Retroactive Compliance Reviews: Meet These Requirements When Checking for PTE 2020-02 Violations

Benefits and executive compensation partner Fred Reish and counsel Joan Neri coauthored an article for PLANADVISER on steps firms can take to facilitate the retrospective review process.

In the Q&A article, a registered investment adviser who makes rollover recommendations to investors about their retirement plans and individual retirement accounts (IRAs) said, “When I advise that a participant or IRA owner roll over their account to an IRA I manage, I’ve been complying with the Employee Benefits Security Administration’s prohibited transaction exemption (PTE) 2020-02. I know I’ll need to conduct a retrospective review. What does that entail?”

Reish and Neri explain that the retrospective review is a condition to satisfying the PTE and outline the five components, including:

1. Conducting the retrospective review at least annually
2. Preparing a report setting forth the results of the review
3. Having the report certified by a senior executive officer of the firm
4. Completing the report no later than six months following the end of the period
5. Retaining the report and supporting data for six years

In conclusion, the authors state that firms should consider preliminary measures to prepare for the review, such as developing an intake process for rollover recommendations and ensuring that the retention policy captures the information that served as a basis for the recommendation and disclosures made to investors.

The full article is available for PLANADVISER subscribers.