4662 Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2570 

RIN 1210–AC05 

Procedures Governing the Filing and 

Processing of Prohibited Transaction 

Exemption Applications 

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor. 

ACTION: Final rule. 

SUMMARY: The Department of Labor (the 

Department) is adopting amendments to 

its existing procedure governing the 

filing and processing of applications for 

administrative exemptions from the 

prohibited transaction provisions of the 

Employee Retirement Income Security 

Act of 1974 (ERISA), the Internal 

Revenue Code of 1986 (the Code), and 

the Federal Employees’ Retirement 

System Act of 1986 (FERSA) (the 

Amendments). The Secretary of Labor 

(the Secretary) is authorized to grant 

exemptions from the prohibited 

transaction provisions of ERISA, the 

Code, and FERSA and to establish an 

exemption procedure to provide for 

such relief. The Amendments update 

and supersede the Department’s existing 

prohibited transaction exemption 

procedures. 

DATES: The amendments in this rule are 

effective April 8, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Brian Shiker, telephone: (202) 693– 

8552, email: shiker.brian@dol.gov, 

Office of Exemption Determinations, 

Employee Benefits Security 

Administration, U.S. Department of 

Labor (this is not a toll-free number). 

Customer Service Information: 

Individuals interested in obtaining 

information from the Department 

concerning ERISA and employee benefit 

plans may call the Employee Benefits 

Security Administration’s Toll-Free 

Hotline, at 1–866–444–EBSA (3272) or 

visit the Department’s website 

(www.dol.gov/ebsa). 

SUPPLEMENTARY INFORMATION: 

Background 

Part 4 of Title I of ERISA establishes 

an extensive framework of standards 

and rules that govern the conduct of 

ERISA plan fiduciaries; collectively, 

these rules are designed to safeguard the 

integrity of employee benefit plans. As 

part of this structure, ERISA section 

406(a) generally prohibits a plan 

fiduciary from causing the plan to 

engage in a variety of transactions with 

certain related parties, unless a statutory 

or administrative exemption applies to 

the transaction. These related parties 

(which include plan fiduciaries, 

sponsoring employers, unions, service 

providers, and other persons who may 

be in a position to exercise improper 

influence over a plan) are defined as 

‘‘parties in interest’’ in ERISA section 

3(14). ERISA section 406(b) generally 

prohibits a plan fiduciary from (1) 

dealing with the assets of a plan in their 

own interest or for their account, (2) 

acting in any transaction involving the 

plan on behalf of a party whose interests 

are adverse to those of the plan or its 

participants and beneficiaries, or (3) 

receiving any consideration for their 

own personal account from a party 

dealing with the plan in connection 

with a transaction involving plan assets, 

unless an exemption specifically applies 

to such conduct. To supplement these 

provisions, ERISA sections 406(a)(1)(E) 

and 407(a) impose restrictions on the 

nature and extent of plan investments in 

assets such as ‘‘employer securities’’ (as 

defined in ERISA section 407(d)(1)) and 

‘‘employer real property’’ (as defined in 

ERISA section 407(d)(2)). The 

transactions prohibited under ERISA 

sections 406 and 407 are referred to as 

‘‘prohibited transactions.’’ 

Most of the transactions prohibited by 

ERISA section 406 are likewise 

prohibited by Code section 4975, which 

imposes an excise tax on those 

transactions to be paid by each 

‘‘disqualified person’’ (defined in Code 

section 4975(e)(2) in virtually the same 

manner as the term ‘‘party in interest’’ 

is defined in ERISA section 3(14)) who 

engages in the prohibited transactions. 

Prohibited Transaction Exemptions 

Both ERISA and the Code contain 

various statutory exemptions from the 

prohibited transaction rules. These 

statutory exemptions were enacted by 

Congress to prevent the disruption of a 

number of customary business practices 

involving employee benefit plans, 

parties in interest, and fiduciaries. The 

statutory exemptions afford relief for 

transactions such as loans to 

participants and stock ownership plans, 

the provision of services necessary for 

the operation of a plan, certain 

investment advice transactions 

involving individual account plan 

participants and beneficiaries, and the 

investment of plan assets into deposits 

in certain financial institutions 

regulated by state or Federal agencies. 

In addition to the statutory 

exemptions, ERISA section 408(a) 

authorizes the Secretary to grant 

administrative exemptions from the 

restrictions of ERISA sections 406 and 

407(a) in instances where the Secretary 

makes a finding on the record that relief 

is (1) administratively feasible, (2) in the 

interests of the plan and its participants 

and beneficiaries, and (3) protective of 

the rights of participants and 

beneficiaries of such plan. Similarly, 

Code section 4975(c)(2) authorizes 

issuance of administrative exemptions 

from the prohibitions of Code section 

4975(c)(1) subject to the same findings. 

Before an exemption is granted, notice 

of its pendency must be published in 

the Federal Register and interested 

persons must be given the opportunity 

to comment on the proposed exemption. 

If the exemption transaction involves 

potential fiduciary self-dealing or 

conflicts of interest, an opportunity for 

a public hearing must be provided. 

ERISA section 408(a) authorizes the 

Secretary to grant administrative 

exemptions on either an individual or a 

class basis. Class exemptions provide 

general relief from the restrictions of 

ERISA, the Code, and FERSA to those 

parties in interest who engage in the 

categories of transactions described in 

the exemption and who also satisfy the 

conditions stipulated by the exemption. 

Persons who are in conformity with all 

the requirements of a class exemption 

do not ordinarily decide to seek an 

individual exemption for the same 

transaction from the Department. 

Individual exemptions, by contrast, 

involve case-by-case determinations as 

to whether the specific facts represented 

by an applicant concerning an 

exemption transaction as well as the 

conditions applicable to such a 

transaction support a finding by the 

Department that the requirements for 

relief from the prohibited transaction 

provisions of ERISA, the Code, and 

FERSA have been satisfied in a 

particular instance. While the vast 

majority of administrative exemptions 

issued by the Department are the 

product of requests for relief from 

individual applicants or the broader 

employee benefits community, ERISA 

section 408(a) also authorizes the 

Department to initiate administrative 

exemptions on its own motion. 

In considering individual exemption 

requests from applicants, the 

Department exercises its authority 

under ERISA section 408(a) by carefully 

examining the decision-making process 

used by a plan’s fiduciaries with respect 

to an exemption transaction, and the 

safeguards that are established against 

conflicts of interest. In general, the 

Department does not make 

determinations concerning the 

appropriateness or prudence of the 

investment proposals submitted by 


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Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 4663 

1See Secretary of Labor’s Order 6–2009, 74 FR 

21524 (May 7, 2009). 

2 5 U.S.C. 8477(c)(3). 

