RIA Compliance Consultants has released a new sample form, Annual Review – Certification of Annual Retrospective Review of IRA Rollover.
Category Archives: ERISA
Fiduciary Advice Exemption Enforcement for PTE 2020-02 Now in Effect for Investment Advisers
February 01, 2022
As of February 1, 2022, the U.S. Department of Labor (“DoL”) will begin enforcing PTE 2020-02, a fiduciary advice prohibited transaction exemption that applies to IRA rollovers. Previously, the DoL had issued a temporary enforcement policy in Field Assistance Bulletin 2018-02 indicating that the DoL would not pursue enforcement claims related to prohibited transaction claims so long as an investment adviser could demonstrate that it was complying with the Impartial Conduct Standards “in good faith and with reasonable diligence.” The temporary enforcement policy ended on January 31, 2022.
On Thursday, October 28, president of RIA Compliance Consultants Bryan Hill and Senior Compliance Consultant Jarrod James presented the webinar IRA Rollovers Under U.S. Department of Labor’s PTE 2020-02. This webinar explained the requirements of PTE 2020-02, and presented some compliance best practices. Please click on the following link to purchase a recording of this webinar: IRA Rollovers Under U.S. Department of Labor’s PTE 2020-02
Investment adviser firms advising plan participants on IRA rollovers should review the recently published guidance of the U.S. Department of Labor (“DoL”) regarding PTE 2020-02, a new fiduciary advice prohibited transaction exemption. Compliance with PTE 2020-02 now permits investment advisers to provide advice regarding IRA rollovers without violating Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and the Internal Revenue Code of 1986 (“IRC”), both of which prohibit investment advisers from receiving payments that create a conflict of interest when providing fiduciary investment advice to plan sponsors, plan participants, and IRA owners. The adoption of PTE 2020-02 follows several years of rulemaking, court actions, and DoL guidance regarding the definition of fiduciary investment advice and clarifies that advice regarding IRA rollovers is considered a fiduciary activity, in contrast to the DoL’s prior interpretation.
DOL Investigation Requires Investment Adviser to Pay $1.27 Million to Pension Plans
September 21, 2012
The U.S. Department of Labor (“DOL”) recently announced an agreement with USI Advisors, a registered investment advisor, to settle several alleged violations of the Employee Retirement Income Security Act of 1974 (“ERISA”).
The U.S. Department of Labor (“DOL”) recently announced a new proposal to provide a web-based tool for ERISA covered retirement plans to report violations of the new 408(b)(2) disclosure requirements. Under the new 408(b)(2) regulations, as of July 1, 2012 ERISA covered service providers were required to provide retirement plans, to which they provide services, with certain disclosures. Failure to provide the required disclosures will result in services to the ERISA covered plan being classified as a prohibited transaction under ERISA and the Internal Revenue Code. The purpose of the new tool is to assist plan sponsors in determining whether they have all the required information and to provide an easy way for plan sponsors to report service providers who fail to make the required 408(b)(2) disclosures.
Dale Brown, President and CEO of the Financial Services Institute (“FSI”), wrote a letter to Representative John Kline, (R – MN) Chairman of the U.S. House Education and Workforce Committee and to ranking member George Miller, (D – CA) in response to comments made by Phyllis Borzi, Assistant Secretary of the Department of Labor, (“DOL”) in a letter to the same members of the Committee. Borzi told the ranking members she was disappointed with the lack of participation in the DOL’s request for data as part of its “effort to expand the definition of fiduciary under the Employee Retirement Income Security Act of 1974 (“ERISA”).”In Brown’s letter he is critical of DOL Assistant Secretary Borzi for what he calls an impractical request.
The new ERISA 408(b)(2) regulations, which were recently issued by the U.S. Department of Labor (“DOL”), place disclosure requirements on “service providers” to ERISA covered plans. Specifically, a covered service provider is required to disclose in writing the services to be provided, the service provider’s fiduciary status to the Plan, and a description of all direct and indirect compensation received in connection with services provided to the Plan. Service providers must provide these disclosure requirement to plan fiduciaries in order for a contract for plan services to be “reasonable” as required by ERISA section 408(b)(2).
Service providers are required to provide the new 408(b)(2) disclosures to any ERISA covered plan for which they provide services. However, what exactly is an ERISA covered plan?
Under the new ERISA 408(b)(2) regulation a covered service provider is required to disclose in writing to the responsible plan fiduciary of an ERISA covered plan the services to be provided, its fiduciary status to the plan, and what compensation the service provider is to receive in connection with services provided. The deadline for covered service providers to make these disclosures is July 1, 2012.