On August 21, 2008, the Employee Benefits Security Administration (EBSA) announced two proposed rules making investment advise more accessible for participants in 401(k) plans and individual retirement plans (IRAs).

Congress passed the Pension Protection Act (PPA) in 2006, amending the Employee Retirement Income Security Act (ERISA).  The PPA added a new prohibited transaction exemption that allows greater flexibility for participants of 401(k) plans and IRAs to obtain investment advice. Under the exemption, advice may be given through an unbiased computer model or through an adviser compensated on a flat-fee basis.  Furthermore, advisors must disclose their fees.

The proposed regulation provides guidance on certifying the unbiased computer models and provides a model form that advisors can use to disclose their fees.

EBSA is also proposing a class exemption from ERISA’s prohibited transactions rule allowing advisors to give individualized advice to participants after giving advice generated by use of a computer model.

Written comments on the proposed regulation should be received by the Department of Labor on or before October 6, 2008. To submit comments electronically, email e-ORI@dol.gov, or use the Federal eRulemaking portal at http://www.regulations.gov/.  Interested parties may also send comments to the Office of Regulations and Interpretations, Employee Benefits Security Administration, Attn: Investment Advice Regulations, Room N-5655, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210.