Fiduciary Investment Advice and Non-Plan Assets

[Guest shapstheeldest@gmail.com]

In a recent conversation I was informed that there is a DOL "ruling" (more likely an advisory opinion) that states that if a 401(k) plan uses plan assets to pay for investment advice the registered investment advisor may not provide advice for outside or non-plan assets of participants. Does anyone know of the DOL piece referenced? Thanks in advance for any help you may lend.

[MoJo]

ERISA has an "exclusive benefit" rule that provides that plan assets can ONLY be used to provide the benefits offered under the plan, and to offset the reasonable and necessary costs of administering the plan. Providing advice (and having the plan pay for it) is probably an appropriate plan expense, but having advice that provides advice for non-plan assets would not be. That said, advice can take into consideration outside assets when determining the appropriate investments within the plan, but cannot advise on changes to those outside assets.

[Guest shapstheeldest@gmail.com]

ERISA has an "exclusive benefit" rule that provides that plan assets can ONLY be used to provide the benefits offered under the plan, and to offset the reasonable and necessary costs of administering the plan. Providing advice (and having the plan pay for it) is probably an appropriate plan expense, but having advice that provides advice for non-plan assets would not be. That said, advice can take into consideration outside assets when determining the appropriate investments within the plan, but cannot advise on changes to those outside assets.

thank you for the response MoJo. i recognize the reasoning behind the rule, but for the life of me cannot find this "DOL ruling" that was discussed. the "ruling" was mentioned as if it were an actual DOL issuance separate and apart clarifying ERISA's exclusive benefit rule. thus far no one seems to know of it. again, thanks for your assistance.

[david rigby]

Is this the DOL "ruling" to which you refer?

http://www.dol.gov/ebsa/regs/fab_2007-1.html