DOL Finalizes Amendment to Qualified Professional Asset Manager Exemption

On April 2, 2024, the DOL announced that it amended a rule that provides an exemption for qualified professional asset managers (QPAMs). A QPAM is defined as a bank, savings and loan association, insurance company, or registered investment adviser that assists retirement plans in making financial investments. QPAMS are particularly useful in that they can facilitate transactions that would otherwise not be allowed under ERISA, through the exemption granted by the DOL. The amendment clarifies language in the original rule, including what misconduct can render a QPAM ineligible for the exemption. The amendment:

• Requires a QPAM to provide a one-time notice to the DOL that it is relying upon the exemption.
• Updates the list of crimes enumerated in the original rule to explicitly include foreign crimes that are substantially equivalent to the listed crimes.
• Expands the circumstances that may lead to ineligibility.
• Provides a one-year winding down (transition) period to help plans and IRAs avoid or minimize possible negative impacts of terminating or switching QPAMs or adjusting asset management arrangements when a QPAM becomes ineligible pursuant to the original and gives QPAMs a reasonable period to seek an individual exemption, if appropriate.
• Updates asset management and equity thresholds in the QPAM definition.
• Clarifies the requisite independence and control a QPAM must have with respect to investment decisions and transactions.
• Adds a standard recordkeeping requirement.

Sponsors of ERISA retirement plans should be aware of these new clarifications and procedures for evaluating whether a QPAM is eligible for the exemption.

Amendment to Prohibited Transaction Class Exemption 84-14 for Transactions Determined by Independent Qualified Professional Asset Managers (the QPAM Exemption) »
DOL Amendment to QPAM Exemption Announcement »