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Connecticut CPA
July/August 2017
conflicts of interest can expose fiducia-
ries to claims by plan sponsors, partici-
pants, and IRA owners, as well as the
DOL for breach of fiduciary duty and li-
ability for losses caused by the breach.
In addition, ERISA prohibits certain
transactions ("prohibited transac-
tions") between plans and fiduciaries
that jeopardize plans' security due
to conflicts of interest. The receipt of
compensation from plan assets and
from certain third parties can implicate
these rules. Briefly, ERISA prohibits
among other activities, the "transfer to,
or use by or for the benefit of, a party
in interest, of any assets of the plan."
To avoid engaging in a prohibited
transaction, investment advisers must
structure their compensation arrange-
ments in a manner that does not in-
volve a conflict of interest or self-deal-
ing or they must rely on an exemption.
In conjunction with its issuance of the
Fiduciary Rule, the DOL also issued
two new prohibited transaction ex-
for certain insurers, financial
institutions, their affiliates and related
entities, and modified certain existing
exemptions. The requirement to satis-
fy several conditions for these exemp-
tions has been delayed on a transition
period that currently ends on January
1, 2018.
More information about the exemp-
tions can be found on the DOL website
The Fiduciary Rule has significant im-
pact on providers and recipients of
financial/investment advice. Although
the most drastic effects of the Rule will
be felt by financial institutions, it also
impacts other plan advisors and ser-
vice providers.
Many agree with the DOL's objective
of protecting the retirement assets and
the best interests of plan participants
and account owners. However, imple-
mentation of the Rule has caused sig-
nificant burdens for plan service pro-
viders and particularly complex com-
pliance hurdles for financial institutions
and broker-dealers.
Considering its significant disrup-
tion, opposition within the industry
and within Congress, and the ongoing
DOL review of the Rule, changes to the
Rule may be on the horizon, including
a possible extension of the transition
period beyond January 1, 2018.
paid advertisement
George J. Kasper, J.D., LL.M. is a
partner in the labor, employment,
and employee benefits practice at
Pullman & Comley in Bridgeport,
where employers and plan fiducia-
ries seek his counsel on all types
of employee benefit plans, includ-
ing defined benefit pension plans,
401(k) and 403(b) plans, multiem-
ployer plans, medical benefit plans,
cafeteria plans, and disability plans.
He is a member of the CTCPA
Employee Benefit Plans Interest
Group and is a frequent speaker at
CTCPA events.
He can be reached at 203-330-2119
Considering its significant
disruption, opposition within the
industry and within Congress,
and the ongoing DOL review of
the Rule, changes to the Rule
may be on the horizon.
The new exemptions include the Best Interest
Contract Exemption (the "BIC Exemption") and
the Principal Transactions Exemption