An announcement by 401(k) plan provider CitiStreet last week that it will provide workers with expanded advice about investment choices in their retirement plans may be pushing government regulations to their limits in an aggressive effort to retain rollover assets, observers said last week.

The move, while perfectly legal, represents the first time a 401(k) provider will take fiduciary responsibility for suggesting specific mutual funds to its investors. It is the result of a U.S. Department of Labor (DOL) opinion issued in December that allows financial services companies to provide investment advice directly to their plan participants, provided that advice comes from a third party. The opinion, observers say, is intended to prevent firms from recommending certain mutual funds that yield higher fees that would be more profitable to a fund complex.

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