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May 06, 2015

Expanded Fiduciary Rule Addresses Appraisals, Seeks Comments

The U.S. Department of Labor is seeking comment by July 6 on its proposed rule to change who is considered a fiduciary of a qualified plan, IRA or health savings account. A more expansive proposal was released in 2010, but it faced significant pushback and was quickly withdrawn.

The new proposal, which addresses the primary concerns expressed by the Appraisal Institute, touches on appraisals in several ways, including:

  • It considers as a fiduciary only those appraisals, fairness opinions and similar statements related to aparticular transaction; 
  • It expands an exemption for general reoccurring reports or opinions of value that satisfy required reporting and disclosure rules under the Employee Retirement Income Security Act to include federal or state law, rule, regulation or self-regulatory organizations;
  • It limits what constitutes investment advice concerning valuations or appraisals provided to an investment fund. This change means that a person who provides an appraisal, fairness opinion or opinion of value to a collective investment fund or pooled separate account in which more than one unaffiliated plan has an investment or which holds “plan assets” of more than one unaffiliated plan under Labor’s plan assets regulations will not be considered to be providing investment advice; and
  • It does not expand fiduciary coverage to valuations or appraisals for employee stock ownership plans, which likely will be addressed in a subsequent proposal.  

Read a copy of the proposal, find supplementary information on the proposal and provide comment.

AI professionals are encouraged to contact the AI Washington office with any questions or concerns with the proposed rule at 202-298-6449. 

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