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April 15, 2002 Breaking News

The Pension Security Act, H.R. 3762 passed the House by a vote of 255-163 on April 11. Among other provisions, the bill requires two new notices for participants in public and private defined contribution plans: an investment education notice and a notice in advance of a "black out" period. The investment education notice must be made available to participants in defined contribution plans yearly and may be posted on a website. Failure to provide the notice results in a monetary penalty of up to $50,000 unless mitigating circumstances are shown. The "black out" notice is intended to alert plan participants to periods during which the plan may restrict their rights to direct investments, obtain loans from the plan, or receive distributions. Failure to meet the requirements results in an excise tax of up to $500,000 unless mitigating circumstances are shown. The bill now moves to the Senate where the Health, Education, Labor, and Pensions Committee has already passed similar legislation, S. 1992, but which covers private sector plans only. The Finance Committee, which has jurisdiction over governmental plans, is not yet acted.