Qualifies the following as such fiduciary advisers if they satisfy applicable laws: (1) registered investment advisers; (2) banks; (3) insurance companies; (4) registered broker-dealers; (5) affiliates of such entities; or (6) employees, agents, or registered representatives of such entities. Requires fiduciary advisers to keep for six years records necessary to determine whether the conditions of the exemption have been met.
Requires such a fiduciary adviser to disclose: (1) fees or other compensation it receives relating to the provision of investment advice or a resulting sale or acquisition of securities or other property, including from third parties; (2) any interest it has and its affiliates have in any security or other property recommended, purchased or sold; (3) any limitation placed on its ability to provide advice; (4) the advisory services offered; (5) that it is acting as a fiduciary of the plan in connection with the provision of such advice; and (6) any information required to be disclosed under applicable securities laws. Requires such disclosure to be: (1) written to be understandable by the average plan participant; and (2) maintained in currently accurate form.
Allows any such investment advice provided to participants or beneficiaries to be implemented only at their direction. Requires the terms of the transaction to be at least as favorable to the plan as an arm's length transaction would be. Requires to be reasonable any compensation received by the fiduciary adviser and its affiliates in connection with any transaction.
Requires such a fiduciary adviser to provide the plan sponsor a written acknowledgment that it is acting as a fiduciary of the plan. Exempts from the duty to monitor the specific investment advice given by the fiduciary adviser a plan sponsor or other fiduciary that arranges for a fiduciary adviser to provide investment advice to participants and beneficiaries, if certain conditions are met under this Act. Declares that the plan sponsor or other fiduciary retains the duty of prudent selection and periodic review of the fiduciary adviser. Allows plan assets to be used to pay for the expenses of providing investment advice to participants and beneficiaries.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2269 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2269
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to promote the provision of
retirement investment advice to workers managing their retirement
income assets.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 21, 2001
Mr. Boehner (for himself, Mr. Armey, Mr. Sam Johnson of Texas, Mr.
Tancredo, Mr. Baird, Mr. Lucas of Kentucky, Mr. McInnis, Mr. Foley, and
Mr. Smith of Washington, Mr. Oxley, Mr. Dicks, Mrs. Roukema, Mr. Baker,
Mr. Camp, Mr. English, Mr. Gutknecht, Mr. Kirk, Mrs. Tauscher, and Mr.
Holt) introduced the following bill; which was referred to the
Committee on Education and the Workforce, and in addition to the
Committee on Ways and Means, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 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.
This Act may be cited as the ``Retirement Security Advice Act of
2001''.
SEC. 2. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF
INVESTMENT ADVICE.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 408(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1108(b)) is amended by
adding at the end the following new paragraph:
``(14) If the requirements of subsection (g) are met--
``(A) the provision of investment advice referred
to in section 3(21)(A)(ii) provided by a fiduciary
adviser (as defined in subsection (g)(4)(A)) to an
employee benefit plan or to a participant or
beneficiary of an employee benefit plan,
``(B) the sale, acquisition, or holding of
securities or other property (including any lending of
money or other extension of credit associated with the
sale, acquisition, or holding of securities or other
property) pursuant to such investment advice, and
``(C) the direct or indirect receipt of fees or
other compensation by the fiduciary adviser or an
affiliate thereof (or any employee, agent, or
registered representative of the fiduciary adviser or
affiliate) in connection with the provision of such
investment advice.''.
