[Official Guidance]

Text of DOL Proposed Regs: Definition of Fiduciary; Conflict of Interest Rule for Retirement Investments (PDF)
120 pages. "This document contains a proposed regulation defining who is a 'fiduciary' of an employee benefit plan under [ERISA] as a result of giving investment advice to a plan or its participants or beneficiaries. The proposal also applies to the definition of a 'fiduciary' of a plan (including an individual retirement account (IRA)) under section 4975 of the Internal Revenue Code ... If adopted, the proposal would treat persons who provide investment advice or recommendations to an employee benefit plan, plan fiduciary, plan participant or beneficiary, IRA, or IRA owner as fiduciaries under ERISA and the Code in a wider array of advice relationships than the existing ERISA and Code regulations, which would be replaced. The proposed rule, and related exemptions, would increase consumer protection for plan sponsors, fiduciaries, participants, beneficiaries and IRA owners. This document also withdraws a prior proposed regulation published in 2010 ... concerning this same subject matter." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Guidance Overview]

DOL Fact Sheet on Proposed Rules to Address Conflicts of Interest in Retirement Advice (PDF)
"Today, DOL is proposing a new rule that will seek to: [1] Require more retirement investment advisers to put their client's best interest first, by expanding the types of retirement investment advice covered by fiduciary protections ... [2] Preserve access to retirement education ... [3] Distinguish 'order-taking' as a non-fiduciary activity ... [4] Carve out sales pitches to plan fiduciaries with financial expertise ... [5] Lead to gains for retirement savers in excess of $40 billion over the next 10 years ...

Drawing on comments received and in order to minimize compliance costs, the proposed rule creates a new type of PTE that is broad, principles-based and adaptable to changing business practices.... To qualify for the new 'best interest contract exemption,' the company and individual adviser providing retirement investment advice must enter into a contract with its clients that: [1] Commits the firm and adviser to providing advice in the client's best interest ... [2] Warrants that the firm has adopted policies and procedures designed to mitigate conflicts of interest ... [3] Clearly and prominently discloses any conflicts of interest, like hidden fees often buried in the fine print or backdoor payments, that might prevent the adviser from providing advice in the client's best interest ...

The proposal will not only make more advisers fiduciaries but also ensure they are held accountable to their clients if they provide advice that is not in their clients' best interest, because: [1] DOL currently has the right to bring enforcement actions against fiduciary advisers to plan sponsors and participants who do not provide advice in their clients' best interest ... [2] The 'best interest contract exemption' allows customers to hold fiduciary advisers accountable for providing advice in their best interest ... [3] The IRS can impose an excise tax on transactions based on conflicted advice ...

