Modified Boehner Bill Heads For House Vote

The bill, sponsored by Committee Chairman John Boehner (R-Ohio), would provide a limited exemption from ERISA’s prohibited transaction rules to allow retirement plan participants to receive investment advice from investment management firms.

The bill passed by a roll call vote of 29-17, largely along party lines. Four Democrats supported the bill: Representatives Carolyn McCarthy (D-New York), Susan Davis (D-California), David Wu (D-Oregon) and Rush Holt (D-New Jersey).

According to the American Benefits Council, modifications to the original bill included:

• limiting the bill?s prohibited transaction exemption to advice given to defined contribution plans and participants
• clarifying that fiduciary advisers be qualified to offer advice under a comprehensive statutory scheme
• an improved “plain language” disclosure provided at the same time as the advice; and
• a written acknowledgment by investment advisers to plan participants and plan sponsors that the advisers are indeed fiduciaries.

Alternative Advice

Representative Robert Andrews (D-New Jersey) offered a substitute bill that was defeated by a party-line roll call vote. That alternative called for:

• a more specific disclosure schedule designed to remind beneficiaries when conflicts of interest may be occurring;
• a requirement that advisers be accredited by a test, standard, code or regulatory structure;
• more strict remedies for an adviser’s breach of fiduciary duty
• employers to offer plan participants an alternative, “independent” source of advice

Those measures were designed to address concerns raised by Andrews and Representative John Tierney (D-Massachusetts) in a July hearing of the committee.

Chairman John Boehner (R-Ohio), who sponsored the legislation, argued that those provisions would drive up costs and administrative burdens – and could lead to substantial litigation.

The newly approved version of the bill will now be reported to the full House for possible consideration later this fall.