September 9, 2024
What happened?
Qualified Professional Asset Managers (“QPAMs”) have until September 15, 2024, to notify the DOL of their reliance on the exemption. Managers relying on the Prohibited Transaction Class Exemption 84-14 (“QPAM Exemption”) must notify the DOL by email to QPAM@dol.gov and the email must state the QPAM’s legal and operating names.
This notification requirement is one part of the amended QPAM exemption (see our prior coverage). If a firm is not relying on the QPAM exemption, no notice is needed. After September 15th, if a firm starts relying on the QPAM exemption for the first time under a legal or operating name, the firm has 90 days to provide this notice to the DOL.
What does this mean for me?
The DOL will maintain a public website of entities relying on the QPAM Exemption. This means that clients will be able to check to see if your firm appears on the list. In our discussions with advisers, two issues often come up.
First, does my firm rely on the QPAM exemption? Sounds like a simple question, but prior to the 2024 amendments, it was very easy for firms to say they qualified, could qualify, or had QPAM status without examining the question at all. A firm might never have worked out whether they needed to rely on the exemption. Now, with an appearance on a public list saying you are relying, or absence from that list signaling you are not, this question needs to be answered. We recommend reviewing your existing agreements with ERISA clients. If you are a 3(38) fiduciary to a plan where you manage plan assets with independent discretion, your agreement may state that you will rely on the QPAM exemption or reference the exemption citation 84-14. Managers of Collective Investment Trusts (CITs) often have these 3(38) fiduciary agreements and need the protection of the QPAM Exemption. The QPAM exemption is one of many prohibited transaction exemptions available under ERISA. Review your agreements to be sure of your firm’s needs.
Second, all firms relying on the QPAM exemption should appear on the DOL website once the deadline passes. This presents a marketing issue for your firm if you have old slides, posts, or template documents that claim your firm can rely on the QPAM exemption. To substantiate this claim of QPAM status, the legal and operating name of the entity you are marketing needs to appear on the DOL’s website. Likewise, if you have existing arrangements where your clients have been told you rely or could rely on the QPAM exemption, they may look to find your name listed there. Be ready with your explanation if you determine QPAM status is not necessary for your firm. The QPAM exemption is now a yes or no question that you are likely to see in requests for information. Revise your responses and marketing material. If the answer is yes – make sure you are listed on the DOL’s website. If the answer is no – make sure you can explain why you don’t need to rely on the QPAM exemption for the way your firm operates.
If you still have questions or would like to speak with a regulatory expert, let us know.