3See Secretary of Labor’s Order 6–2009, 74 FR 

21524 (May 7, 2009). 4 76 FR 66637 (October 27, 2011). 

exemption applicants. However, the 

Department ordinarily will not 

favorably consider an exemption request 

if the Department believes that the 

proposed transactions are inconsistent 

with the fiduciary responsibility 

provisions of ERISA sections 403 and 

404. To protect plans and their 

participants, the Department requires an 

exemption transaction to be designed to 

minimize the potential for conflicts of 

interest and self-dealing. Also, 

exemptions generally preclude 

unilateral action by the applicant that 

could disadvantage the plan. 

Prohibited Transaction Exemption 

Procedure 

ERISA section 408(a) and Code 

section 4975(c)(2) direct the Secretary 

and the Secretary of the Treasury (the 

Secretaries), respectively, to establish 

procedures for granting administrative 

exemptions. In connection with this 

directive, ERISA section 3003(b) directs 

the Secretaries to consult and 

coordinate with each other with respect 

to the establishment of rules applicable 

to the granting of exemptions from the 

prohibited transaction restrictions of 

ERISA and the Code. Further, under 

ERISA section 3004, the Secretaries are 

authorized to develop rules on a joint 

basis that are appropriate for the 

efficient administration of ERISA. 

Pursuant to these statutory provisions, 

the Secretaries jointly issued an 

exemption procedure on April 28, 1975 

(ERISA Procedure 75–1, 40 FR 18471, 

also issued as Rev. Proc. 75–26, 1975– 

1 C.B. 722). Under this procedure, a 

person seeking an exemption under 

both ERISA section 408(a) and Code 

section 4975 was obliged to file an 

exemption application with both the 

Internal Revenue Service (IRS) and the 

Department. However, requiring 

applicants to seek exemptive relief for 

the same transaction from two separate 

Federal departments soon proved 

administratively cumbersome. 

To resolve this problem, section 102 

of Presidential Reorganization Plan No. 

4 of 1978 (3 CFR, 1978 Comp., p. 332), 

reprinted in 5 U.S.C. app. at 672 (2006), 

and in 92 Stat. 3790 (1978)), effective on 

December 31, 1978, transferred to the 

Secretary the authority of the Secretary 

of the Treasury to issue exemptions 

under Code section 4975, with certain 

enumerated exceptions. As a result, 

Congress gave the Secretary authority 

under Code section 4975(c)(2) and 

ERISA section 408(a) to issue individual 

and class administrative exemptions 

from the prohibited transaction 

restrictions of ERISA and the Code. The 

Secretary has delegated this authority, 

along with most of the Secretary’s other 

responsibilities under ERISA, to the 

Assistant Secretary of Labor for the 

Employee Benefits Security 

Administration.1

FERSA also contains prohibited 

transaction rules similar to those found 

in ERISA and the Code that are 

applicable to parties in interest with 

respect to the Federal Thrift Savings 

Fund established by FERSA. The 

Secretary is directed under FERSA to 

prescribe, by regulation, a procedure for 

granting administrative exemptions 

from certain of those prohibited 

transactions.2 The Secretary also 

delegated this rulemaking authority 

under FERSA to the Assistant Secretary 

of Labor for the Employee Benefits 

Security Administration.3

Over time, the Department has issued 

additional guidance explaining its 

policies and practices relating to the 

consideration of exemption 

applications. In 1985, the Department 

published a statement of policy 

concerning the issuance of retroactive 

exemptions from the prohibited 

transaction provisions of ERISA section 

406 and Code section 4975 (ERISA 

Technical Release 85–1, January 22, 

1985). This statement noted that, in 

evaluating future applications for 

retroactive exemptions, the Department 

would ordinarily take into account a 

variety of objective factors in 

determining whether a plan fiduciary 

had exhibited good faith conduct in 

connection with the past prohibited 

transaction for which relief is sought 

(such as whether the fiduciary had 

utilized a contemporaneous 

independent appraisal or reference to an 

objective third-party source, e.g., a stock 

exchange, in establishing the fair market 

value of the plan assets acquired or 

disposed of by the plan in connection 

with the transaction at issue). However, 

while noting that the satisfaction of 

such objective criteria might be 

indicative of a fiduciary’s good faith 

conduct, the release cautioned that the 

Department would routinely examine 

the totality of facts and circumstances 

surrounding a past prohibited 

transaction before reaching a final 

determination on whether a retroactive 

exemption is warranted. 

In 1990, the Department published a 

final regulation (29 CFR 2570.30 

through 2570.52 (1991), reprinted in 55 

FR 32847 (August 10, 1990)), setting 

forth a revised exemption procedure 

that superseded ERISA Procedure 75–1 

(the Exemption Procedure Regulation). 

This regulation, which became effective 

on September 10, 1990, reflected the 

jurisdictional changes made by 

Presidential Reorganization Plan No. 4 

and extended the scope of the 

exemption procedure to applications for 

relief from the FERSA prohibited 

transaction rules. In addition, the 

Exemption Procedure Regulation 

codified various informal exemption 

guidelines developed by the Department 

since the adoption of ERISA Procedure 

75–1. 

In 1995, the Department issued a 

publication entitled ‘‘Exemption 

Procedures under Federal Pension Law’’ 

(the 1995 Exemption Publication). In 

addition to providing a brief overview of 

the exemption process, the 1995 

Exemption Publication included 

definitions of technical terms such as 

‘‘qualified independent fiduciary,’’ 

‘‘qualified independent appraiser,’’ and 

‘‘qualified appraisal report.’’ These 

definitions, derived from conditions 

contained in previously granted 

exemptions, provide important 

guidance about the Department’s 

standards concerning the independence, 

knowledge, and competence of thirdparty experts retained by a plan to 

review and oversee an exemption 

transaction, as well as the contents of 

the reports and representations the 

Department ordinarily requires from 

such experts. 

The Department published an 

updated Exemption Procedure 

Regulation in 2011 (29 CFR 2570.30 

through 2570.52 (2011)).4 The updated 

Exemption Procedure Regulation 

revised the prohibited transaction 

exemption procedure to reflect changes 

in the Department’s exemption practices 

since the previous exemption procedure 

was issued in 1990. Among other things, 

the Department consolidated elements 

of the exemption policies and guidance 

previously found in ERISA Technical 

Release 85–1 and the 1995 Exemption 

Publication within a single, 

comprehensive final regulation. The 

updated Exemption Procedure 

Regulation promoted the prompt and 

efficient consideration of all exemption 

applications by (1) clarifying the types 

of information and documentation 

generally required for a complete filing, 

(2) affording expanded opportunities for 

the electronic submission of information 

and comments relating to an exemption, 

and (3) providing plan participants and 

other interested persons with a more 

thorough understanding of the 

exemption under consideration. 


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4664 Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 

5 87 FR 14722 (March 15, 2022). 

6 87 FR 51299 (August 22, 2022). 

7 87 FR 62751 (October 17, 2022). 

8These commenters consisted of parties from the 

financial services industry and their attorney 

representatives, as well as independent fiduciaries 

and appraisers. 

