Sponsors, fiduciaries, and advisors to 401(k), individual retirement account (IRA) and other individual account plans should review a new final regulation intended to give more flexibility to plans and their advisors in providing fiduciary investment advice to participants and beneficiaries under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code) published by the Department of Labor Employee Benefit Security Administration (EBSA) on October 25, 2011. While many plan sponsors, fiduciaries and invesment advisors are likely to find attractive the added options for paying for investment advice allowed by the new final rule, the use of this rule is subject to many strings and conditions. Consequently, those planning to rely upon the new rules to allow investment advisors to collect compensation from investments recommended by the advisor must exercise care that the necessary arrangements are in place and administered to fulfill these conditions.