(2) Requirements.--Section 408 of such Act is amended
further by adding at the end the following new subsection:
``(g)(1) The requirements of this subsection are met in connection
with the provision of advice referred to in section 3(21)(A)(ii),
provided to an employee benefit plan or a participant or beneficiary of
an employee benefit plan by a fiduciary adviser with respect to such
plan, in connection with any sale or acquisition of a security or other
property for purposes of investment of amounts held by such plan, if--
``(A) in the case of the initial provision of such advice
with regard to a security or other property, by such fiduciary
adviser to such plan, participant, or beneficiary, the
fiduciary adviser provides to the recipient of such advice, at
the time of or before the initial provision of such advice, a
clear and conspicuous description, in writing (including by
means of electronic communication), of--
``(i) all fees or other compensation relating to
such advice that the fiduciary adviser or any affiliate
thereof is to receive (including compensation provided
by any third party) in connection with the provision of
such advice or in connection with such acquisition or
sale,
``(ii) any material affiliation or contractual
relationship of the fiduciary adviser or affiliates
thereof in such security or other property,
``(iii) any limitation placed on the scope of the
investment advice to be provided by the fiduciary
adviser with respect to any such sale or acquisition,
and
``(iv) the types of services offered by the
fiduciary advisor in connection with the provision of
investment advice by the fiduciary adviser,
``(B) in the case of the initial or any subsequent
provision of such advice to such plan, participant, or
beneficiary, the fiduciary adviser, throughout the 1-year
period following the provision of such advice, maintains the
information described in clauses (i) through (iv) of
subparagraph (A) in currently accurate form for availability,
upon request and without charge, to the recipient of such
advice,
``(C) the fiduciary adviser provides appropriate
disclosure, in connection with any such acquisition or sale, in
accordance with all applicable securities laws,
``(D) such acquisition or sale occurs solely at the
direction of the recipient of such advice,
``(E) the compensation received by the fiduciary adviser
and affiliates thereof in connection with such acquisition or
sale is reasonable, and
``(F) the terms of such acquisition or sale are at least as
favorable to such plan as an arm's length transaction would be.
``(2) A fiduciary adviser referred to in paragraph (1) who has
provided advice referred to in such paragraph shall, for a period of
not less than 6 years after the provision of such advice, maintain any
records necessary for determining whether the requirements of the
preceding provisions of this subsection and of subsection (b)(14) have
been met. A transaction prohibited under section 406 shall not be
considered to have occurred solely because the records are lost or
destroyed prior to the end of the 6-year period due to circumstances
beyond the control of the fiduciary adviser.
``(3)(A) Subject to subparagraph (B), a plan sponsor or other
person who is a fiduciary shall not be treated as failing to meet the
requirements of this part solely by reason of the provision of
investment advice referred to in section 3(21)(A)(ii) (or solely by
reason of contracting for or otherwise arranging for the provision of
such investment advice), if--
``(i) such advice is provided by a fiduciary adviser
pursuant to an arrangement between such plan sponsor or other
fiduciary and such fiduciary adviser for the provision by such
fiduciary adviser of investment advice referred to in such
section, and
``(ii) the terms of such arrangement require compliance by
the fiduciary adviser with the requirements of this subsection.
``(B) Nothing in subparagraph (A) shall be construed to exempt a
plan sponsor or other person who is a fiduciary from any requirement of
this part for the prudent selection and periodic review of a fiduciary
adviser with whom the plan sponsor or other person enters into an
arrangement for the provision of advice referred to in section
3(21)(A)(ii). Such plan sponsor or other person who is a fiduciary has
no duty under this part to monitor the specific investment advice given
by the fiduciary adviser to any particular recipient of such advice.
``(C) Nothing in this part shall be construed to preclude the use
of plan assets to pay for reasonable expenses in providing investment
advice referred to in section 3(21)(A)(ii).
``(4) For purposes of this subsection and subsection (b)(14)--
``(A) The term `fiduciary adviser' means, with respect to a
plan, a person who is a fiduciary of the plan by reason of the
provision of investment advice by such person to the plan or to
a participant or beneficiary and who is--
``(i) registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.) or under the laws of the State in which the
fiduciary maintains its principal office and place of
business,
``(ii) a bank or similar financial institution
referred to in section 408(b)(4),
``(iii) an insurance company qualified to do
business under the laws of a State,
``(iv) a person registered as a broker or dealer
under the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.),
``(v) an affiliate of a person described in any of
clauses (i) through (iv), or
``(vi) an employee, agent, or registered
representative of a person described in any of clauses
(i) through (v).
