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DOL Fiduciary Rule and Prohibited Transaction Exemption Compliance Date is Approaching

Beginning July 1, 2022, retirement investment providers that provide fiduciary rollover advice must document and disclose to the customer the specific reasons that the rollover to a plan or an individual retirement account (“IRA”) is in the “best interest” of the customer. Investment providers that make such rollover recommendations must comply with Prohibited Transaction Exemption 2020-02 (the “Exemption”) in order to retain investment related fees generated from that advice without running afoul of ERISA’s prohibited transaction rules. In general, advice is in a customer’s “best interest” if it is both prudent and loyal, and does not place the financial or other interests of the investment provider or financial institution ahead of the interests of the customer. As part of the rollover documentation and disclosure to customers, the following factors should be considered: (i) the customer’s alternatives to a rollover, including leaving the money in the plan, if permitted, and selecting… Continue Reading

June 2022
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