Extension Request on DOL’s Proposed Amendment to PTE
Summary
SIFMA in a joint letter with Other Associations provided comments to the U.S. Department of Labor (DOL) requesting a 60-day extension to the time to comment on the Department’s Proposed Amendment to Prohibited Transaction Class Exemption 84-14.
Excerpt
August 19, 2022
Assistant Secretary Ali Khawar
Office of Exemption Determinations
Employee Benefits Security Administration
U.S. Department of Labor
200 Constitution Ave., NW
Washington, DC 20210
Re: EBSA-2022-0008
Dear Assistant Secretary Khawar,
We request a 60-day extension to the time to comment on the Department’s Proposed Amendment to Prohibited Transaction Class Exemption 84-14 (the Proposed Amendment). The Proposed Amendment was issued on July 28, 2022 and comments are due on September 26, 2022. The Proposed Amendment is beyond technical corrections, and the plan sponsor and investment manager community requires additional time to comment to educate and understand how the many different entities will be impacted by the Proposed Amendment.
The Proposed Amendment would have significant costs to plans, participants and providers that the Department may not have fully considered. If the Proposed Amendment is adopted as currently proposed, virtually all ERISA plan and IRA investment managers relying on the QPAM Exemption would need to draft and send out amendments to their current agreements, which would require plans to have consultations with each manager, along with costs for consultant and legal review. Larger plans could have to interface with hundreds of managers of separate accounts and pooled funds.
The Proposed Amendment’s expansion of disqualifications to not only include foreign crimes, but also deferred prosecution agreements and non-prosecution agreements, would take time to analyze and would require consultation with foreign criminal lawyers to understand the complexities. We would also need to discuss with plan sponsors the extreme repercussions of the expanded grounds for immediate disqualification of a QPAM. The one-year winding down period does not provide help to plan sponsors since a QPAM cannot enter into any new transactions during this period.