Most recently, on March 15, 2022, the 

Department published a proposed 

amendment to the Exemption Procedure 

Regulation (the Proposed Rule) that 

would update its existing procedures 

governing the filing and processing of 

applications for administrative 

exemptions from the prohibited 

transaction provisions of ERISA, the 

Code, and FERSA.5 The Department 

received 29 comment letters on the 

Proposed Rule before the public 

comment period ended on May 29, 

2022. 

After consideration of the comments, 

including a written request for a public 

hearing, the Department held a virtual 

public hearing on September 15, 2022, 

which provided an opportunity for all 

interested parties to testify on material 

factual information regarding the 

Proposed Rule.6 Eight organizations 

were represented at the hearing. The 

Department reopened the Proposed 

Rule’s public comment period on the 

hearing date. Following the hearing, the 

Department posted the hearing 

transcript to EBSA’s website on October 

6, 2022, and announced that the 

reopened comment period that began on 

the hearing date would close on October 

28, 2022.7 Eight organizations submitted 

comments during the reopened 

comment period. 

After careful consideration of the 

comments and testimony, the 

Department is finalizing the Proposed 

Rule (the Final Amendment). The Final 

Amendment makes a number of changes 

to the Proposed Rule in response to 

comments, which are discussed in 

detail in the section below titled 

‘‘Changes to the Exemption Procedure 

Proposed Rule.’’ 

Changes to the Exemption Procedure 

Proposed Rule 

The Department issued the Proposed 

Rule to promote a prompt, efficient, 

open, and transparent exemption 

application process. Accordingly, the 

Proposed Rule would make applicants 

explicitly aware of the information the 

Department requires and the specific 

steps it takes during the exemption 

application process to ensure that a 

thorough and complete record is created 

by which any impacted party, including 

plan participants and beneficiaries, can 

review and understand the decisionmaking process the Department engaged 

in when considering an exemption 

application. Specifically, in the 

Proposed Rule, the Department, among 

other things, proposed to (1) clarify the 

types of information and documentation 

required for a complete application, (2) 

revise the definitions of a ‘‘qualified 

independent fiduciary’’ and ‘‘qualified 

independent appraiser’’ to ensure their 

independence, (3) clarify the content of 

specific reports and documents 

applicants must submit to ensure that 

the Department receives sufficient 

information to make the requisite 

findings under ERISA section 408(a) to 

issue an exemption, (4) update various 

timing requirements to ensure clarity in 

the application review process, (5) 

clarify items that are included in the 

administrative record for an application 

and when the administrative record is 

available for public inspection, and (6) 

expand opportunities for applicants to 

submit information to the Department 

electronically. 

General Comments on the Proposed 

Rule and the Need for Changes 

Before discussing specific changes the 

Department made to the Proposed Rule 

in this Final Amendment, the 

Department notes that many 

commenters raised general, broad 

objections to the Proposed Rule.8 Some 

commenters expressed concern that the 

Department had become more restrictive 

in its approach to exemptions and 

contended that the Proposed Rule 

would result in fewer exemptions. As 

evidence of this assertion, the 

commenters pointed to a decline in the 

number of exemptions the Department 

has issued over the last several years. 

The Department does not believe, 

however, that it has become unduly 

restrictive in its approach to 

exemptions. Instead, the number and 

frequency of granted exemptions reflects 

multiple factors, including market 

participants’ increased ability to 

structure transactions in ways that avoid 

violating the prohibited transaction 

rules, the flexibility provided by many 

administrative class exemptions 

previously issued by the Department, 

the expansion of statutory exemptions, 

and market developments. The 

Department also notes that in the 2023 

fiscal year, the Department granted 19 

individual prohibited transaction 

exemptions, an increase in the number 

of exemptions from previous years. 

One concern that the Department 

shares with many of the commenters is 

that the process was starting to become 

more drawn-out and longer than 

necessary. One reason the process is 

sometimes lengthy is that the 

Department frequently needs to followup with applicants to ensure that it has 

all of the information necessary to make 

the required statutory findings. This 

timeline was frustrating to everyone, 

and commenters noted it throughout 

their comments. While the commenters 

are correct that the Department intended 

to formalize many of its current 

exemption practices in this rulemaking 

process, its goal in doing so is to bring 

clarity and transparency to the 

exemption process, especially for plan 

participants and beneficiaries impacted 

by the exemption transaction, not to 

decrease the number of applications it 

receives or grants. The Department’s 

reasoning is that by providing clearer 

expectations about what information 

should be included in exemption 

applications, some of the friction 

associated with the exemption process 

can be reduced because the Department 

will have less need to request additional 

information from applicants. This will 

make the entire process more accessible 

and efficient, especially for applicants 

that have less experience with the 

Department’s exemption process. 

Contrary to the commenters’ concerns, 

the Final Amendment is designed to 

help applicants navigate through the 

exemption process and not to dissuade 

them from applying for exemptions. The 

Final Amendment makes the exemption 

application process more efficient by 

reducing or eliminating delays caused 

when information is missing from 

exemption applications, and they are 

otherwise incomplete. It also tries to 

ensure that all entities have the same 

access to the exemption transaction 

process by making all steps of the 

process transparent. 

In addition, commenters stated that 

the Proposed Rule is overly prescriptive, 

burdensome, and costly. The 

Department reiterates that one of the 

main reasons it is amending the 

Exemption Procedure Regulation is to 

clarify the specific items it expects 

applicants to include with their 

exemption applications and provide 

information regarding the process by 

which the Department evaluates 

exemption applications. The 

Department can achieve this goal only if 

the requirements of the Final 

Amendment are sufficiently 

prescriptive, because by adding more 

specificity, the Department will make 

the exemption application process less 

burdensome and costly and more 

streamlined and efficient. 

The Department emphasizes that 

ERISA section 408(a) requires it to build 

an administrative record for the 

Department to make its required 

findings that an exemption transaction 


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Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 4665 

9The Department’s RIA that is included in this 

Final Amendment was informed by comments that 

the Department received in response to its notice 

and comment solicitation in the Paperwork 

Reduction Act section of the Proposed Rule. 

is (1) administratively feasible, (2) in the 

interest of the plan and its participants 

and beneficiaries, and (3) protective of 

its participants and beneficiaries. Under 

the current Exemption Procedure 

Regulation, the Department often 

engages in a drawn-out process where it 

makes several requests for additional 

information from the applicant after the 

submission of an application in the 

course of the Department’s review. The 

information required under ERISA 

section 408(a) is, however, the same 

whether it is included with the initial 

submission of an application or 

obtained through this drawn-out 

process. Making the Department’s 

expectations clearer through the Final 

Amendment should streamline and 

expedite the application process, which 

should redound to the benefit of both 

applicants and the Department. These 

changes will also enhance the 

administrative feasibility for 

exemptions. 

