HR 2988 — Protecting Prudent Investment of Retirement Savings Act

changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

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 TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

Subtitle A--General Provisions

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 DEFINITIONS

 Sec. 3. For purposes of this title:
 (1) The terms ``employee welfare benefit plan'' and ``welfare 
plan'' mean any plan, fund, or program which was heretofore or 
is hereafter established or maintained by an employer or by an 
employee organization, or by both, to the extent that such 
plan, fund, or program was established or is maintained for the 
purpose of providing for its participants or their 
beneficiaries, through the purchase of insurance or otherwise, 
(A) medical, surgical, or hospital care or benefits, or 
benefits in the event of sickness, accident, disability, death 
or unemployment, or vacation benefits, apprenticeship or other 
training programs, or day care centers, scholarship funds, or 
prepaid legal services, or (B) any benefit described in section 
302(c) of the Labor Management Relations Act, 1947 (other than 
pensions on retirement or death, and insurance to provide such 
pensions).
 (2)(A) Except as provided in subparagraph (B), the terms 
``employee pension benefit plan'' and ``pension plan'' mean any 
plan, fund, or program which was heretofore or is hereafter 
established or maintained by an employer or by an employee 
organization, or by both, to the extent that by its express 
terms or as a result of surrounding circumstances such plan, 
fund, or program--
 (i) provides retirement income to employees, or
 (ii) results in a deferral of income by employees for 
 periods extending to the termination of covered 
 employment or beyond,
regardless of the method of calculating the contributions made 
to the plan, the method of calculating the benefits under the 
plan or the method of distributing benefits from the plan. A 
distribution from a plan, fund, or program shall not be treated 
as made in a form other than retirement income or as a 
distribution prior to termination of covered employment solely 
because such distribution is made to an employee who has 
attained age 62 and who is not separated from employment at the 
time of such distribution.
 (B) The Secretary may by regulation prescribe rules 
consistent with the standards and purposes of this Act 
providing one or more exempt categories under which--
 (i) severance pay arrangements, and
 (ii) supplemental retirement income payments, under 
 which the pension benefits of retirees or their 
 beneficiaries are supplemented to take into account 
 some portion or all of the increases in the cost of 
 living (as determined by the Secretary of Labor) since 
 retirement,
shall, for purposes of this title, be treated as welfare plans 
rather than pension plans. In the case of any arrangement or 
payment a principal effect of which is the evasion of the 
standards or purposes of this Act applicable to pension plans, 
such arrangement or payment shall be treated as a pension plan. 
An applicable voluntary early retirement incentive plan (as 
defined in section 457(e)(11)(D)(ii) of the Internal Revenue 
Code of 1986) making payments or supplements described in 
section 457(e)(11)(D)(i) of such Code, and an applicable 
employment retention plan (as defined in section 457(f)(4)(C) 
of such Code) making payments of benefits described in section 
457(f)(4)(A) of such Code, shall, for purposes of this title, 
be treated as a welfare plan (and not a pension plan) with 
respect to such payments and supplements.
 (C) A pooled employer plan shall be treated as--
 (i) a single employee pension benefit plan or 
 single pension plan; and
 (ii) a plan to which section 210(a) applies.
 (3) The term ``employee benefit plan'' or ``plan'' means an 
employee welfare benefit plan or an employee pension benefit 
plan or a plan which is both an employee welfare benefit plan 
and an employee pension benefit plan.
 (4) The term ``employee organization'' means any labor union 
or any organization of any kind, or any agency or employee 
representation committee, association, group, or plan, in which 
employees participate and which exists for the purpose, in 
whole or in part, of dealing with employers concerning an 
employee benefit plan, or other matters incidental to 
employment relationships; or any employees' beneficiary 
association organized for the purpose in whole or in part, of 
establishing such a plan.
 (5) The term ``employer'' means any person acting directly as 
an employer, or indirectly in the interest of an employer, in 
relation to an employee benefit plan; and includes a group or 
association of employers acting for an employer in such 
capacity.
 (6) The term ``employee'' means any individual employed by an 
employer.
 (7) The term ``participant'' means any employee or former 
employee of an employer, or any member or former member of an 
employee organization, who is or may become eligible to receive 
a benefit of any type from an employee benefit plan which 
covers employees of such employer or members of such 
organization, or whose beneficiaries may be eligible to receive 
any such benefit.
 (8) The term ``beneficiary'' means a person designated by a 
participant, or by the terms of an employee benefit plan, who 
is or may become entitled to a benefit thereunder.
 (9) The term ``person'' means an individual, partnership, 
joint venture, corporation, mutual company, joint-stock 
company, trust, estate, unincorporated organization, 
association, or employee organization.
 (10) The term ``State'' includes any State of the United 
States, the District of Columbia, Puerto Rico, the Virgin 
Islands, American Samoa, Guam, Wake Island, and the Canal Zone. 
The term ``United States'' when used in the geographic sense 
means the States and the Outer Continental Shelf lands defined 
in the Outer Continental Shelf Lands Act (43 U.S.C. 1331-1343).
 (11) The term ``commerce'' means trade, traffic, commerce, 
transportation, or communication between any State and any 
place outside thereof.
 (12) The term ``industry or activity affecting commerce'' 
means any activity, business, or industry in commerce or in 
which a labor dispute would hinder or obstruct commerce or the 
free flow of commerce, and includes any activity or industry 
``affecting commerce'' within the meaning of the Labor 
Management Relations Act, 1947, or the Railway Labor Act.
 (13) The term ``Secretary'' means the Secretary of Labor.
 (14) The term ``party in interest'' means, as to an employee 
benefit plan--
 (A) any fiduciary (including, but not limited to, any 
 administrator, officer, trustee, or custodian), 
 counsel, or employee of such employee benefit plan;
 (B) a person providing services to such plan;
 (C) an employer any of whose employees are covered by 
 such plan;
 (D) an employee organization any of whose members are 
 covered by such plan;
 (E) an owner, direct or indirect, of 50 percent or 
 more of--
 (i) the combined voting power of all classes 
 of stock entitled to vote or the total value of 
 shares of all classes of stock of a 
 corporation,
 (ii) the capital interest or the profits 
 interest of a partnership, or
 (iii) the beneficial interest of a trust or 
 unincorporated enterprise,
 which is an employer or an employee organization 
 described in subparagraph (C) or (D);
 (F) a relative (as defined in paragraph (15)) of any 
 individual described in subparagraph (A), (B), (C), or 
 (E);
 (G) a corporation, partnership, or trust or estate of 
 which (or in which) 50 percent or more of--
 (i) the combined voting power of all classes 
 of stock entitled to vote or the total value of 
 shares of all classes of stock of such 
 corporation,
 (ii) the capital interest or profits interest 
 of such partnership, or
 (iii) the beneficial interest of such trust 
 or estate,
 is owned directly or indirectly, or held by persons 
 described in subparagraph (A), (B), (C), (D), or (E);
 (H) an employee, officer, director (or an individual 
 having powers or responsibilities similar to those of 
 officers or directors), or a 10 percent or more 
 shareholder directly or indirectly, of a person 
 described in subparagraph (B), (C), (D), (E), or (G), 
 or of the employee benefit plan; or
 (I) a 10 percent or more (directly or indirectly in 
 capital or profits) partner or joint venturer of a 
 person described in subparagraph (B), (C), (D), (E), or 
 (G).
The Secretary, after consultation and coordination with the 
Secretary of the Treasury, may by regulation prescribe a 
percentage lower than 50 percent for subparagraph (E) and (G) 
and lower than 10 percent for subparagraph (H) or (I). The 
Secretary may prescribe regulations for determining the 
ownership (direct or indirect) of profits and beneficial 
interests, and the manner in which indirect stockholdings are 
taken into account. Any person who is a party in interest with 
respect to a plan to which a trust described in section 
501(c)(22) of the Internal Revenue Code of 1986 is permitted to 
make payments under section 4223 shall be treated as a party in 
interest with respect to such trust.
 (15) The term ``relative'' means a spouse, ancestor, lineal 
descendant, or spouse of a lineal descendant.
 (16)(A) The term ``administrator'' means--
 (i) the person specifically so designated by the 
 terms of the instrument under which the plan is 
 operated;
 (ii) if an administrator is not so designated, the 
 plan sponsor; or
 (iii) in the case of a plan for which an 
 administrator is not designated and a plan sponsor 
 cannot be identified, such other person as the 
 Secretary may by regulation prescribe.
 (B) The term ``plan sponsor'' means (i) the employer in the 
case of an employee benefit plan established or maintained by a 
single employer, (ii) the employee organization in the case of 
a plan established or maintained by an employee organization, 
