The Department of Labor’s (DOL) Prohibited Transaction Exemption (PTE) 2020-02 expands the definition of fiduciary advice under the Employee Retirement Income Security Act (ERISA) to recommendations about rollovers and individual retirement account investments. Benefits and executive compensation partner Fred Reish discusses best practices for compliance in an article for MarketFacts.
Reish explains that there will be a heavy compliance burden for insurance carriers, broker-dealers and investment advisers that intend to utilize PTE 2020-02. However, insurance companies and agents may continue to rely on PTE 84-24. Further, Reish outlines how companies that intend to comply with PTE 2020-02 must draft and adopt policies and procedures to meet complex requirements.
In conclusion, Reish notes that the DOL anticipates taking further action on investment advice, which may mean changing the existing regulation or issuing a new regulation that expands the scope of who a fiduciary is under ERISA. He also explains three areas to consider as the industry moves forward to comply with PTE 2020-02 by December.