The Department of Labor (DOL) recently finalized a new prohibited transaction exemption (the 2020 PTE) that addresses what conditions must be satisfied by a financial service professional who runs afoul of ERISA’s prohibited transaction provisions as a result of receiving compensation in connection with providing investment advice to participants in retirement plans, including IRAs. The preamble to the 2020 PTE includes an interpretation that alters longstanding guidance on how the DOL will determine whether a person is a fiduciary by reason of making a recommendation to rollover plan assets to an IRA. Investment professionals who provide such investment advice must determine how their practices are impacted by these new rules.
Author: Paul J. Schneider, JD, LLM, is senior counsel to Paisner~Litvin, LLP, Bala Cynwyd, Pennsylvania, where he has advised clients on taxation and employee benefit matters for more than 30 years. He is a charter fellow of the American College of Employee Benefits Counsel and has served as chairman of the Important Developments Subcommittee of the American Bar Association Tax Section’s Employee Benefits Committee. Mr. Schneider is a graduate of Lehigh University, Columbia University School of Law (JD), New York University (LLM in Taxation), and LaSalle University (MBA). Mr. Schneider frequently writes articles and lectures on tax and employee benefits-related topics, and is the former coeditor of ERISA: A Comprehensive Guide, 4th Edition (Aspen, 2011).
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