Ashland Partners provides examinations of the Prohibited Transaction Exemption (“PTE”) 84-14 for plan assets transacted by independent Qualified Professional Asset Managers (“QPAM”).
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law meant to protect retirement assets by establishing minimum standards for pension plans in private industry. The purpose of the rules are to ensure that plan fiduciaries do not misuse plan assets. As a result, ERISA generally prohibits the fiduciaries of qualified plans from executing various transactions.
The qualifications for a QPAM are set forth in PTE 84-14 issued by the Department of Labor. Certain regulated institutions, such as registered investment advisors, certain banks and insurance companies, may qualify as a QPAM. In order for a registered investment manager to qualify as a QPAM, the investment manager must:
- Be registered as an investment adviser under the Investment Advisers Act of 1940 as amended;
- Have total client assets under management and control in excess of $85 million as of the last day of the QPAM's most recent fiscal year; and
- Have shareholders' or partners' equity in excess of $1 million as determined by the QPAM's most recent balance sheet.
The QPAM exemption is a class exemption (PTE 84-14). Registered investment advisors who manage in-house plans cannot engage in otherwise beneficial transactions on behalf of plans with related parties in the absence of an administrative exemption, unless the company meets the requirements and restrictions imposed in PTE 84-14 which includes a QPAM Exemption Audit.