(iii) in the case of a plan established or maintained by two or 
more employers or jointly by one or more employers and one or 
more employee organizations, the association, committee, joint 
board of trustees, or other similar group of representatives of 
the parties who establish or maintain the plan, or (iv) in the 
case of a pooled employer plan, the pooled plan provider.
 (17) The term ``separate account'' means an account 
established or maintained by an insurance company under which 
income, gains, and losses, whether or not realized, from assets 
allocated to such account, are, in accordance with the 
applicable contract, credited to or charged against such 
account without regard to other income, gains, or losses of the 
insurance company.
 (18) The term ``adequate consideration'' when used in part 4 
of subtitle B means (A) in the case of a security for which 
there is a generally recognized market, either (i) the price of 
the security prevailing on a national securities exchange which 
is registered under section 6 of the Securities Exchange Act of 
1934, or (ii) if the security is not traded on such a national 
securities exchange, a price not less favorable to the plan 
than the offering price for the security as established by the 
current bid and asked prices quoted by persons independent of 
the issuer and of any party in interest; and (B) in the case of 
an asset other than a security for which there is a generally 
recognized market, the fair market value of the asset as 
determined in good faith by the trustee or named fiduciary 
pursuant to the terms of the plan and in accordance with 
regulations promulgated by the Secretary.
 (19) The term ``nonforfeitable'' when used with respect to a 
pension benefit or right means a claim obtained by a 
participant or his beneficiary to that part of an immediate or 
deferred benefit under a pension plan which arises from the 
participant's service, which is unconditional, and which is 
legally enforceable against the plan. For purposes of this 
paragraph, a right to an accrued benefit derived from employer 
contributions shall not be treated as forfeitable merely 
because the plan contains a provision described in section 
203(a)(3).
 (20) The term ``security'' has the same meaning as such term 
has under section 2(1) of the Securities Act of 1933 (15 U.S.C. 
77b(1)).
 (21)(A) Except as otherwise provided in subparagraph (B), a 
person is a fiduciary with respect to a plan to the extent (i) 
he exercises any discretionary authority or discretionary 
control respecting management of such plan or exercises any 
authority or control respecting management or disposition of 
its assets, (ii) he renders investment advice for a fee or 
other compensation, direct or indirect, with respect to any 
moneys or other property of such plan, or has any authority or 
responsibility to do so, or (iii) he has any discretionary 
authority or discretionary responsibility in the administration 
of such plan. Such term includes any person designated under 
section 405(c)(1)(B).
 (B) If any money or other property of an employee benefit 
plan is invested in securities issued by an investment company 
registered under the Investment Company Act of 1940, such 
investment shall not by itself cause such investment company or 
such investment company's investment adviser or principal 
underwriter to be deemed to be a fiduciary or a party in 
interest as those terms are defined in this title, except 
insofar as such investment company or its investment adviser or 
principal underwriter acts in connection with an employee 
benefit plan covering employees of the investment company, the 
investment adviser, or its principal underwriter. Nothing 
contained in this subparagraph shall limit the duties imposed 
on such investment company, investment adviser, or principal 
underwriter by any other law.
 (22) The term ``normal retirement benefit'' means the greater 
of the early retirement benefit under the plan, or the benefit 
under the plan commencing at normal retirement age. The normal 
retirement benefit shall be determined without regard to--
 (A) medical benefits, and
 (B) disability benefits not in excess of the 
 qualified disability benefit.
For purposes of this paragraph, a qualified disability benefit 
is a disability benefit provided by a plan which does not 
exceed the benefit which would be provided for the participant 
if he separated from the service at normal retirement age. For 
purposes of this paragraph, the early retirement benefit under 
a plan shall be determined without regard to any benefit under 
the plan which the Secretary of the Treasury finds to be a 
benefit described in section 204(b)(1)(G).
 (23) The term ``accrued benefit'' means--
 (A) in the case of a defined benefit plan, the 
 individual's accrued benefit determined under the plan 
 and, except as provided in section 204(c)(3), expressed 
 in the form of an annual benefit commencing at normal 
 retirement age, or
 (B) in the case of a plan which is an individual 
 account plan, the balance of the individual's account.
The accrued benefit of an employee shall not be less than the 
amount determined under section 204(c)(2)(B) with respect to 
the employee's accumulated contribution.
 (24) The term ``normal retirement age'' means the earlier 
of--
 (A) the time a plan participant attains normal 
 retirement age under the plan, or
 (B) the later of--
 (i) the time a plan participant attains age 
 65, or
 (ii) the 5th anniversary of the time a plan 
 participant commenced participation in the 
 plan.
 (25) The term ``vested liabilities'' means the present value 
of the immediate or deferred benefits available at normal 
retirement age for participants and their beneficiaries which 
are nonforfeitable.
 (26) The term ``current value'' means fair market value where 
available and otherwise the fair value as determined in good 
faith by a trustee or a named fiduciary (as defined in section 
402(a)(2)) pursuant to the terms of the plan and in accordance 
with regulations of the Secretary, assuming an orderly 
liquidation at the time of such determination.
 (27) The term ``present value'', with respect to a liability, 
means the value adjusted to reflect anticipated events. Such 
adjustments shall conform to such regulations as the Secretary 
of the Treasury may prescribe.
 (28) The term ``normal service cost'' or ``normal cost'' 
means the annual cost of future pension benefits and 
administrative expenses assigned, under an actuarial cost 
method, to years subsequent to a particular valuation date of a 
pension plan. The Secretary of the Treasury may prescribe 
regulations to carry out this paragraph.
 (29) The term ``accrued liability'' means the excess of the 
present value, as of a particular valuation date of a pension 
plan, of the projected future benefit costs and administrative 
expenses for all plan participants and beneficiaries over the 
present value of future contributions for the normal cost of 
all applicable plan participants and beneficiaries. The 
Secretary of the Treasury may prescribe regulations to carry 
out this paragraph.
 (30) The term ``unfunded accrued liability'' means the excess 
of the accrued liability, under an actuarial cost method which 
so provides, over the present value of the assets of a pension 
plan. The Secretary of the Treasury may prescribe regulations 
to carry out this paragraph.
 (31) The term ``advance funding actuarial cost method'' or 
``actuarial cost method'' means a recognized actuarial 
technique utilized for establishing the amount and incidence of 
the annual actuarial cost of pension plan benefits and 
expenses. Acceptable actuarial cost methods shall include the 
accrued benefit cost method (unit credit method), the entry age 
normal cost method, the individual level premium cost method, 
the aggregate cost method, the attained age normal cost method, 
and the frozen initial liability cost method. The terminal 
funding cost method and the current funding (pay-as-you-go) 
cost method are not acceptable actuarial cost methods. The 
Secretary of the Treasury shall issue regulations to further 
define acceptable actuarial cost methods.
 (32) The term ``governmental plan'' means a plan established 
or maintained for its employees by the Government of the United 
States, by the government of any State or political subdivision 
thereof, or by any agency or instrumentality of any of the 
foregoing. The term ``governmental plan'' also includes any 
plan to which the Railroad Retirement Act of 1935 or 1937 
applies, and which is financed by contributions required under 
that Act and any plan of an international organization which is 
exempt from taxation under the provisions of the International 
Organizations Immunities Act (59 Stat. 669). The term 
``governmental plan'' includes a plan which is established and 
maintained by an Indian tribal government (as defined in 
section 7701(a)(40) of the Internal Revenue Code of 1986), a 
subdivision of an Indian tribal government (determined in 
accordance with section 7871(d) of such Code), or an agency or 
instrumentality of either, and all of the participants of which 
are employees of such entity substantially all of whose 
services as such an employee are in the performance of 
essential governmental functions but not in the performance of 
commercial activities (whether or not an essential government 
function)
 (33)(A) The term ``church plan'' means a plan established and 
maintained (to the extent required in clause (ii) of 
subparagraph (B)) for its employees (or their beneficiaries) by 
a church or by a convention or association of churches which is 
exempt from tax under section 501 of the Internal Revenue Code 
of 1986.
 (B) The term ``church plan'' does not include a plan--
 (i) which is established and maintained primarily for 
 the benefit of employees (or their beneficiaries) of 
 such church or convention or association of churches 
 who are employed in connection with one or more 
