This final regulation implements the provisions of the statutory exemption set forth in sections 408(b)(14) and 408(g) of the Employee Retirement Income Security Act, as amended (ERISA or the Act), and parallel provisions in sections 4975(d)(17) and 4975(f)(8) of the Internal Revenue Code of 1986, as amended (Code), relating to the provision of investment advice described in section 3(21)(A)(ii) of the Act by a fiduciary adviser to participants and beneficiaries in participant-directed individual account plans, such as 401(k) plans, and beneficiaries of individual retirement accounts (and certain similar plans).
US Code:
29 USC 1108(b)(14)
Name of Law: Employee Retirement Income Security Act of 1974
US Code:
29 USC 1108(g)
Name of Law: Employee Retirement Income Security Act of 1974
PL: Pub.L. 109 - 280 601 Name of Law: Pension Protection Act of 2006
The Pension Protection Act of 2006 (Pub. L. 109-280) amended the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code) to include a statutory exemption for providing investment advice to participants and beneficiaries in self-directed defined contribution individual account ERISA-covered plans (Plans) and beneficiaries of individual retirement accounts, individual retirement annuities, Archer MSAs, health savings accounts and Coverdell education savings accounts (collectively IRAs) described in the Code. The statutory exemption provides relief from the prohibited transaction provisions of ERISA, and the parallel provisions of the Code. The increase in burden occurred, because the Department determined that a regulation providing guidance on various aspects of the statutory exemption provides more clarity thereby encouraging the provision of investment advice under the statutory exemption.
Consistent with the statutory exemption, the Department has included specific disclosure, recordkeeping, and audit requirements as conditions of the regulation. These information collections are designed to clarify how the statutory exemption applies to investment advice arrangements involving participants or beneficiaries of Plans and IRAs (collectively, Participants). The information required depends in part on whether the fiduciary adviser giving the advice meets the conditions of the statutory exemption by providing investment advice through use of a computer model, or by providing advice that does not result in varying compensation to the fiduciary adviser entity from investments made in accordance with the investment advice.
The burden increase also occurred, because the Department determined that additional relief for investment advice is appropriate in order to increase the availability of investment advice to participants and beneficiaries in Plans and IRAs (collectively, Participants) that could provide the benefit of avoiding investment mistakes. Therefore, it is issuing a class prohibited transaction exemption as part of the final regulation.
$0
No
No
Uncollected
Uncollected
Uncollected
Uncollected
Chris Cosby 202 693-8540
No
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
Investment Advice to Participants and Beneficiaries