[Code of Federal Regulations]
[Title 26, Volume 17]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR54.4975-9]

[Page 267-269]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 54_PENSION EXCISE TAXES--Table of Contents
 
Sec. 54.4975-9  Definition of ``fiduciary''.

    (a)-(b) [Reserved]
    (c) Investment advice. (1) A person shall be deemed to be rendering 
``investment advice'' to an employee benefit plan, within the meaning of 
section 4975(e)(3)(B) and this paragraph, only if:
    (i) Such person renders advice to the plan as to the value of 
securities or other property, or makes recommendations as to the 
advisability of investing in, purchasing, or selling securities or other 
property; and
    (ii) Such person either directly or indirectly (e.g., through or 
together with any affiliate):
    (A) Has discretionary authority or control, whether or not pursuant 
to agreement, arrangement or understanding, with respect to purchasing 
or selling securities or other property for the plan; or
    (B) Renders any advice described in paragraph (c)(1)(i) of this 
section on a regular basis to the plan pursuant to a mutual agreement, 
arrangement or understanding, written or otherwise, between such person 
and the plan or a fiduciary with respect to the plan, that such services 
will serve as a primary basis for investment decisions with respect to 
plan assets, and that such person will render individualized investment 
advice to the plan based on the particular needs of the plan regarding 
such matters as, among other things, investment policies or stategy, 
overall portfolio composition, or diversification of plan investments.
    (2) A person who is a fiduciary with respect to a plan by reason of 
rendering investment advice (as defined in paragraph (c)(1) of this 
section) for a fee or other compensation, direct or indirect, with 
respect to any moneys or other property of such plan, or having any

[[Page 268]]

authority or responsibility to do so, shall not be deemed to be a 
fiduciary regarding any assets of the plan with respect to which such 
person does not have any discretionary authority, discretionary control 
or discretionary responsibility, does not exercise any authority or 
control, does not render investment advice (as defined in paragraph 
(c)(1) of this section) for a fee or other compensation, and does not 
have any authority or responsibility to render such investment advice, 
provided that nothing in this paragraph shall be deemed to:
    (i) Exempt such person from the provisions of section 405(a) of the 
Employee Retirement Income Security Act of 1974 concerning liability for 
fiduciary breaches by other fiduciaries with respect to any assets of 
the plan; or
    (ii) Exclude such person from the definition of the term 
disqualified person (as set forth in section 4975(e)(2)) with respect to 
any assets of the plan.
    (d) Execution of securities transactions. (1) A person who is a 
broker or dealer registered under the Securities Exchange Act of 1934, a 
reporting dealer who makes primary markets in securities of the United 
States Government or of an agency of the United States Government and 
reports daily to the Federal Reserve Bank of New York its positions with 
respect to such securities and borrowings thereon, or a bank supervised 
by the United States or a State, shall not be deemed to be a fiduciary, 
within the meaning of section 4975(e)(3), with respect to an employee 
benefit plan solely because such person executes transactions for the 
purchase or sale of securities on behalf of such plan in the ordinary 
course of its business as a broker, dealer, or bank, pursuant to 
instructions of a fiduciary with respect to such plan, if:
    (i) Neither the fiduciary nor any affiliate of such fiduciary is 
such broker, dealer, or bank; and
    (ii) The instructions specify (A) the security to be purchased or 
sold, (B) a price range within which such security is to be purchased or 
sold, or, if such security is issued by an open-end investment company 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1, et 
seq.), a price which is determined in accordance with Rule 22c-1 under 
the Investment Company Act of 1940 (17 CFR 270.22c-1), (C) a time span 
during which such security may be purchased or sold (not to exceed five 
business days), and (D) the minimum or maximum quantity of such security 
which may be purchased or sold within such price range, or, in the case 
of security issued by an open-end investment company registered under 
the Investment Company Act of 1940, the minimum or maximum quantity of 
such security which may be purchased or sold, or the value of such 
security in dollar amount which may be purchased or sold, at the price 
referred to in paragraph (d)(1)(ii)(B) of this section.
    (2) A person who is a broker-dealer, reporting dealer, or bank which 
is a fiduciary with respect to an employee benefit plan solely by reason 
of the possession or exercise of discretionary authority or 
discretionary control in the management of the plan or the management or 
disposition of plan assets in connection with the execution of a 
transaction or transactions for the purchase or sale of securities on 
behalf of such plan which fails to comply with the provisions of 
paragraph (d)(1) of this section, shall not be deemed to be a fiduciary 
regarding any assets of the plan with respect to which such broker-
dealer, reporting dealer or bank does not have any discretionary 
authority, discretionary control or discretionary responsibility, does 
not exercise any authority or control, does not render investment advice 
(as defined in paragraph (c)(1) of this section) for a fee or other 
compensation, and does not have any authority or responsibility to 
render such investment advice, provided that nothing in this paragraph 
shall be deemed to:
    (i) Exempt such broker-dealer, reporting dealer, or bank from the 
provisions of section 405(a) of the Employee Retirement Income Security 
Act of 1974 concerning liability for fiduciary breaches by other 
fiduciaries with respect to any assets of the plan; or
    (ii) Exclude such broker-dealer, reporting dealer, or bank from the 
definition of the term disqualified person (as set forth in section 
4975(e)(2)) with respect to any assets of the plan.

[[Page 269]]

    (e) Affiliate and control. (1) For purposes of paragraphs (c) and 
(d) of this section, an ``affiliate'' of a person shall include:
    (i) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control with 
such person;
    (ii) Any officer, director, partner, employee or relative (as 
defined in section 4975(e)(6)) of such person; and
    (iii) Any corporation or partnership of which such person is an 
officer, director or partner.
    (2) For purposes of this paragraph, the term control means the power 
to exercise a controlling influence over the management or policies of a 
person other than an individual.

[T.D. 7386, 40 FR 50841, Oct. 31, 1975]