 unrelated trades or businesses (within the meaning of 
 section 513 of the Internal Revenue Code of 1986), or
 (ii) if less than substantially all of the 
 individuals included in the plan are individuals 
 described in subparagraph (A) or in clause (ii) of 
 subparagraph (C) (or their beneficiaries).
 (C) For purposes of this paragraph--
 (i) A plan established and maintained for its 
 employees (or their beneficiaries) by a church or by a 
 convention or association of churches includes a plan 
 maintained by an organization, whether a civil law 
 corporation or otherwise, the principal purpose or 
 function of which is the administration or funding of a 
 plan or program for the provision of retirement 
 benefits or welfare benefits, or both, for the 
 employees of a church or a convention or association of 
 churches, if such organization is controlled by or 
 associated with a church or a convention or association 
 of churches.
 (ii) The term employee of a church or a convention or 
 association of churches includes--
 (I) a duly ordained, commissioned, or 
 licensed minister of a church in the exercise 
 of his ministry, regardless of the source of 
 his compensation;
 (II) an employee of an organization, whether 
 a civil law corporation or otherwise, which is 
 exempt from tax under section 501 of the 
 Internal Revenue Code of 1986 and which is 
 controlled by or associated with a church or a 
 convention or association of churches; and
 (III) an individual described in clause (v).
 (iii) A church or a convention or association of 
 churches which is exempt from tax under section 501 of 
 the Internal Revenue Code of 1986 shall be deemed the 
 employer of any individual included as an employee 
 under clause (ii).
 (iv) An organization, whether a civil law corporation 
 or otherwise, is associated with a church or a 
 convention or association of churches if it shares 
 common religious bonds and convictions with that church 
 or convention or association of churches.
 (v) If an employee who is included in a church plan 
 separates from the service of a church or a convention 
 or association of churches or an organization, whether 
 a civil law corporation or otherwise, which is exempt 
 from tax under section 501 of the Internal Revenue Code 
 of 1986 and which is controlled by or associated with a 
 church or a convention or association of churches, the 
 church plan shall not fail to meet the requirements of 
 this paragraph merely because the plan--
 (I) retains the employee's accrued benefit or 
 account for the payment of benefits to the 
 employee or his beneficiaries pursuant to the 
 terms of the plan; or
 (II) receives contributions on the employee's 
 behalf after the employee's separation from 
 such service, but only for a period of 5 years 
 after such separation, unless the employee is 
 disabled (within the meaning of the disability 
 provisions of the church plan or, if there are 
 no such provisions in the church plan, within 
 the meaning of section 72(m)(7) of the Internal 
 Revenue Code of 1986) at the time of such 
 separation from service.
 (D)(i) If a plan established and maintained for its employees 
(or their beneficiaries) by a church or by a convention or 
association of churches which is exempt from tax under section 
501 of the Internal Revenue Code of 1986 fails to meet one or 
more of the requirements of this paragraph and corrects its 
failure to meet such requirements within the correction period, 
the plan shall be deemed to meet the requirements of this 
paragraph for the year in which the correction was made and for 
all prior years.
 (ii) If a correction is not made within the correction 
period, the plan shall be deemed not to meet the requirements 
of this paragraph beginning with the date on which the earliest 
failure to meet one or more of such requirements occurred.
 (iii) For purposes of this subparagraph, the term 
``correction period'' means--
 (I) the period ending 270 days after the date of 
 mailing by the Secretary of the Treasury of a notice of 
 default with respect to the plan's failure to meet one 
 or more of the requirements of this paragraph; or
 (II) any period set by a court of competent 
 jurisdiction after a final determination that the plan 
 fails to meet such requirements, or, if the court does 
 not specify such period, any reasonable period 
 determined by the Secretary of the Treasury on the 
 basis of all the facts and circumstances, but in any 
 event not less than 270 days after the determination 
 has become final; or
 (III) any additional period which the Secretary of 
 the Treasury determines is reasonable or necessary for 
 the correction of the default,
whichever has the latest ending date.
 (34) The term ``individual account plan'' or ``defined 
contribution plan'' means a pension plan which provides for an 
individual account for each participant and for benefits based 
solely upon the amount contributed to the participant's 
account, and any income, expenses, gains and losses, and any 
forfeitures of accounts of other participants which may be 
allocated to such participant's account.
 (35) The term ``defined benefit plan'' means a pension plan 
other than an individual account plan; except that a pension 
plan which is not an individual account plan and which provides 
a benefit derived from employer contributions which is based 
partly on the balance of the separate account of a 
participant--
 (A) for the purposes of section 202, shall be treated 
 as an individual account plan, and
 (B) for the purposes of paragraph (23) of this 
 section and section 204, shall be treated as an 
 individual account plan to the extent benefits are 
 based upon the separate account of a participant and as 
 a defined benefit plan with respect to the remaining 
 portion of benefits under the plan.
 (36) The term ``excess benefit plan'' means a plan maintained 
by an employer solely for the purpose of providing benefits for 
certain employees in excess of the limitations on contributions 
and benefits imposed by section 415 of the Internal Revenue 
Code of 1986 on plans to which that section applies, without 
regard to whether the plan is funded. To the extent that a 
separable part of a plan (as determined by the Secretary of 
Labor) maintained by an employer is maintained for such 
purpose, that part shall be treated as a separate plan which is 
an excess benefit plan.
 (37)(A) The term ``multiemployer plan'' means a plan--
 (i) to which more than one employer is required to 
 contribute,
 (ii) which is maintained pursuant to one or more 
 collective bargaining agreements between one or more 
 employee organizations and more than one employer, and
 (iii) which satisfies such other requirements as the 
 Secretary may prescribe by regulation.
 (B) For purposes of this paragraph, all trades or businesses 
(whether or not incorporated) which are under common control 
within the meaning of section 4001(b)(1) are considered a 
single employer.
 (C) Notwithstanding subparagraph (A), a plan is a 
multiemployer plan on and after its termination date if the 
plan was a multiemployer plan under this paragraph for the plan 
year preceding its termination date.
 (D) For purposes of this title, notwithstanding the preceding 
provisions of this paragraph, for any plan year which began 
before the date of the enactment of the Multiemployer Pension 
Plan Amendments Act of 1980, the term ``multiemployer plan'' 
means a plan described in section 3(37) of this Act as in 
effect immediately before such date.
 (E) Within one year after the date of the enactment of the 
Multiemployer Pension Plan Amendments Act of 1980, a 
multiemployer plan may irrevocably elect, pursuant to 
procedures established by the corporation and subject to the 
provisions of sections 4403(b) and (c), that the plan shall not 
be treated as a multiemployer plan for all purposes under this 
Act or the Internal Revenue Code of 1954 if for each of the 
last 3 plan years ending prior to the effective date of the 
Multiemployer Pension Plan Amendments Act of 1980--
 (i) the plan was not a multiemployer plan because the 
 plan was not a plan described in section 3(37)(A)(iii) 
 of this Act and section 414(f)(1)(C) of the Internal 
 Revenue Code of 1954 (as such provisions were in effect 
 on the day before the date of the enactment of the 
 Multiemployer Pension Plan Amendments Act of 1980 ); 
 and
 (ii) the plan had been identified as a plan that was 
 not a multiemployer plan in substantially all its 
 filings with the corporation, the Secretary of Labor 
 and the Secretary of the Treasury.
 (F)(i) For purposes of this title a qualified football 
coaches plan--
 (I) shall be treated as a multiemployer plan to the 
 extent not inconsistent with the purposes of this 
 subparagraph; and
 (II) notwithstanding section 401(k)(4)(B) of the 
 Internal Revenue Code of 1986, may include a qualified 
 cash and deferred arrangement.
 (ii) For purposes of this subparagraph, the term ``qualified 
football coaches plan'' means any defined contribution plan 
which is established and maintained by an organization--
 (I) which is described in section 501(c) of such 
 Code;
 (II) the membership of which consists entirely of 
 individuals who primarily coach football as full-time 
 employees of 4-year colleges or universities described 
 in section 170(b)(1)(A)(ii) of such Code; and
 (III) which was in existence on September 18, 1986.
 (G)(i) Within 1 year after the enactment of the 
 Pension Protection Act of 2006--
 (I) an election under subparagraph (E) may be 
 revoked, pursuant to procedures prescribed by 
 the Pension Benefit Guaranty Corporation, if, 
 for each of the 3 plan years prior to the date 
 of the enactment of that Act, the plan would 
 have been a multiemployer plan but for the 
 election under subparagraph (E), and
 (II) a plan that meets the criteria in 
 clauses (i) and (ii) of subparagraph (A) of 
 this paragraph or that is described in clause 
 (vi) may, pursuant to procedures prescribed by 
