76032 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

1Reorganization Plan No. 4 of 1978 (5 U.S.C. 

App. 1 (2018)) generally transferred the authority of 

the Secretary of the Treasury to grant administrative 

exemptions under Code section 4975 to the 

Secretary of Labor. 

(o) ‘‘Retirement Investor’’ means: 

(1) A participant or beneficiary of a 

Plan with authority to direct the 

investment of assets in their account or 

to take a distribution; 

(2) The beneficial owner of an IRA 

acting on behalf of the IRA; or 

(3) A fiduciary acting on behalf of a 

Plan or an IRA. 

(p) A ‘‘Senior Executive Officer’’ is 

any of the following: the chief 

compliance officer, the chief executive 

officer, president, chief financial officer, 

or one of the three most senior officers 

of the Insurer. 

Signed at Washington, DC, this 24th day of 

October, 2023. 

Lisa M. Gomez, 

Assistant Secretary, Employee Benefits 

Security Administration, U.S. Department of 

Labor. 

[FR Doc. 2023–23781 Filed 11–2–23; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2550 

[Application No. D–12094] 

ZRIN 1210–ZA34 

Proposed Amendment to Prohibited 

Transaction Exemptions 75–1, 77–4, 

80–83, 83–1, and 86–128 

AGENCY: Employee Benefits Security 

Administration (EBSA), U.S. 

Department of Labor. 

ACTION: Notice of Proposed Amendment 

to Prohibited Transaction Exemptions 

75–1, 77–4, 80–83, 83–1, and 86–128. 

SUMMARY: This document contains a 

notice of pendency before the 

Department of Labor (the Department) of 

proposed amendments to Prohibited 

Transaction Exemptions (PTEs) 75–1, 

77–4, 80–83, 83–1, and 86–128, 

exemptions from certain prohibited 

transaction provisions of the Employee 

Retirement Income Security Act of 1974 

(ERISA) and the Internal Revenue Code 

of 1986 (the Code). The amendments 

would affect participants and 

beneficiaries of plans, IRA owners, and 

certain fiduciaries of plans and IRAs. 

DATES: Public Comments. Comments are 

due on or before January 2, 2024. 

Public Hearing. The Department 

anticipates holding a public hearing 

approximately 45 days following the 

date of publication in the Federal 

Register. Specific information regarding 

the date, location, and submission of 

requests to testify will be published in 

a notice in the Federal Register. 

Applicability Date. The Department 

proposes to make the final amendment 

effective 60 days after it is published in 

the Federal Register. 

ADDRESSES: All written comments 

concerning the proposed amendments 

should be sent to the Employee Benefits 

Security Administration, Office of 

Exemption Determinations, U.S. 

Department of Labor through the 

Federal eRulemaking Portal and 

identified by Application No. D–12094: 

Federal eRulemaking Portal: https://

www.regulations.gov. at Follow the 

instructions for submitting comments. 

Docket: For access to the docket to 

read background documents, including 

the plain-language summary of the 

proposal of not more than 100 words in 

length required by the Providing 

Accountability Through Transparency 

Act of 2023, or comments, go to the 

Federal eRulemaking Portal at https://

www.regulations.gov. 

See SUPPLEMENTARY INFORMATION

below for additional information 

regarding comments. 

FOR FURTHER INFORMATION CONTACT: 

Susan Wilker, telephone (202) 693– 

8540, Office of Exemption 

Determinations, Employee Benefits 

Security Administration, U.S. 

Department of Labor (these are not tollfree numbers). 

SUPPLEMENTARY INFORMATION: 

Comment Instructions 

Warning: All comments received will 

be included in the public record 

without change and will be made 

available online at https://

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be confidential or other 

information whose disclosure is 

restricted by statute. If you submit a 

comment, EBSA recommends that you 

include your name and other contact 

information, but DO NOT submit 

information that you consider to be 

confidential, or otherwise protected 

(such as Social Security number or an 

unlisted phone number), or confidential 

business information that you do not 

want publicly disclosed. However, if 

EBSA cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EBSA might not be 

able to consider your comment. 

Additionally, the https://

www.regulations.gov website is an 

‘‘anonymous access’’ system, which 

means EBSA will not know your 

identity or contact information unless 

you provide it. If you send an email 

directly to EBSA without going through 

https://www.regulations.gov, your email 

address will be automatically captured 

and included as part of the comment 

that is placed in the public record and 

made available on the internet. 

Background 

As described elsewhere in this edition 

of the Federal Register, the Department 

is proposing to amend the regulation 

defining when a person renders 

‘‘investment advice for a fee or other 

compensation, direct or indirect’’ with 

respect to any moneys or other property 

of an employee benefit plan, for 

purposes of the definition of a 

‘‘fiduciary’’ in section 3(21)(A)(ii) of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act) and in 

section 4975(e)(3)(B) of the Internal 

Revenue Code (Code). The Department 

is also proposing, elsewhere in this 

edition of the Federal Register, to 

amend prohibited transaction 

exemption (PTE) 2020–02 to provide 

additional clarity for advice fiduciaries 

and additional protections for plans and 

investors and PTE 84–24 to address 

specific issues that financial institutions 

face complying with the conditions of 

PTE 2020–02 when distributing 

annuities through independent agents. 

The Department is hereby proposing 

amendments to existing PTEs 75–1, 77– 

4, 80–83, 83–1, and 86–128 that 

currently provide relief for investment 

advice fiduciaries to receive 

compensation when plans and IRAs 

enter into certain transactions 

recommended by the fiduciaries as well 

as certain related transactions. The 

ERISA and Code provisions at issue 

generally prohibit fiduciaries with 

respect to employee benefit plans and 

individual retirement accounts (IRAs) 

from engaging in self-dealing in 

connection with transactions involving 

these plans and IRAs. The proposed 

amendments would remove fiduciary 

investment advice, as defined under 

ERISA and in a proposed regulation 

issued by the Department that is found 

elsewhere in this issue of the Federal 

Register, from the covered transactions 

in each exemption and make certain 

other administrative changes. The 

Department is proposing these 

amendments on its own motion, 

pursuant to its authority under ERISA 

section 408(a) and Code section 

4975(c)(2) and in accordance with 

procedures set forth in 29 CFR part 

2570, subpart B (76 FR 66637 (October 

27, 2011)).1


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Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 76033 

2Exemptions from Prohibitions Respecting 

Certain Classes of Transactions Involving Employee 

Benefit Plans and Certain Broker-Dealers, Reporting 

Dealers and Banks, 40 FR 50845 (Oct. 31, 1975), as 

amended at 71 FR 5883 (Feb. 3, 2006). 

3 71 FR 5883 (Feb. 3, 2006). 

4Part I(a) expired on May 1, 1978. It ultimately 

was replaced by PTE 86–128 (51 FR 41686 (Nov. 

18, 1986)). 

5Class Exemption for Certain Transactions 

Between Investment Companies and Employee 

Benefit Plans, 42 FR 18732 (Apr. 8, 1977). 

6Class Exemption for Certain Transactions 

Involving Purchase of Securities Where Issuer May 

Use Proceeds to Reduce or Retire Indebtedness to 

Parties in Interest, 45 FR 73189 (Nov. 4, 1980), as 

amended at 67 FR 9483 (March 1, 2002). 

7Class Exemption for Certain Transactions 

Involving Mortgage Pool Investment Trusts, 48 FR 

895 (Jan. 7, 1984), as amended at 67 FR 9483 

(March 1, 2002). 

8Class Exemption for Securities Transactions 

Involving Employee Benefit Plans and BrokerDealers, 51 FR 41686 (November 18, 1986), as 

amended at 67 FR 64137 (October 17, 2002). 

9Prohibited Transaction Exemption 2020–02, 

Improving Investment Advice for Workers & 

Retirees 85 FR 82798 (Dec. 18, 2020). 

Current PTEs 75–1, 77–4, 80–83, 83–1, 

and 86–128 

PTEs 75–1, 77–4, 80–83, 83–1, and 

86–128 currently provide investment 

advice fiduciaries with relief for the 

following transactions: 

PTE 75–1 2 provides an exemption for 

broker-dealers, reporting dealers, and 

banks to engage in certain classes of 

transactions with employee benefit 

plans and IRAs. The exemption has five 

parts: 3

• Part I provides relief for agency 

transactions and services; 4

• Part II(1) permits the purchase or 

sale of a security between an employee 

benefit plan or IRA and a broker-dealer 

registered under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et. 

seq.), a reporting dealer who makes 

primary markets in securities of the 

United States Government or of any 

agency of the United States Government 

and reports daily to the Federal Reserve 

Bank of New York its positions with 

respect to Government securities and 

borrowings thereon, or a bank 

supervised by the United States or a 

State. The exemption provided in Part 

II(1) does not extend to the fiduciary 

self-dealing and conflicts of interest 

prohibitions of ERISA and the Code; 

• Part II(2) contains a special 

exemption for mutual fund purchases 

(the mutual fund exemption) between 

fiduciaries and plans or IRAs. Although 

it does provide relief for fiduciary selfdealing and conflicts of interest, the 

mutual fund exemption is only available 

if the fiduciary who decides on behalf 

of the plan or IRA to enter into the 

transaction is not a principal 

underwriter for, or affiliated with, the 

mutual fund; 

• Part III permits a fiduciary to cause 

a plan or IRA to purchase securities 

from a member of an underwriting 

syndicate other than the fiduciary itself 

when the fiduciary is also a member of 

the syndicate; 

• Part IV permits a plan or IRA to 

purchase securities in a principal 

transaction from a fiduciary that is a 

market maker with respect to such 

securities; and 

• Part V permits the extension of 

credit to a plan or IRA by a brokerdealer in connection with the purchase 

or sale of securities; 

PTE 77–4 5 provides relief for a plan’s 

or IRA’s purchase or sale of open-end 

investment company shares where the 

investment adviser for the open-end 

investment company is also a fiduciary 

to the plan or IRA; 

PTE 80–83 6 provides relief for a 

fiduciary causing a plan or IRA to 

purchase a security when the proceeds 

of the securities issuance may be used 

by the issuer to retire or reduce 

indebtedness to the fiduciary or an 

affiliate; 

PTE 83–1 7 provides relief for the sale 

of certificates in an initial issuance of 

certificates by the sponsor of a mortgage 

pool to a plan or IRA when the sponsor, 

trustee, or insurer of the mortgage pool 

is a fiduciary with respect to the plan or 

IRA assets invested in such certificates; 

and 

PTE 86–128 8 provides an exemption 

for certain types of fiduciaries to use 

their authority to cause a plan or IRA to 

pay a fee to the fiduciary, or its affiliate, 

for effecting or executing securities 

transactions as agent for the plan. The 

exemption further provides relief for 

these types of fiduciaries to act as agent 

in an ‘‘agency cross transaction’’ for 

both a plan or IRA and one or more 

other parties to the transaction, and for 

such fiduciaries or their affiliates to 

receive fees from the other party(ies) in 

connection with the agency cross 

transaction. An agency cross transaction 

is defined in the exemption as a 

securities transaction in which the same 

person acts as agent for both any seller 

and any buyer for the purchase or sale 

of a security. 

