Home > 108th Congressional Bills > H.R. 1000 (ih) To amend title I of the Employee Retirement Income Security Act of 1974 [Introduced in House] ...

H.R. 1000 (ih) To amend title I of the Employee Retirement Income Security Act of 1974 [Introduced in House] ...


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108th CONGRESS

  1st Session

                               H. R. 1000

_______________________________________________________________________

                                 AN ACT

To amend title I of the Employee Retirement Income Security Act of 1974 
and the Internal Revenue Code of 1986 to provide additional protections 
  to participants and beneficiaries in individual account plans from 
    excessive investment in employer securities and to promote the 
  provision of retirement investment advice to workers managing their 
                       retirement income assets.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
108th CONGRESS
  1st Session
                                H. R. 1000

_______________________________________________________________________

                                 AN ACT


 
To amend title I of the Employee Retirement Income Security Act of 1974 
and the Internal Revenue Code of 1986 to provide additional protections 
  to participants and beneficiaries in individual account plans from 
    excessive investment in employer securities and to promote the 
  provision of retirement investment advice to workers managing their 
                       retirement income assets.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Pension Security 
Act of 2003''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
               TITLE I--IMPROVEMENTS IN PENSION SECURITY

Sec. 101. Periodic pension benefits statements.
Sec. 102. Inapplicability of relief from fiduciary liability during 
                            blackout periods.
Sec. 103. Informational and educational support for pension plan 
                            fiduciaries.
Sec. 104. Diversification requirements for defined contribution plans 
                            that hold employer securities.
Sec. 105. Prohibited transaction exemption for the provision of 
                            investment advice.
Sec. 106. Study regarding impact on retirement savings of participants 
                            and beneficiaries by requiring consultants 
                            to advise plan fiduciaries of individual 
                            account plans.
Sec. 107. Treatment of qualified retirement planning services.
Sec. 108. Effective dates and related rules.
            TITLE II--OTHER PROVISIONS RELATING TO PENSIONS

Sec. 201. Amendments to Retirement Protection Act of 1994.
Sec. 202. Reporting simplification.
Sec. 203. Improvement of employee plans compliance resolution system.
Sec. 204. Flexibility in nondiscrimination, coverage, and line of 
                            business rules.
Sec. 205. Extension to all governmental plans of moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
Sec. 206. Notice and consent period regarding distributions.
Sec. 207. Annual report dissemination.
Sec. 208. Technical corrections to Saver Act.
Sec. 209. Missing participants and beneficiaries.
Sec. 210. Reduced PBGC premium for new plans of small employers.
Sec. 211. Reduction of additional PBGC premium for new and small plans.
Sec. 212. Authorization for PBGC to pay interest on premium overpayment 
                            refunds.
Sec. 213. Substantial owner benefits in terminated plans.
Sec. 214. Benefit suspension notice.
Sec. 215. Studies.
Sec. 216. Interest rate range for additional funding requirements.
                     TITLE III--GENERAL PROVISIONS

Sec. 301. Provisions relating to plan amendments.

