Under these rules, many transactions may be barred even where they pose no threat to the plan. Each of these proposals is described below. At the time of the mark up, DOL filed a formal letter opposing the legislation. The exemption also amends the corresponding excise tax provisions of Code section 4975. Disclosure could be in the form of a general standing authorization for a fiduciary to engage in a certain class of transactions, and need not be provided in advance of each transaction.
Special relief is provided for transactions involving plans sponsored by service providers.
Transactions between a plan and the plan's fiduciary are allowed, if the fiduciary or an affiliate is engaged in the business of entering that type of transaction, and the terms are the same as those offered to the general public. The exemption would virtually eliminate as unnecessary the current DOL administrative exemptions process. Affiliates of these entities, employees, agents, and registered representatives are also eligible for relief. Compensation paid to the fiduciary adviser and its affiliates must be reasonable, and the terms of the transaction must be arm's-length. Employers must prudently select the adviser, but are not liable for specific investment advice provided to participants.