To ensure the Qualified Professional Asset Manager Exemption continues to safeguard plans, participants and beneficiaries, as well as owners of individual retirement accounts and their interests, the U.S. Department of Labor's Employee Benefits Security Administration recently announced a proposed amendment to the exclusion.
It would be the first change to the Class Prohibited Transaction Exemption 84-14 in 38 years, according to a July 26 Department of Labor news release.
“After nearly 40 years since the Department of Labor first granted the Qualified Professional Asset Manager Exemption, modernizing changes are overdue,” Ali Khawar, acting assistant secretary for Employee Benefits Security, said in the release.
Protections for plans and individual retirement account owners are proposed that would expand the types of serious misconduct that disqualify plan asset managers from using the exemption, Khawar said, according to the release. The proposed changes would eliminate any doubt that foreign criminal convictions are disqualifying.
The exemption in the proposal would provide a one-year period for a disqualified financial institution to wind down its activities as a QPAM in an orderly fashion, according to the release. That would enable plans and IRA owners to terminate their relationship with an ineligible asset manager without undue disruption, Khawar said.
