ERISA News

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.   

The Department of Health and Human Services (HHS) has introduced a notice of proposed rulemaking implementing Section 1557 of the Affordable Care Act (ACA). Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, and disability in covered health programs and activities. HHS has introduced a final rule twice before but was unable to implement the rule following civil litigation. The proposed rule seeks to clarify Section 1557 by addressing gaps identified in prior regulation, as follows.

The IRS has issued Notice 2022-32, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for July used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

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 Securities and Exchange Commission (SEC) has adopted amendments that rescind two rules applicable to proxy voting advice businesses (PVABs) that were adopted in 2020. The 2020 rule imposed conditions on the availability of two exemptions from the proxy rules’ information and filing requirements. Those conditions require that

• Registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner, and
• PVAB clients are provided with a means of becoming aware of any written responses by registrants to proxy voting advice

The IRS has released a draft 2022 tax year Form 8889, Health Savings Accounts (HSAs). Form 8889 is filed by taxpayers to report HSA contributions and associated tax deductions, HSA distributions, and any tax or penalty tax owed for distributions not used for qualified medical expenses.

The IRS has released Revenue Ruling 2022-13 on the applicability of Internal Revenue Code (IRC) Section 432(b)(7) following a merger involving a multiemployer defined benefit (DB) plan that has received special financial assistance (SFA). IRC Sec. 432(b)(7) provides for deemed critical status for eligible multiemployer plans receiving SFA. If a multiemployer DB plan that has received SFA is merged into a multiemployer DB plan that has not received SFA, and the designated plan ongoing is the one that has not received SFA, is the ongoing plan deemed to be in Sec. 432(b)(7) critical status? The IRS holds that, in this case, when the ongoing plan after a merger was not the one that had received SFA prior to the merger, it is not deemed to be in Sec. 432(b)(7) critical status solely as a result of the merger.

A plaintiff in a 401(k) plan sponsored by Colgate-Palmolive Co. has filed a lawsuit against several parties after an unknown individual defrauded the plan of her entire $750,000 account. The plaintiff has named the plan sponsor, the recordkeeper Alight Solutions, and the plan trustee Mellon Bank, as defendants in the lawsuit. The plaintiff alleges the parties breached their fiduciary duty by failing to safeguard her assets.

The Pension Benefit Guaranty Corporation (PBGC) has released a final rule outlining terms for underfunded multiemployer plans seeking special financial assistance (SFA) under the American Rescue Plan (ARP) Act of 2021. ARP allows certain financially troubled multiemployer plans to apply for special financial assistance in accordance with rules developed by PBGC. The rule is scheduled to be published on July 8, 2022.