As banks continue to grapple with the effects of the Department of Labor’s fiduciary rule on the marketing and sales of deposit IRAs, the American Bankers Association is making available to its members a briefing paper by the law firm of Morgan, Lewis & Bockius, LLP. The paper describes and analyzes bank IRA programs in light of the changes finalized in the fiduciary rule, and is intended to assist banks as they navigate the new considerations the rule raises for IRA deposit programs.
The briefing paper points out that a statutory exemption — Section 4975(d)(4) of the Internal Revenue Code — permits a bank to advise its customers on IRA investments and on IRA rollovers without implicating the fiduciary rule’s applicability or requirements, so long as the IRA is designed to invest exclusively in the bank’s deposits. As a result, the briefing paper concludes that a bank may rely on this statutory exemption to conduct its IRA CD program (or other program where the IRA is designed to invest exclusively in the bank’s deposits), rather than having to rely on the DOL’s new regulatory exemption, the “best interest contract exemption.”
Morgan Lewis will be holding a call on Wednesday, Sept. 7, at 2:00 p.m. ET to discuss the briefing paper and to respond to any member bank questions or comments. For more information, contact ABA’s Tim Keehan.