``(B) The term `affiliate' means an affiliated person, as
defined in section 2(a)(3) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a)(3)).
``(C) The term `registered representative' means a person
described in section 3(a)(18) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(18)) or section 202(a)(17) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(17)).''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Subsection (d) of section 4975 of the
Internal Revenue Code of 1986 (relating to exemptions from tax
on prohibited transactions) is amended--
(A) in paragraph (14), by striking ``or'' at the
end;
(B) in paragraph (15), by striking the period at
the end and inserting ``; or''; and
(C) by adding at the end the following new
paragraph:
``(16) If the requirements of subsection (f)(7) are met--
``(A) the provision of investment advice referred
to in subsection (e)(3)(B) provided by a fiduciary
adviser (as defined in subsection (f)(7)(C)(i)) to a
plan or to a participant or beneficiary of a plan,
``(B) the sale, acquisition, or holding of
securities or other property (including any extension
of credit associated with the sale, acquisition, or
holding of securities or other property) pursuant to
such investment advice, and
``(C) the direct or indirect receipt of fees or
other compensation by the fiduciary adviser or an
affiliate thereof (or any employee, agent, or
registered representative of the fiduciary adviser or
affiliate) in connection with the provision of such
investment advice.''.
(2) Requirements.--Subsection (f) of such section 4975
(relating to other definitions and special rules) is amended by
adding at the end the following new paragraph:
``(7) Requirements for exemption for investment advice
provided by fiduciary advisers.--
``(A) In general.--The requirements of this
paragraph are met in connection with the provision of
advice referred to in subsection (e)(3)(B), provided to
a plan or a participant or beneficiary of a plan by a
fiduciary adviser with respect to such plan, in
connection with any sale or acquisition of a security
or other property for purposes of investment of amounts
held by such plan, if--
``(i) in the case of the initial provision
of such advice by such fiduciary adviser to
such plan, participant, or beneficiary, the
fiduciary adviser provides to the plan,
participant, or beneficiary, at the time of or
before the initial provision of such advice, a
description, in writing or by means of
electronic communication, of--
``(I) all fees or other
compensation relating to such advice
that the fiduciary adviser or any
affiliate thereof is to receive
(including compensation provided by any
third party) in connection with the
provision of such advice or in
connection with such acquisition or
sale,
``(II) any material affiliation or
contractual relationship of the
fiduciary adviser or affiliates thereof
in such security or other property,
``(III) any limitation placed on
the scope of the investment advice to
be provided by the fiduciary
adviser with respect to any such sale or acquisition, and
``(IV) the types of services
offered by the fiduciary advisor in
connection with the provision of
investment advice by the fiduciary
adviser,
``(ii) in the case of the initial or any
subsequent provision of such advice to such
plan, participant, or beneficiary, the
fiduciary adviser, throughout the 1-year period
following the provision of such advice,
maintains the information described in
subclauses (I) through (IV) of clause (i) in
currently accurate form for availability, upon
request and without charge, to the recipient of
such advice,
``(iii) the fiduciary adviser provides
appropriate disclosure, in connection with any
such acquisition or sale, in accordance with
all applicable securities laws,
``(iv) such acquisition or sale occurs
solely at the discretion of the recipient of
such advice,
``(v) the compensation received by the
fiduciary adviser and affiliates thereof in
connection with such acquisition or sale is
reasonable, and
``(vi) the terms of such acquisition or
sale are at least as favorable to such plan as
an arm's length transaction would be.
``(B) Maintenance of records.--A fiduciary adviser
referred to in subparagraph (A) who has provided advice
referred to in such subparagraph shall, for a period of
not less than 6 years after the provision of such
advice, maintain any records necessary for determining
whether the requirements of the preceding provisions of
this subsection and of subsection (d)(16) have been
met. A prohibited transaction described in subsection
(c)(1) shall not be considered to have occurred solely
because the records are lost or destroyed prior to the
end of the 6-year period due to circumstances beyond
the control of the fiduciary adviser.
