ERISA for Registered Investment Advisers and Broker-Dealers

We aid all state and U.S. Securities and Exchange Commission ("SEC") registered investment advisers (RIAs), broker-dealers, investment funds and others with their ERISA legal and compliance needs. 

Prohibited Transaction Exemption ("PTE") 2020-20
 

LawVisory helps our clients with all ERISA legal and compliance matters to ensure they are in full compliance with ERISA and so they and their clients do not suffer the extremely harsh consequences of prohibited transactions that are not covered by an exemption.

 

Prior to 2020, investment advice regarding IRAs, including as to rolling over assets (from an ERISA plan or another IRA) that was not provided on a regular basis was not considered “investment advice” and the RIA was not necessarily an ERISA fiduciary -- therefore the RIA was not subject to ERISA.  This has now changed.

 

PTE 2020-02 became effective on February 16, 2021 as to the expanded definition of fiduciary advice for enforcement purposes and the PTE. However, a non-enforcement policy has delayed most, but not all, of the PTE conditions to December 21, 2021.

 

For instance, the requirement to document the reasons that a rollover recommendation is in the best interest of the retirement investor and provide that documentation to the retirement investor has not been included under the non-enforcement policy. 
 

Compliance with PTE 2020-02 has basically six parts.  The ERISA fiduciary must:

1.  Provide advice in accordance with the Impartial Conduct Standards;

 

2.  Acknowledge in writing their and their investment professionals’ fiduciary status under Title I of ERISA and the IRC, as applicable, when providing investment advice to the retirement investor.

3.  Describe in writing the services to be provided and the financial institutions’ and investment professionals’ material conflicts of interest. 

 

4.  Document the reasons that a rollover recommendation is in the best interest of the retirement investor and provide that documentation to the retirement investor. 

5.  Adopt policies and procedures prudently designed to ensure compliance with the Impartial Conduct Standards and that mitigate conflicts of interest.

6.  Conduct an annual retrospective review of compliance with PTE 2020-02.