Insurance Marketing Organization Exemption

ICR 201701-1210-005

OMB: 1210-0159

Federal Form Document

Forms and Documents
Document
Name
Status
Supporting Statement A
2017-01-10
IC Document Collections
IC ID
Document
Title
Status
225057
New
ICR Details
1210-0159 201701-1210-005
Historical Inactive
DOL/EBSA
Insurance Marketing Organization Exemption
New collection (Request for a new OMB Control Number)   No
Regular
Comment filed on proposed rule 05/17/2017
Retrieve Notice of Action (NOA) 01/19/2017
In accordance with 5 CFR 1320, the information collection is not approved at this time. Prior to publication of the final rule, the agency should provide to OMB a summary of all comments received on the proposed information collection and identify any changes made in response to these comments.
  Inventory as of this Action Requested Previously Approved
36 Months From Approved
0 0 0
0 0 0
0 0 0

The Department is granting this prohibited transaction class exemption (PTE) in response to its regulation under ERISA section 3(21)(A)(ii) and Code section 4975(e)(3)(B). The Regulation amended the definition of a "fiduciary" under ERISA and the Code to specify when a person is a fiduciary by reason of the provision of investment advice for a fee or other compensation regarding assets of a plan or IRA (i.e., an investment advice fiduciary). The Regulation replaced an existing regulation dating to 1975, with the aim of more appropriately distinguishing between the sorts of advice relationships that should be treated as fiduciary in nature and those that should not. This PTE allows insurance marketing organizations (IMOs) to receive various forms of compensation that, in the absence of an exemption, would be prohibited under ERISA and the Code. In this regard, ERISA and the Code generally prohibit investment advice fiduciaries from receiving payments from third parties and from acting on conflicts of interest, including using their authority to affect or increase their own compensation, in connection with transactions involving a plan or IRA. Certain types of fees and compensation, such as insurance commissions and revenue sharing payments, commonly paid to an IMO in connection with investment transactions entered into by plans or IRAs, fall within these prohibitions. This PTE would allow IMOs to receive compensation when plan participants or beneficiaries, IRAs, or certain small plans, purchase, hold or sell investment products based on these fiduciaries' advice, under conditions designed to safeguard the interests of these investors. To safeguard the interests of the plans and IRAs, the exemption would require the IMO and the adviser to contractually acknowledge fiduciary status and commit to adhere to certain impartial conduct standards when providing advice to the plans and IRAs, including providing advice in their Best Interest. The IMO would further be required to warrant that it has adopted policies and procedures designed to mitigate the impact of conflicts of interest and ensure that the individual advisers adhere to impartial conduct standards. The exemption would also require disclosure regarding adviser and IMO fee practices. Additional conditions would apply to IMOs that limit products available to advisers for recommendation based on third-party payments generated or based on the fact that they are proprietary products (i.e., products offered or managed by the IMO or its affiliates). IMOs relying on the exemption would be required to notify the Department in advance of doing so. Finally, financial institutions making use of the exemption would have to maintain certain records, and make it available to the Department.

US Code: 29 USC 1108 Name of Law: Employee Retirement Income Security Act of 1974
  
None

1210-ZA26 Proposed rulemaking 82 FR 7336 01/19/2017

  82 FR 7336 01/19/2017
82 FR 7336 01/19/2017
No

1
IC Title Form No. Form Name
IMO Exemption Conditions

Yes
Changing Regulations
No
This is a proposed new prohibited transaction class exemption.

$0
No
No
No
No
No
Uncollected
Allan Beckmann 202 693-8429 beckmann.allan@dol.gov

  No

On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
 
 
 
 
 
 
 
    (i) Why the information is being collected;
    (ii) Use of information;
    (iii) Burden estimate;
    (iv) Nature of response (voluntary, required for a benefit, or mandatory);
    (v) Nature and extent of confidentiality; and
    (vi) Need to display currently valid OMB control number;
 
 
 
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
01/19/2017


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