115 STAT. 136 PUBLIC LAW 107-16—JUNE 7, 2001 "(I) a distribution described in clause (ii) in excess of $1,000 is made, and "(II) the distributee does not make an election under subparagraph (A) and does not elect to receive the distribution directly, the plan administrator shall make such transfer to an individual retirement plan of a designated trustee or issuer and shall notify the distributee in writing (either separately or as part of the notice under section 402(f)) that the distribution may be transferred to another individual retirement plan. "(ii) ELIGIBLE PLAN.— For purposes of clause (i), the term 'eligible plan' means a plan which provides that any nonforfeitable accrued benefit for which the present value (as determined under section 411(a)(ll)) does not exceed $5,000 shall be immediately distributed to the participant.". (2) CONFORMING AMENDMENTS. — (A) The heading of section 401(a)(31) is amended by striking "OPTIONAL DIRECT" and inserting "DIRECT". (B) Section 401(a)(31)(C), as redesignated by paragraph (1), is amended by striking "Subparagraph (A)" and inserting "Subparagraphs (A) and (B)". (b) NOTICE REQUIREMENT.—Subparagraph (A) of section 402(f)(1) is amended by inserting before the comma at the end the following: "and that the automatic distribution by direct transfer applies to certain distributions in accordance with section 401(a)(31)(B)". (c) FIDUCIARY RULES. — (1) IN GENERAL.— Section 404(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended by adding at the end the following new paragraph: "(3) In the case of a pension plan which makes a transfer to an individual retirement account or annuity of a designated trustee or issuer under section 401(a)(31)(B) of the Internal Revenue Code of 1986, the participant or beneficiary shall, for purposes of paragraph (1), be treated as exercising control over the assets in the account or annuity upon— "(A) the earlier of the earlier of— "(i) a rollover of all or a portion of the amount to another individual retirement account or annuity; or "(ii) one year after the transfer is made; or "(B) if the transfer is made in a manner consistent with guidance provided by the Secretary.". 26 USC 401 note. (2) REGULATIONS.— Deadline. (A) AUTOMATIC ROLLOVER SAFE HARBOR.— Not later than 3 yeeirs after the date of enactment of this Act, the Secretary of Labor shall prescribe regulations providing for safe harbors under which the designation of an institution and investment of funds in accordance with section 401(a)(31)(B) of the Internal Revenue Code of 1986 is deemed to satisfy the fiduciary requirements of section 404(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(a)). (B) USE OF LOW-COST INDIVIDUAL RETIREMENT PLANS.— The Secretary of the Treasury and the Secretary of Labor
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