Tag Archives: monitor

Things I Worry About (24): Pooled Employer Plans and DOL RFI (5)


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Key Takeaways

  • The DOL has issued guidance about PEPs—pooled employer plans—that provides tips for adopting employers and questions about PEPs and that suggests a possible fiduciary safe harbor for small employers who adopt PEPs.
  • This article continues a discussion of the questions that the DOL says that employers should ask when considering adopting a PEP for their employees. The questions covered in this article are 7 through 9, which deal with fees and costs, investments and scope of fiduciary responsibility.
  • Both advisors and employers should consider the DOL Tips when considering PEPs and, if a PEP would be a good choice, which one is a good fit for the employer.

This series of articles examines the DOL’s July 29, 2025, release that includes interpretative guidance on PEPs, solicits information about PEP practices, includes tips for selecting PEPs, and discusses a possible fiduciary safe harbor for adopting PEPs. 2025-14281.pdf (SECURED).

The first two articles in this series,  Things I Worry About (20) and Things I Worry About (21), discussed some of the DOL’s findings when it reviewed the 2023 Forms 5500 filed by PEPs. The third and fourth articles, Things I Worry About (22) and Things I Worry About (23), started the review of issues identified by the DOL for deciding whether to join a PEP.

This is the third article about the questions that the DOL suggested employers ask when adopting PEPs. That section—entitled “Fiduciary Tips for Small Employers Selecting a PEP”—posed nine questions that employers should ask. This article covers the remaining DOL questions and comments, as well as my comments.

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Things I Worry About (23): Pooled Employer Plans and DOL RFI (4)


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Key Takeaways

  • The DOL has issued guidance about PEPs—pooled employer plans—that provides tips for adopting employers and questions about PEPs and that suggests a possible fiduciary safe harbor for small employers who adopt PEPs.
  • This article continues a discussion of the questions that the DOL says that employers should ask when considering adopting a PEP for their employees. The questions covered in this article are 4 through 6, which deal with fees and costs, investments and scope of fiduciary responsibility.
  • Both advisors and employers should consider the DOL Tips when deciding whether to join a PEP and, if so, which one.

This series of articles examines the DOL’s July 29, 2025, release that includes interpretative guidance on PEPs, solicits information about PEP practices, includes tips for selecting PEPs, and discusses a possible fiduciary safe harbor for adopting PEPs. 2025-14281.pdf (SECURED).

The first two articles in this series,  Things I Worry About (20) and Things I Worry About (21), discussed some of the DOL’s findings when it reviewed the 2023 Forms 5500 filed by PEPs. The third article, Things I Worry About (22), started the review of issues identified by the DOL for deciding whether to join a PEP.

This is the second in a series of articles about the questions that the DOL suggested employers ask when adopting PEPs. That section—entitled “Fiduciary Tips for Small Employers Selecting a PEP”—posed nine questions that employers should ask. My last article, Things I Worry About (22), covered the first three questions. This article and my next one cover the remaining DOL questions and comments, as well as my comments.

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Things I Worry About (22): Pooled Employer Plans and DOL RFI (3)


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Key Takeaways

  • The DOL has issued guidance about PEPs—pooled employer plans—that provides tips for adopting employers and questions about PEPs and a possible fiduciary safe harbor for small employers who adopt PEPs.
  • This article begins a discussion of the questions that the DOL says that employers should ask when considering adopting a PEP for their employees.

This series of articles examines the DOL’s July 29, 2025 release that includes interpretative guidance on PEPs, solicits information about PEP practices, includes tips for selecting PEPs, and discusses a possible fiduciary safe harbor for adopting PEPs. 2025-14281.pdf (SECURED).

The first two articles in this series,  Things I Worry About (20) and Things I Worry About (21), discussed some of the DOL’s findings when it reviewed the 2023 Forms 5500 filed by PEPs. This article moves on to the questions that the DOL suggested employers ask when adopting PEPs. That section—entitled “Fiduciary Tips for Small Employers Selecting a PEP”—posed 9 questions that employers should ask. This article and my next two provide the DOL’s questions and comments, as well as my comments.