The rule's substance has changed based on comments received since 2010. Specifically, the proposal: [1] Provides a new, broad, principles-based exemption that can accommodate and adapt to the broad range of evolving business practices ... [2] Includes other new, broad exemptions ... [3] Includes a carve-out from fiduciary status for providing investment education to IRA owners ... [4] Determines who is a fiduciary based not on title, but rather the advice rendered ... [5] Limits the seller's carve-out to sales pitches to large plan fiduciaries with financial expertise ... [6] Excludes valuations or appraisals of the stock held by employee stock ownership plans (ESOPs) from the definition of fiduciary investment advice." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of Proposed Prohibited Transaction Class Exemption: 'Best Interest Contract Exemption' (PDF)
114 pages. "This document contains a notice of pendency before the [DOL] of a proposed exemption from certain prohibited transactions provisions of [ERISA] and the Internal Revenue Code ... The provisions at issue generally prohibit fiduciaries with respect to employee benefit plans and individual retirement accounts (IRAs) from engaging in self-dealing and receiving compensation from third parties in connection with transactions involving the plans and IRAs. The exemption proposed in this notice would allow entities such as broker-dealers and insurance agents that are fiduciaries by reason of the provision of investment advice to receive such compensation when plan participants and beneficiaries, IRA owners, and certain small plans purchase, hold or sell certain investment products in accordance with the fiduciaries' advice, under protective conditions to safeguard the interests of the plans, participants and beneficiaries, and IRA owners. The proposed exemption would affect participants and beneficiaries of plans, IRA owners and fiduciaries with respect to such plans and IRAs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of Proposed Amendment to and Proposed Partial Revocation of PTE 84-24 for Certain Transactions Involving Insurance Agents and Brokers, Pension Consultants, Insurance Companies and Investment Company Principal Underwriters (PDF)
40 pages. "The ERISA and Code provisions at issue generally prohibit fiduciaries with respect to employee benefit plans and individual retirement accounts (IRAs) from engaging in self-dealing in connection with transactions involving these plans and IRAs. The exemption allows fiduciaries to receive compensation when plans and IRAs enter into certain insurance and mutual fund transactions recommended by the fiduciaries as well as certain related transactions. The proposed amendments would increase the safeguards of the exemption. This document also contains a notice of pendency before the Department of the proposed revocation of the exemption as it applies to IRA purchases of mutual fund shares and certain annuity contracts. The amendment and revocations would affect participants and beneficiaries of plans, IRA owners and certain fiduciaries of plans and IRAs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of Proposed Amendments to Class Exemptions 75-1, 77-4, 80-83 and 83-1 (PDF)
27 pages. "These existing exemptions generally permit fiduciaries to receive compensation or other benefits as a result of the use of their fiduciary authority, control or responsibility in connection with investment transactions involving plans or IRAs. The proposed amendments would require the fiduciaries to satisfy uniform Impartial Conduct Standards in order to obtain the relief available under each exemption. The proposed amendments would affect participants and beneficiaries of plans, IRA owners, and fiduciaries with respect to such plans and IRAs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of Proposed Amendment to and Proposed Partial Revocation of PTE 86-128 for Securities Transactions Involving Employee Benefit Plans and Broker-Dealers; Proposed Amendment to and Proposed Partial Revocation of PTE 75-1, Exemptions from Prohibitions Respecting Certain Classes of Transactions Involving Employee Benefits Plans and Certain Broker-Dealers, Reporting Dealers and Banks (PDF)
58 pages. "The ERISA and Code provisions at issue generally prohibit fiduciaries with respect to employee benefit plans and individual retirement accounts (IRAs) from engaging in self-dealing in connection with transactions involving plans and IRAs. The exemptions allow fiduciaries to receive compensation in connection with certain securities transactions entered into by plans and IRAs. The proposed amendments would increase the safeguards of the exemptions. This document also contains a notice of pendency before the Department of the proposed revocation of PTE 86-128 with respect to transactions involving investment advice fiduciaries and IRAs, and of PTE 75-1, Part II(2), and PTE 75-1, Parts I(b) and I(c) [as amended], as duplicative in light of existing or newly proposed relief. The amendments and revocations would affect participants and beneficiaries of plans, IRA owners and certain fiduciaries of plans and IRAs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of Proposed Amendment to PTE 75-1, Exemptions from Prohibitions Respecting Certain Classes of Transactions Involving Employee Benefit Plans and Certain Broker-Dealers, Reporting Dealers and Banks (PDF)
25 pages. "PTE 75-1, Part V, [as amended] permits the extension of credit to a plan or IRA by a broker-dealer in connection with the purchase or sale of securities; however, it does not permit the receipt of compensation for an extension of credit by broker-dealers that are fiduciaries with respect to the assets involved in the transaction. The amendment proposed in this notice would permit investment advice fiduciaries to receive compensation when they extend credit to plans and IRAs to avoid a failed securities transaction. The proposed amendment would affect participants and beneficiaries of plans, IRA owners, and fiduciaries with respect to such plans and IRAs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of Proposed PTE for Principal Transactions in Certain Debt Securities Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (PDF)
60 pages. "This document contains a notice of pendency before the [DOL] of a proposed exemption from certain prohibited transactions provisions of [ERISA] and the Internal Revenue Code ... The provisions at issue generally prohibit fiduciaries with respect to employee benefit plans and individual retirement accounts (IRAs) from purchasing and selling securities when the fiduciaries are acting on behalf of their own accounts (principal transactions). The exemption proposed in this notice would permit principal transactions in certain debt securities between a plan, plan participant or beneficiary account, or an IRA, and a fiduciary that provides investment advice to the plan or IRA, under conditions to safeguard the interests of these investors. The proposed exemption would affect participants and beneficiaries of plans, IRA owners, and fiduciaries with respect to such plans and IRAs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Guidance Overview]

Text of DOL Regulatory Impact Analysis: Fiduciary Investment Advice (PDF)
250 pages (!) "In developing the new proposal, the Department conducted an in-depth economic assessment of current market conditions and the likely effects of reform. As further discussed [in this analysis], the Department found that conflicted advice is widespread, causing serious harm to plan and IRA investors, and that disclosing conflicts alone would fail to adequately mitigate the conflicts or remedy the harm. By extending fiduciary status to more advice and providing flexible and protective PTEs that apply to a broad array of compensation arrangements, the new proposal will mitigate conflicts, support consumer choice, and deliver substantial gains for retirement investors and economic benefits that more than justify its costs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

Today's Important Step to Strengthen Retirement Security
"Today's proposed rule would ensure that the people providing you with retirement investment advice are working in your best interest. And it includes streamlined, flexible ways to comply with that goal, for example by allowing advisers to enter into a new and enforceable best interest contract before they can receive any payments that might bias their advice. It's a straightforward agreement so you know you'll get advice on investing your retirement savings that puts your interests first. The many advisers already putting their customers' best interest first deserve the level playing field for offering quality advice that this rule will provide." (U.S. Department of Labor [DOL] Blog)  

BenefitsLink Collection of Prior Commentary on the Fiduciary Definition/Standard for Investment Advice

(BenefitsLink)