Other Advice Exemptions 

PTE 2020–02 

PTE 2020–02 9 permits investment 

advice fiduciaries to receive 

compensation as a result of their advice, 

including as a result of advice to roll 

over assets from an employee benefit 

plan to an IRA, and to engage in certain 

principal transactions and was designed 

to promote investment advice that is in 

the best interest of retirement investors 

(e.g., plan participants and beneficiaries, 

and IRA owners). The exemption’s 

conditions emphasize mitigating 

conflicts of interest and ensuring that 

retirement investors receive advice that 

is prudent and loyal. An important 

objective of the exemption is to require 

fiduciary investment advice providers to 

adhere to stringent standards that are 

designed to ensure that their investment 

recommendations reflect the best 

interest of plan and IRA investors. 

Accordingly, financial institutions and 

investment professionals relying on PTE 

2020–02 must: (i) acknowledge their 

fiduciary status in writing; (ii) disclose 

their services and material conflicts of 

interest; and adhere to impartial 

conduct standards; (iii) adopt policies 

and procedures prudently designed to 

ensure compliance with the impartial 

conduct standards and mitigate conflicts 

of interest that could otherwise cause 

violations of those standards; (iii) 

document and disclose the specific 

reasons that any rollover 

recommendations are in the retirement 

investor’s best interest; (iv) and conduct 

an annual retrospective compliance 

review. 

The Department is proposing an 

amendment to PTE 2020–02 that is 

published separately in this edition of 

the Federal Register. The proposed 

amendment to PTE 2020–02 would 

build on these existing conditions to 

provide more protections for retirement 

investors receiving advice and more 

certainty for financial institutions and 

investment professionals complying 

with the exemption’s conditions. In this 

regard, among other things, the 

Department is proposing additional 

disclosures to ensure that retirement 

investors have sufficient information to 

make informed decisions about the costs 

of the investment advice transaction and 

about the significance and severity of 

the investment advice fiduciary 

conflicts of interest. The proposed 

amendment also would provide more 

guidance for financial institutions and 

investment professionals complying 

with the impartial conduct standards 

and implementing the policies and 

procedures requirement. As discussed 

in detail in the preamble to the 

amendment, these additional conditions 

would provide important protections to 

retirement investors by enhancing the 

existing protections of PTE 2020–02. 


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76034 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

10 49 FR 13208 (April 3, 1983), as amended at 71 

FR 5887 (Feb. 3, 2006). 

11See 29 CFR 2550.408b–2; 42 FR 32390 (June 24, 

1977); Reasonable Contract or Arrangement under 

Section 408(b)(2)—Fee Disclosure, Final Rule, 77 

FR 5632 (Feb. 3, 2012). 12 81 FR 21181, 21199 (Apr. 8, 2016). 

PTE 84–24 

PTE 84–24 10 provides exemptive 

relief for certain prohibited transactions 

that occur when plans or IRAs purchase 

insurance and annuity contracts and 

shares in an investment company 

registered under the Investment 

Company Act of 1940 (a mutual fund). 

The exemption permits insurance 

agents, insurance brokers and pension 

consultants that are parties in interest or 

fiduciaries with respect to plans and 

IRAs to effect the purchase of the 

insurance or annuity contracts for the 

plans or IRAs and receive a commission 

on the sale. The exemption also is 

available for the prohibited transaction 

that occurs when the insurance 

company selling the insurance or 

annuity contract is a party in interest or 

disqualified person with respect to the 

plan or IRA. Likewise, with respect to 

mutual fund transactions, PTE 84–24 

permits mutual fund principal 

underwriters that are parties in interest 

or fiduciaries to effect the sale of mutual 

fund shares to plans or IRAs and receive 

a commission on the transaction. 

The Department is proposing an 

amendment to PTE 84–24 that is 

published separately in this edition of 

the Federal Register that would provide 

an alternative exemption for 

independent insurance agents to receive 

insurance commissions in connection 

with recommendations of annuity 

products if certain conditions are met 

that are similar to the conditions 

contained in PTE 2020–02. These 

conditions are tailored to protect 

retirement investors from the specific 

conflicts of interest that arise when 

independent insurance agents are 

compensated through insurance 

commissions. Additionally, the 

amendment would exclude investment 

advice fiduciaries from the existing 

relief provided in the current Section II 

of PTE 84–24, add a new eligibility 

provision for investment advice 

transactions, and amend the current 

recordkeeping condition to be similar to 

the recordkeeping provision in PTE 

2020–02. 

Description of Proposed Amendments 

to PTEs 75–1, 77–4, 80–83, 83–1, and 

86–128 

Providing for a single standard of care 

(which is currently found in PTE 2020– 

02) that would apply universally to all 

fiduciary investment advice, regardless 

of the specific type of product or advice 

provider, will provide greater protection 

for retirement investors and create a 

level playing field among investment 

advice providers. Therefore, to ensure a 

universal standard of care for the 

provision of investment advice that is 

based on the conditions of PTE 2020– 

02, the Department is proposing to 

amend PTEs 75–1 Parts III & IV, 77–4, 

80–83, 83–1, and 86–128 to include the 

following statement: ‘‘Exception. No 

relief from the restrictions of ERISA 

section 406(b) and the taxes imposed by 

Code section 4975(a) and (b) by reason 

of Code sections 4975(c)(1)(E) and (F) is 

available for fiduciaries providing 

investment advice within the meaning 

of ERISA section 3(21)(A)(ii) or Code 

section 4975(e)(3)(B) and regulations 

thereunder.’’ 

As a result of this amendment, 

investment advice fiduciaries would 

instead rely on the amended PTE 2020– 

02 for exemptive relief for covered 

investment advice transactions. By 

providing exemptive relief for fiduciary 

investment advice transactions under 

one exemption, PTE 2020–02, 

retirement investors would receive 

consistent protections when receiving 

investment advice from investment 

professionals such that a level playing 

regulatory playing field would apply 

regardless of the investment product the 

advisor recommends. The Department 

requests comment on this proposed 

change. 

In addition to removing exemptive 

relief for investment advice 

transactions, the Department also is 

proposing certain administrative 

amendments to these exemptions, 

which are discussed below. 

Amendments to PTE 75–1 

The Department is proposing to 

revoke parts of PTE 75–1, which was 

granted shortly after ERISA’s passage to 

provide certainty to the securities 

industry over the nature and extent to 

which ordinary and customary 

transactions between broker-dealers and 

plans or IRAs would be subject to 

ERISA’s prohibited transaction rules. 

PTE 75–1 Part I 

PTE 75–1, Part I, paragraphs (b) and 

(c) provide exemptive relief for certain 

non-fiduciary services provided by 

broker-dealers in securities transactions. 

Code section 4975(d)(2), ERISA section 

408(b)(2) and regulations thereunder, 

have clarified the scope of relief for 

service providers to plans and IRAs.11

The Department believes that the relief 

provided in Parts I(b) and I(c) of PTE 

75–1 duplicates the relief available 

under the statutory exemptions at Code 

section 4975(d)(2) and ERISA section 

408(b)(2). Therefore, the Department is 

proposing to revoke paragraphs (b) and 

(c) of Part I, and requests comments on 

this proposed revocation. 

PTE 75–1, Part II 

PTE 75–1, Part II(2), contains a special 

exemption for mutual fund purchases 

(the mutual fund exemption) between 

fiduciaries and plans or IRAs subject to 

minimal safeguards for retirement 

investors. The conditions of the 

exemption require a fiduciary to 

customarily purchase and sell securities 

for its own account in the ordinary 

course of its business, the transaction to 

occur on terms at least as favorable to 

the plan as an arm’s length transaction 

with an unrelated party, and records to 

be maintained. 

The Department is proposing to 

revoke PTE 75–1, Part II(2), because it 

has determined that it is not protective 

of retirement investors and has been 

broadly interpreted beyond the 

Department’s intention when it was 

issued.12 The transactions that have 

been covered by PTE 75–1 Part II(2) are 

largely now covered by newer, more 

protective exemptions, and fiduciaries 

providing investment advice on the 

purchase or sale of a mutual fund 

security can rely on PTE 2020–02. 

Moreover, fiduciaries providing 

investment management on the 

purchase or sale of a mutual fund 

security can receive non-commission 

compensation under PTE 77–4. The 

Department requests comment on this 

proposed revocation, and also on how 

the remaining parts of PTE 75–1 Part II 

will be used. 

The Department is further proposing 

to revise the recordkeeping provisions 

of Section (e) of PTE 75–1, Part II. 

Section (e) currently provides that 

records demonstrating compliance with 

the exemption must be maintained by 

the plan or IRA involved in the 

transaction. The proposed amendment 

would place the responsibility for 

maintaining such records on the brokerdealer, reporting dealer, or bank 

engaging in the transaction with such 

plan or IRA. The proposed amendment 

also would provide that parties relying 

on the exemption do not have to 

disclose trade secrets or other 

confidential information to members of 

the public (i.e., plan fiduciaries, 

contributing employers or employee 

organizations whose members are 

covered by the plan, participants and 

beneficiaries and IRA owners), but that 

in the event a party refuses to disclose 

information on this basis, it must 


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Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 76035 

13The Department has previously determined, 

after consulting with the Internal Revenue Service 

(the IRS), that plans described in 4975(e)(1) of the 

Code are included within the scope of relief 

provided by PTE 75–1 because it was issued jointly 

by the Department and the IRS. See PTE 2002–13, 

67 FR 9483 (Mar. 1, 2002) (preamble discussion). 

For simplicity and consistency with the other new 

exemptions and amendments to other existing 

exemptions published elsewhere in this issue of the 

Federal Register, the Department has adopted this 

specific definition of IRA. 

