Conflicted Investment Advice Proposed Rule Fiduciary Carve-Out Disclosure Requirements

Forms and Documents

Document Name	Status
COI Reg Supporting Statementfinal.docx Supporting Statement A	2015-04-17

IC Document Collections

IC ID	Document Title	Status
214872	Investment Education Carve-Out	New
214871	Platform Provider Carve-Out	New
213834	Seller's Carve-Out Disclosure	New

ICR Details

OMB Control No: 1210-0155	ICR Reference No: 201411-1210-006
Status: Historical Inactive	Previous ICR Reference No:
Agency/Subagency: DOL/EBSA	Agency Tracking No:
Title: Conflicted Investment Advice Proposed Rule Fiduciary Carve-Out Disclosure Requirements
Type of Information Collection: New collection (Request for a new OMB Control Number)	Common Form ICR:  No
Type of Review Request: Regular
OIRA Conclusion Action: Comment filed on proposed rule	Conclusion Date: 07/20/2015
	Date Received in OIRA: 04/20/2015
Terms of Clearance: 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.

	Inventory as of this Action	Requested	Previously Approved
Expiration Date		36 Months From Approved
Responses	0	0	0
Time Burden (Hours)	0	0	0
Cost Burden (Dollars)	0	0	0

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Abstract: The Department is proposing a 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. Paragraph (b)(1)(i) of the proposed regulation provides a carve-out to the general investment advice fiduciary definition for advice provided in connection with an arm's length sale, purchase, loan, or bilateral contract between a sophisticated plan investor that has 100 or more plan participants and the adviser ("seller's carve-out"). It also applies in connection with an offer to enter into such a transaction or when the person providing the advice is acting as representative, such as an agent for the plan's counterparty. The person must provide advice to a plan fiduciary who is independent of the counterparty and must exercise authority or control respecting the management or disposition of the plan's assets, with respect to an arm's length sale, purchase, loan or bilateral contract between the plan and the counterparty, or with respect to a proposal to enter into such a sale, purchase, loan or bilateral contract. The seller's carve-out applies if certain conditions are met. Among these conditions are the following: the adviser must obtain a written representation from the plan fiduciary that (1) the plan fiduciary is a fiduciary who exercises authority or control respecting the management or disposition of the employee benefit plan's assets (as described in ERISA section 3(21)(A)(i), (2) the employee benefit plan has 100 or more participants covered under the plan, and (3) the fiduciary will not rely on the person to act in the best interests of the plan, to provide impartial investment advice, or to give advice in a fiduciary capacity. Another carve-out is directed to service providers, such as recordkeepers and third party administrators that offer a "platform" or selection of investment vehicles to participant-directed individual account plans under ERISA. Specifically, paragraph (b)(3) of the proposed regulation makes clear that persons who merely market and make available securities or other property through a platform or similar mechanism to an employee benefit plan without regard to the individualized needs of the plan and its participants, or beneficiaries do not act as investment advice fiduciaries. In order for the platform provider carve-out to apply, the person providing the platform must provide a written disclosure to the plan fiduciary stating that the person is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity. Paragraph (b)(6) of the proposal makes clear that furnishing and providing certain specified investment educational information and materials (including certain investment allocation models and interactive plan materials) to a plan, plan fiduciary, participant, beneficiary or IRA owner will not constitute the rendering of investment advice if certain conditions are met. One of the conditions is that the asset allocation models or interactive materials must explain all material facts and assumptions on which the models and materials are based and include a statement indicating that, in applying particular asset allocation models to their individual situations, participants, beneficiaries, or IRA owners should consider their other assets, income, and investments in addition to their interests in the plan or IRA to the extent they are not taken into account in the model or estimate.

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Authorizing Statute(s): US Code: 29 USC 1135 Name of Law: Employee Retirement Income Security Act
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
1210-AB32	Proposed rulemaking	80 FR 21928	04/20/2015

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Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 3

IC Title	Form No.	Form Name
Platform Provider Carve-Out
Investment Education Carve-Out
Seller's Carve-Out Disclosure

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Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Changing Regulations

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: The Department is proposing a 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. Paragraph (b)(1)(i) of the proposed regulation provides a carve-out to the general investment advice fiduciary definition for advice provided in connection with an arm's length sale, purchase, loan, or bilateral contract between a sophisticated plan investor that has 100 or more plan participants and the adviser ("seller's carve-out"). It also applies in connection with an offer to enter into such a transaction or when the person providing the advice is acting as representative, such as an agent for the plan's counterparty. The person must provide advice to a plan fiduciary who is independent of the counterparty and must exercise authority or control respecting the management or disposition of the plan's assets, with respect to an arm's length sale, purchase, loan or bilateral contract between the plan and the counterparty, or with respect to a proposal to enter into such a sale, purchase, loan or bilateral contract. The seller's carve-out applies if certain conditions are met. Among these conditions are the following: the adviser must obtain a written representation from the plan fiduciary that (1) the plan fiduciary is a fiduciary who exercises authority or control respecting the management or disposition of the employee benefit plan's assets (as described in ERISA section 3(21)(A)(i), (2) the employee benefit plan has 100 or more participants covered under the plan, and (3) the fiduciary will not rely on the person to act in the best interests of the plan, to provide impartial investment advice, or to give advice in a fiduciary capacity. Another carve-out is directed to service providers, such as recordkeepers and third party administrators that offer a "platform" or selection of investment vehicles to participant-directed individual account plans under ERISA. Specifically, paragraph (b)(3) of the proposed regulation makes clear that persons who merely market and make available securities or other property through a platform or similar mechanism to an employee benefit plan without regard to the individualized needs of the plan and its participants, or beneficiaries do not act as investment advice fiduciaries. In order for the platform provider carve-out to apply, the person providing the platform must provide a written disclosure to the plan fiduciary stating that the person is not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity. Paragraph (b)(6) of the proposal makes clear that furnishing and providing certain specified investment educational information and materials (including certain investment allocation models and interactive plan materials) to a plan, plan fiduciary, participant, beneficiary or IRA owner will not constitute the rendering of investment advice if certain conditions are met. One of the conditions is that the asset allocation models or interactive materials must explain all material facts and assumptions on which the models and materials are based and include a statement indicating that, in applying particular asset allocation models to their individual situations, participants, beneficiaries, or IRA owners should consider their other assets, income, and investments in addition to their interests in the plan or IRA to the extent they are not taken into account in the model or estimate.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Is the Supporting Statement intended to be a Privacy Impact Assessment required by the E-Government Act of 2002? No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? Uncollected

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Common Form ICR:  No

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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:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(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;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

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.

Certification Date: 04/20/2015

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