Several commenters also urged the 

Department to withdraw the Proposed 

Rule and repropose it at a later date after 

receiving additional input from 

interested stakeholders. The Department 

disagrees with these commenters. The 

Department received comments from 

many different types of parties, 

representing financial institutions, 

fiduciaries, appraisers, plans, and 

participants and beneficiaries, among 

others during the initial comment 

period. The Department also notes that 

it provided interested stakeholders with 

multiple additional opportunities to 

provide their input on the Proposed 

Rule beyond their initial comments by 

(1) extending the initial public comment 

period, (2) holding a public hearing 

where the regulatory community 

expressed its views directly to the 

Department through written and oral 

testimony, and (3) reopening the 

comment period on the hearing date. 

Moreover, the Final Amendment 

improves the Department’s exemption 

process and ultimately reduces 

applicants’ burden; further delay would 

unnecessarily deprive the public of 

these benefits. 

One commenter raised a concern that 

the Department may apply the Proposed 

Rule’s provisions regarding independent 

fiduciaries and appraisers to other areas, 

such as the employee stock ownership 

plan valuation rules under ERISA. In 

response to this comment, the 

Department notes that the Final 

Amendment applies only to the 

Department’s rules regarding the filing 

and processing of exemption 

applications. If the Department decides 

to issue future guidance regarding other 

areas of ERISA that contains similar 

rules for fiduciaries and appraisers to 

those contained in the Final 

Amendment, notice and an opportunity 

to comment on such guidance would be 

provided to the public, consistent with 

the Administrative Procedure Act. 

Finally, several commenters objected 

to the Office of Management and Budget 

(OMB) and the Department’s 

determination that the rule was not 

‘‘significant’’ for purposes of Executive 

Order 12866. These commenters 

asserted that the Department should 

have included a regulatory impact 

analysis (RIA) with the Proposed Rule to 

assess its impact on plans, participants, 

and beneficiaries. In response to such 

comments, the Department has included 

an assessment of the potential costs and 

benefits of the Final Amendment, in 

accordance with section 6(a)(3)(B)(ii) of 

Executive Order 12866 (as amended by 

Executive Order 14094).9

Specific Rule Provisions 

The current Exemption Procedure 

Regulation consists of 23 individual 

sections (§§ 2570.30 through 2570.52) 

that are arranged by topic, and that 

generally reflect the chronological order 

of steps the Department takes to process 

an exemption application. This Final 

Amendment retains the current sectionby-section topical structure and most of 

the operative language of the current 

Exemption Procedure Regulation. While 

the Department made some nonsubstantive revisions to the current 

Exemption Procedure Regulation to 

improve its readability and provide 

clarity that are not discussed in this 

preamble, the Department addresses all 

substantive amendments to the current 

Exemption Procedure Regulation in the 

section-by-section discussion below. 

Section 2570.30 

Section 2570.30 sets forth the scope of 

the Exemption Procedure Regulation. It 

addresses the filing and processing of 

applications for both individual and 

class exemptions that the Department 

may propose and grant pursuant to 

ERISA section 408(a), Code section 

4975(c)(2), FERSA, and on its own 

motion. Paragraph (b) broadly addresses 

the Department’s power to issue 

exemptions. Similar to the Proposed 

Rule, the Department revises the 

regulatory text that is applicable to 

retroactive exemptions in the Final 

Amendment, to include a statement that 

the Department will review any 

retroactive exemption application to 

determine whether any plan 

participants or beneficiaries were 

harmed by the transaction for which 

retroactive relief is sought. This 

language reinforces the Department’s 

existing policy that it, generally, will 

not support a request for a retroactive 

exemption involving a transaction that 

negatively impacted participants and 

beneficiaries. The Department notes that 

whether a transaction negatively 

impacts participants and beneficiaries 

will be determined based on the facts 

and circumstances, which will include 

a possible determination as to whether 

participants and beneficiaries were 

made whole for any harm. Further, the 

Department emphasizes in the Final 

Amendment that it will apply a high 

level of scrutiny to any retroactive 

exemption application using 

longstanding standards that have been 

previously set forth by the Department 

in the Exemption Procedure Regulation. 

As a result, the Department strongly 

suggests that a party that anticipates 

engaging in a transaction that would 

require retroactive exemptive relief 

contact the Department before engaging 

in the transaction. 

Paragraph (d) of the Proposed Rule 

provides, generally, that the issuance of 

an administrative exemption does not 

relieve a fiduciary or other party in 

interest or disqualified person with 

respect to a plan from the obligation to 

comply with certain other provisions of 

ERISA, the Code, or FERSA. For clarity, 

the Final Amendment adds additional 

text to the proposed paragraph (d) to 

clarify the impact of an administrative 

exemption under the Code. Specifically, 

the Final Amendment states that the 

issuance of an exemption does not affect 

the requirements of Code section 401(a), 

including that a plan must operate for 

the exclusive benefit of the employees 

of the employer maintaining the plan 

and their beneficiaries, or the rules with 

respect to other Code provisions, 

including that an administrative 

exemption with respect to a 

contribution to a pension plan does not 

affect the deductibility of the 

contribution under Code section 404. 

Paragraph (e) of the Final Amendment 

provides that the Department will not 

accept oral exemption applications or 

grant exemptions orally. Similar to the 

Proposed Rule, the Department has 

revised the regulatory text in the Final 

Amendment to clarify that the 

Department will provide feedback in 

response to oral inquiries, but it will not 

be bound by that feedback. The 

Department cannot give parties 

assurances that an exemption will be 

issued or whether a specific exemption 

condition will be required before it has 


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4666 Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 

10 67 FR 44622 (July 3, 2002). 

gone through the public exemption 

process, fully considered the record, 

and made a final determination. The 

Department also proposed to include 

language that any oral statements made 

by the party making the inquiry will 

become part of the administrative 

record. Commenters objected to this 

language on the basis that it would have 

a chilling effect on the regulated 

community’s communications with the 

Department. As discussed in more detail 

below in § 2570.32(d), the creation of an 

accurate and complete administrative 

record outweighs commenters’ concerns 

and necessitates the inclusion of oral 

communications in the administrative 

record. However, in order to be 

responsive to commenters’ concerns 

while ensuring an accurate and 

complete administrative record, the 

Department has streamlined the Final 

Amendment to omit language in the 

proposed paragraph (e) regarding oral 

communications. Instead, all issues 

pertaining to the administrative record, 

many previously highlighted by the 

Proposed Rule, including the inclusion 

of pre-submission and oral 

communications, are addressed in 

§ 2570.32(d). 

Finally, the Department proposed to 

add a new paragraph (g), which would 

have provided that the Department 

issues administrative exemptions at its 

sole discretion based on the statutory 

criteria set forth in ERISA section 408(a) 

and Code section 4975(c)(2). Several 

commenters were concerned that the 

‘‘sole discretion’’ language used here 

and in other sections of the Proposed 

Rule represented an attempt by the 

Department to leave stakeholders 

without a realistic opportunity to 

challenge its actions as arbitrary and 

capricious under the Administrative 

Procedure Act. For example, the 

commenters maintained that the 

Department could create a competitive 

imbalance by issuing two exemptions in 

identical circumstances with different 

conditions, or by refusing to give an 

exemption to one applicant that was 

given to a similarly situated applicant. 