14Special rules apply under Section III(h) for 

pooled funds and groups of plans maintained by a 

single employer or controlled group of employers. 

provide a written notice to the requester 

advising it of the reasons for the refusal 

and that the Department may request 

such information on the requester’s 

behalf. 

The Department requests comment 

regarding whether fiduciaries providing 

discretionary investment management 

services on the purchase or sale of a 

mutual fund security in a principal 

transaction need the relief that is 

provided by PTE 75–1, Part II(2), and, if 

so, what conditions would be 

appropriate. 

Part 75–1, Part V 

PTE 75–1, Part V permits a brokerdealer to extend credit to a plan or IRA 

in connection with the purchase or sale 

of securities. It originally did not permit 

the receipt of compensation for an 

extension of credit by broker-dealers 

that are fiduciaries with respect to the 

assets involved in the transaction. In 

2016, the Department amended this 

exemption to allow investment advice 

fiduciaries to receive compensation 

when they extend credit to plans and 

IRAs to avoid a failed securities 

transaction. As a condition of the 

amendment, the failure of the purchase 

or sale of the securities could not have 

been caused by the fiduciary or an 

affiliate. The Department also added a 

definition of the term ‘‘IRA’’ as any 

account or annuity described in Code 

section 4975(e)(1)(B) through (F), 

including, for example, an individual 

retirement account described in section 

408(a) of the Code and a health savings 

account described in section 223(d) of 

the Code.13 The amendment also revised 

the recordkeeping provisions of PTE 75– 

1, Part V, to require the broker-dealer 

engaging in the covered transaction, as 

opposed to the plan or IRA, to maintain 

the records. The Department is 

proposing to make these amendments to 

PTE 75–1 Part V as it did in 2016. 

PTE 86–128 

The Department is proposing certain 

administrative changes to PTE 86–128, 

which are not directly related to the 

provision of fiduciary investment 

advice. As it did in 2016, the 

Department is proposing to delete 

Section IV(a), which provides an 

exclusion from the conditions of the 

exemption for certain plans not covering 

employees, including IRAs, to increase 

the safeguards available to these 

retirement investors. Therefore, 

investment advice fiduciaries to IRAs 

would have to rely on another 

exemption, such as PTE 2020–02. 

Fiduciaries that exercise full 

discretionary authority or control with 

respect to IRAs could continue to rely 

on PTE 86–128, as long as they comply 

with all of the exemption’s conditions. 

The Department is also proposing 

certain technical changes to the 

exemption, including deleting 

subsection IV(b)(1), and redesignating 

remaining sections as needed. The 

language currently in Section IV(b)(1) 

excludes investment advice providers; 

however, investment advice providers 

would be excluded from the exemption 

as a whole; therefore, the exclusion does 

not need to be repeated in Section IV. 

As a result of the deletion of Section 

IV(a) and IV(b)(1), the Department is 

redesignating subsections IV(b)(2) and 

(3) as subsections IV(a)(1) and (2), 

respectively, and Section IV(c) as 

Section IV(b). 

The Department is proposing to revise 

the new Section IV(b) to read: 

‘‘Recapture of profits. Sections III(a) and 

III(i) of this exemption do not apply in 

cases where the person engaging in a 

covered transaction returns or credits to 

the plan all profits earned by that 

person in connection with the securities 

transactions associated with the covered 

transaction.’’ Discretionary trustees 

were first permitted to rely on PTE 86– 

128 without meeting the ‘‘recapture of 

profits’’ provision pursuant to an 

amendment made in 2002 (2002 

Amendment). To effect this change, the 

2002 Amendment revised Section III(a), 

which had provided that ‘‘[t]he person 

engaging in the covered transaction 

[may not be] a trustee (other than a 

nondiscretionary trustee), or an 

administrator of the plan, or an 

employer any of whose employees are 

covered by the plan.’’ Under the 

amendment, the reference to ‘‘trustee 

(other than a nondiscretionary trustee)’’ 

was deleted from Section III(a), and 

discretionary trustees had to satisfy 

certain additional conditions set forth in 

Section III(h) and (i) to rely on the 

exemption. Section III(h) provides that 

discretionary trustees may engage in the 

covered transactions only with plans or 

IRAs with total net assets of at least $50 

million,14 and Section III(i) requires 

discretionary trustees to provide 

additional disclosures. The Department 

understands that after the 2002 

Amendment, practitioners had 

questions regarding whether 

discretionary trustees were permitted to 

rely on the ‘‘recapture of profits’’ 

provision, which allows persons 

identified in Section III(a) to engage in 

the covered transactions if they return 

or credit to the plan or IRA all profits, 

as an alternative to complying with 

Sections III(h) and (i). By deleting the 

reference to discretionary trustees from 

Section III(a), the Department believes 

that the 2002 Amendment inadvertently 

may have prevented trustees of plans or 

IRAs from using the recapture of profits 

approach, and instead, has limited the 

exemption to trustees that satisfy 

Section III(h) and (i). This result was not 

intended, therefore, the Department is 

proposing to modify the exemption to 

permit all trustees, regardless of 

associated plan or IRA size, to utilize 

the recapture of profits exception as 

they originally were permitted to do in 

PTE 86–128. 

In order to achieve this result, the 

Department has proposed an 

amendment to section IV(c) providing 

that Sections III(a) and III(i) do not 

apply in any case where the person 

engaging in the covered transaction 

returns or credits to the plan or IRA all 

profits earned by that person in 

connection with the securities 

transaction associated with the covered 

transaction. In addition, the Department 

proposes to reinsert a reference to 

trustees (other than nondiscretionary 

trustees) in Section III(a) along with the 

existing references to plan 

administrators and employers. Finally, 

the Department is proposing to add a 

sentence to the end of Section III(a) 

stating: ‘‘Notwithstanding the foregoing, 

this condition does not apply to a 

trustee that satisfies Section III(h) and 

(i).’’ The purpose of these proposed 

amendments is to clarify that trustees 

may engage in covered transactions 

subject to the recapture of profits 

limitations in Section V(b) of the 

exemption. 

The Department is not proposing to 

amend PTE 86–128 to include mutual 

fund principal transactions that are 

currently covered in PTE 75–1 Part II(2). 

The Department previously made such 

a change in 2016 to allow both 

investment advice and investment 

discretion mutual fund principal fund 

transactions to rely on an amended PTE 

86–128. However, the Department now 

believes other exemptions, including 

PTE 2020–02, provide sufficient relief 

for these types of transactions and 

enhanced protection for retirement 

investors. 


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76036 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

Lastly, the Department is proposing to 

add a new Section VII to PTE 86–128 

that would require the fiduciary 

engaging in a transaction covered by the 

exemption to maintain records 

necessary to enable certain persons 

(described in proposed Section VII(b)) to 

determine whether the conditions of 

this exemption have been met. The 

proposed recordkeeping requirement is 

consistent with the recordkeeping 

provisions contained in other existing 

class exemptions as well as the 

recordkeeping provisions of proposed 

amendments to PTEs 84–24 and 2020– 

02, which are published separately in 

this issue of the Federal Register. 

Executive Order 12866 and 13563 

Statement 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects; distributive impacts; and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying costs and benefits, reducing 

costs, harmonizing rules, and promoting 

flexibility. 

Under Executive Order 12866, as 

amended by Executive Order 14094, 

‘‘significant’’ regulatory actions are 

subject to review by the Office of 

Management and Budget (OMB). 

Section 3(f) of the Executive order 

defines a ‘‘significant regulatory action’’ 

as an action that is likely to result in a 

rule (1) having an annual effect on the 

economy of $200 million or more, or 

adversely and materially affecting a 

sector of the economy, productivity, 

competition, jobs, the environment, 

public health or safety, or state, local, or 

tribal governments or communities; (2) 

creating a serious inconsistency or 

otherwise interfering with an action 

taken or planned by another agency; (3) 

materially altering the budgetary 

impacts of entitlement grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or (4) 

raising legal or policy issues for which 

centralized review would meaningfully 

further the President’s priorities or the 

principles set forth in the Executive 

order. It has been determined that this 

proposal is ‘‘significant regulatory 

action’’ within the scope of section 

3(f)(1) of the Executive order. Therefore, 

the Department has provided an 

assessment of the proposal’s potential 

costs, benefits, and transfers, and OMB 

has reviewed this proposed amendment 

pursuant to the Executive order. 

Paperwork Reduction Act Statements 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department conducts a 

preclearance consultation program to 

allow the general public and Federal 

agencies to comment on proposed and 

continuing collections of information in 

accordance with the Paperwork 

Reduction Act of 1995 (PRA). This helps 

to ensure that the public understands 

the Department’s collection 

instructions, respondents can provide 

the requested data in the desired format, 

reporting burden (time and financial 

resources) is minimized, collection 

instruments are clearly understood, and 

the Department can properly assess the 

impact of collection requirements on 

respondents. 

Currently, the Department is soliciting 

comments concerning the information 

collection requests (ICRs) included in 

the proposed amendments to Prohibited 

Transaction Exemptions 75–1, 77–4, 80– 

83, 83–1, and 86–128. To obtain a copy 

of the ICRs, contact the PRA addressee 

shown below or go to https://

www.RegInfo.gov. The Department has 

submitted a copy of the amendments to 

the OMB in accordance with 44 U.S.C. 

3507(d) for review of its information 

collections. The Department and OMB 

are particularly interested in comments 

that: 

• Evaluate whether the collection of 

information is necessary for the 

functions of the agency, including 

whether the information will have 

practical utility; 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

collection of information, including the 

validity of the methodology and 

assumptions used; 

• Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

• Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology 

(e.g., permitting electronically delivered 

responses). 

Commenters may send their views on 

the Department’s PRA analysis in the 

same way they send comments in 

response to these proposed rules (for 

example, through the 

www.regulations.gov website), including 

as part of a comment responding to the 

broader proposal. Comments are due by 

January 2, 2024 to ensure their 

consideration. 

PRA Addressee: Address requests for 

copies of the ICR to James Butikofer, 

Office of Research and Analysis, U.S. 

