DOL Issues Final Amendment to Qualified Professional Asset Manager (QPAM) Exemption
Published April 02, 2024
The U.S. Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) issued a final amendment to the class prohibited transaction exemption 84-14, known as the Qualified Professional Asset Manager (QPAM) exemption. The exemption permits various parties related to employee benefit plans and individual retirement accounts (IRAs) to engage in transactions involving plan and IRA assets.
The amendment responds to substantial changes in the financial services industry since the exemption’s 1984 establishment. These changes include industry consolidation and the increasing global reach of financial services institutions in their affiliations and investment strategies for both plan and IRA assets.
The final amendment ensures that the exemption continues to protect plans and their participants and beneficiaries and IRA owners by doing the following:
- Addressing perceived ambiguity by clarifying that foreign convictions are included in the scope of the exemption’s ineligibility provision.
- Expanding the ineligibility provision to include additional types of serious misconduct.
- Adding a one-year transition period that focuses on mitigating potential costs and disruption to plans and IRA owners when a QPAM becomes ineligible due to a conviction or participates in other serious misconduct.
- Updating asset management and equity thresholds in the QPAM definition.
- Clarifying the requisite independence and control a QPAM must have with respect to investment decisions and transactions.
- Adding a standard recordkeeping requirement.
The amendment is effective June 17, 2024.