The Department of Labor is dropping a rule proposed during the final days of the Bush administration that would have allowed 401(k) providers to offer advice to investors even if it involved a plan in which its own funds were sold.

“We believe the final investment advice regulation published in the Jan. 21 Federal Register went too far in permitting investment advice arrangements not specifically contemplated by the statutory exemption,” said Phyllis Borzi, assistant secretary of the Employee Benefits Security Administration at DOL. “We are taking a fresh look at the regulation that was issued and are working to bring it more closely in line with the [Pension Protection Act of 2006] statutory language.”

Some legislators have voiced concern that the proposal would have allowed a conflict of interest for companies that sell funds in 401(k) plans.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.