Department of Labor, Employee Benefits 

Security Administration, 200 

Constitution Avenue NW, Room N– 

5718, Washington, DC 20210, or 

ebsa.opr@dol.gov. ICRs also are 

available at https://www.RegInfo.gov 

(https://www.reginfo.gov/public/do/ 

PRAMain). 

Amendments to PTE 75–1 

The Department proposes to amend 

PTE 75–1, Part V, to include a new 

disclosure requirement requiring the 

plan or IRA to receive a written 

disclosure of certain terms before the 

extension of credit. The disclosure must 

include the rate of interest or other fees 

that will be charged on such extension 

of credit, and the method of determining 

the balance upon which interest will be 

charged. The plan or IRA must 

additionally be provided with prior 

written disclosure of any changes to 

these terms. The Department believes 

that it is a usual and customary business 

practice to maintain records required to 

demonstrate compliance with disclosure 

distribution regulations mandated by 

the Securities and Exchange 

Commission (SEC). The Department 

believes that this new disclosure 

requirement is consistent with the 

disclosure requirement mandated by the 

SEC in 17 CFR 240.10b–16(1) for margin 

transactions. Therefore, the Department 

concludes that this requirement 

produces no additional burden to the 

public. 

The Department is also amending PTE 

75–1, Parts II and V to adjust the 

recordkeeping requirement to shift the 

burden from plans and IRAs to financial 

institutions. The amended class 

exemption requires as a condition for 

relief that financial institutions engaging 

in the exempted transactions (rather 

than the plans or IRAs) to retain or 

cause to be maintained all records 

pertaining to such transactions for six 

years and provide access to the records 

upon request to the specified parties. 

Finally, the Department is proposing 

to amend PTE 75–1 Parts III and IV, 

which currently provide relief for 

investment advice fiduciaries, by 

removing fiduciary investment advice 

from the covered transactions. 

Investment advice providers would 

instead have to rely on the amended 

PTE 2020–02 for exemptive relief 

covering investment advice 

transactions. 

Broker-dealers registered under the 

Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.), reporting dealers, 

and banks are eligible to rely on the 

exemption. According to the SEC, 

approximately 3,508 broker-dealers 


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15Estimates based on SEC’s FOCUS filings and 

SEC’s Form ADV filings. 16Cerulli Associates, U.S. RIA Marketplace 2022, 

Exhibit 5.10, Part 1, The Cerulli Report. 17Federal Insurance Deposit Corporation, 

Quarterly Banking Profile, Statistics at a Glance- as 

of March 31, 2023, https://www.fdic.gov/analysis/ 

quarterly-banking-profile/statistics-at-a-glance/ 

2023mar/industry.pdf. 

18Reporting dealers covered by the exemption are 

not accounted for separately because they are banks 

and security brokerages that trade in U.S. 

Government Securities; thus, reporting dealers are 

already accounted for in the number of brokerdealer firms and banks. The New York Federal 

Reserve Bank reported 21 primary dealers on March 

21, 2013. http://www.newyorkfed.org/markets/

pridealers_current.html. 

19 Internal Department calculation based on 2023 

labor cost data. For a description of the 

Department’s methodology for calculating wage 

rates, see https://www.dol.gov/sites/dolgov/files/ 

EBSA/laws-and-regulations/rules-and-regulations/ 

technical-appendices/labor-cost-inputs-used-inebsa-opr-ria-and-pra-burden-calculations-june2019.pdf. 

20The burden is estimated as follows: (3,942 

financial institutions × 4 hours) = 15,768 hours. A 

labor rate of $190.63 is used for a financial manager. 

The labor rate is applied in the following 

calculation: (3,942 × 4 hours) × $190.63 = 

$3,005,854. 

were SEC-registered as of December 

2021.15 Not all broker-dealers perform 

services for employee benefit plans. In 

2021, 54 percent of registered 

investment advisers provided employersponsored retirement benefits 

consulting.16 Assuming the percentage 

of broker-dealers provide advice to 

retirement plans is the same as the 

percent of investment advisers 

providing services to plans, the 

Department estimates 54 percent, or 

1,894 broker-dealers, would be affected 

by PTE 75–1. 

According to the Federal Deposit 

Insurance Corporation, there are 4,096 

commercial banks as of March 31, 

2023.17 If one-half of these banks (about 

2,048) and 54 percent of broker-dealers 

(about 1,894 broker-dealers) relied on 

this exemption, there would be 

approximately 3,942 respondents.18

Recordkeeping Requirements 

The Department has assumed that 

financial service providers that transact 

with employee benefit plans will 

maintain these records on behalf of their 

client plans. Because of the 

sophisticated nature of financial service 

providers and the regulation of the 

securities industry by State and federal 

government, and by self-regulatory 

organizations, the Department has 

assumed that the records required by 

this class exemption are the same 

records kept in the normal course of 

business, or in compliance with other 

requirements. The Department requests 

comment on this assumption. 

The Department has estimated that 

the additional time needed to maintain 

records for the financial institutions to 

be consistent with the exemption will 

be four hours per entity annually at a 

wage rate of $190.63 per hour.19 Thus, 

the Department estimates it would take 

15,768 hours at an equivalent cost of 

$3,005,854 to maintain the records and 

make the records available for 

inspection.20

TABLE 1—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH RECORDKEEPING

Year 1 Subsequent years 

Activity Burden hours Equivalent 

burden cost Burden hours Equivalent burden cost 

Financial Manager ........................................................................................... 15,768 $3,005,854 15,768 $3,005,854 

Total .......................................................................................................... 15,768 3,005,854 15,768 3,005,854 

Summary 

In sum, the Department estimates the 

total burden hours for the amended PTE 

1975–1 is 15,768 hours at a total 

equivalent burden cost of $3,005,854. 

The total cost burden is estimated to be 

de minimis. The Department assumes 

that required records are maintained by 

the relevant affected entities, the brokerdealers and banks. Thus, there are no 

additional tasks performed outside of 

those performed by the brokerage firms/ 

banks. 

The paperwork burden estimates are 

summarized as follows: 

Type of Review: Revision of an 

existing collection. 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Titles: Prohibited Transaction 

Exemption 75–1 (Security Transactions 

with Broker-Dealers, Reporting Dealers 

and Banks). 

OMB Control Number: 1210–0092. 

Affected Public: Businesses or other 

for-profits; not for profit institutions. 

Estimated Number of Respondents: 

3,942. 

Estimated Number of Annual 

Responses: 3,942. 

Frequency of Response: Initially, 

Annually, When engaging in exempted 

transaction. 

Estimated Total Annual Burden 

Hours: 15,768 hours. 

Estimated Total Annual Burden Cost: 

$0. 

Amendments to PTE 86–128 

The Department is proposing to 

amend Section VI of PTE 86–128 to 

require financial institutions to 

maintain or cause to be maintained for 

six years the records necessary for the 

Department, IRS, plan fiduciary, 

contributing employer or employee 

organization whose members are 

covered by the plan, participants and 

beneficiaries and IRA owners to 

determine whether conditions of this 

exemption have been met. 

In addition, the amendment would 

impose conditions on IRAs. Section III 

of the class exemption imposes the 

following requirements on fiduciaries of 

employee benefit plans that effect or 

execute securities transactions and the 

independent plan fiduciaries 

authorizing the plan or IRA to engage in 

the transactions with the investment 

advice provider (‘‘authorizing 

fiduciary’’) under the conditions 

contained in the exemption: 

(1) The authorizing fiduciary must 

provide the investment advice provider 

with an advance written authorization 

for the transactions; 

(2) The investment advice provider 

must provide the authorizing fiduciary 

with information necessary to determine 

whether an authorization should be 

made, including a copy of the 

exemption, a form for termination, a 

description of the investment advice 

provider’s brokerage placement 

practices, and any other reasonably 

available information regarding the 

matter that the authorizing fiduciary 

requests; 

(3) The investment advice provider 

must provide the authorizing fiduciary 

with a termination form, at least 

annually, explaining that the 

authorization is terminable at will, 

without penalty to the plan, and that 

failure to return the form will result in 

continued authorization for the 


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21Estimates based on 2021 Form 5500 data. 

22EBSA identified 57,575 new plans in its 2021 

Form 5500 filings, or 7.5 percent of all Form 5500 

pension plan filings. 

23The number of new plans is estimated as: 1,000 

plans × 7.5 percent of plans are new = 75 new 

plans. 

24Cerulli Associates, U.S. Retirement EndInvestor 2023: Fostering Comprehensive 

Relationships, The Cerulli Report. 

25The Department lacks data on the number of 

IRA owners that own multiple IRAs. To provide 

scope of magnitude, one source reported that in 

2019, 19 percent of IRA owners contributed to both 

a traditional IRA and Roth IRA. (See Investment 

Company Institute, The Role of IRAs in U.S. 

Households’ Saving for Retirement, 2020, 27(1) ICI 

Research Perspective, (2021).) This statistic does 

not account for individuals who own multiple IRAs 

of each type or those who did not contribute in 

2019, but it provides a lower bound. 

26 (10,000 managed IRAs × 2.1 percent of IRAs are 

new) = 210 IRAs. 

27Estimates are based on the SEC’s FOCUS filings 

and Form ADV filings for broker-dealers. 

28 Internal Department calculation based on 2023 

labor cost data. For a description of the 

Department’s methodology for calculating wage 

rates, see https://www.dol.gov/sites/dolgov/files/ 

EBSA/laws-and-regulations/rules-and-regulations/ 

technical-appendices/labor-cost-inputs-used-inebsa-opr-ria-and-pra-burden-calculations-june2019.pdf. 

29The Department estimates approximately 94.2 

percent of retirement investors receive disclosures 

electronically. This is the sum of the estimated 

share of retirement investors receiving electronic 

disclosures under the 2002 electronic disclosure 

safe harbor (58.2 percent) and the estimated share 

of retirement investors receiving electronic 

disclosures under the 2020 electronic disclosure 

safe harbor (36 percent). 

30 85 FR 31884 (May 27, 2020). 

31The burden is estimated as follows: [(1,894 

investment advice providers × 30 minutes) ÷ 60 

minutes] = 947 hours. A labor rate of $190.63 is 

used for a financial manager. The labor rate is 

applied in the following calculation: [(1,894 

investment advice providers × 30 minutes) ÷ 60 

minutes] × $190.63 per hour = $180,527. 