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Best Interest Standard of Care for Advisors #85: Compliance with PTE 2020-02: Special Issues: Monitoring (2)


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Key Takeaways

The DOL has issued FAQs that generally explain PTE 2020-02 and the expanded definition of fiduciary advice.

The DOL’s expanded definition of fiduciary advice was described in the preamble to PTE 2020-02.

The PTE then provides conditional relief for conflicted non-discretionary recommendations, if its conditions are satisfied.

My last article, Best Interest #84, discussed the requirement in the preamble to PTE 2020-02 that, where products of “unusual complexity and risk” are recommended, there are best interest issues if monitoring services are not provided.

This article discusses products of unusual complexity and risk.

Background

The DOL’s prohibited transaction exemption (PTE) 2020-02 (Improving Investment Advice for Workers & Retirees), allows investment advisers, broker-dealers, banks, and insurance companies (“financial institu­tions”), and their representatives (“investment professionals”), to receive conflicted compensation resulting from non-discretionary fiduciary investment advice to ERISA retirement plans, participants (including rollover recommendations), and IRA owners (“retirement investors”). In addition, in the preamble to the PTE the DOL announced an expanded definition of fiduciary advice, meaning that many more financial institutions and investment professionals are fiduciaries for their recommendations to retirement investors and, therefore, will need the protection provided by the exemption.

In the preamble to the PTE, the DOL described its expanded definition of fiduciary advice. The fiduciary regulations in ERISA and the Internal Revenue Code have two definitions of fiduciary advice. The first is the obvious—where the investment professional and financial institution have discretion over retirement accounts (ERISA or tax qualified plans, participant accounts in those plans, and IRAs). In effect, that is a one-part test—“discretion”. In addition, there is a 5-part test for non-discretionary fiduciary advice. The DOL did not amend the regulation to modify any of the “parts,” but instead reinterpreted some of the parts, and particularly the “regular basis” part, to significantly increase the number of investment professionals and financial institutions who are fiduciaries. This article is not about the expanded definition, but instead about a circumstance in which a fiduciary could have more responsibility than anticipated.

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Best Interest Standard of Care for Advisors #84: Compliance with PTE 2020-02: Special Issues: Monitoring


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Key Takeaways

The DOL has issued FAQs that generally explain PTE 2020-02 and the expanded definition of fiduciary advice.

    • The DOL’s expanded definition of fiduciary advice was described in the preamble to PTE 2020-02.
    • The PTE then provides conditional relief for conflicted non-discretionary recommendations, if its conditions are satisfied.
    • This article discusses whether the DOL’s position is that the fiduciary definition and the best interest standard in the PTE require “monitoring” of recommended investments. The answer is, possibly, in some cases.

Background

The DOL’s prohibited transaction exemption (PTE) 2020-02 (Improving Investment Advice for Workers & Retirees), allows investment advisers, broker-dealers, banks, and insurance companies (“financial institu­tions”), and their representatives (“investment professionals”), to receive conflicted compensation resulting from non-discretionary fiduciary investment advice to ERISA retirement plans, participants (including rollover recommendations), and IRA owners (“retirement investors”). In addition, in the preamble to the PTE the DOL announced an expanded definition of fiduciary advice, meaning that many more financial institutions and investment professionals are fiduciaries for their recommendations to retirement investors and, therefore, will need the protection provided by the exemption.

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Best Interest Standard of Care for Advisors #44


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The Department of Labor’s Prohibited Transaction Exemption and Its Impact on Recommendations to Plans, Participants and IRAs (Part 9)

On February 16, 2021, the DOL’s prohibited transaction exemption (PTE) 2020-02 became effective. The PTE is titled “Improving Investment Advice for Workers & Retirees.” It allows investment advisers, broker-dealers, banks, and insurance companies (“financial institutions”), and their representatives (“investment professionals”), to receive conflicted compensation resulting from non-discretionary fiduciary investment advice to retirement plans, participants and IRA owners (“retirement investors”).

In the preamble to the PTE, the DOL announced an expanded definition of fiduciary advice, meaning that many more financial institutions and investment professionals will be fiduciaries and therefore will need the protections afforded by the exemption. In addition, they will need prudent, or best practice, processes to satisfy the fiduciary and best interest standards of care.

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