The Department disagrees. While the 

proposed text correctly reflects that the 

decision to grant or deny an exemption 

ultimately is within the Department’s 

sole discretion, the regulation could not 

circumvent the Administrative 

Procedure Act requirements nor does (or 

could) it purport to give the Department 

authority to act arbitrarily. Therefore, 

the Department has retained the 

language as proposed in the Final 

Amendment. 

In conjunction with this new 

paragraph (g), the Department proposed 

to add language stating that the 

existence of previously issued 

administrative exemptions is not 

determinative of whether the 

Department will propose future 

exemptions for applications with the 

same or similar facts, or whether a 

proposed exemption will contain the 

same conditions as a similar previously 

issued administrative exemption. The 

addition of this language reinforces the 

Department’s existing policy that it has 

the sole discretionary authority to issue 

exemptions and is not bound by facts or 

conditions of prior exemptions in 

making determinations with respect to 

an exemption application. This policy 

allows the Department to retain 

sufficient flexibility to grant exemptions 

that are appropriate in an ever-changing 

business, legislative, and regulatory 

policy environment. 

Commenters objected to proposed 

paragraph (g) and argued that the 

Department should be bound or, at a 

minimum, influenced by previously 

issued administrative exemptions. 

These commenters believe that prior 

exemptions should establish precedent 

that stakeholders can reasonably rely on 

to foster predictability, efficiency, and 

consistent treatment of different 

applicants. 

It is reasonable for applicants to 

identify similar exemptions the 

Department previously has granted in 

certain situations as a starting point 

when submitting an exemption 

application to the Department. 

Applicants should be aware, however, 

that revisions and changes may be 

necessary based on the current facts and 

circumstances, whether they are driven 

by business, legislative, regulatory, or 

policy considerations. The Department 

endeavors to use the prohibited 

transaction class exemption process 

when the exemption transaction is 

reasonably understood to be a 

transaction that would benefit, and be 

protective of the interests of, 

participants and beneficiaries of 

numerous plans. When the Department 

is considering a prohibited transaction 

individual exemption, however, it is 

because the Department understands the 

transaction to be specific and unique to 

the party before it. Accordingly, parties 

that are facing similar, but not identical 

situations, are encouraged to seek their 

own exemption. Previously issued 

exemptions are instructive, and a useful 

starting point, but do not prevent the 

Department from considering each 

situation that comes before it in its 

entirety. As a result, the Department has 

modified the proposed paragraph (g) in 

the Final Amendment to provide that 

previously issued administrative 

exemptions may inform the 

Department’s determination of whether 

to propose future exemptions based on 

the unique facts and circumstances of 

each application. 

Lastly, with respect to proposed 

paragraph (g), commenters raised 

concerns regarding the interplay 

between the Department’s stance that 

applicants cannot rely on exemptions as 

precedents and the existing expedited 

review process the Department 

established in Prohibited Transaction 

Exemption 96–62 (commonly referred to 

as EXPRO).10 EXPRO permits the 

Department to perform an expedited 

review of an exemption application that 

is ‘‘substantially similar’’ to two other 

exemptions the Department has granted 

in the prior five years, as determined in 

the Department’s sole discretion. The 

Department disagrees with the 

commenters’ position that the Proposed 

Rule creates tension with EXPRO. 

Pursuant to proposed paragraph (g), the 

Department may use previously issued 

exemptions to inform its decisions 

regarding whether to grant individual 

exemptions. The EXPRO process merely 

uses prior exemptions to expeditiously 

inform the Department of whether an 

exemption would meet the requirements 

of ERISA section 408(a); it does not bind 

the Department to prior exemptions as 

precedent. Instead, before granting an 

exemption under EXPRO, the 

Department must determine, in its sole 

discretion, (1) whether a proposed 

transaction is ‘‘substantially similar’’ 

and (2) whether there is little, if any, 

risk of abuse or loss to plan participants 

and beneficiaries. Even if a transaction 

is substantially similar, the Department 

may deny an application under EXPRO 

if it finds that the particular transaction 

creates a risk of abuse or loss, or if it 

determines that the exemption 

transaction differs from the prior 

exemptions based on the Department’s 

understanding of changes in present 

circumstances, whether business, 

legislative, regulatory, or policy. 

Section 2570.31 

Section 2570.31 sets forth definitions 

that are used throughout the Exemption 

Procedure Regulation. While the 

Department did not propose to revise 

most of the definitions (other than to 

improve readability), the Department 

proposed substantive revisions to 

several existing definitions and added 

new definitions. These changes address 

issues that the Department has often 

experienced in its review of exemption 

applications. 


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11See, e.g., PTE 2020–02 (85 FR 82798, December 

18, 2020); PTE 2022–02 (87 FR 23245, April 19, 

2022); PTE 2022–03 (87 FR 54264, September 2, 

2022); and Proposed Exemption for Morgan Stanley 

& Co. LLC, and Current and Future Affiliates and 

Subsidiaries, Application No. D–11955 (86 FR 

64695, November 18, 2021). 12 87 FR 14725 (Mar. 15, 2022). 

First, the Department proposed to 

revise the definition of ‘‘affiliate’’ set 

forth in paragraph (a) to include: 

• any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the person. For 

purposes of this paragraph, the term 

‘‘control’’ means the power to exercise 

a controlling influence over the 

management or policies of a person 

other than an individual; any officer, 

director, partner, employee, or relative 

(as defined in ERISA section 3(15)) of 

any such person; or 

• any corporation, partnership, trust, 

or unincorporated enterprise of which 

such person is an officer, director, 

partner, or five percent or more owner. 

In addition to rewording the text for 

clarity, the proposed revised definition 

would have included all employees and 

officers, rather than only those who are 

highly compensated (as defined in Code 

section 4975(e)(2)(H)) or have direct or 

indirect authority, responsibility, or 

control regarding the custody, 

management, or disposition of plan 

assets involved in the subject exemption 

transaction to ensure that all parties that 

commonly serve as affiliates are 

captured, without a complicating 

reference to a Code citation. 

Although commenters maintained 

that the revised definition may have 

been too broad because it is overly 

inclusive and might capture parties that 

are not related to the exemption 

transaction, the Department is finalizing 

this definition as proposed. The revision 

reflects the affiliate definition the 

Department currently uses in individual 

and class exemptions and has proved to 

be both appropriately protective and 

workable.11

The Department proposed to 

substantially revise the definition of the 

term ‘‘qualified independent appraiser’’ 

in paragraph (i) of the proposal. 

