The bill (see Retirement Security Advice Bill Makes a Comeback ) would allow defined contribution plan providers to provide investment advice to participants and exempt plan sponsors from liability for such advice, by creating an ERISA exemption for the provision of advice and any fees or compensation associated with it.
While the amendment of ERISA is the thrust of the bill, it would make corresponding amendments to the tax code, preventing the IRS from imposing a 15% prohibited transaction excise tax on the provision of investment advice as outlined in the bill.
During the markup, the Ways and Means Committee is expected to focus primarily on the changes to the tax code that correspond to the ERISA amendments approved by the Education and the Workforce Committee.
And while the bill affects the tax code, the Treasury Department is deferring on the issue to the Labor Department, which is seen as the lead agency on this issue. The Labor Department supports the legislation (see In Depth -New Administration Embraces Investment Advice Bill , DoL Embraces Advice Bill in Dramatic Turnaround at and Boehner Assesses DoL Turnaround on Advice Bill ), maintaining that increasing competition in the advice market would improve quantity and quality of investment advice.
Industry members predict that the markup will feature the same brand of partisan debate evident at the Education and the Workforce markup (see Modified Boehner Bill Heads for the House ), with Democrats dissatisfied with the adequacy of requirements regarding the disclosure of material relationships and qualifications of advisers.
Democrats maintain that fiduciary advisers should be held to a certain standard to prevent unqualified providers from giving advice. They also question the independence of such advice, and point to “several weaknesses in existing ERISA remedies” for breach of fiduciary duties.
– Camilla Klein firstname.lastname@example.org
Read more at Upfront: The Trouble with the Boehner Bill
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