DOL Confirms The PTE for Advisors

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Ernie Guerriero, CLU®,ChFC®,CEBS,CPCU,CPC®,CMS,AIF®,RICP®,CPFA

The Department of Labor’s (DOL) Employee Benefits Security Administration has confirmed that the Trump administration’s “Improving Investment Advice for Worker & Retirees” Prohibited Transaction Exemption for investment advice fiduciaries will go into effect as scheduled on Feb. 16, 2021.

The DOL adds that “in the coming days” it will publish related guidance for retirement investors, employee benefit plans and investment advice providers.

“This exemption allows for important investor protections, including a stringent ‘best interest’ standard of care for fiduciary recommendations of rollovers from ERISA-protected retirement accounts,” said Deputy Assistant Secretary of Labor for the Employee Benefits Security Administration Ali Khawar in a press release. “We recognize that investment advice providers have been preparing for the exemption, and this step will allow them to implement important system changes. That said, we will continue our stakeholder outreach to determine how we might improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach.”

The DOL adds that the temporary enforcement policy stated in Field Assistance Bulletin 2018-02 will remain in place until Dec. 20, 2021. In that FAB, the DOL extended until further notice its temporary enforcement policy relating to its rule defining who is a fiduciary and the associated prohibited transaction exemptions. It advised that, based on questions regarding fiduciary obligations in the aftermath of the March 15 ruling by the U.S. Court of Appeals for the 5th Circuit, it has concluded that financial institutions should be permitted to continue relying on its temporary enforcement policy, pending the issuance of additional guidance.

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