H.R. 2269 – Retirement Security Advice Act of 2001 1. Modified closed rule.
2. Provides that, in lieu of the amendments recommended by the Committees on Education and the Workforce and Ways and Means, the amendment in the nature of a substitute printed in part A of the Rules Committee report accompanying the resolution shall be considered as adopted.
3. Waives all points of order against consideration of the bill as amended.
4. Provides one hundred minutes of debate in the House with sixty minutes equally divided and controlled by the chairman and ranking minority member of the Committee on Education and the Workforce and forty minutes equally divided and controlled by the chairman and ranking minority member of the Committee on Ways and Means.
5. Provides for consideration of only the amendment in the nature of a substitute printed in part B of the Rules Committee report accompanying the resolution, if offered by Representative George Miller of California, or his designee, which shall be considered as read and shall be separately debatable for one hour equally divided and controlled by the proponent and an opponent.
6. Waives all points of order against the amendment printed in part B of the report.
7. Provides one motion to recommit with or without instructions.
--------- RESOLUTION Resolved, That upon the adoption of this resolution it shall be in order without intervention of any point of order to consider in the House the bill (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. The bill shall be considered as read for amendment. 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. The previous question shall be considered as ordered on the bill, as amended, and on any further amendment thereto to final passage without intervening motion except: (1) one hour and 40 minutes of debate on the bill, as amended, with one hour equally divided and controlled by the chairman and ranking minority member of the Committee on Education and the Workforce and 40 minutes equally divided and controlled by the chairman and ranking minority member of the Committee on Ways and Means; (2) the further amendment printed in part B of the report of the Committee on Rules, if offered by Representative George Miller of California or his designee, which shall be in order without intervention of any point of order, shall be considered as read, and shall be separately debatable for one hour equally divided and controlled by the proponent and an opponent; and (3) one motion to recommit with or without instructions.
SUMMARY OF AMENDMENTS MADE IN ORDER UNDER THE RULE
Summary of Amendment Printed in Part A of the Report to be Considered as Adopted
Amendment in the Nature of a Substitute. Combines the provisions reported by the Committee on Education and the Workforce and the Committee on Ways and Means. Provides a statutory exemption from the prohibited transaction rules of the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) for: the provision of investment advice regarding plan assets subject to the direction of plan participants and beneficiaries to a plan, its participants and beneficiaries; the sale, acquisition, or holding of securities or other property pursuant to such investment advice; and the direct or indirect receipt of fees or other compensation in connection with providing the advice. Requires an entity to be a “fiduciary adviser” and meet a series of detailed requirements to qualify for an exemption. Requires the fiduciary adviser to provide a clear and conspicuous written (including electronic) disclosure of: the fees or other compensation that the fiduciary adviser and its affiliates receive relating to the provision of investment advice or a resulting sale or acquisition of securities or other property (including from third parties); any interest of the fiduciary adviser (and its affiliates) in any security or other property recommended, purchased or sold; any limitation placed on the fiduciary's ability to provide advice; the advisory services offered; that the adviser is acting as a fiduciary of the plan in connection with the provision of such advice; and any information required to be disclosed under applicable securities laws. Requires that this disclosure must be made at a time reasonably contemporaneous with the initial provision of advice and annually thereafter, or if there is a material change or at the participant’s request, and that the disclosure must be written in a way that the average plan participant could understand the information. Requires that the terms of the transaction be at least as favorable to the plan as an arm's length transaction would be, and the compensation received by the fiduciary adviser (and its affiliates) in connection with any transaction to be reasonable. Also requires the fiduciary adviser to provide a written acknowledgment that it is acting as a fiduciary of the plan to the plan sponsor and to comply with a 6-year record-keeping requirement (for records necessary to determine whether the conditions of the exemption have been met). Provides that a plan sponsor or other fiduciary that arranges for a fiduciary adviser to provide investment advice to participants and beneficiaries has no duty to monitor the specific investment advice given by the fiduciary adviser to any particular recipient of advice, but the plan sponsor or other fiduciary retains the duty of prudent selection and periodic review of the fiduciary adviser.
TEXT OF AMENDMENT PRINTED IN PART A OF THE REPORT
Summary of Amendment Printed in Part B of the Report
Miller (CA) - Democratic Substitute. Under the Democratic substitute, the prohibited transaction rules under section 4975 of the Internal Revenue Code, and sections 406 and 408 of the Employee Retirement Security Act (ERISA) would be waived if the following requirements are met:***summaries derived from information provided by amendment sponsors
- Disclosure: At the time of providing advice with regard to the sale, acquisition, or holding of the security or other property, the advisor would be required to provide the plan participant or beneficiary under the plan with a clear and conspicuous notification of the factors set forth below. The disclosure could be written or provided by electronic means in a manner to be reasonably understood by the average plan participant. The Secretary would be required to provide a model disclosure form pursuant to regulations. The model disclosure form would include mathematical examples that are understood by the average plan participant. The advisor would be required to disclose any interest of such advisor, or any affiliation or contractual relationship of the advisor with any third party who has an interest in the security or other property. The advisor also would be required to disclose all fees and other compensations (including ongoing fees and compensation) relating to the advice that the advisor (or any affiliate) is to receive in connection with providing advice, or in connection with the sale, acquisition, or holding of the security or other property.
- Available option for Independent advisor: In cases where the advisor has an interest in the security or other property, or has an affiliation or contractual relationship with any third party that has an interest in the security or other property, the advisor would be required to arrange, as an alternative to the advice that would otherwise be provided by the advisor, qualified investment advice with respect to the security or the other property provided by at least one alternative investment advisor meeting the qualification requirements set forth in the bill. The alternative independent advice would be provided under the same terms and conditions, including no additional charge to the participant or beneficiary, as apply with respect to the investment advice to be provided by the advisor.
- Qualification of individuals providing advice: An individual providing investment advice would be required to be (1) registered as an investment advisor under the Investment Advisers Act of 1940, (2) if not registered under such act, registered under the laws of the State in which the fiduciary maintains its principal office and place of business, (3) registered as a broker or dealer under the Securities Exchange Act of 1934, (4) a bank or similar financial institution as defined in the Investment Advisers Act of 1940, (5) an insurance company qualified to do business under the laws of the state, or (6) any other comparable qualified entity which satisfies such criteria as the Secretary determines appropriate. Additional requirements would be imposed on employees of the entities listed above, and whose duties include providing qualified investment advice. Such individuals would be required to be (a) registered under the Investment Advisers Act or under state laws as previously provided, (b) a registered broker or dealer under the Securities Exchange Act, or (c) meet such other comparable standard as set forth by the Secretary.
- Remedies available to plan participant: The plan participant who successfully brings a cause of action under ERISA against the fiduciary for a breach of fiduciary duty would be entitled to recover, from the advisor, any economic loss suffered as a result of such breach. (60 minutes)
TEXT OF AMENDMENT PRINTED IN PART B OF THE REPORT
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