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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921
Millions of self-employed workers with individual retirement accounts
(IRAs) or Keogh pension plans would get free or low cost brokerage services
under a proposal by the U. S. Labor Department.
Under the department's proposed exemption, broker-dealers could provide
services as incentives for maintaining IRAs and Keogh plans. The proposal would
let IRA and Keogh customers receive services otherwise prohibited by Employee
Retirement Income Security Act if certain conditions are met.
Services could 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 proposed exemption would require the following conditions:
- the IRA or Keogh plan be established and maintained for the
exclusive benefit of the participant, a spouse or beneficiary;
- services offered must be of the type the broker-dealer could offer
consistent with federal and state laws;
- services be provided in the ordinary course of business by brokers
to customers who qualify for such services but do not maintain IRA or Keogh
plans with the broker- dealer;
- the account value or the fees incurred by the IRA or Keogh plan must
be the same as that for any account eligible to receive reduced or no cost
services;
- IRA and Keogh customers must be eligible for the same services
offered to other customers with the same account values or who generate the
same amount of fees; and
- investment performance on IRA and Keogh investments must be no less
favorable than that of identical investments made by customers ineligible for
the reduced or no cost investment services.
The proposed exemption is similar to the relief provided under
Prohibited Transaction Exemption 93-2 which permits individuals who maintain
IRAs and Keogh plans to receive reduced or no cost banking services.
The proposal is scheduled to be published in the July 31 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, Attn: D-09707.
Archived News Release--Caution:
information may be out of date.
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