DOL Finalizes Class Exemption for Investment Advisers

On December 15, 2020, the Department of Labor finalized long-considered regulations on investment advice for retirement accounts under the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“Code”). The new exemption would allow investment advice fiduciaries to receive compensation, “including as a result of advice to roll over assets from a Plan to an IRA,” and to engage in principal transactions otherwise prohibited under ERISA and the Code.

As we previously described, the new class exemption would be available to registered investment advisers, broker-dealers, financial institutions and insurance companies that “provide fiduciary investment advice to Retirement Investors” (e.g., Plan participants and beneficiaries, IRA owners and Plan and IRA fiduciaries).

A summary of the exemption’s key provisions is available in this important DOL Fact Sheet titled “Improving Investment Advice for Workers & Retirees.” The DOL press release accompanying the action affirmed that the “standards in the Department’s exemption … align with [the Best Interest] standards of other regulators, including the SEC.”

The new prohibited transaction class exemption will be effective 60 days after the date of publication in the Federal Register. Consequently, even the earliest effective date would fall under the purview of a new administration, which may affect the schedule.

For more information, or to learn how the new regulations will affect your firm, please contact Bates Compliance today.

Hank Sanchez, Managing Director

• hsanchez@batesgroup.com | 504-450-9632

Rory O'Connor, Director

• roconnor@batesgroup.com | 860-671-7270