Today, Oct. 24, 2011, the IRS issued new Final Regs on Investment Advice to Participants and Beneficiaries in individual account plans, including 401(k) plans. The regulations say they affect plan sponsors, fiduciaries, participants and beneficiaries of participant-directed individual account plans, as well as providers of investments and investment advice related services to these plans. The Final Regs are 114-pages long.
According to the DOL, the genesis of these final regulations began with Congress amending the prohibited transaction provisions of ERISA and the Code, as part of Section 601 of the Pension Protection Act of 2006, to permit “a broader array of investment advice providers to offer their services to participants and beneficiaries responsible for investment of assets in their individual accounts and, accordingly, the adequacy of their retirement savings.”
The DOL then issued Field Assistance Bulletin 2007-01 on Feb. 2, 2007.
On Jan. 21, 2009, the DOL issued final regulations which were then withdrawn on Nov. 20, 2009.
On March 2, 2010, the DOL issued new proposed regulations. When finalized, the proposed regulations were to implement the statutory prohibited transaction exemption under ERISA sections 408(b)(14) and 408(g) and the parallel provisions in the Code. In response to the proposed regulations, the DOL received 74 comment letters which they respond to in these final regulations.
These Final Regulations include provisions on computer models, audits, fees, written notice and disclosure requirements, and a new provision on Disclosure to Authorizing Fiduciary.