 the Pension Benefit Guaranty Corporation, elect 
 to be a multiemployer plan, if--
 (aa) for each of the 3 plan years 
 immediately preceding the first plan 
 year for which the election under this 
 paragraph is effective with respect to 
 the plan, the plan has met those 
 criteria or is so described,
 (bb) substantially all of the plan's 
 employer contributions for each of 
 those plan years were made or required 
 to be made by organizations that were 
 exempt from tax under section 501 of 
 the Internal Revenue Code of 1986, and
 (cc) the plan was established prior 
 to September 2, 1974.
 (ii) An election under this subparagraph shall be 
 effective for all purposes under this Act and under the 
 Internal Revenue Code of 1986, starting with any plan 
 year beginning on or after January 1, 1999, and ending 
 before January 1, 2008, as designated by the plan in 
 the election made under clause (i)(II).
 (iii) Once made, an election under this subparagraph 
 shall be irrevocable, except that a plan described in 
 clause (i)(II) shall cease to be a multiemployer plan 
 as of the plan year beginning immediately after the 
 first plan year for which the majority of its employer 
 contributions were made or required to be made by 
 organizations that were not exempt from tax under 
 section 501 of the Internal Revenue Code of 1986.
 (iv) The fact that a plan makes an election under 
 clause (i)(II) does not imply that the plan was not a 
 multiemployer plan prior to the date of the election or 
 would not be a multiemployer plan without regard to the 
 election.
 (v)(I) No later than 30 days before an election is 
 made under this subparagraph, the plan administrator 
 shall provide notice of the pending election to each 
 plan participant and beneficiary, each labor 
 organization representing such participants or 
 beneficiaries, and each employer that has an obligation 
 to contribute to the plan, describing the principal 
 differences between the guarantee programs under title 
 IV and the benefit restrictions under this title for 
 single employer and multiemployer plans, along with 
 such other information as the plan administrator 
 chooses to include.
 (II) Within 180 days after the date of enactment of 
 the Pension Protection Act of 2006, the Secretary shall 
 prescribe a model notice under this clause.
 (III) A plan administrator's failure to provide the 
 notice required under this subparagraph shall be 
 treated for purposes of section 502(c)(2) as a failure 
 or refusal by the plan administrator to file the annual 
 report required to be filed with the Secretary under 
 section 101(b)(1).
 (vi) A plan is described in this clause if it is a 
 plan sponsored by an organization which is described in 
 section 501(c)(5) of the Internal Revenue Code of 1986 
 and exempt from tax under section 501(a) of such Code 
 and which was established in Chicago, Illinois, on 
 August 12, 1881.
 (vii) For purposes of this Act and the Internal Revenue Code 
of 1986, a plan making an election under this subparagraph 
shall be treated as maintained pursuant to a collective 
bargaining agreement if a collective bargaining agreement, 
expressly or otherwise, provides for or permits employer 
contributions to the plan by one or more employers that are 
signatory to such agreement, or participation in the plan by 
one or more employees of an employer that is signatory to such 
agreement, regardless of whether the plan was created, 
established, or maintained for such employees by virtue of 
another document that is not a collective bargaining agreement.
 (38) The term ``investment manager'' means any fiduciary 
(other than a trustee or named fiduciary, as defined in section 
402(a)(2))--
 (A) who has the power to manage, acquire, or dispose 
 of any asset of a plan;
 (B) who (i) is registered as an investment adviser 
 under the Investment Advisers Act of 1940; (ii) is not 
 registered as an investment adviser under such Act by 
 reason of paragraph (1) of section 203A(a) of such Act, 
 is registered as an investment adviser under the laws 
 of the State (referred to in such paragraph (1)) in 
 which it maintains its principal office and place of 
 business, and, at the time the fiduciary last filed the 
 registration form most recently filed by the fiduciary 
 with such State in order to maintain the fiduciary's 
 registration under the laws of such State, also filed a 
 copy of such form with the Secretary; (iii) is a bank, 
 as defined in that Act; or (iv) is an insurance company 
 qualified to perform services described in subparagraph 
 (A) under the laws of more than one State; and
 (C) has acknowledged in writing that he is a 
 fiduciary with respect to the plan.
 (39) The terms ``plan year'' and ``fiscal year of the plan'' 
mean, with respect to a plan, the calendar, policy, or fiscal 
year on which the records of the plan are kept.
 (40)(A) The term ``multiple employer welfare arrangement'' 
means an employee welfare benefit plan, or any other 
arrangement (other than an employee welfare benefit plan), 
which is established or maintained for the purpose of offering 
or providing any benefit described in paragraph (1) to the 
employees of two or more employers (including one or more self-
employed individuals), or to their beneficiaries, except that 
such term does not include any such plan or other arrangement 
which is established or maintained--
 (i) under or pursuant to one or more agreements which 
 the Secretary finds to be collective bargaining 
 agreements,
 (ii) by a rural electric cooperative, or
 (iii) by a rural telephone cooperative association.
 (B) For purposes of this paragraph--
 (i) two or more trades or businesses, whether or not 
 incorporated, shall be deemed a single employer if such 
 trades or businesses are within the same control group,
 (ii) the term ``control group'' means a group of 
 trades or businesses under common control,
 (iii) the determination of whether a trade or 
 business is under ``common control'' with another trade 
 or business shall be determined under regulations of 
 the Secretary applying principles similar to the 
 principles applied in determining whether employees of 
 two or more trades or businesses are treated as 
 employed by a single employer under section 4001(b), 
 except that, for purposes of this paragraph, common 
 control shall not be based on an interest of less than 
 25 percent,
 (iv) the term ``rural electric cooperative'' means--
 (I) any organization which is exempt from tax 
 under section 501(a) of the Internal Revenue 
 Code of 1986 and which is engaged primarily in 
 providing electric service on a mutual or 
 cooperative basis, and
 (II) any organization described in paragraph 
 (4) or (6) of section 501(c) of the Internal 
 Revenue Code of 1986 which is exempt from tax 
 under section 501(a) of such Code and at least 
 80 percent of the members of which are 
 organizations described in subclause (I), and
 (v) the term ``rural telephone cooperative 
 association'' means an organization described in 
 paragraph (4) or (6) of section 501(c) of the Internal 
 Revenue Code of 1986 which is exempt from tax under 
 section 501(a) of such Code and at least 80 percent of 
 the members of which are organizations engaged 
 primarily in providing telephone service to rural areas 
 of the United States on a mutual, cooperative, or other 
 basis.
 (41) Single-employer plan.--The term ``single-employer plan'' 
means an employee benefit plan other than a multiemployer plan.
 (42) the term ``plan assets'' means plan assets as defined by 
such regulations as the Secretary may prescribe, except that 
under such regulations the assets of any entity shall not be 
treated as plan assets if, immediately after the most recent 
acquisition of any equity interest in the entity, less than 25 
percent of the total value of each class of equity interest in 
the entity is held by benefit plan investors. For purposes of 
determinations pursuant to this paragraph, the value of any 
equity interest held by a person (other than such a benefit 
plan investor) who has discretionary authority or control with 
respect to the assets of the entity or any person who provides 
investment advice for a fee (direct or indirect) with respect 
to such assets, or any affiliate of such a person, shall be 
disregarded for purposes of calculating the 25 percent 
threshold. An entity shall be considered to hold plan assets 
only to the extent of the percentage of the equity interest 
held by benefit plan investors. For purposes of this paragraph, 
the term ``benefit plan investor'' means an employee benefit 
plan subject to part 4, any plan to which section 4975 of the 
Internal Revenue Code of 1986 applies, and any entity whose 
underlying assets include plan assets by reason of a plan's 
investment in such entity.
 (43) Pooled employer plan.--
 (A) In general.--The term ``pooled employer 
 plan'' means a plan--
 (i) which is an individual account 
 plan established or maintained for the 
 purpose of providing benefits to the 
 employees of 2 or more employers;
 (ii) which is a plan described in 
 section 401(a) of the Internal Revenue 
 Code of 1986 which includes a trust 
 exempt from tax under section 501(a) of 
 such Code, a plan that consists of 
 annuity contracts described in section 
 403(b) of such Code, or a plan that 
 consists of individual retirement 
 accounts described in section 408 of 
 such Code (including by reason of 
 subsection (c) thereof); and
 (iii) the terms of which meet the 
 requirements of subparagraph (B).
 Such term shall not include a plan maintained 
 by employers which have a common interest other 
 than having adopted the plan, but such term 
 shall include any plan (other than a plan 
 excepted from the application of this title by 
 section 4(b)(2)) maintained for the benefit of 
 the employees of more than 1 employer that 
 consists of annuity contracts described in 
 section 403(b) of such Code and that meets the 
