Will ERISA’s Fiduciary Exemption “Rollover” to the New Administration? DOL Issues Year-End Package Relating to “Investment Advice”

The U.S. Department of Labor (the "DOL”) on December 15, 2020 issued a release finalizing a Final Prohibited Transaction Class Exemption (“PTCE”) 2020-2 for retirement accounts that are subject to the Employee Retirement Income Security Act of 1974 (or the corresponding provisions of the federal tax code). PTCE 2020-2, if it remains in place under the incoming Biden administration, may be of use by financial institutions that affirmatively wish to be or otherwise conclude that they may be regarded as fiduciaries for these purposes. The release also expressly reinstates the 1975 “investment advice” fiduciary regulation that had been substantially amended in 2016 and provides additional interpretive color from the DOL on a variety of elements of the 1975 Rule. The 2016 amendment, which was extremely controversial, was ultimately vacated by the courts. This OnPoint provides a detailed discussion of a variety of the considerations associated with PTCE 2020-2, the DOL's new interpretations of the reinstated 1975 regulation and a number of related matters.