)(i)) is taken into ac-
count for purposes of the opening balance of 
the amended plan.’’. 
(3) INTEREST RATE FOR DETERMINATIONS RE-
LATING TO PLAN CONVERSIONS.—Paragraph (6) of 
section 411(d) of such Code (as amended by para-
graph (2)) is amended further by adding at the end 
the following new subparagraph: 
‘‘(G) INTEREST
RATE.—For purposes of 
this paragraph—
‘‘(i) in the case of an amendment de-
scribed in subparagraph (A) which takes 
effect on or after the enactment of this 
subparagraph, the interest rate and mor-
tality tables to be used in determining the
present value of the accrued benefit under 
such amendment shall be the applicable 
rate and tables under section 417(e)(3) as 
of the date on which such amendment 
takes effect, and 
‘‘(ii) in the case of amendments de-
scribed in subparagraph (A) which took ef-
fect before the enactment of this subpara-
graph, the interest rate and mortality ta-
bles to be used in determining the present 
value of the accrued benefit under such 
amendments shall be the applicable rate 
and tables which were in effect under sec-
tion 412(l) as of the effective date of the 
respective amendment.’’.
(b) EFFECTIVE DATE AND RELATED RULES.—
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan amendments taking 
effect after the date of the enactment of this Act. 
(2) PLAN AMENDMENTS SUBJECT TO LITIGA-
TION.—The amendments made by this section also 
shall apply to any plan amendment taking effect on 
or before such date if—
(A) no determination letter is issued on or 
before such date by the Internal Revenue Serv-