Department of Labor Issues Final Regulations on Providing Investment Advice to Retirement Plan Participants


On October 24, 2011, the U.S. Department of Labor ("DOL") issued a final rule that further outlines the conditions required when fiduciaries provide investment advice to participants and beneficiaries in self-directed individual account plans and IRAs (the "Final Regulations"). DOL Reg. §§ 2550.408g-1 and 2.

The prohibited transaction rules in the Employee Retirement Income Security Act ("ERISA"), and the parallel provisions under the Internal Revenue Code (the "Code"), generally prevent a fiduciary investment adviser from recommending plan investment options if the adviser receives additional fees as a result of the advice.

A prohibited transaction exemption was added in 2006 to both ERISA and the Code, permitting plan fiduciaries to provide investment advice to participants and beneficiaries pursuant to "eligible investment advice arrangements" (the "Statutory Exemption").

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