On February 12, 2021, the DOL published a News Release (the “Release”). The Release confirmed that a prohibited transaction exemption for plan fiduciaries who provide investment advice to ERISA plans would become effective as scheduled on February 16, 2021. That exemption was issued during the Trump administration. Many in the employee benefits community thought that the Biden administration would delay the effective date until that administration could ultimately withdraw or revise that exemption.
According to the Release, “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…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 Release also stated that the temporary enforcement policy set forth in DOL Field Assistance Bulletin 2018-02 will remain in place until December 20, 2021. Under that guidance, the DOL will not pursue prohibited transactions claims against investment advice fiduciaries “who are working diligently and in good faith to comply” with the prohibited transaction exemption.