Joint Trades on DOL Prohibited Transaction Exemption Applications Changes
Summary
SIFMA in a joint letter with other associations provided comments to the Acting Assistant Secretary requesting an extension of time from 30 to 60 days to comment on the Notice of Proposed Rulemaking: Procedures Governing the Filing and Processing of Prohibited Transaction Exemptions Applications.
SIFMA signed with the following:
Alternative & Direct Investment Securities Association
American Benefits Council
American Council of Life Insurers
The Employee-owned S Corporations of America
The ESOP Association
Financial Services Institute, Inc.
Finseca
Indexed Annuity Leadership Council
Institute for Portfolio Alternatives
Institute for Portfolio Management
Investment Company Institute
Insured Retirement Institute
National Association of Fixed Annuities
National Association of Insurance and Financial Advisors
U.S. Chamber of Commerce
Excerpt
Via Electronic Delivery
March 23, 2022
Mr. Ali Khawar
Acting Assistant Secretary
200 Constitution Ave NW
Suite N-5677
Washington, DC 20210
RE: RIN 1210-ACO5: Notice of Proposed Rulemaking: Procedures Governing the Filing and Processing of Prohibited Transaction Exemption Applications
Dear Acting Assistant Secretary Khawar:
On behalf of the undersigned organizations, we request an extension of time from 30 to 60 days to comment on the Notice of Proposed Rulemaking: Procedures Governing the Filing and Processing of Prohibited Transaction Exemptions Applications (NPRM). As explained below, unlike most administrative procedures, this NPRM contains substantive provisions that raise novel legal and policy issues, which require substantial time and effort to evaluate and comment on the impact it could have to the regulated community and retirement savers. Furthermore, given these substantive changes, we request that the Department of Labor (DOL) reexamine its determination that the NPRM is not “significant” under Executive Order 12866 (EO 12866).
Background
Since the enactment of the Employee Retirement Income Security Act of 1974, as amended (ERISA), DOL1 has issued procedures, regulations and informal guidance on how to obtain a prohibited transaction exemption (PTE) under ERISA Section 408 (29 U.S.C. § 1108).2 When the initial regulation was proposed in 1988 and subsequently amended in 2010, DOL provided a 60-day comment period on the proposals.3
This NPRM was published in the Federal Register on March 15, 2022, and it would “supersede the Department of Labor’s …existing procedure governing the filing and processing of applications for administrative exemptions from the prohibited transaction provisions of the Employee Retirement Income Security Act of 1974 (ERISA), the Internal Revenue Code of 1986 (the Code), and the Federal Employees’ Retirement System Act of 1986 (FERSA).”4 Unlike the
1 Both the labor and tax provisions of ERISA contain prohibited transaction provisions. However, to avoid duplication, Section 102 of the Presidential Reorganization Plan No. 4 of 1978 gave DOL the authority to issue exemptions under both ERISA and the Code. However, the Reorganization Plan did not give DOL authority to add ERISA’s substantive requirements to entities or transactions only governed by the Internal Revenue Code (Code).
2 See ERISA Procedure 75-1; ERISA Technical Release 85-1; 29 C.F.R. § 2570.30 (1991, 2011); Exemption Procedures under Federal Pension Law (1995) (which included definitions of technical terms).
3 54 Fed. Reg. 24422 (June 28, 1988); 75 Fed. Reg. 53172 (Aug 30, 2010).
4 87 Fed. Reg. 14722 (Mar. 15, 2022).