David Kaleda was quoted in an article in BNA Pension & Benefits Reporter titled, “Speakers Say Investment Advice Exemption Unlikely to Be Widely Used by Employers.”
Upon qualifying for the statutory exemption under the final rule, investment advisers can receive fees from investments they recommend to retirement plan participants if they are compensated on a “level-fee” basis, meaning fees that do not vary based on which investments plan participants choose. Advisers may also qualify for the exemption if they provide advice pursuant to a computer model if certain requirements are met.
In light of the fact that employers and service providers may continue to rely upon prior DOL guidance with respect to the provision of advice in a manner that does not violate ERISA’s and the tax code’s prohibited transaction provisions, Kaleda stated he did not think the statutory exemption would be used very often. “The only reason an employer might want to use the statutory exemption is to get the reassurance of a yearly audit,” Kaleda added. “For service providers, it gives them the opportunity to create their own proprietary computer model.”