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In connection with its recently proposed amendment to the definition of investment advice fiduciary under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code), the U.S. Department of Labor (DOL) also released a proposed amendment to PTE 2020-02: Improving Investment Advice for Workers & Retirees.

Under PTE 2020-02 Financial Institutions and Investment Professionals, which includes investment advisers and their representatives, can receive compensation for recommending certain transactions to Retirement Investors (i.e., a plan, plan fiduciary, plan participant or beneficiary, IRA, IRA owner or beneficiary or IRA fiduciary) which would otherwise violate the prohibited transaction rules under ERISA and the Code.

Requirements include complying with certain Impartial Conduct Standards (i.e., providing advice that is in the best interest of the Retirement Investor, receiving only reasonable compensation, and avoiding materially misleading statements), providing certain disclosures, adopting policies and procedures, conducting an annual retrospective review, and maintaining records of compliance for six years. Continue reading ›

This past October the U.S. Department of Labor (DOL) released a proposed amendment to the definition of investment advice fiduciary under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code). Investment advice fiduciaries must generally avoid engaging in certain prohibited transactions absent an exemption. In connection with this proposed amendment, the DOL also released proposed amendments to class prohibited transaction exemptions (PTEs) available to investment advice fiduciaries, including PTE 2020-02 and PTE 84-24.

Whether an individual is providing fiduciary investment advice under ERISA and the Code is currently determined by the DOL’s five-part test set forth in its 1975 regulation. Generally, a person will be deemed to be rendering fiduciary investment advice if: 1) the person renders advice to a  plan or IRA (including plan participants or beneficiaries) as to the value of, or advisability of investing in, securities or other property; 2) on a regular basis; 3) pursuant to a mutual agreement with the plan or IRA; 4) that the advice will serve as a primary basis for investment decisions with respect to plan or IRA assets; and 5) that the advice will be individualized based on the particular needs of the plan or IRA.[1] Section 3(21)(A)(ii) of ERISA and section 4975(e)(3)(B) of the Code further provide that this investment advice must be “for a fee or other compensation, direct or indirect.” Continue reading ›

We don’t typically venture into politics in the RIA Compliance Blog except to explain or predict regulatory trends, and this post is no exception. But something happened recently in the political realm that made me want to explain to non-Georgia natives how much we native Georgians really love our state.

In case you haven’t heard, the President of the United States claims that the recent presidential election held here in our home state of Georgia was fraudulent. This past weekend, he telephoned our Secretary of State, Brad Raffensperger, to explain the many reasons for his belief.

Near the end of the call, President Trump informed Raffensperger that his office has a list of about 4,500 people who had moved away from Georgia prior to the 2020 election but voted in the election anyway. Raffensperger’s attorney informed the President that the Secretary of State’s office has investigated the names on that list and has thus far has concluded that all the people on the list once lived in Georgia, moved out of state, then moved back to Georgia legitimately. This response truly perplexed President Trump, who said:

“How many people do that? They moved out, and then they said, ‘Ah, to hell with it, I’ll move back.’ You know, it doesn’t sound like a very normal — you mean, they moved out, and what, they missed it so much that they wanted to move back in? It’s crazy.”

Continue reading ›

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