Officials at unit of the U.S. Department of Labor are still deciding how to interpret a new law that could permit individual retirement account fiduciary advisors to earn more compensation for selling some products than they earn for selling other products.

The Employee Benefits Security Administration held a hearing Tuesday on the computer advice provision of the Pension Protection Act of 2006.

The PPA provision permits insurance companies, banks, registered investment advisors and other IRA fiduciaries to collect fees and other compensation for selling products to IRA holders.

If human advisors give the advice, the compensation cannot vary according to the investment options that the IRA holder chooses, according to the text of the law.

If a computer model that meets PPA anti-bias standards gives the advice, then the fiduciary in charge of the computer may be able to collect higher compensation for selling some investment options than for selling others.

A representative for Financial Engines Inc., Palo Alto, Calif., a registered investment advisor that has developed an automated, Web-based retirement investment advice service, says computer models already can generate comprehensive, unbiased advice.

“The advisory services provide a rich level of personalization capabilities,” Financial Engines executives say in written comments submitted before the hearing.

Representatives for the American Council of Life Insurers, Washington, and the Investment Company Institute, Washington, say they are not sure whether current computer advice systems can comply with the PPA requirement for the computer model to provide unbiased advice on “all investment options.”

The ACLI “is not aware of the existence of a computer model that could offer advice on an unlimited range of investment choices,” the ACLI says in a comment letter.

But “computer models do exist to assist beneficiaries in choosing funds for an IRA investment where, by design, the program has a finite menu of investment options,” the ACLI says.

Jon Breyfogle of the Groom Law Group, Washington, who represented the ICI at the hearing, said at the hearing that an ICI survey of members about all-encompassing investment computer advice models, “did not find a single ICI member that has such a computer model.”

EBSA should use its authority under the PPA to issue a class exemption and limit the scope of the investment advice that a qualified computer model must offer, Breyfogle said.

“The department will have substantial flexibility under the law in determining the conditions of the class exemption,” Breyfogle said.

Alan Lebowitz, deputy assistant secretary for program operations at EBSA, told Breyfogle he is not so certain that the PPA gives EBSA “substantial flexibility” to determine the conditions of the class exemptions.

“I believe the statute is restrictive,” Lebowitz said.

“This won’t be resolved today,” Michael Jurs, a spokesman for Financial Engines, said at the hearing. “This will be with us for awhile.”