| Issues and Answers | ||
| Can an employee take leave to care for an injured veteran? | |||
|
| |||
|
| Test Your Human Resources Knowledge | ||
|
| Labor Law Journal Submissions | ||
|
| Human Resources Links | ||
|
| Labor Arbitrators' Awards and Biographies | ||
CCH's Law, Explanation and Analysis of Health Care Reform Legislation
Get full explanation and analysis of every aspect of health care reform legislation. These legislative changes will imminently impact thousands of employers, private insurance providers, and the Medicare and Medicaid programs. Pre-order today and save $20!
The Investment Company Institute (ICI) has expressed its opposition to a computer model investment advice program for IRAs and is urging the Department of Labor (DOL) to reach the conclusion that such a program is not feasible.
Under the Pension Protection Act of 2006 (PPA; P.L. 109-280), fiduciary advisors are permitted to offer, and receive compensation for, investment advice to retirement plan participants, provided that either level fees are assessed or a computer model is used, the ICI states. In recognition that a computer model advisory program may be less suitable for IRAs than for other retirement plans, the PPA requires the DOL to determine whether such a model is feasible for IRAs. If not, the DOL is required to issue a prohibited transaction exemption that can be used to provide advice in connection with IRAs.
The ICI estimates that there are approximately 6,200 mutual funds, 5,000 U.S. publicly traded securities, and a multitude of government debt securities, potentially available as investments by IRA investors, further noting that IRAs are permitted to invest in virtually anything other than collectibles and life insurance. The ICI surveyed its members, and respondents included most of its largest members with very large retirement businesses, holding over $4.2 trillion in mutual fund assets, including $831 billion in IRA assets. No survey respondent indicated that it had a computer model advisory program which took into account the full range of IRA investments.
Based on the survey results, it is the ICI's position that no computer model can account for all of the investment options generally available to IRAs, including individual equities and bonds. Consequently, the ICI is urging the DOL to concur with the conclusion that a computer model investment advice program is not feasible for IRAs, and to promptly report its findings to Congress well before the end of the year. The ICI further urges the DOL to issue, within the next six months, a proposed class prohibited transaction exemption (PTE) which would be flexible enough to provide IRA savers with new options for advice. Such a class PTE should include robust up-front and ongoing disclosures of the financial interests and investment affiliations of the fiduciary adviser.
For more information on this and related topics, consult the CCH Pension Plan Guide.
Visit our News Library to read more news stories.
©2009, CCH. All Rights Reserved.
