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On Tuesday, April 23, 2024, the U.S. Department of Labor released its new final rule regarding when a person becomes a “fiduciary” by virtue of providing investment advice for purposes of the Employee Retirement Income Security Act of 1974 and Section 4975 of the Internal Revenue Code of 1986. Upon becoming effective, the Final Rule will meaningfully expand the definition of fiduciary as it pertains to the provision of investment advice. The Final Rule is the latest in the DOL’s efforts to change this definition. In 2018, the Fifth Circuit Court of Appeals vacated the DOL’s 2016 fiduciary regulation, its last formal rulemaking effort in this regard.
On Tuesday, October 31, 2023, the U.S. Department of Labor issued a new proposed rule pertaining to the definition of “fiduciary” under ERISA and Section 4975 of the Code. If adopted, the proposed rule would replace the DOL’s long-standing regulation addressing when a person is fiduciary under ERISA in connection with the provision of investment advice.
On November 22, the United States Department of Labor released its final rule adopting certain revisions to its investment duties regulation under ERISA at 29 CFR Section 2550.404a-1. The revisions in the Final Rule are intended to clarify the application to ERISA plan fiduciaries of the ERISA duties of loyalty and prudence in respect of investments and the use of written proxy voting guidelines and policies. The Final Rule clarifies that ERISA plan fiduciaries may consider climate change and environmental, social and corporate governance factors when making investment decisions and exercising shareholder rights for plans.
On July 26, the United States Department of Labor issued proposed amendments to Prohibited Transaction Class Exemption 84-14, the so-called “QPAM Exemption.” The QPAM Exemption is an important prohibited transaction class exemption widely utilized by asset managers to provide relief for potential prohibited transactions that could arise in transactions between plans subject to ERISA and/or Section 4975 of the Code and financial services and other firms that are “parties in interest” under ERISA or “disqualified persons” under the Code (e.g., fiduciaries, plan sponsors, service providers and entities related to the foregoing by ownership) to such plans.
The U.S. Department of Labor last month issued Compliance Assistance Release No. 2022-1 - 401(k) Plan Investments in “Cryptocurrencies” (the “Release”) in which it strongly cautions ERISA plan fiduciaries to use “extreme care” before considering the inclusion of a cryptocurrency or other related option as a choice on a self-directed 401(k) plan’s menu of investment choices. In the Release, the Department noted that it had become aware that certain firms were marketing cryptocurrency-type investments as potential options for 401(k) plans.