July 26, 2022

Joshua Waldbeser Discusses Qualified Professional Asset Manager Exemption With 401(k) Specialist

In “DOL Announces Proposed Changes to 401(k) Asset Management PTE,” 401(k) Specialist summarized the Department of Labor (DOL) Employee Benefits Security Administration’s proposed amendment to the class prohibited transaction exemption (PTE) 84-14, also known as the qualified professional asset manager (QPAM) exemption. Benefits and executive compensation partner Joshua Waldbeser commented on the nearly 40-year-old PTE, which allows major financial firms to manage retirement assets.

“QPAM is a very important exemption for managers of private funds that hold plan assets and certain other institutions,” said Waldbeser. “QPAM has a very practical, common-sense purpose — it allows asset managers to transact as independent fiduciaries with counterparties who just incidentally happen to be parties-in-interest to benefit plan investors, where there is no material reason to be concerned about abuses.”

“Unfortunately, in some cases, there are no good or practical alternatives to QPAM,” Waldbeser added. “This is especially true where the manager is transacting in assets for which there is no generally recognized market to determine pricing, which is often the case for certain private funds.”

Waldbeser noted that the fundamental structure of the exemption would remain largely in place, but there is more to the proposal than just the clarification as to foreign convictions. “For example, the proposal would require QPAMs to register as such with the DOL. That’s an example of a requirement that, if missed, could potentially have significant consequences,” he explained.

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