< Back to H.R. 3623 (107th Congress, 2001–2002)

Text of the Employee Savings Protection Act of 2002

This bill was introduced on January 24, 2002, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jan 24, 2002 (Introduced).

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HR 3623 IH

107th CONGRESS

2d Session

H. R. 3623

To amend title I of the Employee Retirement Income Security Act of 1974 to prohibit knowing misrepresentations by fiduciaries of 401(k) plans which may induce participants and beneficiaries to act contrary to their own best interest in controlling the assets in their own accounts, and to amend title 11 of the United States Code to protect claims based on such misrepresentations.

IN THE HOUSE OF REPRESENTATIVES

January 24, 2002

Mr. BENTSEN introduced the following bill; which was referred to the Committee on Education and the Workforce, and in addition to the Committee on the Judiciary, 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 to prohibit knowing misrepresentations by fiduciaries of 401(k) plans which may induce participants and beneficiaries to act contrary to their own best interest in controlling the assets in their own accounts, and to amend title 11 of the United States Code to protect claims based on such misrepresentations.

    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 ‘Employee Savings Protection Act of 2002’.

SEC. 2. PROHIBITION OF MISREPRESENTATIONS BY PLAN FIDUCIARIES RELATING TO THE PRESENT OR EXPECTED VALUATION OF EMPLOYER SECURITIES.

    (a) IN GENERAL- Section 404(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(a)) is amended by adding at the end the following new paragraph:

    ‘(3) Any knowing misrepresentation by a fiduciary of an individual account plan that includes a cash or deferred arrangement (as defined in section 401(k)(2) of the Internal Revenue Code of 1986) to a participant or beneficiary under the plan relating to the present or expected valuation of employer securities that--

      ‘(A) was made at a time reasonably contemporaneous with a period of decisionmaking by the participant or beneficiary in the exercise of his or her control over the assets in his or her account, or

      ‘(B) could otherwise be reasonably perceived as likely to induce decisions that were made by the participant or beneficiary in the exercise of his or her control over such assets,

    shall be treated as a failure by the fiduciary to discharge the fiduciary’s duties with respect to a plan in accordance with the preceding provisions of this subsection.’.

    (b) LIABILITY FOR MISREPRESENTATION- Section 404(c) of such Act (29 U.S.C. 1104(c)) is amended by adding at the end the following new paragraph:

    ‘(4) In the case of an individual account plan that includes a cash or deferred arrangement (as defined in section 401(k)(2) of the Internal Revenue Code of 1986), paragraph (1)(B) shall not apply in connection with any loss which results from any exercise of control by a participant or beneficary over the assets in his or her account undertaken in reliance on a misrepresentation described in paragraph (a)(3).’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply with respect to misrepresentations made on or after January 1, 2000.

SEC. 3. PROTECTION OF CERTAIN EMPLOYEE CLAIMS IN BANKRUPTCY.

    (a) AMENDMENTS- Title 11 of the United States Code is amended--

      (1) in section 507(a) by adding at the end the following:

      ‘(10) Tenth, allowed unsecured claims arising under part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 by operation of section 404(c)(4) of such Act for failures by fiduciaries to discharge their duties as described in section 404(a)(3) of such Act.’; and

      (2) in section 1129(a)(9)(B) by striking ‘or 507(a)(7)’ and inserting ‘507(a)(7), or 507(a)(10)’.

    (b) EFFECTIVE DATE; APPLICATION OF AMENDMENTS- The amendments made by subsection (a) shall take effect on January 1, 2000, and shall apply with respect to cases commenced under title 11 of the United States Code on or after such date.