<nobr>Nov 23, 2009</nobr>

DOL Withdraws Final Rule on Investment Advice

The Department of Labor's Employee Benefits Security Administration on November 19 announced that it is withdrawing the final rule on investment advice under ERISA's prohibited transaction provisions, just two days after it announced an extension of the effective date of the final rule.

EBSA's notice published in the November 20 Federal Register withdraws the January 21, 2009, final rule that implemented a statutory prohibited transaction exemption under the Pension Protection Act (PPA), and provided an additional administrative class exemption. The final rules, which were issued by the Bush Administration, were immediately delayed in order to permit Obama Administration officials a review of policy and legal issues raised with respect to the rules.

EBSA said it decided to withdraw the rule based on public comments that "raised sufficient doubts as to whether the conditions of the final rule and the class exemption associated with the rule could adequately protect the interests of plan participants and beneficiaries." EBSA highlighted questions submitted by commenters regarding whether the conditions in the final rules' prohibited transaction class exemptions allowing investment advice to be provided to participants and beneficiaries in participant-directed individual account plans would be adequate in mitigating the potential for investment adviser self-dealing.

The effective date of the withdrawal is January 19, 2010. EBSA said it intends to publish separately a proposed rule that conforms to the PPA statutory exemption relating to investment advice.

Questions or comments on this issue should be addressed to Kathryn Ricard (kricard@eric.org).



Websites:

DOL Announcement of Withdrawal

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