Insurance Marketing Organization Exemption

Forms and Documents

Document Name	Status
IMO Exemption Supporting Statement 1-9-17-clean.docx Supporting Statement A	2017-01-10

IC Document Collections

IC ID	Document Title	Status
225057	IMO Exemption Conditions	New

ICR Details

OMB Control No: 1210-0159	ICR Reference No: 201701-1210-005
Status: Historical Inactive	Previous ICR Reference No:
Agency/Subagency: DOL/EBSA	Agency Tracking No:
Title: Insurance Marketing Organization Exemption
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: 05/17/2017
	Date Received in OIRA: 01/19/2017
Terms of Clearance: In accordance with 5 CFR 1320, the information collection is not approved at this time. Prior to publication of the final rule, the agency should provide to OMB a summary of all comments received on the proposed information collection and identify any changes made in response to these comments.

	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 granting this prohibited transaction class exemption (PTE) in response to its regulation under ERISA section 3(21)(A)(ii) and Code section 4975(e)(3)(B). The Regulation amended 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). The Regulation replaced 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 insurance marketing organizations (IMOs) 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 investment advice 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 insurance commissions and revenue sharing payments, commonly paid to an IMO in connection with investment transactions entered into by plans or IRAs, fall within these prohibitions. This PTE would allow IMOs to receive compensation when plan participants or beneficiaries, IRAs, or certain small plans, purchase, hold or sell investment products based on these fiduciaries' advice, under conditions designed to safeguard the interests of these investors. To safeguard the interests of the plans and IRAs, the exemption would require the IMO 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 IMO 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 IMO fee practices. Additional conditions would apply to IMOs 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 IMO or its affiliates). IMOs 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 records, and make it available to the Department.

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Authorizing Statute(s): US Code: 29 USC 1108 Name of Law: Employee Retirement Income Security Act of 1974
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
1210-ZA26	Proposed rulemaking	82 FR 7336	01/19/2017

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Federal Register Notices & Comments
60-day Notice:	Federal Register Citation:	Citation Date:
	82 FR 7336	01/19/2017
30-day Notice:	Federal Register Citation:	Citation Date:
	82 FR 7336	01/19/2017
Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 1

IC Title	Form No.	Form Name
IMO Exemption Conditions

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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: This is a proposed new prohibited transaction class exemption.

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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: 01/19/2017

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