Labor Department Proposes Amended Waivers On Receipt Of Services On IRAs And Self-Employed Plans

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has proposed broadening the scope of two class exemptions allowing individual retirement accounts (IRAs) or Keogh pension plans to get free or low cost brokerage or banking services

Under the department's proposed exemptions, broker-dealers and banks could provide services as incentives for maintaining educational IRAs and simple retirement accounts. The proposal would expand the type of IRAs covered by Prohibited Transaction Exemptions (PTEs) 97-11 and 93-33. PTE 97-11 allows brokerage firms to give IRA and Keogh customers low or no cost services which otherwise are prohibited by the Employee Retirement Income Security Act. PTE 93- 33 provided similar relief to the banking industry.

Services customers could get from these institutions include financial planning, direct deposit/debit and automatic fund transfer privileges, enhanced account statements, toll-free access to client service centers, check writing privileges, debit/credit cards, special newsletters, and reduced brokerage and asset management fees.

The proposal for broker-dealers was requested by the Securities Industry Association, which represents more than 700 securities firms which provide brokerage and investment advisory services to the public. The proposal would amend PTE 97-11 to allow broker- dealers to offer low or no cost services for education IRAs as well as IRAs and Keogh plans.

The American Bankers Association asked the department to amend PTE 93-33. The proposal would broaden the current exemption to include the former two type of plans.

The proposal is scheduled to be published in the Oct. 21 Federal Register. Public comments or requests for a hearing should be submitted in writing to the Office of Exemption Determinations, Pension and Welfare Benefits Administration, U.S. Department of Labor, Room N-5649, 200 Constitution Ave., N.W., Washington, D.C. 20210, marked to the Attn: D-10554 (brokerage exemption) or Attn: D-10567 (banking exemption).

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Archived News Release — Caution: Information may be out of date.

Contact Name: Gloria Della
Phone Number: 202.219.8921