Commenters generally objected to the 

proposed changes because, according to 

them, such changes could result in a 

substantial reduction of the number of 

experienced appraisers available to 

represent the interests of plans in 

exemption transactions, and it would 

especially be harmful for smaller 

appraisers. They also indicated that the 

changes could result in further industry 

consolidation, which could lead to 

concentration of risks. After considering 

these comments, the Department has 

decided not to finalize the revised 

definition as proposed, and, except for 

the modifications discussed below, 

generally, has reverted to the qualified 

independent appraiser definition in the 

current Exemption Procedure 

Regulation. 

The Department made a few revisions 

to the Exemption Procedure Regulation 

text in the Final Amendment regarding 

the qualified independent appraiser 

definition to clarify the underlying 

meaning of the existing language. The 

Department requested comments on 

these definitions, including whether the 

‘‘proposed changes are clear [and 

whether they] appropriately reflect the 

manner in which entities interact with 

ERISA-covered plans and plan 

participants and beneficiaries.’’ 12 Based 

on this request for comment, the 

Department received input from the 

public that the proposed definition of 

qualified independent appraiser would 

better reflect the manner in which the 

appraiser interacted with plans if the 

definition were slightly changed. 

Specifically, the Final Amendment 

amends the qualified independent 

appraiser definition to provide that the 

Department generally will not conclude 

that an appraiser’s independence is 

compromised solely based on the 

revenues it receives from parties in 

interest (and their affiliates) 

participating in the exemption 

transaction, as long as the appraiser 

neither receives nor is projected to 

receive more than two percent of its 

revenues within the current Federal 

income tax year from the parties in 

interest (and their affiliates). Although 

larger percentages merit more stringent 

scrutiny, an appraiser may be 

considered independent based upon 

other facts and circumstances provided 

that the appraiser neither receives nor is 

projected to receive more than five 

percent of its revenues within the 

current Federal income tax year from 

parties in interest (and their affiliates) 

participating in the exemption 

transaction. 

While the amended definition returns 

to the two and five percent of revenue 

thresholds provided in the Exemption 

Procedure Regulation, the Department 

has modified the language in the Final 

Amendment to clarify that an appraiser 

whose revenue threshold is less than 

two percent is not automatically 

deemed independent. The Department 

may consider other facts and 

circumstances indicating that an 

appraiser is not independent regardless 

of its revenue threshold. For example, if 

an appraiser is likely to be retained by 

the applicant for additional appraisals 

due to its provision of an appraisal 

submitted with the exemption 

application, the Department may 

question whether the appraiser is truly 

independent. Further, the modified 

language emphasizes that appraisers 

with revenue thresholds that are 

between two and five percent could 

merit heightened scrutiny from the 

Department. The revised language in the 

Final Amendment strikes the 

appropriate balance of addressing 

commenters’ concerns that the proposed 

changes could have negatively impacted 

the appraiser marketplace while giving 

appropriate weight to the participantprotective importance of an appraiser’s 

independence based on all relevant facts 

and circumstances regardless of the 

appraiser’s revenue percentage. 

The Department also proposed to 

revise the qualified independent 

appraiser definition in the Proposed 

Rule to provide that an appraiser must 

be independent of and unrelated to the 

qualified independent fiduciary 

involved with the exemption 

transaction. Commenters objected to the 

revision by asserting that many 

independent fiduciaries retain affiliates 

to perform appraisals and eliminating 

this practice would unnecessarily drive 

up the cost of an exemption application. 

After considering these comments, the 

Department has not included the 

proposed language in the Final 

Amendment. 

The Department also proposed to 

revise the definition of a ‘‘qualified 

appraisal report’’ in paragraph (h)(2)(i) 

to require the appraiser to provide an 

appraisal report ‘‘on behalf of the plan.’’ 

Commenters representing appraisers 

stated that longstanding ethical 

standards of the valuation profession 

require appraisers to perform appraisals 

independently and without bias in favor 

of any party. All appraisal reports are 

based on objective criteria and may not 

be ‘‘on the behalf’’ of any party. After 

considering this information, the 

Department did not include the 

proposed language in the Final 

Amendment. 

The Department made similar 

amendments to the definition of 

‘‘qualified independent fiduciary’’ in 

paragraph (j) of the proposed § 2570.31. 

As with the qualified independent 

appraiser definition, commenters 

expressed concern that the proposed 

changes to the qualified independent 

fiduciary definition would substantially 

reduce the number of experienced 

independent fiduciaries available to 

represent the interests of plans and 

participants and beneficiaries in 

exemption transactions, especially 


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smaller independent fiduciaries. After 

considering these concerns, the 

Department, generally, is not finalizing 

these provisions of the exemption as 

proposed and has mostly reverted to the 

language of the Exemption Procedure 

Regulation. 

The Department proposed to revise 

the independent fiduciary definition to: 

• require the fiduciary to be 

independent from any other party 

involved in the development of the 

exemption request; and 

• state that the Department would 

consider whether a fiduciary has an 

interest in the exemption transaction or 

in future transactions of the same nature 

or type in determining whether a 

fiduciary is independent. 

Beyond the broad objections 

described above regarding the changes 

to the definition, commenters stated 

these particular changes would result in 

the exclusion of experienced 

independent fiduciaries, leaving only 

inexperienced fiduciaries to represent 

the interests of plans and participants 

and beneficiaries. Commenters 

maintained that if a fiduciary develops 

expertise in a particular area, it would 

necessarily have an interest in future 

transactions, because future business 

drives a fiduciary to invest the resources 

necessary to develop expertise. While 

the Department is persuaded not to 

include the proposed change in the 

Final Amendment, it has revised the 

definition to provide that when the 

Department makes an independence 

determination based on all of the 

relevant facts and circumstances, that 

determination will include an 

evaluation of the extent to which the 

plan’s counterparty in the exemption 

transaction participated or influenced 

the selection of the fiduciary. Using 

such explanatory language emphasizes 

the conflict of interest concerns, 

previously raised in the Proposed Rule, 

that the Department focuses on as part 

of its evaluation of fiduciary 

independence without unduly limiting 

those parties that may serve as 

independent fiduciaries. 

Second, as with the definition of a 

qualified independent appraiser, the 

Department proposed to revise the 

revenue threshold used to determine 

independence in the Proposed Rule. 

Commenters made the same objections 

to this proposed change by asserting 

that it could have a detrimental impact 

on the independent fiduciary 

marketplace. After considering these 

comments, the Department, generally, 

has not included the proposed changes 

in the Final Amendment and has largely 

reverted to the original revenue 

thresholds set forth in the existing 

Exemption Procedure Regulation. 

However, as with the definition of a 

qualified independent appraiser, the 

Department has revised the language in 

the Exemption Procedure Regulation in 

the Final Amendment to clarify the 

underlying intent of the existing 

language. 

