Investment Education vs Investment Advice: Helping Executives with NQDC Decisions

Investment education gives people information and tools so they can make their own decisions; investment advice is a recommendation tailored to a person, and under ERISA giving it for a fee can make the provider a fiduciary. The Department of Labor's Interpretive Bulletin 96-1 is the main guidance on where that line falls, and although top-hat NQDC plans are largely exempt from ERISA's fiduciary rules, sponsors commonly borrow IB 96-1 as a framework for deciding what help to offer executives.

This guide explains what IB 96-1 says, why it matters for a plan it may not technically govern, what changed in 2026, and which design features keep a deferral calculator on the education side. It is a plain-English overview, not a legal opinion; your counsel should review any education program against your plan's facts.

What Interpretive Bulletin 96-1 says

IB 96-1, codified at 29 CFR 2509.96-1, sets out the DOL's view of when providing investment-related information to participants in participant-directed individual account plans is not "investment advice" under ERISA section 3(21)(A)(ii) and the regulation at 29 CFR 2510.3-21(c). The bulletin says the answer generally depends on the facts and circumstances.

It then describes four categories of information that, in the DOL's view, are not investment advice, regardless of who provides them or how often:

1. Plan information. The benefits of participating, the benefits of increasing contributions and how the plan's terms work.
2. General financial and investment information. Concepts such as risk and return, diversification, compounding and tax-deferred investing.
3. Asset allocation models. Sample portfolios for hypothetical people with different time horizons and risk profiles, subject to conditions.
4. Interactive investment materials. Questionnaires, worksheets, software and similar tools that let a participant estimate future needs and assess the effect of different choices.

For an NQDC program, the first and fourth categories matter most. Explaining how deferral elections, payout options and employer credits work is plan information. A calculator that lets an executive test their own election is an interactive material.

The conditions for interactive tools and calculators

IB 96-1(d)(4) sets conditions for interactive materials. Here is how each maps to an NQDC deferral calculator.

A tool that meets these conditions shows consequences rather than prescribing choices. A tool that says "you should defer 20% into the growth fund" has crossed into a recommendation.

Does IB 96-1 even apply to a top-hat plan?

Generally not in the way it applies to a 401(k). ERISA Part 4, the fiduciary responsibility rules, does not apply to "a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" (29 U.S.C. 1101). Parallel exclusions remove top-hat plans from ERISA's participation, vesting and funding rules. Top-hat plans remain subject to reporting and disclosure in relaxed form, claims procedures and enforcement.

Sponsors still draw the education line deliberately, for practical reasons:

• The exemption is narrow. A DOL ERISA Advisory Council report notes that the legislative history shows Congress expected it to apply narrowly. Plan design and eligibility questions belong with counsel.
• Consistency across plans. Your 401(k) education almost certainly follows IB 96-1. Using one standard across qualified and nonqualified plans is simpler to explain and govern.
• Employee relations. Executives who feel steered into a deferral that later disappoints them may blame the company, fiduciary status or not.
• Your staff. HR and total rewards teams should not be in the position of telling a senior leader how much to defer.

Is choosing an education vendor a fiduciary decision?

Under IB 96-1(e), designating someone to provide investment education or advice to an ERISA plan's participants is a discretionary act of plan management, subject to ERISA's standards of prudence and loyalty. The bulletin also says a sponsor that does not select, endorse or arrange for a third-party educator is not responsible for that party's actions.

For a top-hat plan exempt from Part 4, those fiduciary duties may not apply as such. A documented, careful selection process is still good governance: it shows you looked at accuracy, privacy and the education-not-advice design before putting a tool in front of executives. Keep a short file with what you reviewed, who approved it and when. The decision-support tool guide includes an evaluation checklist.

What changed in 2026

On March 20, 2026, EBSA published a notice of court vacatur (91 FR 13503, effective April 20, 2026). It implements the courts' vacatur of the DOL's 2024 Retirement Security Rule, which redefined who is an ERISA investment-advice fiduciary, along with related 2024 amendments to PTE 2020-02.