32The burden is estimated as follows: 1,894 

investment advice providers × 15 minutes = 474 

hours. A labor rate of $63.45 is used for a clerical 

worker. The labor rate is applied in the following 

calculation: [(1,894 investment advice providers × 

15 minutes) ÷ 60 minutes] × $63.45 per hour = 

$30,044. 

investment advice provider to engage in 

securities transactions on behalf of the 

plan or IRA; 

(4) The investment advice provider 

must provide the authorizing fiduciary 

with either (a) a confirmation slip for 

each individual securities transaction 

within 10 days of the transaction 

containing the information described in 

Rule 10b–10(a)(1–7) under the 

Securities Exchange Act of 1934, 17 CFR 

240.10b–10 or (b) a quarterly report 

containing certain financial information 

including the total of all transactionrelated charges incurred by the plan or 

IRA; 

(5) The investment advice provider 

must provide the authorizing fiduciary 

with an annual summary of the 

confirmation slips or quarterly reports, 

containing all security transactionrelated charges, the brokerage placement 

practices (if changed), and a portfolio 

turnover ratio; 

(6) An investment advice provider 

who is a discretionary trustee must 

provide the authorizing fiduciary with 

an annual report showing separately the 

commissions paid to affiliated brokers 

and non-affiliated brokers, on both a 

total dollar basis and a cents-per-share 

basis. 

Using data from 2021 Form 5500, the 

Department estimates that 1,257 unique 

plans hired service providers denoting 

on the Schedule C that they were a 

discretionary trustee. Further, among 

these plans, 801 also reported that they 

provided investment management 

services or received investment 

management fees paid directly or 

indirectly by the plan.21 Based on these 

values, the Department estimates on 

average, 1,000 plans have discretionary 

fiduciaries with full discretionary 

control. As small plans do not file the 

Schedule C, this estimate may be an 

underestimate. The Department requests 

comment on how many plans have 

discretionary fiduciaries with full 

discretionary control and how many 

would continue to rely on PTE 1986– 

128 under the proposed amendments. 

The Department estimates that of the 

estimated 1,000 plans discussed above, 

7.5 percent are new accounts or new 

financial advice relationships.22 Based 

on these assumptions, the Department 

estimates that 75 plans would be 

affected by the proposed amendments to 

PTE 1986–128.23

The Department lacks reliable data on 

the number of managed IRAs that would 

experience such a transaction in a given 

year. The Department estimates that 

there are 10,000 managed IRAs. The 

Department also does not have data on 

the number of new IRA accounts that 

are opened each year. However, in 2022, 

of the 67.8 million IRA owners, 1.4 

million, or approximately 2.1 percent, 

opened an IRA for the first time.24

Inferring from this statistic, the 

Department estimates that 2.1 percent of 

IRA accounts are new each year. The 

Department acknowledges that some 

IRA owners may have multiple IRAs, 

and as such, this statistic may 

underestimate the percentage of new 

IRAs opened.25 This results in an 

estimate of 210 IRAs that are new 

accounts or new financial advice 

relationships.26

The Department lacks reliable data on 

the number of investment advice 

providers who are discretionary 

fiduciaries that would rely on the 

amended exemption. For the purposes 

of this analysis, the Department assumes 

that the number of discretionary 

fiduciaries relying on the exemption is 

equal to the estimated number of brokerdealers estimated to be affected by the 

amendments to PTE 2020–02, or 1,894 

investment advice providers.27

The Department requests comment on 

this assumption, particularly with 

regard to what types of entities would 

be likely to rely on the amended 

exemption, as well as any underlying 

data. 

The following wage rates are 

assumed: an in-house rate of $159.34 for 

legal professionals and $63.45 for 

clerical staff.28 In addition, the 

Department assumes that 100 percent of 

plans will use electronic means to 

deliver the required information with no 

associated cost burden. The Department 

also assumes that 94.2 percent of IRAs 

and financial institutions will use 

electronic means to deliver the required 

information with no associated cost 

burden.29 The Department assumes that 

is similar to the percent receiving 

electronically under the Department’s 

2020 electronic disclosure safe harbor.30

The Department requests comments on 

these assumptions. 

Recordkeeping Requirement 

The Department is proposing to 

amend Section VI to require financial 

institutions to maintain or cause to be 

maintained for six years the records 

necessary for the Department, IRS, plan 

fiduciary, contributing employer or 

employee organization whose members 

are covered by the plan, participants 

and beneficiaries and IRA owners to 

determine whether conditions of this 

exemption have been met. 

Each of the 1,894 investment advice 

providers will maintain these records on 

behalf of their client plans in their 

normal course of business. Therefore, 

the Department has estimated that the 

additional time needed to maintain 

records consistent with the exemption 

will only require about one-half hour, 

on average annually for a financial 

manager at an hourly rate of $190.63 to 

organize and collate the documents. 

This results in 947 hours of burden at 

an equivalent cost of $180,527.31 The 

recordkeeping requirement will also 

require 15 minutes of clerical time at an 

hourly rate of $63.45 to prepare and 

send the documents for inspection, 

resulting in 474 hours of burden at an 

equivalent cost of $30,044.32

In total, the recordkeeping 

requirement is expected to impose an 

hour burden of 1,421 hours with an 

equivalent cost of $210,571. 


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33 75 plans + 210 IRAs = 285 plans and IRAs that 

are new or that enter new arrangements each year. 34The burden is estimated as follows: [(285 plans 

and IRAs × 15 minutes per plan or IRA) ÷ 60 

minutes] = 71 hours. A labor rate of $159.34 is used 

for a legal professional. The labor rate is applied in 

the following calculation: [(285 plans and IRAs × 15 

minutes per plan or IRA) ÷ 60 minutes] × $159.34 

per hour = $11,353. 

35The burden is estimated as follows: [(285 plans 

or IRAs × 5 minutes per plan or IRA) ÷ 60 minutes] 

= 24 hours; A labor rate of $63.45 is used for a 

clerical worker. The labor rate is applied in the 

following calculation: [(285 plans or IRAs × 5 

minutes per IRA) ÷ 60] × $63.45 = $1,507. 36The burden is estimated as follows: (2 pages × 

$0.05 per page) + $0.66 for postage = $0.76; The 

mailing rate is applied in the following calculation: 

(210 authorizations for IRAs × 5.8 percent paper) × 

$0.76 = $9. 37The burden is estimated as follows: [[(75 plans 

× 5 minutes per plan) ÷ 60 minutes] + [(210 IRAs 

× 5 minutes per IRA) ÷ 60 minutes] = 24 hours; A 

labor rate of $63.45 is used for a clerical worker. 

The labor rate is applied in the following 

calculation: {[(75 plans × 5 minutes per plan) ÷ 60 

minutes] × $63.45} + [{(210 IRAs × 5 minutes per 

IRA) ÷ 60 minutes] × $63.45} = $1,507. 

38The burden is estimated as follows: 7 pages × 

$0.05 per page + $0.66 for postage = $1.01; The 

mailing rate is applied in the following calculation: 

(75 plans × 5.8 percent paper × $1.01) + (210 

materials packages for IRAs × 5.8 percent paper × 

$1.01) = $17. 

TABLE 2—HOUR BURDEN AND EQUIVALENT COST ASSOCIATED WITH RECORDKEEPING

Year 1 Subsequent years 

Activity Burden hours Equivalent 

burden cost Burden hours Equivalent burden cost 

Financial Manager ........................................................................................... 947 $180,527 947 $180,527 

Clerical ............................................................................................................. 474 30,044 474 30,044 

Total .......................................................................................................... 1,421 210,571 1,421 210,571 

Written Authorization From the 

Authorizing Fiduciary to the BrokerDealer 

Authorizing fiduciaries of new plans 

and IRAs entering into a relationship 

with an investment advice provider are 

required to provide the investment 

advice provider with an advance written 

authorization to perform transactions for 

the plan or IRA. The Department 

estimates that there are approximately 

285 plans and IRAs that are new or that 

enter new arrangements each year.33

Therefore, the Department estimates 

that approximately 285 authorizing 

fiduciaries are expected to send an 

advance written authorization. It is 

assumed that a legal professional will 

spend 15 minutes per plan reviewing 

the disclosures and preparing an 

authorization form. This results in an 

hour burden of 71 hours with an 

equivalent cost of $11,353.34

To produce and distribute the 

authorization, the Department assumes 

that 100 percent of plans and 94.2 

percent of IRAs will use traditional 

electronic methods at no additional 

burden, and the remaining 5.8 percent 

of IRAs will be mailed. The Department 

assumes that clerical staff will spend 5 

minutes preparing and sending the 

authorization, resulting in an hour 

burden of approximately 24 hours with 

an equivalent cost of $1,507.35 It is 

assumed that the authorization will be 

two pages and paper authorizations will 

cost $0.76 each, which results in a cost 

burden of $9.36

In total, the written authorization 

requirement is expected to result in a 

total hour burden of 95 hours with an 

equivalent cost of $12,860 and a total 

cost burden of $9. 

TABLE 3—HOUR BURDEN, EQUIVALENT COST, POSTAGE AND MATERIAL COST ASSOCIATED WITH THE WRITTEN

AUTHORIZATION

Year 1 Subsequent years 

Activity Burden hours Equivalent 

burden cost Pages Material cost Burden hours Equivalent burden cost Pages Material cost 

Legal ................ 71 $11,353 0 $0 71 $11,353 0 $0 

Clerical ............. 24 1,507 2 9 24 1,507 2 9 

Total .......... 95 12,860 2 9 95 12,860 2 9 

Provision of Materials for Evaluation of 

Authorization of Transaction 

Prior to a written authorization being 

made, the authorizing fiduciary must be 

provided by the financial institution 

with a copy of the exemption, a form for 

termination of authorization, a 

description of broker’s placement 

practices, and any other reasonably 

available information. This information 

is assumed to be readily available. 

To produce and distribute the 

materials, the Department assumes that 

94.2 percent of financial institutions 

will use traditional electronic methods 

at no additional burden, while the 

remaining 5.8 percent of financial 

institutions will mail the materials. The 

Department estimates that a clerical staff 

member will spend five minutes to 

prepare and distribute the required 

information to the authorizing fiduciary. 

This information will be sent to the 285 

plans and IRAs entering into an 

agreement with a financial institution, 

and based on the above, the Department 

estimates that this requirement results 

in an hour burden of 24 hours with an 

equivalent cost of $1,507.37 It is 

assumed that this information will be 

seven pages and paper distribution will 

cost $1.01 each, which results in a cost 

burden of about $17.38

In total, the written authorization 

requirement is expected to result in a 

total hour burden of 24 hours with an 

equivalent cost of $1,507 and a total cost 

burden of $17. 


