The Four Safe Harbors of Investment Information

The Department of Labor recently has issued guidance on the amount of investment education a company can offer before stepping over the line into “investment advice,” prohibited by ERISA. The guidance named four “safe harbors”—categories of information that generally won’t be considered investment advice. These are:

One—Plan information:
information such as benefits of participation, reasons to contribute as much as possible, the impact of pre-retirement withdrawals, and the investment information required by the 404(c) regulations, such as prospectuses and fund returns.

Two—General financial and investment information:
general financial investment concepts, asset classes, the historical returns for different asset classes and the effects of inflation over periods of time.

Three—Asset allocation models:
models that provide participants with portfolios of hypothetical individuals with different time horizons and risk profiles. Models should include all material facts and assumptions on which the models are based.

Four—Interactive investment materials:
asset allocation models may be applied to individual employees’ investing issues through worksheets, software and other similar tools.

Note: All four of these “safe harbor” areas have additional conditions and requirements. Employers are advised to seek a full copy of the guidelines from the Department of Labor.

SOURCE: Hewitt Associates