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U.S. Securities and Exchange Commission

Securities Act of 1933 — Rule 482
Investment Company Institute, et al.


November 16, 2015
Our Ref. No. 201578155
Investment Company Institute, et al.
File No. 132-3

This is a response to your letter, dated November 12, 2015, in which you requested that we clarify certain statements in the Staff No-Action Letter to the American Retirement Association dated February 18, 2015 (“ARA Letter”). [1] The ARA Letter concerned the requirements of rule 482 under the Securities Act of 1933 (“Securities Act”), which governs investment company advertising, in the context of certain information furnished to participants and beneficiaries in certain retirement plans under the Internal Revenue Code of 1986 (“Code”) that are not subject to the Employee Retirement Income Security Act of 1974 (“ERISA,” and the plans, “Non-ERISA Plans”). [2]


Investment Vendors

The ARA Letter uses the term “Investment Vendors.” Under the ARA Letter, Investment Vendors are defined as insurance company and custodial account vendors that offer annuity contracts and registered open-end investment companies (“funds”) as “Investment Options,” also defined in the ARA Letter, to participants in a Non-ERISA Plan. The ARA Letter specifies that the term “Investment Option” also includes any other lawful investment alternative, provided that it meets the definition of “designated investment alternative” in the DOL Rule (“Other Investment Options”).

You request clarification that the term “Investment Vendor” under the ARA Letter also may be read to include broker-dealers, banks, or other entities, that are selected by the employer to offer such Other Investment Options to the participants in the employer’s Non-ERISA Plan. We agree with such interpretation of the term Investment Vendor under the ARA Letter.

Electronic Communication

The ARA Letter states, among other things, that each Investment Vendor will provide the DOL Required Investment Information to participants in the Non-ERISA Plan “pursuant to a written agreement with the employer (or its designee).” You request clarification that the term “written agreement,” as used in the ARA Letter, may be read to include any written instruction or directive from the employer (or its designee) accepted by the Investment Vendor, including an instruction or directive communicated electronically (e.g., via e-mail) by the employer (or its designee) to the Investment Vendor and agreed to, also electronically, by the Investment Vendor. The ARA Letter also provides that “Investment Vendors may satisfy this ‘written agreement’ condition by providing written notice to the employer (or its designee) on or after the date of [the ARA Letter] that the Investment Vendor is complying with this condition as a term of an existing written agreement.” You request clarification that such “written notice” may be provided electronically, such as by e-mail.

We agree that these references to a “written agreement” and “written notice” in the ARA Letter may be read to include electronic communications.

Specified Date

The ARA Letter also states, in relevant part, that “[e]ach written agreement [between each Investment Vendor and the employer or its designee] will specify a date on or before which the Investment Vendor will provide the Information to all current participants in the Non-ERISA 403(b) Plan.” You request clarification that the requirement to “specify a date” may be satisfied by an Investment Vendor by stating to the employer (or its designee) that it will provide the Information (as defined in the ARA Letter) to all current participants in the Non-ERISA Plan as quickly as administratively possible after the date of the written agreement. We agree with this interpretation.

Effective Date of Registration Statement

The ARA Letter states that “[i]information provided by an Investment Vendor as DOL Required Investment Information shall not include information about an Investment Option prior to the effective date of the registration statement for that Investment Option.” You request clarification that this statement applies only with respect to an Investment Option for which a registration statement has been or will be filed. We agree that that is the scope of the statement in the ARA Letter.

When Information is Furnished

The ARA Letter states that “The Information [as defined in the ARA Letter] will be furnished to (i) new participants in the Non-ERISA 403(b) Plan prior to their initial investment, and (ii) each participant at least annually in accordance with the timing requirements in the DOL Rule.” You request clarification of two phrases in this statement.

First, you request clarification that the phrase “prior to” may be interpreted as “on or before the date on which a participant can first direct his or her investments,” as permitted under the DOL Rule. You state that such interpretation is important to reflect situations where participants are immediately eligible to participate and direct investments in the Non-ERISA Plan upon hiring, in which case it would be impossible or impractical to provide the information earlier than the date on which the participant can direct his or her investments. We agree that such interpretation is appropriate.

Second, you request clarification that the phrase “at least annually” may be interpreted to mean at least once in any 14-month period, in accordance with DOL timing requirements, including recent DOL guidance under the DOL Rule. [3] We agree that such interpretation is appropriate.

Laura L. Solomon
Senior Counsel

[1] American Retirement Association, SEC Staff No-Action Letter (Feb. 18, 2015) available at http://www.sec.gov/divisions/investment/noaction/2015/american-retirement-sssociation-021815-482.htm.

[2] In the ARA Letter, we agreed to extend to Non-ERISA Plans our position in the Staff No-Action Letter to the U.S. Department of Labor (“DOL”), dated October 26, 2011 (“DOL Letter”), available at http://www.sec.gov/divisions/investment/noaction/2011/dol102611-482.htm. In the DOL Letter, we agreed to treat specified investment-related information provided by a plan administrator, or a person designated by a plan administrator to act on its behalf, to participants and beneficiaries in participant-directed individual account plans, that is required by and complies with the disclosure requirements set forth in Rule 404a-5(d) (“DOL Rule”) under ERISA (such information, “DOL Required Investment Information”), as if it were a communication that satisfies the requirements of rule 482 under the Securities Act. The DOL Rule is designed to ensure that plan participants are provided with sufficient information regarding the plan and designated investment alternatives, in a comparative format, to make informed decisions when managing their accounts.

[3] Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans—Timing of Annual Disclosure; Direct Final Rule 80 Fed. Reg. 14301 (Mar. 19, 2015), amending 29 CFR §2550.404a-5(h)(1).

Incoming Letter

The Incoming Letter is in Acrobat format.

Related Letter

Staff Letter (Securities Act of 1933 — Rule 482), February 18, 2015




Modified: 11/16/2015