 requirements of subparagraph (B) of section 
 413(e)(1) of such Code.
 (B) Requirements for plan terms.--The 
 requirements of this subparagraph are met with 
 respect to any plan if the terms of the plan--
 (i) designate a pooled plan provider 
 and provide that the pooled plan 
 provider is a named fiduciary of the 
 plan;
 (ii) designate a named fiduciary 
 (other than an employer in the plan) to 
 be responsible for collecting 
 contributions to the plan and require 
 such fiduciary to implement written 
 contribution collection procedures that 
 are reasonable, diligent, and 
 systematic;
 (iii) provide that each employer in 
 the plan retains fiduciary 
 responsibility for--
 (I) the selection and 
 monitoring in accordance with 
 section 404(a) of the person 
 designated as the pooled plan 
 provider and any other person 
 who, in addition to the pooled 
 plan provider, is designated as 
 a named fiduciary of the plan; 
 and
 (II) to the extent not 
 otherwise delegated to another 
 fiduciary by the pooled plan 
 provider and subject to the 
 provisions of section 404(c), 
 the investment and management 
 of the portion of the plan's 
 assets attributable to the 
 employees of the employer (or 
 beneficiaries of such 
 employees);
 (iv) provide that employers in the 
 plan, and participants and 
 beneficiaries, are not subject to 
 unreasonable restrictions, fees, or 
 penalties with regard to ceasing 
 participation, receipt of 
 distributions, or otherwise 
 transferring assets of the plan in 
 accordance with section 208 or 
 paragraph (44)(C)(i)(II);
 (v) require--
 (I) the pooled plan provider 
 to provide to employers in the 
 plan any disclosures or other 
 information which the Secretary 
 may require, including any 
 disclosures or other 
 information to facilitate the 
 selection or any monitoring of 
 the pooled plan provider by 
 employers in the plan; and
 (II) each employer in the 
 plan to take such actions as 
 the Secretary or the pooled 
 plan provider determines are 
 necessary to administer the 
 plan or for the plan to meet 
 any requirement applicable 
 under this Act or the Internal 
 Revenue Code of 1986 to a plan 
 described in section 401(a) of 
 such Code, a plan that consists 
 of annuity contracts described 
 in section 403(b) of such Code, 
 or to a plan that consists of 
 individual retirement accounts 
 described in section 408 of 
 such Code (including by reason 
 of subsection (c) thereof), 
 whichever is applicable, 
 including providing any 
 disclosures or other 
 information which the Secretary 
 may require or which the pooled 
 plan provider otherwise 
 determines are necessary to 
 administer the plan or to allow 
 the plan to meet such 
 requirements; and
 (vi) provide that any disclosure or 
 other information required to be 
 provided under clause (v) may be 
 provided in electronic form and will be 
 designed to ensure only reasonable 
 costs are imposed on pooled plan 
 providers and employers in the plan.
 (C) Exceptions.--The term ``pooled employer 
 plan'' does not include--
 (i) a multiemployer plan; or
 (ii) a plan established before the 
 date of the enactment of the Setting 
 Every Community Up for Retirement 
 Enhancement Act of 2019 unless the plan 
 administrator elects that the plan will 
 be treated as a pooled employer plan 
 and the plan meets the requirements of 
 this title applicable to a pooled 
 employer plan established on or after 
 such date.
 (D) Treatment of employers as plan 
 sponsors.--Except with respect to the 
 administrative duties of the pooled plan 
 provider described in paragraph (44)(A)(i), 
 each employer in a pooled employer plan shall 
 be treated as the plan sponsor with respect to 
 the portion of the plan attributable to 
 employees of such employer (or beneficiaries of 
 such employees).
 (44) Pooled plan provider.--
 (A) In general.--The term ``pooled plan 
 provider'' means a person who--
 (i) is designated by the terms of a 
 pooled employer plan as a named 
 fiduciary, as the plan administrator, 
 and as the person responsible for the 
 performance of all administrative 
 duties (including conducting proper 
 testing with respect to the plan and 
 the employees of each employer in the 
 plan) which are reasonably necessary to 
 ensure that--
 (I) the plan meets any 
 requirement applicable under 
 this Act or the Internal 
 Revenue Code of 1986 to a plan 
 described in section 401(a) of 
 such Code, a plan that consists 
 of annuity contracts described 
 in section 403(b) of such Code, 
 or to a plan that consists of 
 individual retirement accounts 
 described in section 408 of 
 such Code (including by reason 
 of subsection (c) thereof), 
 whichever is applicable; and
 (II) each employer in the 
 plan takes such actions as the 
 Secretary or pooled plan 
 provider determines are 
 necessary for the plan to meet 
 the requirements described in 
 subclause (I), including 
 providing the disclosures and 
 information described in 
 paragraph (43)(B)(v)(II);
 (ii) registers as a pooled plan 
 provider with the Secretary, and 
 provides to the Secretary such other 
 information as the Secretary may 
 require, before beginning operations as 
 a pooled plan provider;
 (iii) acknowledges in writing that 
 such person is a named fiduciary, and 
 the plan administrator, with respect to 
 the pooled employer plan; and
 (iv) is responsible for ensuring that 
 all persons who handle assets of, or 
 who are fiduciaries of, the pooled 
 employer plan are bonded in accordance 
 with section 412.
 (B) Audits, examinations and 
 investigations.--The Secretary may perform 
 audits, examinations, and investigations of 
 pooled plan providers as may be necessary to 
 enforce and carry out the purposes of this 
 paragraph and paragraph (43).
 (C) Guidance.--The Secretary shall issue such 
 guidance as the Secretary determines 
 appropriate to carry out this paragraph and 
 paragraph (43), including guidance--
 (i) to identify the administrative 
 duties and other actions required to be 
 performed by a pooled plan provider 
 under either such paragraph; and
 (ii) which requires in appropriate 
 cases that if an employer in the plan 
 fails to take the actions required 
 under subparagraph (A)(i)(II)--
 (I) the assets of the plan 
 attributable to employees of 
 such employer (or beneficiaries 
 of such employees) are 
 transferred to a plan 
 maintained only by such 
 employer (or its successor), to 
 an eligible retirement plan as 
 defined in section 402(c)(8)(B) 
 of the Internal Revenue Code of 
 1986 for each individual whose 
 account is transferred, or to 
 any other arrangement that the 
 Secretary determines is 
 appropriate in such guidance; 
 and
 (II) such employer (and not 
 the plan with respect to which 
 the failure occurred or any 
 other employer in such plan) 
 shall, except to the extent 
 provided in such guidance, be 
 liable for any liabilities with 
 respect to such plan 
 attributable to employees of 
 such employer (or beneficiaries 
 of such employees).
 The Secretary shall take into account 
 under clause (ii) whether the failure 
 of an employer or pooled plan provider 
 to provide any disclosures or other 
 information, or to take any other 
 action, necessary to administer a plan 
 or to allow a plan to meet requirements 
 described in subparagraph (A)(i)(II) 
 has continued over a period of time 
 that demonstrates a lack of commitment 
 to compliance. The Secretary may waive 
 the requirements of subclause (ii)(I) 
 in appropriate circumstances if the 
 Secretary determines it is in the best 
 interests of the employees of the 
 employer referred to in such clause 
 (and the beneficiaries of such 
 employees) to retain the assets in the 
 plan with respect to which the 
 employer's failure occurred.
 (D) Good faith compliance with law before 
 guidance.--An employer or pooled plan provider 
 shall not be treated as failing to meet a 
 requirement of guidance issued by the Secretary 
 under subparagraph (C) if, before the issuance 
 of such guidance, the employer or pooled plan 
 provider complies in good faith with a 
 reasonable interpretation of the provisions of 
 this paragraph, or paragraph (43), to which 
 such guidance relates.
 (E) Aggregation rules.--For purposes of this 
 paragraph, in determining whether a person 
 meets the requirements of this paragraph to be 
 a pooled plan provider with respect to any 
 plan, all persons who perform services for the 
 plan and who are treated as a single employer 
 under subsection (b), (c), (m), or (o) of 
 section 414 of the Internal Revenue Code of 
 1986 shall be treated as one person.
 (45) Pension-linked emergency savings account.--The 
 term ``pension-linked emergency savings account'' means 
 a short-term savings account established and maintained 
 as part of an individual account plan, in accordance 
 with section 801, on behalf of an eligible participant 
 (as such term is defined in section 801(b)) that--
 (A) is a designated Roth account (within the 
 meaning of section 402A of the Internal Revenue 
 Code of 1986) and accepts only participant 
 contributions, as described in section 
 801(d)(1)(A), which are designated Roth 
 contributions subject to the rules of section 
 402A(e) of such Code; and
 (B) meets the requirements of part 8 of 
 subtitle B.
 (46) Designated investment alternative.--
 (A) In general.--The term ``designated 
 investment alternative'' means any investment 
 alternative designated by a responsible 
 fiduciary of an individual account plan 
 described in subsection 404(c) into which 
 participants and beneficiaries may direct the 
 investment of assets held in, or contributed 
 to, their individual accounts.
 (B) Exception.--The term ``designated 
 investment alternative'' does not include 
 brokerage windows, self-directed brokerage 
 accounts, or similar plan arrangements that 
 enable participants and beneficiaries to select 
 investments beyond those designated by a 
 responsible plan fiduciary.

