DOL Announces New Temporary Enforcement Policy
The Department of Labor (DOL) has extended the transitional relief under Field Assistance Bulletin (FAB) 2018-02 and provided additional temporary non-enforcement guidance related to specific provisions of Prohibited Transaction Exemption (PTE) 2020-02 in FAB 2021-02.
In FAB 2018-02, the DOL stated it will not pursue prohibited transaction claims against investment advice fiduciaries who work diligently and in good faith to comply with “Impartial Conduct Standards.” These Standards require financial institutions and investment professionals to give advice that is in the best interest of the retirement investment, specifically meeting standards of prudence and loyalty; not charge more than reasonable compensation; and not to make any misleading statements about investment transactions and other relevant matters. When issuing PTE 2020-02, the DOL extended FAB 2018-02’s temporary enforcement policy until December 20, 2021.
Among the many requirements of PTE 2020-02, investment advice fiduciaries are required to comply with specific rollover documentation and disclosure requirements for prohibited transactions resulting from both rollover and investment advice within an employer plan or IRA.
The DOL is now extending through January 31, 2022, the temporary relief from FAB 2018-02 that is due to expire on December 20, 2021. Additionally, the DOL will not enforce specific documentation and disclosure requirements related to rollover recommendations in PTE 2020-02 through June 30, 2022. However, all other requirements of PTE 2020-02 will still be enforced beginning February 1, 2022.
As with prior guidance, this is only relief from the DOL’s enforcement, and does not apply to any other private relief.