OMB files this comment in accordance with 5 CFR 1320.11( c ). This OMB action is not an approval to conduct or sponsor an information collection under the Paperwork Reduction Act of 1995. This action has no effect on any current approvals. If OMB has assigned this ICR a new OMB Control Number, the OMB Control Number will not appear in the active inventory. For future submissions of this information collection, reference the OMB Control Number provided. The agency will respond to comments received on the ICR in the final rule.
table that charts list comparision
Inventory as of this Action
Requested
Previously Approved
36 Months From Approved
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0
0
0
0
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0
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The Department is proposing this prohibited transaction class exemption (PTE) in connection with its proposed regulation under ERISA section 3(21)(A)(ii) and Code section 4975(e)(3)(B) (Proposed Regulation). The Proposed Regulation would amend the definition of a "fiduciary" under ERISA and the Code to specify when a person is a fiduciary by reason of the provision of investment advice for a fee or other compensation regarding assets of a plan or IRA (i.e., an investment advice fiduciary). If adopted, the Proposed Regulation would replace an existing regulation dating to 1975, with the aim of more appropriately distinguishing between the sorts of advice relationships that should be treated as fiduciary in nature and those that should not.
This PTE allows certain investment advice fiduciaries to receive various forms of compensation that, in the absence of an exemption, would be prohibited under ERISA and the Code. In this regard, ERISA and the Code generally prohibit fiduciaries from receiving payments from third parties and from acting on conflicts of interest, including using their authority to affect or increase their own compensation, in connection with transactions involving a plan or IRA. Certain types of fees and compensation, such as brokerage or insurance commissions, 12b-1 fees and revenue sharing payments, commonly paid to a broker-dealer, insurance agent or other fiduciary in connection with investment transactions entered into by plans or IRAs, fall within these prohibitions. This PTE would allow investment advice fiduciaries to receive compensation when plan participants or beneficiaries, IRAs, or certain small plans, purchase, hold or sell investment products based on the fiduciaries' advice, under conditions designed to safeguard the interests of these investors. Specifically, the PTE would apply when compensation is received in connection with a transaction involving a plan participant or beneficiary, an IRA, or a fiduciary of an employee benefit plan with less than 100 participants (referred to generally as "retirement investors"), in accordance with the adviser's advice.
To safeguard the interests of the plans and IRAs, the exemption would require the financial institution and the adviser to contractually acknowledge fiduciary status and commit to adhere to certain impartial conduct standards when providing advice to the plans and IRAs, including providing advice in their Best Interest. The financial institution would further be required to warrant that it has adopted policies and procedures designed to mitigate the impact of conflicts of interest and ensure that the individual advisers adhere to impartial conduct standards. The exemption would also require disclosure regarding adviser and financial institution fee practices. Additional conditions would apply to financial institutions that limit products available to advisers for recommendation based on third-party payments generated or based on the fact that they are proprietary products (i.e., products offered or managed by the financial institution or its affiliates). Financial institutions relying on the exemption would be required to notify the Department in advance of doing so. Finally, financial institutions making use of the exemption would have to maintain certain data, and make it available to the Department, to help evaluate the effectiveness of the exemption in safeguarding the interests of plans and IRAs.
US Code:
29 USC 1108
Name of Law: Employee Retirement Income Security Act of 1974
The Department is proposing this prohibited transaction class exemption (PTE) in connection with its proposed regulation under ERISA section 3(21)(A)(ii) and Code section 4975(e)(3)(B) (Proposed Regulation). The Proposed Regulation would amend the definition of a "fiduciary" under ERISA and the Code to specify when a person is a fiduciary by reason of the provision of investment advice for a fee or other compensation regarding assets of a plan or IRA (i.e., an investment advice fiduciary). If adopted, the Proposed Regulation would replace an existing regulation dating to 1975, with the aim of more appropriately distinguishing between the sorts of advice relationships that should be treated as fiduciary in nature and those that should not.
This PTE allows certain investment advice fiduciaries to receive various forms of compensation that, in the absence of an exemption, would be prohibited under ERISA and the Code. In this regard, ERISA and the Code generally prohibit fiduciaries from receiving payments from third parties and from acting on conflicts of interest, including using their authority to affect or increase their own compensation, in connection with transactions involving a plan or IRA. Certain types of fees and compensation, such as brokerage or insurance commissions, 12b-1 fees and revenue sharing payments, commonly paid to a broker-dealer, insurance agent or other fiduciary in connection with investment transactions entered into by plans or IRAs, fall within these prohibitions. This PTE would allow investment advice fiduciaries to receive compensation when plan participants or beneficiaries, IRAs, or certain small plans, purchase, hold or sell investment products based on the fiduciaries' advice, under conditions designed to safeguard the interests of these investors. Specifically, the PTE would apply when compensation is received in connection with a transaction involving a plan participant or beneficiary, an IRA, or a fiduciary of an employee benefit plan with less than 100 participants (referred to generally as "retirement investors"), in accordance with the adviser's advice.
$0
No
No
No
No
No
Uncollected
Chris Cosby 202 693-8540
Reginfo record details
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.
Best Interest Contract Exemption Supporting Statementfinal.docx
Contract Exemption Conditions