 * * * * * * *

Subtitle B--Regulatory Provisions

 * * * * * * *

Part 4--Fiduciary Responsibility

 * * * * * * *

 FIDUCIARY DUTIES

 Sec. 404. (a)(1) Subject to sections 403(c) and (d), 4042, 
and 4044, a fiduciary shall discharge his duties with respect 
to a plan solely in the interest of the participants and 
beneficiaries and--
 (A) for the exclusive purpose of:
 (i) providing benefits to participants and 
 their beneficiaries; and
 (ii) defraying reasonable expenses of 
 administering the plan;
 (B) with the care, skill, prudence, and diligence 
 under the circumstances then prevailing that a prudent 
 man acting in a like capacity and familiar with such 
 matters would use in the conduct of an enterprise of a 
 like character and with like aims;
 (C) by diversifying the investments of the plan so as 
 to minimize the risk of large losses, unless under the 
 circumstances it is clearly prudent not to do so; [and]
 (D) in accordance with the documents and instruments 
 governing the plan insofar as such documents and 
 instruments are consistent with the provisions of this 
 title and title IV[.]; and
 (E) by selecting, monitoring, and retaining any 
 fiduciary, counsel, employee, or service provider of 
 the plan--
 (i) in accordance with subparagraphs (A) and 
 (B); and
 (ii) without regard to race, color, religion, 
 sex, or national origin.
 (2) In the case of an eligible individual account plan (as 
defined in section 407(d)(3)), the diversification requirement 
of paragraph (1)(C) and the prudence requirement (only to the 
extent that it requires diversification) of paragraph (1)(B) is 
not violated by acquisition or holding of qualifying employer 
real property or qualifying employer securities (as defined in 
section 407(d)(4) and (5)).
 (3) Interest based on pecuniary factors.--
 (A) In general.--For purposes of paragraph (1), a 
 fiduciary shall be considered to act solely in the 
 interest of the participants and beneficiaries of the 
 plan with respect to an investment or investment course 
 of action only if the fiduciary's action with respect 
 to such investment or investment course of action is 
 based solely on pecuniary factors (except as provided 
 in subparagraph (B)). The fiduciary may not subordinate 
 the interests of the participants and beneficiaries in 
 their retirement income or financial benefits under the 
 plan to other objectives and may not sacrifice 
 investment return or take on additional investment risk 
 to promote non-pecuniary benefits or goals. The weight 
 given to any pecuniary factor by a fiduciary shall 
 reflect a prudent assessment of the impact of such 
 factor on risk and return.
 (B) Use of non-pecuniary factors for investment 
 alternatives.--Notwithstanding paragraph (A), if a 
 fiduciary is unable to distinguish between or among 
 investment alternatives or investment courses of action 
 on the basis of pecuniary factors alone, the fiduciary 
 may use non-pecuniary factors as the deciding factor if 
 the fiduciary documents--
 (i) why pecuniary factors were not sufficient 
 to select a plan investment or investment 
 course of action;
 (ii) how the selected investment compares to 
 the alternative investments with regard to the 
 composition of the portfolio with regard to 
 diversification, the liquidity and current 
 return of the portfolio relative to the 
 anticipated cash flow requirements of the plan, 
 and the projected return of the portfolio 
 relative to the funding objectives of the plan; 
 and
 (iii) how the selected non-pecuniary factor 
 or factors are consistent with the interests of 
 the participants and beneficiaries in their 
 retirement income or financial benefits under 
 the plan.
 (C) Investment alternatives for participant-directed 
 individual account plans.--In selecting or retaining 
 investment options for a pension plan described in 
 subsection (c)(1)(A), a fiduciary is not prohibited 
 from considering, selecting, or retaining an investment 
 option on the basis that such investment option 
 promotes, seeks, or supports one or more non-pecuniary 
 benefits or goals, if--
 (i) the fiduciary satisfies the requirements 
 of paragraph (1) and subparagraphs (A) and (B) 
 of this paragraph in selecting or retaining any 
 such investment option; and
 (ii) such investment option is not added or 
 retained as, or included as a component of, a 
 default investment under subsection (c)(5) (or 
 any other default investment alternative) if 
 its investment objectives or goals or its 
 principal investment strategies include, 
 consider, or indicate the use of one or more 
 non-pecuniary factors.
 (D) Definitions.--For the purposes of this paragraph:
 (i) The term ``pecuniary factor'' means a 
 factor that a fiduciary prudently determines is 
 expected to have a material effect on the risk 
 or return of an investment based on appropriate 
 investment horizons consistent with the plan's 
 investment objectives and the funding policy 
 established pursuant to section 402(b)(1).
 (ii) The term ``investment course of action'' 
 means any series or program of investments or 
 actions related to a fiduciary's performance of 
 the fiduciary's investment duties, and includes 
 the selection of an investment fund as a plan 
 investment, or in the case of an individual 
 account plan, a designated investment 
 alternative under the plan.
 (b) Except as authorized by the Secretary by regulation, no 
fiduciary may maintain the indicia of ownership of any assets 
of a plan outside the jurisdiction of the district courts of 
the United States.
 (c)(1)(A) In the case of a pension plan which provides for 
individual accounts and permits a participant or beneficiary to 
exercise control over assets in his account, if a participant 
or beneficiary exercises control over the assets in his account 
(as determined under regulations of the Secretary)--
 (i) such participant or beneficiary shall not be 
 deemed to be a fiduciary by reason of such exercise, 
 and
 (ii) no person who is otherwise a fiduciary shall be 
 liable under this part for any loss, or by reason of 
 any breach, which results from such participant's or 
 beneficiary's exercise of control, except that this 
 clause shall not apply in connection with such 
 participant or beneficiary for any blackout period 
 during which the ability of such participant or 
 beneficiary to direct the investment of the assets in 
 his or her account is suspended by a plan sponsor or 
 fiduciary.
 (B) If a person referred to in subparagraph (A)(ii) meets the 
requirements of this title in connection with authorizing and 
implementing the blackout period, any person who is otherwise a 
fiduciary shall not be liable under this title for any loss 
occurring during such period.
 (C) For purposes of this paragraph, the term ``blackout 
period'' has the meaning given such term by section 101(i)(7).
 (2) In the case of a simple retirement account 
 established pursuant to a qualified salary reduction 
 arrangement under section 408(p) of the Internal 
 Revenue Code of 1986, a participant or beneficiary 
 shall, for purposes of paragraph (1), be treated as 
 exercising control over the assets in the account upon 
 the earliest of--
 (A) an affirmative election among investment 
 options with respect to the initial investment 
 of any contribution,
 (B) a rollover to any other simple retirement 
 account or individual retirement plan, or
 (C) one year after the simple retirement 
 account is established.
 No reports, other than those required under section 
 101(g), shall be required with respect to a simple 
 retirement account established pursuant to such a 
 qualified salary reduction arrangement.
 (3) In the case of a pension plan which makes a 
 transfer to an individual retirement account or annuity 
 of a designated trustee or issuer under section 
 401(a)(31)(B) of the Internal Revenue Code of 1986, the 
 participant or beneficiary shall, for purposes of 
 paragraph (1), be treated as exercising control over 
 the assets in the account or annuity upon--
 (A) the earlier of--
 (i) a rollover of all or a portion of 
 the amount to another individual 
 retirement account or annuity; or
 (ii) one year after the transfer is 
 made; or
 (B) a transfer that is made in a manner 
 consistent with guidance provided by the 
 Secretary.
 (4)(A) In any case in which a qualified change in 
 investment options occurs in connection with an 
 individual account plan, a participant or beneficiary 
 shall not be treated for purposes of paragraph (1) as 
 not exercising control over the assets in his account 
 in connection with such change if the requirements of 
 subparagraph (C) are met in connection with such 
 change.
 (B) For purposes of subparagraph (A), the term 
 ``qualified change in investment options'' means, in 
 connection with an individual account plan, a change in 
 the investment options offered to the participant or 
 beneficiary under the terms of the plan, under which--
 (i) the account of the participant or 
 beneficiary is reallocated among one or more 
 remaining or new investment options which are 
 offered in lieu of one or more investment 
 options offered immediately prior to the 
 effective date of the change, and
 (ii) the stated characteristics of the 
 remaining or new investment options provided 
 under clause (i), including characteristics 
 relating to risk and rate of return, are, as of 
 immediately after the change, reasonably 
 similar to those of the existing investment 
 options as of immediately before the change.
 (C) The requirements of this subparagraph are met in 
 connection with a qualified change in investment 
 options if--
 (i) at least 30 days and no more than 60 days 
 prior to the effective date of the change, the 
 plan administrator furnishes written notice of 
 the change to the participants and 
 beneficiaries, including information comparing 
 the existing and new investment options and an 
 explanation that, in the absence of affirmative 
 investment instructions from the participant or 
 beneficiary to the contrary, the account of the 
 participant or beneficiary will be invested in 
 the manner described in subparagraph (B),
 (ii) the participant or beneficiary has not 
 provided to the plan administrator, in advance 
 of the effective date of the change, 
 affirmative investment instructions contrary to 
 the change, and
 (iii) the investments under the plan of the 
 participant or beneficiary as in effect 
 immediately prior to the effective date of the 
 change were the product of the exercise by such 
 participant or beneficiary of control over the 
 assets of the account within the meaning of 
 paragraph (1).
 (5) Default investment arrangements.--
 (A) In general.--For purposes of paragraph 
 (1), a participant or beneficiary in an 
 individual account plan meeting the notice 
 requirements of subparagraph (B) shall be 
 treated as exercising control over the assets 
 in the account with respect to the amount of 
 contributions and earnings which, in the 
 absence of an investment election by the 
 participant or beneficiary, are invested by the 
 plan in accordance with regulations prescribed 
 by the Secretary. The regulations under this 
 subparagraph shall provide guidance on the 
 appropriateness of designating default 
 investments that include a mix of asset classes 
 consistent with capital preservation or long-
 term capital appreciation, or a blend of both.
 (B) Notice requirements.--
 (i) In general.--The requirements of 
 this subparagraph are met if each 
 participant or beneficiary--
 (I) receives, within a 
 reasonable period of time 
 before each plan year, a notice 
 explaining the employee's right 
 under the plan to designate how 
 contributions and earnings will 
 be invested and explaining how, 
 in the absence of any 
 investment election by the 
 participant or beneficiary, 
 such contributions and earnings 
 will be invested, and
 (II) has a reasonable period 
 of time after receipt of such 
 notice and before the beginning 
 of the plan year to make such 
 designation.
 (ii) Form of notice.--The 
 requirements 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 subparagraph.
 (6) Default investment arrangements for a pension-
 linked emergency savings account.--For purposes of 
 paragraph (1), a participant in a pension-linked 
 emergency savings account shall be treated as 
 exercising control over the assets in the account with 
 respect to the amount of contributions and earnings 
 which are invested in accordance with section 
 801(c)(1)(A)(iii).
 (7) Notice requirements for brokerage windows.--
 (A) In general.--In the case of a pension 
 plan which provides for individual accounts and 
 which provides a participant or beneficiary the 
 opportunity to choose from designated 
 investment alternatives, a participant or 
 beneficiary shall not be treated as exercising 
 control over assets in the account of the 
 participant or beneficiary unless, with respect 
 to any investment arrangement that is not a 
 designated investment alternative, each time 
 before such a participant or beneficiary 
 directs an investment into, out of, or within 
 such investment arrangement, such participant 
 is notified of, and acknowledges, each element 
 of the notice described under paragraph (B).
 (B) Notice.--The notice described under this 
 paragraph is a four part information that is 
 substantially similar to the following 
 information:

 
1. Your retirement plan offers designated investment alternatives prudently selected and monitored by
 fiduciaries for the purpose of enabling you to construct an appropriate retirement savings portfolio. In
 selecting and monitoring designated investment alternatives, your plan's fiduciary considers the risk of loss
 and the opportunity for gain (or other return) compared with reasonably available investment alternatives.
2. The investments available through this investment arrangement are not designated investment alternatives, and
 have not been prudently selected and are not monitored by a plan fiduciary.
3. Depending on the investments you select through this investment arrangement, you may experience diminished
 returns, higher fees, and higher risk than if you select from the plan's designated investment alternatives.
4. The following is a hypothetical illustration of the impact of return at 4 percent, 6 percent, and 8 percent
 on your account balance projected to age 67.

 (C) Illustration.--The notice described under 
 paragraph (B) shall also include a graph 
 displaying the projected retirement balances of 
 such participant or beneficiary at age 67 if 
 the account of such individual were to achieve 
 an annual return equal to each of the 
 following:
 (i) 4 percent.
 (ii) 6 percent.
 (iii) 8 percent.
 (d)(1) If, in connection with the termination of a pension 
plan which is a single-employer plan, there is an election to 
establish or maintain a qualified replacement plan, or to 
increase benefits, as provided under section 4980(d) of the 
Internal Revenue Code of 1986, a fiduciary shall discharge the 
fiduciary's duties under this title and title IV in accordance 
with the following requirements:
 (A) In the case of a fiduciary of the terminated 
 plan, any requirement--
 (i) under section 4980(d)(2)(B) of such Code 
 with respect to the transfer of assets from the 
 terminated plan to a qualified replacement 
 plan, and
 (ii) under section 4980(d)(2)(B)(ii) or 
 4980(d)(3) of such Code with respect to any 
 increase in benefits under the terminated plan.
 (B) In the case of a fiduciary of a qualified 
 replacement plan, any requirement--
 (i) under section 4980(d)(2)(A) of such Code 
 with respect to participation in the qualified 
 replacement plan of active participants in the 
 terminated plan,
 (ii) under section 4980(d)(2)(B) of such Code 
 with respect to the receipt of assets from the 
 terminated plan, and
 (iii) under section 4980(d)(2)(C) of such 
 Code with respect to the allocation of assets 
 to participants of the qualified replacement 
 plan.
 (2) For purposes of this subsection--
 (A) any term used in this subsection which is also 
 used in section 4980(d) of the Internal Revenue Code of 
 1986 shall have the same meaning as when used in such 
 section, and
 (B) any reference in this subsection to the Internal 
 Revenue Code of 1986 shall be a reference to such Code 
 as in effect immediately after the enactment of the 
 Omnibus Budget Reconciliation Act of 1990.
 (e) Safe Harbor for Annuity Selection.--
 (1) In general.--With respect to the selection of an 
 insurer for a guaranteed retirement income contract, 
 the requirements of subsection (a)(1)(B) will be deemed 
 to be satisfied if a fiduciary--
 (A) engages in an objective, thorough, and 
 analytical search for the purpose of 
 identifying insurers from which to purchase 
 such contracts;
 (B) with respect to each insurer identified 
 under subparagraph (A)--
 (i) considers the financial 
 capability of such insurer to satisfy 
 its obligations under the guaranteed 
 retirement income contract; and
 (ii) considers the cost (including 
 fees and commissions) of the guaranteed 
 retirement income contract offered by 
 the insurer in relation to the benefits 
 and product features of the contract 
 and administrative services to be 
 provided under such contract; and
 (C) on the basis of such consideration, 
 concludes that--
 (i) at the time of the selection, the 
 insurer is financially capable of 
 satisfying its obligations under the 
 guaranteed retirement income contract; 
 and
 (ii) the relative cost of the 
 selected guaranteed retirement income 
 contract as described in subparagraph 
 (B)(ii) is reasonable.
 (2) Financial capability of the insurer.--A fiduciary 
 will be deemed to satisfy the requirements of 
 paragraphs (1)(B)(i) and (1)(C)(i) if--
 (A) the fiduciary obtains written 
 representations from the insurer that--
 (i) the insurer is licensed to offer 
 guaranteed retirement income contracts;
 (ii) the insurer, at the time of 
 selection and for each of the 
 immediately preceding 7 plan years--
 (I) operates under a 
 certificate of authority from 
 the insurance commissioner of 
 its domiciliary State which has 
 not been revoked or suspended;
 (II) has filed audited 
 financial statements in 
 accordance with the laws of its 
 domiciliary State under 
 applicable statutory accounting 
 principles;
 (III) maintains (and has 
 maintained) reserves which 
 satisfies all the statutory 
 requirements of all States 
 where the insurer does 
 business; and
 (IV) is not operating under 
 an order of supervision, 
 rehabilitation, or liquidation;
 (iii) the insurer undergoes, at least 
 every 5 years, a financial examination 
 (within the meaning of the law of its 
 domiciliary State) by the insurance 
 commissioner of the domiciliary State 
 (or representative, designee, or other 
 party approved by such commissioner); 
 and
 (iv) the insurer will notify the 
 fiduciary of any change in 
 circumstances occurring after the 
 provision of the representations in 
 clauses (i), (ii), and (iii) which 
 would preclude the insurer from making 
 such representations at the time of 
 issuance of the guaranteed retirement 
 income contract; and
 (B) after receiving such representations and 
 as of the time of selection, the fiduciary has 
 not received any notice described in 
 subparagraph (A)(iv) and is in possession of no 
 other information which would cause the 
 fiduciary to question the representations 
 provided.
 (3) No requirement to select lowest cost.--Nothing in 
 this subsection shall be construed to require a 
 fiduciary to select the lowest cost contract. A 
 fiduciary may consider the value of a contract, 
 including features and benefits of the contract and 
 attributes of the insurer (including, without 
 limitation, the insurer's financial strength) in 
 conjunction with the cost of the contract.
 (4) Time of selection.--
 (A) In general.--For purposes of this 
 subsection, the time of selection is--
 (i) the time that the insurer and the 
 contract are selected for distribution 
 of benefits to a specific participant 
 or beneficiary; or
 (ii) if the fiduciary periodically 
 reviews the continuing appropriateness 
 of the conclusion described in 
 paragraph (1)(C) with respect to a 
 selected insurer, taking into account 
 the considerations described in such 
 paragraph, the time that the insurer 
 and the contract are selected to 
 provide benefits at future dates to 