Specifically, the Final Amendment 

states that the Department generally will 

not conclude that a fiduciary’s 

independence is compromised solely 

based on the revenues it receives from 

parties in interest (and their affiliates) 

that are participating in the exemption 

transaction if the fiduciary neither 

receives nor is projected to receive more 

than two percent of its revenues within 

the current Federal income tax year 

from the parties in interest (and their 

affiliates). Although larger percentages 

merit more stringent scrutiny, a 

fiduciary may be considered 

independent based upon other facts and 

circumstances provided that the 

fiduciary neither receives nor is 

projected to receive more than five 

percent of its revenues within the 

current Federal income tax year from 

parties in interest (and their affiliates) 

participating in the exemption 

transaction. 

As with the qualified independent 

appraiser definition, the amended 

independent fiduciary definition in the 

Final Amendment retains the two and 

five percent of revenue standards 

thresholds set forth in the existing 

Exemption Procedure Regulation, but 

modifies the language to clarify that a 

fiduciary with revenues less than the 

two percent revenue threshold is not 

automatically deemed independent: the 

Final Amendment provides that the 

Department may consider other facts 

and circumstance indicating whether a 

fiduciary is independent regardless of 

its revenue threshold. Further, the 

Department has revised the language in 

the Final Amendment to emphasize that 

fiduciaries whose revenue thresholds 

are between two and five percent merit 

heightened scrutiny from the 

Department. The revised language 

addresses the commenters’ concerns 

that the proposed changes could have 

negatively impacted the independent 

fiduciary marketplace while giving 

proper weight to the participantprotective independence of the 

fiduciary, initially raised as a concern in 

the Proposed Rule, based on all relevant 

facts and circumstances. 

Proposed paragraph (k) would have 

added a new definition of ‘‘presubmission applicant’’ that defines a 

pre-submission applicant as a party that 

contacts the Department, either orally or 

in writing, to inquire whether a party 

with a particular fact pattern would 

need to submit an exemption 

application and, if so, what conditions 

and relief would be applicable. This 

definition would not include a party 

that contacts the Department to inquire 

broadly without reference to a specific 

fact pattern. The Department has 

included this definition in the Final 

Amendment to clearly distinguish 

parties that make inquiries with the 

Department that could potentially lead 

to an exemption application from those 

that simply seek non-fact specific 

guidance from the Department. As 

discussed below, this distinction 

impacts how the Department addresses 

the inquiries and whether an 

administrative record is created when 

pre-submission applicants contact the 

Department regarding an exemption 

transaction. 

The Department also proposed to add 

a new definition of ‘‘party involved in 

the exemption transaction’’ that 

included the following: 

(1) a party in interest (as defined in 

paragraph (f)); 

(2) any party (or its affiliate) that is 

engaged in the exemption transaction; 

and 

(3) any party (or its affiliate) that 

provides services with respect to the 

exemption transaction to either the plan 

or a party described in (1) or (2). 

The Department proposed to use this 

term to replace ‘‘party in interest’’ 

throughout the Exemption Procedure 

Regulation. After considering comments 

and reviewing whether the proposed 

switch to ‘‘party involved in the 

exemption transaction’’ facilitated the 

Department’s goals of transparency and 

efficiency, the Department has 

determined not to include this 

definition in the Final Amendment and 

is reverting the reference in the 

applicable provisions to the term ‘‘party 

in interest’’ that is used in the current 

Exemption Procedure Regulation. 

Reverting to the term ‘‘party in interest’’ 

ensures that applicants can understand 

which parties are being addressed and 

can efficiently collect the information 

necessary to complete an application. 

Section 2570.32 

Section 2570.32 addresses who may 

apply for an exemption and when the 

administrative record for an exemption 

application is created. The Department 

proposed two revisions to § 2570.32. 

First, paragraph (a) would have been 

revised to describe persons who may 

apply for exemptions. The Department 

proposed to delete the language in 

paragraph (a) stating that ‘‘the 

Department will initiate exemption 

proceedings upon the application of’’ to 


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clarify that this paragraph addresses 

only those parties who are permitted to 

apply for an exemption. The 

Department has retained this revision in 

the Final Amendment as proposed 

because the revised language makes 

clear that paragraph (a) does not address 

whether the Department is required to 

initiate an exemption proceeding. The 

decision to initiate an exemption 

proceeding remains within the 

Department’s sole discretion. 

The Department also proposed to add 

a new paragraph (d) to address 

questions applicants have frequently 

asked the Department regarding the 

creation of the administrative record for 

an exemption application that is 

available for public inspection. To 

reflect the addition of this content, the 

Department proposed adding ‘‘and the 

administrative record’’ to the heading of 

§ 2570.32. The Department has included 

these proposed revisions in the Final 

Amendment. 

The Department proposed in 

paragraph (d)(1) of the Proposed Rule to 

open the administrative record for 

public inspection beginning on the date 

a pre-submission applicant provides 

information regarding an exemption 

transaction to the Department, and it 

proposed in paragraph (d)(2) that all 

pre-submission documents and 

communications between the 

Department and pre-submission 

applicants would immediately become 

part of the administrative record that is 

open for public inspection. 

Commenters objected to this proposed 

change because, in their view, it would 

have a chilling effect on informal and 

anonymous communications between 

the Department and the regulated 

community. These commenters asserted 

that applicants would be less likely to 

start the exemption application process 

or otherwise approach the Department 

to discuss potential exemption 

transactions if every communication 

with the Department is included in the 

administrative record that is available to 

the public. 

The Department’s objective in 

proposing to add paragraph (d)(1) to the 

Exemption Procedure Regulation was to 

ensure a complete and accurate 

administrative record while still 

encouraging applicants to communicate 

freely with the Department. As 

discussed in more detail below, the 

Final Amendment still requires presubmission information to be a part of 

the administrative record. However, the 

Department acknowledges commenters’ 

concerns about making information 

submitted during the pre-submission 

process immediately available for public 

disclosure. Therefore, the Department 

has modified the proposed language in 

paragraph (d)(1) in the Final 

Amendment to provide that the 

administrative record for an exemption 

application becomes open for public 

inspection, pursuant to § 2570.51(a), on 

the date an applicant submits an 

exemption application to the Office of 

Exemption Determinations. This 

revision makes clear that the 

administrative record for an exemption 

transaction is not available for public 

inspection until an applicant formally 

submits a written exemption application 

to the Department. However, the 

Department also notes that paragraph 

(d)(1) is not meant to encourage 

extended negotiations between a 

potential applicant and the Department 

before it submits an exemption 

application, or to permit applicants to 

circumvent an open process by 

‘‘informally’’ seeking an exemption from 

the Department, while maintaining that 

they have not yet formally applied. At 

its sole discretion, the Department may 

decline to engage in extended 

conversations without submission of a 

formal application that ensures an 

appropriately open and transparent 

process. 

