This is the second in a series of client advisories regarding the U.S. Department of Labor’s re-proposed regulations (Proposed Rule) defining who is a fiduciary under ERISA and the Code as a result of providing investment advice. This client advisory focuses on a new proposed prohibited transaction exemption published with the Proposed Rule that would allow persons who are deemed to be “investment advice fiduciaries” receive compensation for investment advice if certain conditions are met.

Background -

The Proposed Rule would treat certain persons who provide investment advice for a fee or other compensation to an employer-sponsored retirement plan, plan fiduciary, plan participant or beneficiary, IRA or IRA owner as fiduciaries (investment advice fiduciaries) under the Employee Retirement Income Security Act of 1974 (ERISA), as amended or the Internal Revenue Code of 1986, as amended. (Please see our Client Advisory, “Take Two: DOL Reproposes Changes to Definition of Fiduciary for ERISA Plans and IRAs,” published concurrently with this one, for more information on persons who would qualify as investment advice fiduciaries and the categories of advice covered by the Proposed Rule.)