Client Alert

DOL Proposes New Rules on Providing Investment Advice to Plan Participants and Beneficiaries

March 04, 2010

Lawrence J. Hass, Joshua H. Sternoff and Matthew E. Nadworny

On February 26, 2010, the Department of Labor (the DOL) announced a new proposed regulation (the Proposed Rule) designed to clarify the statutory prohibited transaction exemption in the Employee Retirement Income Security Act of 1974 (ERISA) that permits fiduciary advisers to provide investment advice to participants and beneficiaries of 401(k) and other participant-directed pension plans that results in the purchase of investment products offered by investment management affiliates of a fiduciary adviser. The statutory exemption (Sections 408(b)(14) and 408(g) of ERISA) was enacted as part of the Pension Protection Act of 2006 (the PPA) to remove a prohibited transaction obstacle from the offering of professional investment advice to plan participants and beneficiaries to assist them in making prudent decisions regarding their individual plan accounts.

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