For an NQDC sponsor, the practical effect is limited. The 2024 rule is off the table, and IB 96-1 remains the familiar reference point for drawing the education line. Regulators may revisit the fiduciary definition, so ask counsel to confirm the current state when you approve or renew an education program.

Design features that keep a deferral tool on the education side

Use this checklist when reviewing any NQDC calculator, worksheet or communication. It borrows IB 96-1's conditions and adds practical safeguards.

• No recommendation. The tool shows outcomes for the choices the user tests. It never tells them what to elect.
• Assumptions in the open. Every material assumption, such as returns, inflation, future tax rates, payout years and state of residence, is shown and editable.
• Generally accepted methods. Tax calculations follow published federal and state rules, updated each year.
• Objective outputs. Results follow from inputs; no preset answers.
• Other assets prompted. The user is asked or reminded to consider their 401(k), savings, other income and household situation.
• No fund picks. The tool doesn't recommend specific investment options.
• Clear disclaimers. Results are hypothetical estimates; the plan document governs; users should consult a qualified professional.
• Risks shown, not just benefits. Employer credit risk, liquidity limits and the irrevocability of 409A elections are part of the output.
• Data stays with the employee. The sponsor does not receive individual inputs, results or elections.

What HR should say, and what to avoid

How privacy and data separation reduce risk

When the sponsor can't see what an executive entered or what they were shown, the sponsor isn't in a position to tailor guidance to that person, and it isn't holding a file of executives' outside income, net worth and plans to move. That separation supports the education framing, limits sensitive data in HR systems and makes employees more willing to enter real numbers.

NQDC Calculator's employer license is built this way. Inputs stay in each employee's browser unless they save a scenario to their own account, and the sponsor never receives individual inputs, results or elections. Your plan's terms are set as starting values, configured with you, and employees can see and change every assumption. The tool models federal and state tax for both paths every year, payout schedules, state moves and a break-even employer default risk. Its optimizer reports which deferral percentage and schedule give the best modeled result under the employee's own assumptions; it is a model output, not a recommendation, and the tool never recommends an election.

For broader context on executive support, see executive financial wellness benefits. For how to place an education tool in enrollment messages, see NQDC enrollment communication. Your plan document governs, and counsel and your recordkeeper or advisers should review any education program before launch.

Frequently asked questions

What is the difference between investment education and investment advice?

Education gives participants information, models and tools so they can decide for themselves. Advice is a recommendation tailored to a particular person about what to do. Under ERISA, giving advice for a fee can make the provider a fiduciary, which is why sponsors draw the line carefully.

Does DOL Interpretive Bulletin 96-1 apply to NQDC plans?

IB 96-1 addresses participant-directed individual account plans subject to ERISA's fiduciary rules, and top-hat NQDC plans are largely exempt from those rules. Many sponsors still use it as a framework for NQDC education because it is familiar, consistent with their 401(k) practices and protective of employee relations. Ask counsel how it applies to your plan.

Is a deferred compensation calculator investment advice?

Under IB 96-1's framework, an interactive tool can count as education if it rests on generally accepted methods, produces outputs tied to the user's inputs, discloses or lets the user set every material assumption and prompts them to consider other assets. A tool that tells users what to elect or which funds to pick moves toward advice.

Is choosing an education vendor a fiduciary decision?

For ERISA plans subject to the fiduciary rules, IB 96-1(e) treats designating an educator as a discretionary act subject to prudence and loyalty. Top-hat plans are generally exempt from those rules, but documenting a careful selection is still good governance.

What did the 2026 vacatur of the fiduciary rule change?

EBSA's March 2026 notice implemented the courts' vacatur of the 2024 Retirement Security Rule and related exemption amendments, effective April 20, 2026. For NQDC education, IB 96-1 remains the practical reference point. Have counsel confirm the current rules when you approve or renew a program.