The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) announced this week that it is reopening the comment period for proposed changes to the qualified professional asset manager exemption (QPAM) until April 6.
Update – DOL Finalizes Amendment to QPAM Exemption
The extension comes as the DOL says that at least one interested party may have additional information to provide to the Department that was not submitted by the previous January 6 comment deadline.
“…the Department is reopening the comment period to provide an opportunity for all interested parties to submit additional information,” said the DOL in its announcement. “The Department encourages interested parties to submit comments on the proposed amendment before the additional reopened comment period closes…”
The DOL had initially published a proposed amendment to the prohibited transaction class exemption 84-14 on July 27, 2022, and has extended its deadlines since.
A QPAM independently assists institutions in making financial investments in retirement accounts and manages transactions between parties.
According to the DOL, the QPAM exception allows various parties related to plans to engage in transactions involving plan and individual retirement account (IRA) assets, as long as the assets are managed by QPAMs that are independent of the parties in interest and meet specified financial standards.
The exemption aims to protect plans, participants and beneficiaries, and individual retirement account owners and their interests. The DOL claims that since the exemption’s 1984 creation, substantial changes have occurred in the financial services industry, including industry consolidation and the increasingly global reach of financial services institutions in their affiliations and investment strategies, including plan assets.
Specifically, the DOL adds the amendment would protect plans, their participants, and beneficiaries by:
- Addressing perceived ambiguity as to whether foreign convictions are included in the scope of the exemption’s ineligibility provision.
- Expanding the ineligibility provision to include additional types of serious misconduct.
- Focusing on mitigating potential costs and disruption to plans and IRAs when a QPAM becomes ineligible due to a conviction or participates in other serious misconduct.
- Updating asset management and equity thresholds in the definition of “Qualified Professional Asset Manager.”
- Adding a standard recordkeeping requirement that the exemption currently lacks.
- Clarifying the requisite independence and control that a QPAM must have with respect to investment decisions and transactions.
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