DOL

The Department of Labor (DOL) is extending the comment period for receiving written comments related to prohibited transaction class exemption 84-14 (the Proposed QPAM Amendment) to October 11, 2022. The DOL also intends to hold a public hearing on November 17, 2022, at which time a supplementary comment period will begin, and close approximately 14 days after the hearing transcript is posted on the EBSA’s web page.

Details of the proposed amendment were previously announced.

The Department of Labor (DOL) has released Interpretive Bulletin 2022-01 (IB) relating to independence requirements for accountants who audit employee benefit plans. Under ERISA, plan administrators of benefit plans requiring an audit are required to retain an “independent qualified public accountant” to conduct an examination of the plan’s financial statements and render an opinion as to whether the financial statements and required schedules are presented fairly in accordance with generally accepted accounting principles (GAAP).

The Office of Management and Budget has received a proposed rule from the Department of Labor (DOL) titled “Adoption of Amended and Restated Voluntary Fiduciary Correction Program”. The Voluntary Fiduciary Correction Program (VFCP) is a voluntary enforcement program that allows plan officials to identify and correct certain transactions, such as delinquent participant contributions, sales and exchanges, improper loans, and improper plan expenses. The VFCP was last updated in 2006.

The Departments of Labor, Health and Human Services and Treasury issued a joint FAQ related to the coverage of contraceptive products as preventive services by group health plans or issuers. The FAQ provides the following:

• Group health plans and issuers are required to cover items or services that are integral to the furnishing of a recommended preventive service. The FAQ clarifies that coverage of anesthesia for a tubal litigation procedure or pregnancy tests required prior to the provision of an intrauterine device would be considered preventive services.

Effective July 27, 2022, the Federal prime interest rate increased from 4.75 percent to 5.50 percent. The prime interest rate is largely determined by the federal funds rate, as set by the Federal Reserve’s Federal Open Market Committee (FOMC). As Department of Labor regulations require a retirement plan loan interest rate to be comparable to interest rates charged by entities that are in the business of lending money in similar circumstances, plan sponsors typically use a benchmark such as the prime rate to set the interest rate on plan loans. The next FOMC meeting is scheduled for September 20 and 21, 2022.

July 26, 2022 — The Department of Labor has announced a proposed amendment to the Class Prohibited Transaction Exemption 84-14, also known as the Qualified Professional Asset Manager (QPAM) Exemption. According to a DOL news release, the proposed amendment expands the types of misconduct that disqualify plan asset managers from using the exemption by

The Office of Management and Budget has received a final rule from the Department of Labor (DOL) titled, “Interpretive Bulletin Relating to the Independence of Employee Benefit Plan Accounts.”

The DOL has long had in place a 1975 interpretive bulletin, acknowledging that further guidance may be issued concerning the question of independency of an accountant retained by an employee benefit plan. In 2019, the American Institute of Certified Public Accountants (AICPA) issued a new Statement of Auditing Standards (SAS) 136 which updated audit requirements for employee benefit plans. Required implementation of these new requirements was delayed until plan years ending after December 15, 2021.   

A Proposed Rule titled “Proposed Amendment to PTE 84-14 for Plan Asset Transactions Determined by an Independent Qualified Plan Asset Manager” (QPAM) has left the Office of Management and Budget—suggesting that official release may come soon.

ERISA generally prohibits a number of transactions between a plan and a “party in interest”—including fiduciaries and those providing services to the plan—unless an exemption is granted. PTE 84-14 is a class exemption regarding certain transactions between a party in interest with respect to an employee benefit plan and an investment fund that is managed by a QPAM. An employee benefit plan includes an employee welfare benefit or pension benefit plan, a trust defined under IRC. Secs. 401(a) or 403(a), IRAs, HSAs, MSAs, and ESAs. QPAMs are independent fiduciaries that are a bank, savings and loan, insurance company, or registered investment advisor meeting certain asset/net worth thresholds. 

The Department of Labor has posted online its upcoming guidance priorities. A number of the guidance items deal with retirement savings arrangements, including the following.

• Two items in the “prerule” stage include improving the effectiveness of retirement plan disclosures and guidance on pooled employer plans
• A former initiative to modernize the Form 5500 appears in the proposed rule stage
• A rulemaking to amend the definition of fiduciary to include persons who render investment advice for a fee to employee benefit plans and IRAs
• Revised procedures for granting prohibited transaction exemptions
• A final rule regarding pension benefit statement lifetime income illustrations as required under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019
• Updates to the Voluntary Fiduciary Correction Program
• A third final rule concerning Form 5500 changes related to the SECURE Act
• A final rule regarding prudence and loyalty in selecting plan investments and exercising shareholder rights
• Amendments to the abandoned plan program

The Davis-Bacon Act (DBA) has played a major role in the construction industry for over 90 years. Passed in 1931, it has been described by the Supreme Court as a “minimum wage law designed for the benefit of construction workers.” The DBA generally requires payment of locally prevailing wages under direct federal contracts and for covered contractors and their subcontractors. The employer’s obligation can be met by paying the applicable prevailing wage entirely as cash wages or by a combination of cash wages and employer-provided, bona fide fringe benefits—including pension and health benefits.