Department of Labor Releases Final Rule on Investment Advice

Benefits Alert



The Department of Labor Employee Benefits Security Administration has released a final rule on requirements for providing investment advice to retirement plan participants. The final rule goes into effect on December 27, 2011. Sponsors of retirement plans that allow investment advisers to provide investment advice to plan participants need to be aware of this rule.

The final rule implements a statutory prohibited transaction exemption under Sections 408(b)(14) and 408(g) of the Employee Retirement Income Security Act of 1974 (“ERISA”) as well as related Sections 4975(d)(17) and 4975(f)(8) of the Internal Revenue Code (the“Code”). The exemption was added by the Pension Protection Act of 2006. The DOL initially proposed an investment advice rule in 2008 and finalized such rule in January 2009. However, the DOL withdrew the earlier final rule in November 2009. In March 2010, the DOL published a new proposed rule, which has now been finalized.

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