In mid December of 2020, the Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) released its fiduciary prohibited transaction exemption (PTE) 2020-2 providing guidance to investment advisors who consult 401k and IRA investors. PTE 2020-2 also aligns with the Securities and Exchange Commission’s Regulation Best Interest — a rule that industry officials say will have a significant impact on rollover recommendations and advice to IRAs including self-directed IRA LLCs and self-directed solo 401k plans.
PTE 2020-02 requires advisers to take the following into account when providing recommendations and advice to retirement account holders of retirement account’s such as IRAs and 401k plans, for example:
receive only reasonable compensation;
make no misleading statements in the course of their advising; and
act in the client’s best interest.