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When is the Best Interest Contract Exemption (BIC Exemption) not needed?

The BIC Exemption is needed in many scenarios related to commissions, proprietary funds, third party payments and similar arrangements. It is not needed, however, for all transactions. Specifically, the BIC Exemption is not needed when there is no prohibited transaction, or where another exemption is being used instead. For example:

  1. When an advisor is charging a flat fee for advice to the plan or IRA, there is no prohibited transaction. The BIC Exemption is not necessary because the level compensation is consistent with fiduciary status;
  2. When an advisor is advising the plan, and is charging the same fee for advising a plan participant to roll over into an IRA as it is charging the plan, the BIC Exemption is not needed because there is no prohibited transaction—the compensation is level between the plan and IRA.
  3. When an advisor is recommending a fixed-rate annuity and using PTE 84-24 to permit the receipt of commissions, the BIC Exemption is not needed because PTE 84-24 applies. The advisor may use any applicable exemption if more than one could apply to a transaction.

Download Best Interest Contract Exemption General Requirements >

G46288-55