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Financial Institution Must Notify DOL It Will Use BICE And Must Comply With Record Keeping Requirements

Posted by James M. Carlson
Sep 28 2016

In order to use the BICE a financial institution must notify the DOL by providing an email to e-bice@dol.gov that it will to use the BICE. The notice can be generic. That is, it need not mention any specific IRA or any specific plan. If the notice requirement has been met, then the financial may receive compensation. The notice remains in effect until it would be revoked by the financial institution.

The financial institution must maintain for six years the records necessary for certain persons to determine whether the conditions of the BICE have been met with respect to each specific transaction. Upon request the following individuals must have the right to exam these records during normal business hours:

  1. Any authorized employee or representative of the IRS
  2. Any plan fiduciary which has participated in an investment transaction pursuant to the BICE
  3. Any authorized employee or representative of a plan fiduciary which has participated in an investment transaction pursuant to the BICE
  4. Any contributing employer and any employee organization whose employees or members are covered by the plan
  5. Any authorized employee or representative of a contributing employer and any employee organization which has participated in an investment transaction pursuant to the BICE

Any IRA owner or plan participant or inheriting beneficiary or an authorized representative of such persons.

None of the non-IRS individuals are authorized to examine records regarding a recommended transaction of another retirement investor, privileged trade secrets or privileged commercial or financial information of the financial institution or information identifying other information.

When a financial institution refuses to furnish requested information for a reason state above, it has 30 days in which to inform the requester of the reasons for denying the request and that the DOL if requested could request such information.

If the required records are not maintained, there is a loss of the exemption only for that transaction or transactions for which the records are missing or have not been maintained. Other transactions will still qualify for the BICE if those records are maintained. If the records are lost or destroyed, due to circumstances beyond the control of the financial institutions, then no prohibited transaction will be considered to have occurred solely on the basis of the unavailability of those records.

The financial institution is the party who is responsible to pay the ERISA civil penalty under section 502 or the taxes under section 502 or the taxes under section 4975 if the required records are not maintained

Categories: Pension Alerts, Traditional IRAs