``(C) Definitions.--For purposes of this paragraph
and subsection (d)(16)--
``(i) Fiduciary adviser.--The term
`fiduciary adviser' means, with respect to a
plan, a person who is a fiduciary of the plan
by reason of the provision of investment advice
by such person to the plan or to a participant
or beneficiary and who is--
``(I) registered as an investment
adviser under the Investment Advisers
Act of 1940 (15 U.S.C. 80b-1 et seq.)
or under the laws of the State in which
the fiduciary maintains its principal
office and place of business,
``(II) a bank or similar financial
institution referred to in subsection
(d)(4),
``(III) an insurance company
qualified to do business under the laws
of a State,
``(IV) a person registered as a
broker or dealer under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.),
``(V) an affiliate of a person
described in any of subclauses (I)
through (IV), or
``(VI) an employee, agent, or
registered representative of a person
described in any of subclauses (I)
through (V).
``(ii) Affiliate.--The term `affiliate'
means an affiliated person, as defined in
section 2(a)(3) of the Investment Company Act
of 1940 (15 U.S.C. 80a-2(a)(3)).
``(iii) Registered representative.--The
term `registered representative' means a person
described in section 3(a)(18) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(18)) or
section 202(a)(17) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-2(a)(17)).''.
SEC. 3. EFFECTIVE DATE.
The amendments made by this Act shall apply with respect to advice
referred to in section 3(21)(A)(ii) of the Employee Retirement Income
Security Act of 1974 or section 4975(e)(3)(B) of the Internal Revenue
Code of 1986 provided on or after January 1, 2002.
<all>
Reported (Amended) by the Committee on Education and the Workforce. H. Rept. 107-262, Part I.
House Committee on Ways and Means Granted an extension for further consideration ending not later than Nov. 9, 2001.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported (Amended) by the Yeas and Nays: 25 - 15.
House Committee on Ways and Means Granted an extension for further consideration ending not later than Nov. 13, 2001.
Reported (Amended) by the Committee on Ways and Means. H. Rept. 107-262, Part II.
Reported (Amended) by the Committee on Ways and Means. H. Rept. 107-262, Part II.
Placed on the Union Calendar, Calendar No. 174.
Rules Committee Resolution H. Res. 288 Reported to House. Rule provides for consideration of H.R. 2269 with 1 hour and 40 minutes of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. In lieu of the amendments recommended by the Committee on Education and the Workforce and the Committee on Ways and Means now printed in the bill, the amendment in the nature of a substitute printed in part A of the report of the Committee on Rules accompanying this resolution shall be considered as adopted. Measure will be considered read. A specified amendment is in order.
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Rule H. Res. 288 passed House.
Considered under the provisions of rule H. Res. 288. (consideration: CR H8190-8213; text of measure as reported in House: CR H8190-8193)
Rule provides for consideration of H.R. 2269 with 1 hour and 40 minutes of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. In lieu of the amendments recommended by the Committee on Education and the Workforce and the Committee on Ways and Means now printed in the bill, the amendment in the nature of a substitute printed in part A of the report of the Committee on Rules accompanying this resolution shall be considered as adopted. Measure will be considered read. A specified amendment is in order.
DEBATE - Pursuant to the provisions of H. Res. 288, the House proceeded with one hour and forty minutes of debate on H.R. 2269.
DEBATE - The House proceeded with one hour of debate on the amendment offered by Mr. Andrews.
The previous question was ordered pursuant to the rule.
Considered as unfinished business. (consideration: CR H8213-8215)
Passed/agreed to in House: On passage Passed by recorded vote: 280 - 144 (Roll no. 442).
Roll Call #442 (House)On passage Passed by recorded vote: 280 - 144 (Roll no. 442).
Roll Call #442 (House)Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate and Read twice and referred to the Committee on Finance.