Fiduciary Decisions Factors PTE Into IRA Rollover Compliance Software

The firm is experiencing a surge in B/Ds and RIAs requesting assistance with the new rule as the enforcement date approaches.


With the Department of Labor (DOL) issuing a new prohibitive transaction exemption (PTE) on rollover advice, Fiduciary Decisions says it is getting a record number of calls from broker/dealers (B/Ds) and registered investment advisers (RIAs) asking about complying with the exemption.

The PTE permits investment advice fiduciaries to receive compensation as a result of providing fiduciary investment advice, including fiduciary investment advice to roll over a participant’s account in an employee benefit plan to an individual retirement account (IRA)—among other similar types of rollover recommendations. The exemption also permits investment advice fiduciaries to enter into “principal transactions” in which they could sell or purchase certain securities and other investments from their own inventories to or from plans and IRAs.

While the PTE is already effective, the DOL has issued, with the IRS’ agreement, a nonenforcement policy that says the DOL will not pursue prohibited transaction claims against investment advice fiduciaries so long as the advice satisfies the impartial conduct standards. However, the nonenforcement policy expires on December 20.

“Current IRA workflows do not address the requirements of the PTE,” says Matt Golda, chief operating officer (COO) at Fiduciary Decisions. The financial information technology (IT) firm has been offering full-service compliance software to its clients since 2016.

In light of the December 21 deadline for enforcement of PTE 2020-02, “firms are taking steps to supplement their current process or reviewing standalone solutions that address it,” Golda adds.

Fiduciary Decisions says it is supporting B/Ds and RIAs seeking to comply with PTE 2020-02 with a full-service compliance solution that captures required data, creates side-by-side comparisons and supports compliance workflow.

It is also offering FDI Connect to enhance existing workflows, and providing plan benchmarking data for circumstances when actual plan data isn’t available. It says plan benchmarking data is the next best option for use in meeting the PTE, per the DOL.

Tom Kmak, CEO of Fiduciary Decisions, adds: “We anticipated and planned for this. Investors want and need recommendations. Most rollover recommendations are now considered fiduciary advice. As ERISA [Employee Retirement Income Security Act] fiduciaries, firms must support advisers in avoiding prohibited transactions.”

This is especially important, he says, due to recent reports of planned rigorous enforcement on IRA rollover recommendations. Fiduciary Decisions has seen this issue become priority No. 1 for the industry, Kmak says.