US Department of Labor announces final amendment to ‘QPAM exemption’

WASHINGTON – The U.S. Department of Labor announced today that its Employee Benefits Security Administration has released a final amendment to Class Prohibited Transaction Exemption 84-14, also known as the Qualified Professional Asset Manager Exemption, which permits various parties related to employee benefit plans and individual retirement accounts to engage in transactions involving plan and IRA assets.

Use of the QPAM Exemption depends on certain conditions, including a requirement for plan and IRA assets to be managed by independent QPAMs that meet specified financial standards.

The final amendment announced today responds to substantial changes in the financial services industry since the exemption’s 1984 establishment. Among these changes are industry consolidation and the increasing global reach of financial services institutions in their affiliations and investment strategies, including those that manage plan and IRA assets.

“The Qualified Professional Asset Manager exemption is an important tool for plans and asset managers that must be viewed in the context of what is protective of the rights of plans, participants, beneficiaries and individual retirement account owners,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “The final amendment reflects changes to modernize the QPAM exemption, input received from public comments, and the Department of Labor’s experience administering the exemption.”

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.

In response to public comments and testimony at a Nov. 17, 2022, online public hearing, the department made important changes to the proposed amendment, including additional clarifications of exemption text and adjustments to the scope of foreign judgments and agreements subject to the rule’s ineligibility provisions. For example, the exemption expressly excludes convictions from foreign countries listed as foreign adversaries by the Department of Commerce.

The Federal Register will publish the final rule on April 3, which takes effect 75 days later.

Read the final QPAM amendment. 

Learn more about EBSA and its work to protect job-based healthcare and retirement plans.