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76040 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

39The burden is estimated as follows: [(1,894 

investment advice providers × 15 minutes per 

financial institution) ÷ 60 minutes] = 474 hours; A 

labor rate of $159.34 is used for a legal professional. 

The labor rate is applied in the following 

calculation: [(1,894 investment advice providers × 

15 minutes per financial institution) ÷ 60 minutes] 

× $159.34 per hour = $75,447. 

40The burden is estimated as follows: [(1,000 

plans × 5 minutes per plan) ÷ 60 minutes] + [(10,000 

IRAs × 5 minutes per IRA) ÷ 60 minutes] = 917 

hours. A labor rate of $63.45 is used for a clerical 

worker. The labor rate is applied in the following 

calculation: {[(1,000 plans × 5 minutes per plan) ÷ 

60 minutes] × $63.45} + {[(10,000 IRAs × 5 minutes 

per IRA) ÷ 60 minutes] × $63.45} = $58,163. 

41The burden is estimated as follows: 2 pages × 

$0.05 per page + $0.66 for postage = $0.76. The 

mailing rate is applied in the following calculation: 

(1,000 plans × 5.8 percent paper × $0.76) + (10,000 

IRAs × 5.8 percent paper × $0.76) = $485. 

42 1,000 plans + 10,000 IRAs = 11,000 plans and 

IRAs. 

43 5 pages × $0.05 per page = $0.25. 

44 (11,000 plans and IRAs × 5.8 percent paper × 

$0.25) = $160. 

TABLE 4—HOUR BURDEN, EQUIVALENT COST, POSTAGE AND MATERIAL COST ASSOCIATED WITH PROVISION OF

MATERIALS FOR TRANSACTION AUTHORIZATION

Year 1 Subsequent years 

Activity Burden hours Equivalent 

burden cost Pages Material cost Burden hours Equivalent burden cost Pages Material cost 

Clerical ............. 24 $1,507 7 $17 24 $1,507 7 $17 

Total .......... 24 1,507 7 17 24 1,507 7 17 

Provision of an Annual Termination 

Form 

Each authorizing fiduciary must be 

supplied annually with a form expressly 

providing an election to terminate the 

written authorization. It is assumed that 

legal professionals with each of the 

1,894 investment advice providers will 

spend on average 15 minutes preparing 

the termination forms, which results in 

an hour burden of 474 hours with an 

equivalent cost of $75,447.39

To produce and distribute the 

termination form to the 10,000 IRAs and 

1,000 plans, the Department assumes 

that 94.2 percent of financial 

institutions will use traditional 

electronic methods at no additional 

burden, while the remaining 5.8 percent 

of financial institutions will mail the 

termination forms. The Department 

estimates that clerical staff will spend 

five minutes per plan or IRA preparing 

and distributing the termination forms 

resulting in an hour burden of 917 hours 

with an equivalent cost of $58,163.40 It 

is assumed that the form will be two 

pages, so paper copies will cost $0.76 

each, which results in a cost burden of 

approximately $485.41

In total, providing the annual 

termination form is expected to impose 

an hour burden of 1,391 hours with an 

equivalent cost of $133,610 and a total 

cost burden of $485. 

TABLE 5—HOUR BURDEN, EQUIVALENT COST, POSTAGE AND MATERIAL COST ASSOCIATED WITH PROVISION OF THE

ANNUAL TERMINATION FORM

Year 1 Subsequent years 

Activity Burden hours Equivalent 

burden cost Pages Material cost Burden hours Equivalent burden cost Pages Material cost 

Legal ................ 474 $75,447 0 $0 474 $75,447 0 $0 

Clerical ............. 917 58,163 2 485 917 58,163 2 485 

Total .......... 1,391 133,610 2 485 1,391 133,610 2 485 

Transaction Reporting 

The investment advice provider 

engaging in a covered transaction must 

furnish the authorizing fiduciary with 

either a conformation slip for each 

securities transaction or a quarterly 

report containing specified information. 

As discussed above, the provision of the 

confirmation already is required under 

SEC regulations. Therefore, if the 

transaction reporting requirement is 

satisfied by sending conformation slips, 

no additional hour and cost burden will 

occur. 

Annual Statement 

In addition to the transaction 

reporting requirement, investment 

advice providers are required to send an 

annual report to each of the 11,000 

authorizing fiduciaries 42 containing the 

same information as the quarterly report 

and also containing all security 

transaction-related charges, the 

brokerage placement practices, and a 

portfolio turnover ratio. Collecting and 

generating the information required for 

the annual report is reported as a cost 

burden. Postage cost is not included 

here as it is assumed that the annual 

statement will be sent with the annual 

termination form and postage costs are 

accounted for there. It is assumed that 

the annual statement will be five pages, 

and the paper and print costs are $0.25 

each.43 Therefore, the overall cost 

burden for the paper and print costs are 

about $160.44

In addition, it is assumed that the 

information that must be sent annually 

could be sent together; therefore, the 

clerical staff hours required to prepare 

and distribute the report has been 

included with the provision of annual 

termination form requirement. 

Therefore, no additional hour burden 

has been reported. 

In total, providing the annual 

statement is expected to impose a total 

cost burden of $160. 


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45 2 pages × $0.05 per page = $0.10. 

46 (11,000 plans and IRAs × 5.8 percent paper × 

$0.10) = $64. 

47This estimate is based on information from a 

Request for Information and from industry sources. 

48 (11,000 plans and IRAs × $3.30) = $36,300. 

49This estimate is calculated as: $64 + $36,300 = 

$36,364. 

50The total number of disclosures is calculated in 

the following manner: 285 (Written authorization 

disclosures) + 285 (Provision of materials for 

evaluation of authorization of transaction) + 11,000 

(Annual termination form) + 11,000 (Annual 

Statement) + 11,000 (Report of Commissions Paid) 

= 33,570 disclosures. 

51The total number of paper disclosures is 

calculated in the following manner: (210 Written 

authorization disclosures for IRAs × 5.8 percent 

paper) + (285 Provision of materials for evaluation 

of authorization of transaction × 5.8 percent paper) 

+ (11,000 Annual termination form × 5.8 percent 

paper) + (11,000 Annual Statement × 5.8 percent 

paper) + (11,000 Report of Commissions Paid × 5.8 

percent paper) = 1,943 disclosures. 

TABLE 6—HOUR BURDEN, EQUIVALENT COST, POSTAGE AND MATERIAL COST ASSOCIATED WITH THE ANNUAL

STATEMENT

Year 1 Subsequent years 

Activity Burden hours Equivalent 

burden cost Pages Material cost Burden hours Equivalent burden cost Pages Material cost 

Clerical ............. 0 $0 5 $160 0 $0 5 $160 

Total .......... 0 0 5 160 0 0 5 160 

Report of Commissions Paid 

A discretionary trustee must provide 

an authorizing fiduciary with an annual 

report showing separately the 

commissions paid to affiliated brokers 

and non-affiliated brokers, on both a 

total dollar basis and a cents-per-share 

basis. The collecting and generation of 

the information for the quarterly report 

is reported as a cost burden. The clerical 

hour burden to prepare and distribute 

the report is included with the 

provision of annual termination form 

requirement, because both items are 

required to be sent annually. 

A financial institution who is a 

discretionary trustee must provide each 

of the 11,000 authorizing fiduciaries 

with an annual report showing 

commissions paid to affiliated and nonaffiliated brokers, on both a total dollar 

and a cents-per-share basis. As the 

report is sent annually, it is assumed 

that it could be sent with the transaction 

report, therefore postage costs are not 

counted here. The Department estimates 

that 94.2 percent of financial 

institutions will use traditional 

electronic methods at no additional 

burden, while the remaining 5.8 percent 

of financial institutions will mail the 

annual reports. It is assumed that the 

report will be two pages, and the paper 

and print costs are $0.10 each.45

Therefore, the overall cost burden of the 

paper and print costs is $64.46

Financial institutions are required to 

report specific transaction fees and 

information to the plan fiduciaries. The 

information must be tracked, assigned to 

specific plans, and reported. It is 

assumed that it costs the financial 

institution $3.30 per plan or IRA to 

track this information.47 With 

approximately 11,000 affected plans and 

IRAs, this results in a cost burden of 

approximately $36,300 annually.48

In total, providing the report is 

expected to impose a total cost burden 

of $36,364.49

TABLE 7—HOUR BURDEN, EQUIVALENT COST, POSTAGE AND MATERIAL COST ASSOCIATED WITH THE REPORT OF

COMMISSIONS PAID

Year 1 Subsequent years 

Activity Burden hours Equivalent 

burden cost Pages Material cost Burden hours Equivalent burden cost Pages Material cost 

Clerical ............. 0 $0 2 $36,364 0 $0 2 $36,364 

Total .......... 0 0 2 36,364 0 0 2 36,364 

Summary 

In total, the conditions of this 

exemption will result in the production 

of 33,570 disclosures.50 The Department 

assumes that 100 percent of plans will 

use electronic methods to distribute the 

required information, at de minimis 

burden. The Department also assumes 

that 94.2 percent of IRAs and financial 

institutions will use electronic methods 

to distribute the required information, at 

de minimis burden, while 1,943 51

disclosures will be on paper. Production 

and distribution of disclosures will 

result in an overall hour burden of 2,929 

hours with an equivalent cost of 

$358,548 and an overall cost burden of 

$37,034. 

The paperwork burden estimates are 

summarized as follows: 

Type of Review: Revision to an 

existing collection. 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Titles: PTE 86–128 (Securities BrokerDealers). 

OMB Control Number: 1210–0059. 

Affected Public: Businesses or other 

for-profits; not for profit institutions. 

Estimated Number of Respondents: 

2,179. 

Estimated Number of Annual 

Responses: 33,570. 

Frequency of Response: Initially, 

Annually, When engaging in exempted 

transaction. 

Estimated Total Annual Burden 

Hours: 2,929 hours. 

Estimated Total Annual Burden Cost: 

$37,034. 

Amendments to PTE 77–4, 80–83 and 

PTE 83–1 

The Department has determined that 

PTE 77–4 and PTE 80–83 do not have 

information collections impacted by the 

removal of advice from the exemption. 