 participants or beneficiaries under the 
 plan.
 Nothing in the preceding sentence shall be 
 construed to require the fiduciary to review 
 the appropriateness of a selection after the 
 purchase of a contract for a participant or 
 beneficiary.
 (B) Periodic review.--A fiduciary will be 
 deemed to have conducted the periodic review 
 described in subparagraph (A)(ii) if the 
 fiduciary obtains the written representations 
 described in clauses (i), (ii), and (iii) of 
 paragraph (2)(A) from the insurer on an annual 
 basis, unless the fiduciary receives any notice 
 described in paragraph (2)(A)(iv) or otherwise 
 becomes aware of facts that would cause the 
 fiduciary to question such representations.
 (5) Limited liability.--A fiduciary which satisfies 
 the requirements of this subsection shall not be liable 
 following the distribution of any benefit, or the 
 investment by or on behalf of a participant or 
 beneficiary pursuant to the selected guaranteed 
 retirement income contract, for any losses that may 
 result to the participant or beneficiary due to an 
 insurer's inability to satisfy its financial 
 obligations under the terms of such contract.
 (6) Definitions.--For purposes of this subsection--
 (A) Insurer.--The term ``insurer'' means an 
 insurance company, insurance service, or 
 insurance organization, including affiliates of 
 such companies.
 (B) Guaranteed retirement income contract.--
 The term ``guaranteed retirement income 
 contract'' means an annuity contract for a 
 fixed term or a contract (or provision or 
 feature thereof) which provides guaranteed 
 benefits annually (or more frequently) for at 
 least the remainder of the life of the 
 participant or the joint lives of the 
 participant and the participant's designated 
 beneficiary as part of an individual account 
 plan.
 (f) Exercise of Shareholder Rights.--
 (1) Authority to exercise shareholder rights.--
 (A) In general.--The fiduciary duty to manage 
 plan assets that are shares of stock includes 
 the management of shareholder rights 
 appurtenant to those shares, including the 
 right to vote proxies. When deciding whether to 
 exercise a shareholder right and in exercising 
 such right, including the voting of proxies, a 
 fiduciary must act prudently and solely in the 
 interests of participants and beneficiaries and 
 for the exclusive purpose of providing benefits 
 to participants and beneficiaries and defraying 
 the reasonable expenses of administering the 
 plan. The fiduciary duty to manage shareholder 
 rights appurtenant to shares of stock does not 
 require the voting of every proxy or the 
 exercise of every shareholder right.
 (B) Exception.--This subsection shall not 
 apply to voting, tender, and similar rights 
 with respect to qualifying employer securities 
 or securities held in an investment arrangement 
 that is not a designated investment alternative 
 in the event such rights are passed through 
 pursuant to the terms of an individual account 
 plan to participants and beneficiaries with 
 accounts holding such securities.
 (2) Requirements for exercise of shareholder 
 rights.--A fiduciary, when deciding whether to exercise 
 a shareholder right and when exercising a shareholder 
 right--
 (A) shall--
 (i) act solely in accordance with the 
 economic interest of the plan and its 
 participants and beneficiaries;
 (ii) consider any costs involved;
 (iii) evaluate material facts that 
 form the basis for any particular proxy 
 vote or exercise of shareholder rights; 
 and
 (iv) maintain a record of any proxy 
 vote, proxy voting activity, or other 
 exercise of a shareholder right, 
 including any attempt to influence 
 management; and
 (B) shall not subordinate the interests of 
 participants and beneficiaries in their 
 retirement income or financial benefits under 
 the plan to any non-pecuniary objective, or 
 promote non-pecuniary benefits or goals 
 unrelated to those financial interests of the 
 plan's participants and beneficiaries.
 (3) Monitoring.--A fiduciary shall exercise prudence 
 and diligence in the selection and monitoring of a 
 person, if any, selected to advise or otherwise assist 
 with the exercise of shareholder rights, including by 
 providing research and analysis, recommendations on 
 exercise of proxy voting or other shareholder rights, 
 administrative services with respect to voting proxies, 
 and recordkeeping and reporting services.
 (4) Investment managers and proxy advisory firms.--
 Where the authority to vote proxies or exercise other 
 shareholder rights has been delegated to an investment 
 manager pursuant to section 403(a), or a proxy voting 
 advisory firm or other person who performs advisory 
 services as to the voting of proxies or the exercise of 
 other shareholder rights, a responsible plan fiduciary 
 shall prudently monitor the proxy voting activities of 
 such investment manager or advisory firm and determine 
 whether such activities are in compliance with 
 paragraphs (1) and (2).
 (5) Voting policies.--
 (A) In general.--In deciding whether to vote 
 a proxy pursuant to this subsection, the plan 
 fiduciary may adopt a proxy voting policy, 
 including a safe harbor proxy voting policy 
 described in subparagraph (B), providing that 
 the authority to vote a proxy shall be 
 exercised pursuant to specific parameters 
 designed to serve the economic interest of the 
 plan.
 (B) Safe harbor voting policy.--With respect 
 to a decision not to vote a proxy, a fiduciary 
 shall satisfy the fiduciary responsibilities 
 under this subsection if such fiduciary adopts 
 and follows a safe harbor proxy voting policy 
 that--
 (i) limits voting resources to 
 particular types of proposals that the 
 fiduciary has prudently determined are 
 substantially related to the business 
 activities of the issuer or are 
 expected to have a material effect on 
 the value of the plan investment; or
 (ii) establishes that the fiduciary 
 will refrain from voting on proposals 
 or particular types of proposals when 
 the assets of a plan invested in the 
 issuer relative to the total assets of 
 such plan are below 5 percent (or, in 
 the event such assets are under 
 management, when the assets under 
 management invested in the issuer are 
 below 5 percent of the total assets 
 under management).
 (C) Exception.--No proxy voting policy 
 adopted pursuant to this paragraph shall 
 preclude a fiduciary from submitting a proxy 
 vote when the fiduciary determines that the 
 matter being voted on is expected to have a 
 material economic effect on the investment 
 performance of a plan's portfolio (or the 
 investment performance of assets under 
 management in the case of an investment 
 manager); provided, however, that in all cases 
 compliance with a safe harbor voting policy 
 shall be presumed to satisfy fiduciary 
 responsibilities with respect to decisions not 
 to vote.
 (6) Review.--A fiduciary shall periodically review 
 any policy adopted under this subsection.

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