               TITLE I--IMPROVEMENTS IN PENSION SECURITY

SEC. 101. PERIODIC PENSION BENEFITS STATEMENTS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Requirements.--
                    (A) In general.--Section 105(a) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1025(a)) is amended to read as follows:
    ``(a)(1)(A) The administrator of an individual account plan shall 
furnish a pension benefit statement--
            ``(i) to each plan participant at least annually,
            ``(ii) to each plan beneficiary upon written request, and
            ``(iii) in the case of an applicable individual account 
        plan, to each individual who is a plan participant or 
        beneficiary and who has a right to direct investments, at least 
        quarterly.
    ``(B) The administrator of a defined benefit plan shall furnish a 
pension benefit statement--
            ``(i) at least once every 3 years to each participant with 
        a nonforfeitable accrued benefit who is employed by the 
        employer maintaining the plan at the time the statement is 
        furnished to participants, and
            ``(ii) to a plan participant or plan beneficiary of the 
        plan upon written request.
Information furnished under clause (i) to a participant may be based on 
reasonable estimates determined under regulations prescribed by the 
Secretary, in consultation with the Pension Benefit Guaranty 
Corporation.
    ``(2) A pension benefit statement under paragraph (1)--
            ``(A) shall indicate, on the basis of the latest available 
        information--
                    ``(i) the total benefits accrued, and
                    ``(ii) the nonforfeitable pension benefits, if any, 
                which have accrued, or the earliest date on which 
                benefits will become nonforfeitable,
            ``(B) shall be written in a manner calculated to be 
        understood by the average plan participant, and
            ``(C) may be provided in written form or in electronic or 
        other appropriate form to the extent that such form is 
        reasonably accessible to the recipient.
    ``(3)(A) In the case of a defined benefit plan, the requirements of 
paragraph (1)(B)(i) shall be treated as met with respect to a 
participant if the administrator, at least once each year, provides the 
participant with notice, at the participant's last known address, of 
the availability of the pension benefit statement and the ways in which 
the participant may obtain such statement. Such notice shall be 
provided in written, electronic, or other appropriate form, and may be 
included with other communications to the participant if done in a 
manner reasonably designed to attract the attention of the participant.
    ``(B) The Secretary may provide that years in which no employee or 
former employee benefits (within the meaning of section 410(b) of the 
Internal Revenue Code of 1986) under the plan need not be taken into 
account in determining the 3-year period under paragraph (1)(B)(i).''.
                    (B) Conforming amendments.--
                            (i) Section 105 of the Employee Retirement 
                        Income Security Act of 1974 (29 U.S.C. 1025) is 
                        amended by striking subsection (d).
                            (ii) Section 105(b) of such Act (29 U.S.C. 
                        1025(b)) is amended to read as follows:
    ``(b) In no case shall a participant or beneficiary of a plan be 
entitled to more than one statement described in clause (i) or (ii) of 
subsection (a)(1)(A) or clause (i) or (ii) of subsection (a)(1)(B), 
whichever is applicable, in any 12-month period. If such report is 
required under subsection (a) to be furnished at least quarterly, the 
requirements of the preceding sentence shall be applied with respect to 
each quarter in lieu of the 12-month period.''.
            (2) Information required from applicable individual account 
        plans.--Section 105 of such Act (as amended by paragraph (1)) 
        is amended further by adding at the end the following new 
        subsection:
    ``(d)(1) The statements required to be provided at least quarterly 
under subsection (a)(1)(A)(iii) in the case of applicable individual 
account plans shall include (together with the information required in 
subsection (a)) the following:
            ``(A) the value of each investment to which assets in the 
        individual account have been allocated, determined as of the 
        most recent valuation date under the plan, including the value 
        of any assets held in the form of employer securities, without 
        regard to whether such securities were contributed by the plan 
        sponsor or acquired at the direction of the plan or of the 
        participant or beneficiary,
            ``(B) an explanation, written in a manner calculated to be 
        understood by the average plan participant, of any limitations 
        or restrictions on the right of the participant or beneficiary 
        to direct an investment, and
            ``(C) an explanation, written in a manner calculated to be 
        understood by the average plan participant, of the importance, 
        for the long-term retirement security of participants and 
        beneficiaries, of a well-balanced and diversified investment 
        portfolio, including a discussion of the risk of holding more 
        than 25 percent of a portfolio in the security of any one 
        entity, such as employer securities.
    ``(2) The Secretary shall issue guidance and model notices which 