There is no paperwork burden related to 

PTE 83–1. 


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52 5 U.S.C. 601 et seq. 

53 5 U.S.C. 601(2), 603(a); see also 5 U.S.C. 551. 

54Public Law 104–4, 109 Stat. 48 (Mar. 22, 1995). 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(RFA) 52 imposes certain requirements 

on rules subject to the notice and 

comment requirements of section 553(b) 

of the Administrative Procedure Act or 

any other law.53 Under section 603 of 

the RFA, agencies must submit an initial 

regulatory flexibility analysis (IRFA) of 

a proposal that is likely to have a 

significant economic impact on a 

substantial number of small entities, 

such as small businesses, organizations, 

and governmental jurisdictions. This 

proposed amended exemption, along 

with related amended exemptions and a 

proposed rule amendment published 

elsewhere in this issue of the Federal 

Register, is part of a rulemaking 

regarding the definition of fiduciary 

investment advice, which the 

Department has determined likely will 

have a significant economic impact on 

a substantial number of small entities. 

The impact of this proposed amendment 

on small entities is included in the IRFA 

for the entire project, which can be 

found in the related notice of proposed 

rulemaking found elsewhere in this 

edition of the Federal Register. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 54 requires each 

federal agency to prepare a written 

statement assessing the effects of any 

federal mandate in a proposed or final 

rule that may result in an expenditure 

of $100 million or more (adjusted 

annually for inflation with the base year 

1995) in any 1 year by state, local, and 

tribal governments, in the aggregate, or 

by the private sector. For purposes of 

the Unfunded Mandates Reform Act, as 

well as Executive Order 12875, this 

proposed amended exemption does not 

include any Federal mandate that will 

result in such expenditures. 

Federalism Statement 

Executive Order 13132 outlines 

fundamental principles of federalism. It 

also requires Federal agencies to adhere 

to specific criteria in formulating and 

implementing policies that have 

‘‘substantial direct effects’’ on the states, 

the relationship between the national 

government and states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

these federalism implications must 

consult with State and local officials, 

and describe the extent of their 

consultation and the nature of the 

concerns of State and local officials in 

the preamble to the final regulation. 

Notwithstanding this, Section 514 of 

ERISA provides, with certain exceptions 

specifically enumerated, that the 

provisions of Titles I and IV of ERISA 

supersede any and all laws of the States 

as they relate to any employee benefit 

plan covered under ERISA. 

The Department does not intend this 

exemption to change the scope or effect 

of ERISA section 514, including the 

savings clause in ERISA section 

514(b)(2)(A) for State regulation of 

securities, banking, or insurance laws. 

Ultimately, the Department does not 

believe this proposed class exemption 

has federalism implications because it 

has no substantial direct effect on the 

States, on the relationship between the 

National Government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of Government. 

General Information 

The attention of interested persons is 

directed to the following: (1) The fact 

that a transaction is the subject of an 

exemption under ERISA section 408(a) 

and Code section 4975(c)(2) does not 

relieve a fiduciary, or other party in 

interest or disqualified person with 

respect to a Plan, from certain other 

provisions of ERISA and the Code, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of ERISA 

section 404 which require, among other 

things, that a fiduciary act prudently 

and discharge his or her duties 

respecting the Plan solely in the 

interests of the participants and 

beneficiaries of the Plan. Additionally, 

the fact that a transaction is the subject 

of an exemption does not affect the 

requirement of Code section 401(a) that 

the Plan must operate for the exclusive 

benefit of the employees of the 

employer maintaining the Plan and their 

beneficiaries; (2) Before the proposed 

exemption may be granted under ERISA 

section 408(a) and Code section 

4975(c)(2), the Department must find 

that it is administratively feasible, in the 

interests of Plans and their participants 

and beneficiaries and IRA owners, and 

protective of the rights of participants 

and beneficiaries of the Plan and IRA 

owners; (3) If granted, the proposed 

exemption is applicable to a particular 

transaction only if the transaction 

satisfies the conditions specified in the 

exemption; and (4) The proposed 

exemption, if granted, is supplemental 

to, and not in derogation of, any other 

provisions of ERISA and the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction. 

Proposed Amendments to Class 

Exemptions Prohibited Transaction 

Exemption 75–1, Exemptions From 

Prohibitions Respecting Certain Classes 

of Transactions Involving Employee 

Benefit Plans and Certain BrokerDealers, Reporting Dealers and Banks 

The Department proposes to amend 

Prohibited Transaction Exemption 75–1 

under the authority of ERISA section 

408(a) and Code section 4975(c)(2), and 

in accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (76 

FR 66637, October 27, 2011). 

I. PTE 75–1, Part I, Agency 

transactions and services, subparts (b) 

and (c), are revoked in their entirety. 

II. Part II, Principal transactions, the 

first sentence of subpart (2) is revoked; 

the sentence beginning ‘‘The 

exemptions set forth in (1) and (2) is 

designated as Part II(2) and amended to 

read, ‘‘The exemption set forth in (1) 

above is subject to the following 

conditions:’’ and new section II(2)(d) is 

revised to delete the phrase ‘‘Except 

with respect to transactions described in 

section (2) above,’’. 

III. Part II, Principal transactions, 

sections (e) and (f) are revised to read as 

follows: (e) The broker-dealer, reporting 

dealer, or bank engaging in the covered 

transaction maintains or causes to be 

maintained for a period of six years 

from the date of such transaction such 

records as are necessary to enable the 

persons described in paragraph (f) of 

this exemption to determine whether 

the conditions of this exemption have 

been met, except that: 

(1) No party in interest other than the 

broker-dealer, reporting dealer, or bank 

engaging in the covered transaction, 

shall be subject to the civil penalty, 

which may be assessed under section 

502(i) of the Act, or to the taxes imposed 

by section 4975(a) and (b) of the Code, 

if such records are not maintained, or 

are not available for examination as 

required by paragraph (f) below; and 

(2) A prohibited transaction will not 

be deemed to have occurred if, due to 

circumstances beyond the control of the 

broker-dealer, reporting dealer, or bank, 

such records are lost or destroyed prior 

to the end of such six-year period. 

(f)(1) Notwithstanding anything to the 

contrary in subsections (a)(2) and (b) of 

section 504 of the Act, the records 

referred to in paragraph (e) are 


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55 17 CFR 240.10b–16. 

reasonably available for examination 

during normal business hours by: 

(A) Any duly authorized employee or 

representative of the Department or the 

Internal Revenue Service; 

(B) Any fiduciary of the plan or any 

duly authorized employee or 

representative of such fiduciary; 

(C) Any contributing employer and 

any employee organization whose 

members are covered by the plan, or any 

authorized employee or representative 

of these entities; or 

(D) Any participant or beneficiary of 

the plan, or IRA owner, or the duly 

authorized representative of such 

participant or beneficiary; and 

(2) None of the persons described in 

subparagraph (1)(B)-(D) above shall be 

authorized to examine trade secrets or 

commercial or financial information of 

the broker-dealer, reporting dealer, or 

bank which is privileged or 

confidential, or records regarding a plan 

or IRA other than the plan or IRA with 

respect to which they are the fiduciary, 

contributing employer, employee 

organization, participant, beneficiary, or 

IRA owner. 

(3) Should such broker-dealer, 

reporting dealer, or bank refuse to 

disclose information on the basis that 

such information is exempt from 

disclosure, the broker-dealer, reporting 

dealer, or bank shall, by the close of the 

thirtieth (30th) day following the 

request, provide a written notice 

advising that person of the reasons for 

the refusal and that the Department may 

request such information. 

(4) Failure to maintain the required 

records necessary to determine whether 

the conditions of this exemption have 

been met will result in the loss of the 

exemption only for the transaction or 

transactions for which records are 

missing or have not been maintained. It 

does not affect the relief for other 

transactions. 

For purposes of this exemption, the 

terms ‘‘broker-dealer,’’ ‘‘reporting 

dealer’’ and ‘‘bank’’ shall include such 

persons and any affiliates thereof, and 

the term ‘‘affiliate’’ shall be defined in 

the same manner as that term is defined 

in 29 CFR 2510.3–21(e) and 26 CFR 

54.4975–9(e). 

IV. Part III, Underwritings, is amended 

by inserting a new section III(h) to read 

as follows: 

Exception. No relief from the 

restrictions of ERISA section 406(b) and 

the taxes imposed by Code section 

4975(a) and (b) by reason of Code 

sections 4975(c)(1)(E) and (F) is 

available for fiduciaries providing 

investment advice within the meaning 

of ERISA section 3(21)(A)(ii) or Code 

section and regulations thereunder. 

V. Part IV, Market-making, is 

amended by inserting a new section 

IV(g) to read as follows: 

Exception. No relief from the 

restrictions of ERISA section 406(b) and 

the taxes imposed by Code section 

4975(a) and (b) by reason of Code 

sections 4975(c)(1)(E) and (F) is 

available for fiduciaries providing 

investment advice within the meaning 

of ERISA section 3(21)(A)(ii) or Code 

section 4975(e)(3)(B) and regulations 

thereunder. 

VI. Part V, Extension of Credit, is 

amended by replacing Sections (c) and 

(d) with the following: (c) 

Notwithstanding section (a)(2), a 

fiduciary under ERISA section 

3(21)(A)(ii) or Code section 

4975(e)(3)(B) may receive reasonable 

compensation for extending credit to a 

plan or IRA to avoid a failed purchase 

or sale of securities involving the plan 

or IRA if: 

(1) The potential failure of the 

purchase or sale of the securities is not 

caused by such fiduciary or an affiliate; 

(2) The terms of the extension of 

credit are at least as favorable to the 

plan or IRA as the terms available in an 

arm’s length transaction between 

unaffiliated parties; 

(3) Prior to the extension of credit, the 

plan or IRA receives written disclosure 

of (i) the rate of interest (or other fees) 

that will apply and (ii) the method of 

determining the balance upon which 

interest will be charged, in the event 

that the fiduciary extends credit to 

avoid a failed purchase or sale of 

securities, as well as prior written 

disclosure of any changes to these 

terms. This section (e)(3) will be 

considered satisfied if the plan or IRA 

receives the disclosure described in 

Securities Exchange Act Rule 10b–16; 55

(d) The broker-dealer engaging in the 

covered transaction maintains or causes 

to be maintained for a period of six 

years from the date of such transaction 

in a manner that is reasonably 

accessible for examination, such records 

as are necessary to enable the persons 

described in paragraph (e) of this 

exemption to determine whether the 

conditions of this exemption have been 

met with respect to a transaction, except 

that: 

(1) No party other than the brokerdealer engaging in the covered 

transaction shall be subject to the civil 

penalty which may be assessed under 

section 502(i) of the Act, or to the taxes 

imposed by section 4975(a) and (b) of 

the Code, if such records are not 

maintained, or are not available for 

examination as required by paragraph 

(e) below; and 

(2) A prohibited transaction will not 

be deemed to have occurred if, due to 

circumstances beyond the control of the 

broker-dealer, such records are lost or 

destroyed prior to the end of such sixyear period. 

