April 2024 Compliance News Article

Final Amendment to QPAM Exemption

The Department of Labor (DOL) released a final amendment to Class Prohibited Transaction Exemption 84-14, also known as the Qualified Professional Asset Manager (QPAM) Exemption.

Background

ERISA plan fiduciaries are prohibited from causing a retirement plan to engage in a variety of transactions with certain related parties who may be in a position to exercise improper influence. Statutory exemptions exist for certain transactions, among which includes the commonly relied upon QPAM Exemption (established in 1984). The QPAM Exemption provides broad relief for employee benefit plan and IRA transactions if requirements are met that otherwise would be prohibited by ERISA and the Internal Revenue Code, if the transactions involve a "qualified professional asset manager".

Final Amendment Highlights

As described by the DOL, 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 for a period of 10 years.
Expanding the ineligibility provision to include additional types of serious misconduct.
Requiring a QPAM to notify the DOL within 30 days of being ineligible for the exemption as well as written notice to impacted employee benefit plan and IRA customers.
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, which will be adjusted annually through 2030.
Clarifying the requisite independence and control a QPAM must have with respect to investment decisions and transactions.
Adding a standard recordkeeping requirement, with records required to be available to federal and state regulators along with any fiduciary of a plan, contributing employer or an employer organization or participants covered by the plan.

Effective Date

The final amendment was published on April 3, 2024, and is effective on June 17, 2024. For questions about the Final QPAM Amendment, contact EBSA's Office of Exemption Determinations at (202) 693-8540.

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