meet the requirements of this subsection.''.
            (3) Definition of applicable individual account plan.--
        Section 3 of such Act (29 U.S.C. 1002) is amended by adding at 
        the end the following new paragraph:
    ``(42)(A) The term `applicable individual account plan' means any 
individual account plan, except that such term does not include an 
employee stock ownership plan (within the meaning of section 4975(e)(7) 
of the Internal Revenue Code of 1986) unless there are any 
contributions to such plan (or earnings thereunder) held within such 
plan that are subject to subsection (k)(3) or (m)(2) of section 401 of 
the Internal Revenue Code of 1986. Such term shall not include a one-
participant retirement plan.
    ``(B) The term `one-participant retirement plan' means a pension 
plan with respect to which the following requirements are met:
            ``(i) on the first day of the plan year--
                    ``(I) the plan covered only one individual (or the 
                individual and the individual's spouse) and the 
                individual owned 100 percent of the plan sponsor 
                (whether or not incorporated), or
                    ``(II) the plan covered only one or more partners 
                (or partners and their spouses) in the plan sponsor;
            ``(ii) the plan meets the minimum coverage requirements of 
        section 410(b) of the Internal Revenue Code of 1986 (as in 
        effect on the date of the enactment of this paragraph) without 
        being combined with any other plan of the business that covers 
        the employees of the business;
            ``(iii) the plan does not provide benefits to anyone except 
        the individual (and the individual's spouse) or the partners 
        (and their spouses);
            ``(iv) the plan does not cover a business that is a member 
        of an affiliated service group, a controlled group of 
        corporations, or a group of businesses under common control; 
        and
            ``(v) the plan does not cover a business that leases 
        employees.''.
            (4) Civil penalties for failure to provide quarterly 
        benefit statements.--Section 502 of such Act (29 U.S.C. 1132) 
        is amended--
                    (A) in subsection (a)(6), by striking ``(6), or 
                (7)'' and inserting ``(6), (7), or (8)'';
                    (B) by redesignating paragraph (8) of subsection 
                (c) as paragraph (9); and
                    (C) by inserting after paragraph (7) of subsection 
                (c) the following new paragraph:
    ``(8) The Secretary may assess a civil penalty against any plan 
administrator of up to $1,000 a day for each day on which the plan 
administrator has failed to comply with the requirements of clause 
(iii) of section 105(a)(1)(A) and has not corrected such failure by 
providing the required pension benefit statements to the affected 
participants and beneficiaries.''.
            (5) Model statements.--The Secretary of Labor shall, not 
        later than 180 days after the date of the enactment of this 
        Act, issue initial guidance and a model benefit statement, 
        written in a manner calculated to be understood by the average 
        plan participant, that may be used by plan administrators in 
        complying with the requirements of section 105 of the Employee 
        Retirement Income Security Act of 1974. Not later than 75 days 
        after the date of the enactment of this Act, the Secretary 
        shall promulgate interim final rules necessary to carry out the 
        amendments made by this subsection.
    (b) Amendments to the Internal Revenue Code of 1986.--
            (1) Provision of investment education notices to 
        participants in certain plans.--Section 414 of the Internal 
        Revenue Code of 1986 (relating to definitions and special 
        rules) is amended by adding at the end the following:
    ``(w) Provision of Investment Education Notices to Participants in 
Certain Plans.--
            ``(1) In general.--The plan administrator of an applicable 
        pension plan shall provide to each applicable individual an 
        investment education notice described in paragraph (2) at the 
        time of the enrollment of the applicable individual in the plan 
        and not less often than annually thereafter.
            ``(2) Investment education notice.--An investment education 
        notice is described in this paragraph if such notice contains--
                    ``(A) an explanation, for the long-term retirement 
                security of participants and beneficiaries, of 
                generally accepted investment principles, including 
                principles of risk management and diversification, and
                    ``(B) a discussion of the risk of holding 
                substantial portions of a portfolio in the security of 
                any one entity, such as employer securities.
            ``(3) Understandability.--Each notice required by paragraph 
        (1) shall be written in a manner calculated to be understood by 
        the average plan participant and shall provide sufficient 
        information (as determined in accordance with guidance provided 
        by the Secretary) to allow recipients to understand such 
        notice.
            ``(4) Form and manner of notices.--The notices required by 
        this subsection shall be in writing, except that such notices 
        may be in electronic or other form (or electronically posted on 

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