The Department of Labor recently finalized regulations that would make it much easier for participants of 401(k) plans and individual retirement accounts to receive investment advice.
"Millions of American workers are responsible for managing their 401(k) and IRA accounts. The department took extraordinary steps to engage a broad spectrum of participants, employers, plan fiduciaries and others throughout the rulemaking process," says Bradford P. Campbell, assistant secretary at DOL's Employee Benefits Security Administration. "The final rule expands access to investment advice without compromising the critical protections for plan participants and beneficiaries," he adds.
Under the Pension Protection Act of 2006, participants can receive investment advice through the use of a computer model certified as unbiased and though an advisor compensated on a "level-fee" basis.
The new regulations offer guidance on investment advice dealing with using fee-leveling, using computer models, the authorization of a plan fiduciary and annual audit requirements.
For example, the new rule states that a computer model can not favor investment options that generate the most income for the fiduciary adviser or person with a material affiliation or material contractual relationship with the fiduciary adviser.
The final rule is effective on March 23, 2009.
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