DOL Withdraws Final Investment Advice Regulations
Effective January 19, 2010, the DOL has withdrawn the final rule on the provision of investment advice to participants and beneficiaries in individual account plans, such as 401(k) plans, and beneficiaries of individual retirement accounts (“IRA”) under the Employee Retirement Income Security Act of 1974 (“ERISA”) prohibited transaction provisions.
The final rule was originally published in January 2009 to make investment advice more accessible for participants in 401(k) plans and IRAs. The effective and applicability dates of the final rule had been deferred several times, most recently until May 17, 2010, while the DOL reviewed the policy and the legal issues raised. The PPA amended ERISA by adding a new prohibited transaction exemption that allows greater flexibility for investment advisers to give advice to participants of 401(k)s and IRAs.
The DOL decided to withdraw the final rule over conflict of interest concerns raised in public comments questioning “the adequacy of the final class exemption’s conditions to mitigate the potential for investment adviser self-dealing.”
The DOL has stated that it intends to publish separately a proposed rule that conforms to the PPA statutory exemption relating to investment advice.
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