ICI Advises Against Computer Model for Providing Investment Advice to IRAs

Washington, DC, February 2, 2007 - The Institute has urged the Labor Department (DOL) to report to Congress that a computer model investment advice program for IRAs does not appear feasible.

Background
The Pension Protection Act permits a fiduciary adviser to provide advice to IRA participants using a computer model that meets certain conditions. If a computer model is not feasible, the Labor Department must issue an exemption that can be used to provide advice in connection with IRAs. The Employee Benefits Security Administration (EBSA), an office within DOL, filed a Request for Information soliciting information from the public concerning the feasibility of the application of computer model investment advice programs for Individual Retirement Accounts and similar types of plans.

ICI Position
In its comment letter, ICI states that that there is no computer model that can account for all of the investment options generally available to IRAs, including individual equities and bonds. As a result, the Institute urges the DOL to reach this conclusion promptly and to report its findings to Congress well before the end of the year. The Institute further asks that the DOL begin working on a proposed IRA class exemption with a goal of proposing the class exemption in the next six months and finalizing the exemption by year-end.

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