Will ERISA’s Fiduciary Exemption “Rollover” to the New Administration? DOL Issues Year-End Package Relating to “Investment Advice.”

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Overview The U.S. Department of Labor (the “DOL”) on December 15, 2020 issued a release (the “Release”) finalizing Prohibited Transaction Class Exemption (“PTCE”) 2020-2 (the “Final Exemption”) for retirement accounts (“Plans”) that are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”) or Section 4975 of the Internal Revenue Code of 1986 (the “Code”). The Final Exemption provides relief from ERISA’s and the Code’s prohibited transaction rules for individuals and institutions that wish to assert they are, or otherwise are at risk of being, fiduciaries by virtue of providing “investment advice” as defined under ERISA or Section 4975 of the Code (“Investment Advice”) to Plans and that also intend to offer them financial products and services. The Release is also important because it sets forth in the preamble to the Final Exemption (the “Final Preamble”) the DOL’s most recent published views regarding significant aspects of what makes one an Investment Advice fiduciary. We previously noted the issuance of the Release in a prior NewsFlash, and our OnPoint on the proposed version of PTCE 2020-2.

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