(e)(1) Except as provided in paragraph 

(e)(2) of this exemption, and 

notwithstanding anything to the 

contrary in subsections (a)(2) and (b) of 

section 504 of the Act, the records 

referred to in paragraph (d) are 

reasonably available at their customary 

location for examination during normal 

business hours by: 

(A) An authorized employee or 

representative of the Department of 

Labor or the Internal Revenue Service, 

(B) Any fiduciary of a plan that 

engaged in a transaction pursuant to this 

exemption, or any authorized employee 

or representative of such fiduciary; 

(C) Any contributing employer and 

any employee organization whose 

members are covered by a plan 

described in paragraph (e)(1)(B), or any 

authorized employee or representative 

of these entities; or 

(D) Any participant or beneficiary of 

a plan described in paragraph (e)(1)(B), 

IRA owner or the authorized 

representative of such participant, 

beneficiary or owner. 

(2) None of the persons described in 

paragraph (e)(1)(B)–(D) of this 

exemption are authorized to examine 

records regarding a recommended 

transaction involving another investor, 

or privileged trade secrets or privileged 

commercial or financial information, of 

the broker-dealer engaging in the 

covered transaction, or information 

identifying other individuals. 

(3) Should the broker-dealer engaging 

in the covered transaction refuse to 

disclose information on the basis that 

the information is exempt from 

disclosure, the broker-dealer must, by 

the close of the thirtieth (30th) day 

following the request, provide a written 

notice advising the requestor of the 

reasons for the refusal and that the 

Department may request such 

information. 

(4) Failure to maintain the required 

records necessary to determine whether 

the conditions of this exemption have 

been met will result in the loss of the 

exemption only for the transaction or 

transactions for which records are 

missing or have not been maintained. It 

does not affect the relief for other 

transactions. 

For purposes of this exemption, the 

terms ‘‘party in interest,’’ ‘‘disqualified 

person’’ and ‘‘fiduciary’’ shall include 

such party in interest, disqualified 


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76044 Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 

person, or fiduciary, and any affiliates 

thereof, and the term ‘‘affiliate’’ shall be 

defined in the same manner as that term 

is defined in 29 CFR 2510.3–21 and 26 

CFR 54.4975–9. Also, for the purposes 

of this exemption, the term ‘‘IRA’’ 

means any account or annuity described 

in Code section 4975(e)(1)(B) through 

(F), including, for example, an 

individual retirement account described 

in section 408(a) of the Code and a 

health savings account described in 

section 223(d) of the Code. 

Prohibited Transaction Exemption 77– 

4, Class Exemption for Certain 

Transactions Between Investment 

Companies and Employee Benefit Plans 

The Department proposes to amend 

Prohibited Transaction Exemption 77–4 

under the authority of ERISA section 

408(a) and Code section 4975(c)(2), and 

in accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (76 

FR 66637, October 27, 2011). 

I. A new section II(g) is inserted to 

read as follows: 

Exception. No relief from the 

restrictions of 406(b) and the taxes 

imposed by section 4975(a) and (b) by 

reason of sections 4975(c)(1)(E) and (F) 

is available for fiduciaries providing 

investment advice within the meaning 

of section 3(21)(A)(ii) of ERISA or 

4975(e)(3)(B) of the Code and 

regulations thereunder. 

Prohibited Transaction Exemption 80– 

83, Class Exemption for Certain 

Transactions Involving Purchase of 

Securities Where Issuer May Use 

Proceeds To Reduce or Retire 

Indebtedness to Parties in Interest 

The Department proposes to amend 

Prohibited Transaction Exemption 80– 

83 under the authority of ERISA section 

408(a) and Code section 4975(c)(2), and 

in accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (76 

FR 66637, October 27, 2011). 

I. A new section I.E. is inserted to 

read as follows: 

Exception. No relief from the 

restrictions of 406(b) and the taxes 

imposed by section 4975(a) and (b) by 

reason of sections 4975(c)(1)(E) and (F) 

is available for fiduciaries providing 

investment advice within the meaning 

of section 3(21)(A)(ii) of ERISA or 

4975(e)(3)(B) of the Code and 

regulations thereunder. 

Prohibited Transaction Exemption 83– 

1, Exemption for Certain Transactions 

Involving Mortgage Pool Investment 

Trusts 

The Department proposes to amend 

Prohibited Transaction Exemption 83–1 

under the authority of ERISA section 

408(a) and Code section 4975(c)(2), and 

in accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (76 

FR 66637, October 27, 2011). 

I. A new section I.E. is inserted to 

read as follows: 

Exception. No relief from the 

restrictions of 406(b) and the taxes 

imposed by section 4975(a) and (b) by 

reason of sections 4975(c)(1)(E) and (F) 

is available for fiduciaries providing 

investment advice within the meaning 

of section 3(21)(A)(ii) of ERISA or 

4975(e)(3)(B) of the Code and 

regulations thereunder. 

Prohibited Transaction Exemption 86– 

128, Class Exemption for Securities 

Transactions Involving Employee 

Benefit Plans and Broker-Dealers 

The Department proposes to amend 

Prohibited Transaction Exemption 86– 

128 under the authority of ERISA 

section 408(a) and Code section 

4975(c)(2), and in accordance with the 

procedures set forth in 29 CFR part 

2570, subpart B (76 FR 66637, October 

27, 2011). 

I. New sections II(d) is inserted as 

follows: 

(d) Exception. No relief from the 

restrictions of ERISA 406(b) and the 

taxes imposed by Code section 4975(a) 

and (b) by reason of Code sections 

4975(c)(1)(E) and (F) is available for 

fiduciaries providing investment advice 

within the meaning of ERISA section 

3(21)(A)(ii) or Code section 

4975(e)(3)(B) and regulations 

thereunder. 

II. Section IV(a) is deleted. 

III. Section IV(b) is redesignated as 

Section IV(a), and IV(a)(1) is deleted and 

Sections IV(b)(2) and (3) are 

redesignated as Sections IV(b)(1) and 

(2). 

IV. Section IV(c) is redesignated as 

Section IV(b) and is amended to read: 

(c) Recapture of profits. Sections III(a) 

and III(i) of this exemption do not apply 

in any case where the person engaging 

in a covered transaction returns or 

credits to the plan all profits earned by 

that person in connection with the 

securities transactions associated with 

the covered transaction. 

V. The following is added to the end 

of Section III(a) 

‘‘Notwithstanding the foregoing, this 

condition does not apply to a trustee 

that satisfies Section III(h) and (i).’’ 

VI. New Section VII is inserted as 

follows: 

Section VII. Recordkeeping 

Requirements 

(a) The plan fiduciary engaging in a 

covered transaction maintains or causes 

to be maintained for a period of six 

years, in a manner that is reasonably 

accessible for examination, the records 

necessary to enable the persons 

described in Section VI(b) to determine 

whether the conditions of this 

exemption have been met, except that: 

(1) If such records are lost or 

destroyed, due to circumstances beyond 

the control of the plan fiduciary, then 

no prohibited transaction will be 

considered to have occurred solely on 

the basis of the unavailability of those 

records; and 

(2) No party in interest, other than 

such plan fiduciary who is responsible 

for complying with this paragraph (a), 

will be subject to the civil penalty that 

may be assessed under ERISA section 

502(i) or the taxes imposed by Code 

section 4975(a) and (b), if applicable, if 

the records are not maintained or are 

not available for examination as 

required by paragraph (b) below; and 

(b)(1) Except as provided below in 

subparagraph (2), or as precluded by 12 

U.S.C. 484, and notwithstanding any 

provisions of ERISA section 504(a)(2) 

and (b), the records referred to in the 

above paragraph are reasonably 

available at their customary location for 

examination during normal business 

hours by— 

(A) Any duly authorized employee or 

representative of the Department or the 

Internal Revenue Service; 

(B) Any fiduciary of the plan or any 

duly authorized employee or 

representative of such fiduciary; 

(C) Any contributing employer and 

any employee organization whose 

members are covered by the plan, or any 

authorized employee or representative 

of these entities; or 

(D) Any participant or beneficiary of 

the plan or the authorized 

representative of such participant or 

beneficiary. 

(2) None of the persons described in 

subparagraph (1)(B)–(D) above are 

authorized to examine privileged trade 

secrets or privileged commercial or 

financial information of such fiduciary 

or are authorized to examine records 

regarding a plan or IRA other than the 

plan or IRA with which they are the 

fiduciary, contributing employer, 

employee organization, participant, 

beneficiary or IRA owner. 

(3) Should such plan fiduciary refuse 

to disclose information on the basis that 

such information is exempt from 

disclosure, such plan fiduciary must, by 

the close of the thirtieth (30th) day 

following the request, provide a written 

notice advising the requestor of the 

reasons for the refusal and that the 

Department may request such 

information. 

(4) Failure to maintain the required 

records necessary to determine whether 


lotter on DSK11XQN23PROD with PROPOSALS3
Federal Register / Vol. 88, No. 212 / Friday, November 3, 2023 / Proposed Rules 76045 

the conditions of this exemption have 

been met will result in the loss of the 

exemption only for the transaction or 

transactions for which records are 

missing or have not been maintained. It 

does not affect the relief for other 

transactions. 

Signed at Washington, DC, this 24th day of 

October, 2023. 

Lisa M. Gomez, 

Assistant Secretary, Employee Benefits 

Security Administration, U.S. Department of 

Labor. 

[FR Doc. 2023–23782 Filed 11–2–23; 8:45 am] 

BILLING CODE 4510–29–P 


lotter on DSK11XQN23PROD with PROPOSALS3