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January 25, 2022
DOL Enforcement Deadlines for PTE 2020-02
ERISA consultants at the Retirement Learning Center (RLC) Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business.
A recent call with a financial advisor from California is representative of a common inquiry related to compliance deadlines. The advisor asked: “I’m confused by the compliance deadlines for various provisions of Prohibited Transaction Exemption (PTE) 2020-02 related to providing investment advice to retirement investors. Can you summarize the compliance deadlines, please?”
Highlights of Discussion
Absolutely. Financial professionals and institutions that seek to comply with PTE 2020-02 must satisfy the following six steps by the dates indicated.
| PTE 2020-02 Requirement | Enforcement Begins |
| 1. Provide advice in accordance with the three “Impartial Conduct Standards,” which mandate that advice be given • In the best interest of the retirement investor, • At a reasonable price, • Without any misleading statements. | After January 31, 2022Originally effective February 16, 2021, the DOL implemented a “nonenforcement policy” under DOL FAB 2018-02 Field Assistance Bulletin until December 20, 2021, for those who diligently and in good faith complied with the Impartial Conduct Standards. further extended the nonenforcement policy through January 31, 2022. |
| 2. Acknowledge in writing their fiduciary status under ERISA and the Internal Revenue Code;3. Describe in writing the services to be provided and any material conflicts of interest that may exist;4. Adopt policies and procedures prudently designed to ensure compliance with the Impartial Conduct Standards and that mitigate conflicts of interest;5. Conduct an annual retrospective review of their compliance with the requirements and produce a written report that is certified by one of the financial institution’s senior executive officers; | After January 31, 2022Pursuant to FAB 2021-02, the DOL will not pursue cases against advisors and institutions utilizing PTE 2020-02, provided they make a good faith effort to follow the three Impartial Conduct Standards (see #1 above) |
| 6. FOR ROLLOVERS: If the advice involves a rollover recommendation, then • Document the reasons that a rollover recommendation is in the best interest of the retirement investor; and • Disclose the justification for the rollover in writing to the retirement investor. | After June 30, 2022Pursuant to FAB 2021-02, the DOL will not enforce the rollover documentation and disclosure requirements of PTE through June 30, 2022. |
Conclusion
Financial professionals and organizations that seek relief under PTE 2020-02 should take note of the different enforcement deadlines that apply as a result of FAB 2021-02.