Sec. 211. Alternative fiduciary arrangements to protect plan participants
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Section 405 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1105 ) is amended by adding at the end the following: A small employer that is a plan sponsor of an employee pension benefit plan shall not be liable for a breach of fiduciary responsibility of a small employer plan service provider with respect to the same plan if the requirements of the following subparagraphs are met: The requirements of this subparagraph are met if the small employer prudently selects and monitors the small employer plan named fiduciary.
The requirements of this subparagraph are met if the small employer plan named fiduciary— engages a small employer plan service provider with respect to the employee pension benefit plan; registers as a small employer plan named fiduciary with the Secretary in accordance with paragraph (2)(A); has such educational or professional qualifications as the Secretary may require; provides to employers disclosures or other information as may be required by the Secretary by regulations to facilitate monitoring of the named fiduciary; is bonded in accordance with section 412; and meets the financial responsibility requirements of paragraph (2)(B).
For purposes of paragraph (1)(B)(ii), the small employer plan named fiduciary shall file the required registration with the Secretary— before the date upon which the safe harbor provided in this subsection first applies to a small employer plan sponsor and at such other times as the Secretary may prescribe by regulations, and in such form and manner, and containing such information, as the Secretary determines necessary or appropriate to carry out the purposes of this Act. For purposes of paragraph (1)(B)(vi), a small employer plan named fiduciary shall meet the requirements of this subparagraph if the fiduciary either— has fiduciary liability insurance with a per-claim limit equal to no less than— the greater of 5 percent of plan assets or $1,000,000; or such other amount as is determined by the Secretary by regulation; or is— a bank, as defined in section 202(a)(2) of the Investment Advisers Act of 1940, that has the power to manage, acquire, or dispose of assets of a plan, and that has, as of the last day of its most recent fiscal year, equity capital in excess of $1,000,000; a savings and loan association, the accounts of which are insured by the Federal Savings and Loan Insurance Corporation, that has made application for and been granted trust powers to manage, acquire, or dispose of assets of a plan by a State or Federal authority having supervision over savings and loan associations, and that has, as of the last day of its most recent fiscal year, equity capital or net worth in excess of $1,000,000; an insurance company that is subject to supervision and examination by a State authority having supervision over insurance companies, that is qualified under the laws of more than one State to manage, acquire, or dispose of assets of a plan, and that has, as of the last day of its most recent fiscal year, net worth in excess of $1,000,000; or an investment adviser registered under the Investment Advisers Act of 1940 that, as of the last day of its most recent fiscal year, has total client assets under its management and control in excess of $85,000,000 and shareholders' or partners' equity in excess of $1,000,000.
The Secretary may by regulation adjust the dollar amounts under subparagraph (B)(ii). The Secretary may issue an ex parte cease and desist order under this title if the Secretary— determines that a small plan named fiduciary or small employer plan service provider has not met the requirements under paragraph
(1)or (2); or has reasonable cause to believe that the named fiduciary or service provider has engaged in or is about to engage in conduct that is a violation of this title or that the Secretary determines to be contrary to accepted standards of plan operations that might result in abnormal risk to the plan or participants and beneficiaries of the plan. A person that is adversely affected by the issuance of a cease and desist order under subparagraph
(A)may request a hearing by the Secretary regarding such order. The Secretary may require that a hearing under this subparagraph, including all related information and evidence, be conducted in a confidential manner. The burden of proof in any hearing conducted under this subparagraph shall be on the party requesting the hearing to show cause why the cease and desist order should be set aside. Based upon the evidence presented at a hearing under this subparagraph, the Secretary may affirm, modify, or set aside the cease and desist order, in whole or in part. The Secretary may issue a summary seizure order under this subtitle if the Secretary determines that a small employer plan named fiduciary or small employer plan service provider is in a financially hazardous condition. The Secretary may promulgate such regulations or other guidance as may be necessary or appropriate to carry out this paragraph. This paragraph shall not apply to any named fiduciary that is not a named fiduciary under paragraph (1)(A) or small employer plan service provider under paragraph (1)(B)(i). The Secretary’s authority under this paragraph shall not be construed to limit the Secretary’s ability to exercise enforcement or investigatory authority under any other provision of this title. The Secretary may, in the sole discretion of the Secretary, initiate court proceedings without using the procedures in this paragraph. For purposes of this subsection— The term small employer means, with respect to any year, an employer that did not have more than 50 employees on any day during the preceding year. A small employer that establishes and maintains an employee pension benefit plan for 1 or more years and that is not a small employer for any subsequent year shall be treated as a small employer for the 2 years following the last year the employer was a small employer. If such employer is not a small employer as described in the preceding sentence on account of an acquisition, disposition, or similar transaction involving a small employer, the preceding sentence shall not apply. The term small employer plan named fiduciary means the fiduciary that is designated as the small employer plan named fiduciary in the instrument under which an employee pension benefit plan is maintained. The term small employer plan service provider means— an administrator (as defined in section 3(16)(A)); a fiduciary (as defined in section 3(21)(A)); or an investment manager (as defined in section 3(38)), that is independent from the small employer plan named fiduciary. .
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Sec. 211
Alternative fiduciary arrangements to protect plan participants
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