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DOL/EBSA

RIN: 1210-AB13

Publication ID: Spring 2008

Title: Prohibited Transaction Exemption for Provision of Investment Advice to Participants in Individual Account Plans
Abstract: Section 601 of the Pension Protection Act (Pub. L. 109-280) amended ERISA by adding new sections 408(b)(14) and 408(g). Section 408(b)(14) is a prohibited transaction exemption that permits the provision of investment advice to participants or beneficiaries of certain individual account plans if the investment advice is provided under an eligible investment advice arrangement, as defined in section 408(g). In order to qualify as an eligible investment advice arrangement, the arrangement must either provide that any fees received by the adviser do not vary depending on the basis of any investment options selected, or use a computer model under an investment advice program that meets the criteria set forth in section 408(g) in connection with the provision of investment advice. Further, with respect to both types of advice arrangements, the investment adviser must disclose to advice recipients all fees that the adviser or any affiliate is to receive in connection with the advice. Section 408(g) requires that the computer model which serves as the basis for an eligible investment advice arrangement be certified by an eligible investment expert in accordance with rules prescribed by the Secretary of Labor. Section 408(g) also directs the Secretary of Labor to issue a model form for the required disclosure of fees. EBSA published a Request for Information that invited interested persons to submit written comments and suggestions concerning the expertise and procedures that may be needed to certify that a computer model meets the statutory criteria, and the content, types, and designs of fee disclosure materials currently used and their usefulness to plan participants.
Agency: Department of Labor(DOL)	Priority: Other Significant
RIN Status: Previously published in the Unified Agenda	Agenda Stage of Rulemaking: Proposed Rule Stage
Major: Undetermined	Unfunded Mandates: Undetermined
CFR Citation: 29 CFR 2550
Legal Authority: 29 USC 1108(g) 29 USC 1135 PL 109-280, sec 601(a), Pension Protection Act of 2006 ERISA sec 408(g) ERISA sec 505

Legal Deadline: None

Statement of Need: This rulemaking is necessary to fully implement the new exemption under section 408(b)(14) of ERISA pursuant to section 601 of the PPA.

Summary of the Legal Basis: Section 505 of ERISA provides that the Secretary may prescribe such regulations as she finds necessary and appropriate to carry out the provisions of title I of the Act. In addition, section 408(g)(3) of ERISA provides the Secretary with authority to establish rules governing the computer model certification process.

Alternatives: Alternatives will be considered following a determination of the scope and nature of the regulatory guidance needed by the public.

Anticipated Costs and Benefits: Preliminary estimates of the anticipated costs and benefits will be developed, as appropriate, following a determination regarding the alternatives to be considered.

Timetable:

Action	Date	FR Cite
Request for Information	12/04/2006	71 FR 70429
Request for Information Comment Period End	01/30/2007
NPRM	07/00/2008

Regulatory Flexibility Analysis Required: Undetermined	Government Levels Affected: Undetermined
Federalism: No
Included in the Regulatory Plan: Yes
RIN Data Printed in the FR: No
Agency Contact: Fred Wong Senior Pension Law Specialist Department of Labor Employee Benefits Security Administration 200 Constitution Avenue NW., FP Building, Room N-5655, Washington, DC 20210 Phone:202 693-8500 Fax:202 219-7291