While the Department acknowledges 

commenters’ concerns regarding the 

inclusion of pre-submission information 

in the administrative record, including 

oral communications, the Department’s 

position is that building an accurate and 

transparent record takes precedence 

over those concerns. In making its 

required statutory findings under ERISA 

section 408(a), the Department is 

required to build an administrative 

record to support its findings under 

ERISA section 408(a). The 

administrative record is incomplete 

without all of the information that 

informed the Department’s 

determinations with respect to the 

application, including notes of oral 

communications with the Department. 

The Department emphasizes that the 

record is not developed solely for the 

benefit of the applicant; it is also 

available for review and consideration 

by all parties that may be affected by the 

exemption request, including 

participants and beneficiaries. The 

inclusion of pre-submission information 

in the public record ensures not only 

accuracy but transparency into the 

Department’s exemption determination 

process. The record should contain all 

the information necessary to fully 

review the Department’s ultimate 

decision. Not including all discussions 

between the applicant and the 

Department that inform the 

Department’s decision may hinder, for 

example, a plan participant’s ability to 

provide comments or additional facts 

that might be beneficial to the 

Department’s review of the application 

or prevent a court from fully 

understanding the basis for the 

Department’s exemption determination 

if an applicant or beneficiary legally 

challenges the Department’s decision. 

The Department notes, too, that 

members of the public can continue to 

communicate anonymously with the 

Department pursuant to the 

requirements of § 2570.33(d). 

Based on the Department’s position 

that all pre-submission information, 

whether written or oral, must be 

included in the administrative record as 

of the date an applicant submits an 

exemption application, and building on 

the Proposed Rule’s language, the 

Department has amended paragraph 

(d)(2) in the Final Amendment to 

provide that the administrative record 

includes, but is not limited to, the 

following: (1) the initial exemption 

application and any modifications or 

supplements thereto; (2) all 

correspondence with the applicant after 

the applicant submits the exemption 

application; and (3) any information 

submitted to the Department by the 

applicant in connection with the 

exemption application, whether such 

information is provided orally or in 

writing (as well as any comments and 

testimony received by the Department 

in connection with an application). 

The Department clarified paragraph 

(d)(2) of the Final Amendment in turn, 

by adding a new paragraph (d)(3) which 

states that, although the administrative 

record is open and available to the 

public only after an applicant submits 

an exemption application, the record 

includes any material documents or 

supporting information that an 

applicant submitted to the Department 

in connection with the transaction that 

is the subject of the application, 

whether orally or in writing, before the 

applicant formally submits an 

exemption application to the 

Department. The administrative record 

does not include documents or records 

of communications with the Department 

that are unrelated to the exemption 

transaction that is the subject of the 

application or are associated with an 

exemption application an applicant 

submits subsequent to the unrelated 

communications. 

Consistent with the goals outlined in 

the Proposed Rule, paragraphs (d)(2) 

and (3) of the Final Amendment clearly 

establish the documents and 

communications that the Department 

will include in the administrative 

record to add clarity and transparency 

to the Department’s exemption 


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determination process. The new 

language expressly states that all 

information material to the 

Department’s decision will be included, 

thereby ensuring the creation of an 

accurate and complete administrative 

record. The Department emphasizes, 

however, that pursuant to paragraph 

(d)(3), pre-submission information that 

is not material, such as inapplicable 

background information or information 

regarding other transactions that are not 

relevant to the exemption transaction, 

will not be included in the 

administrative record. Whether 

information is material for purposes of 

paragraph (d)(3) will be determined 

solely at the Department’s discretion. 

Limiting pre-submission information in 

this manner should address the most 

significant concerns of the commenters 

while fully addressing the Department’s 

obligation to build a transparent, 

accurate, and complete administrative 

record for its determinations regarding 

an exemption application. 

In connection with commenters’ 

concerns regarding the proposed 

inclusion of pre-submission documents 

and communications in the 

administrative record, several 

commenters requested the right to 

review and comment on or correct the 

Department’s administrative record 

before the Department provides public 

access to it. The Department’s position 

is that including such a right would be 

inconsistent with its goal of creating a 

record that accurately reflects the 

information the Department considered 

when making its determination. 

Allowing an applicant to edit the 

administrative record for its own 

exemption application would defeat the 

Department’s goal of transparency for 

not only applicants, but all parties 

impacted by the transaction, as well as 

the general public. To the extent, 

however, that a party believes it is 

appropriate to correct any part of the 

public record, they are welcome to 

submit comments and clarifications 

which the Department also will include 

in the public record. The Department 

has determined that the need for an 

open, transparent, and fully developed 

process is best served by including all 

the information it received or reviewed 

when making an exemption 

determination in the administrative 

record at the time an exemption is 

proposed whether or not the 

Department relies on such information. 

Finally, the Department proposed to 

update paragraph (d)(4) of the 

Exemption Procedure Regulation to 

reflect modern methods of 

communication. The paragraph 

provides that if documents are required 

to be provided in writing by either the 

applicant or the Department, the 

documents could be provided either by 

mail or electronically, unless otherwise 

required by the Department at its sole 

discretion. The Department has adopted 

this provision in the Final Amendment 

as proposed. 

Section 2570.33 

In § 2570.33, the Department 

proposed to address applications the 

Department will not consider. 

Specifically, the Department proposed 

to revise the text of the Exemption 

Procedure Regulation to clarify when it 

will not consider an exemption 

application. First, the Department 

proposed to revise paragraph (a)(1), 

under which the Department may 

exclude exemption applications that fail 

to include current information. The 

Department intended that the proposed 

revision would clarify that the 

Department would treat an applicant’s 

failure to include current information 

the same as an applicant’s failure to 

include information. The premise of this 

revision is that absent current 

information, the Department cannot 

develop an accurate understanding of 

the facts sufficient to enable a review of 

the underlying application. The 

Department has adopted this provision 

in the Final Amendment as proposed. 

Second, the Department proposed to 

revise paragraph (a)(2), which generally 

excludes from consideration an 

application involving: (1) a transaction 

or transactions that are the subject of an 

investigation for possible violations of 

part 1 or 4 of subtitle B of Title I of 

ERISA or FERSA sections 8477 or 8478; 

or (2) a party in interest who is the 

subject of such an investigation or who 

is a defendant in an action by the 

Department or the IRS to enforce those 

provisions of ERISA or FERSA. The 

proposed revision would have 

expanded the existing exclusion to 

include any ERISA investigations (not 

only those pursuant to Title I of ERISA 

or FERSA sections 8477 and 8478), as 

well as investigations under any other 

Federal or state law. The proposal also 

would have expanded the limitation on 

applications from parties that are the 

subject of an investigation or a 

defendant in an action brought by the 

Department or the IRS to include any 

other regulatory agencies enforcing 

ERISA, the Code, FERSA, or any other 

Federal or state laws. Commenters 

argued that the new language was too 

expansive and would unnecessarily 

exclude potential applicants. 

The Department has determined that 

the proposed revision to paragraph 

(a)(2) should not be included in the 

Final Amendment because parties 

should not be excluded automatically 

due to these additional investigations 

(except for a failure to include required 

information), thereby reverting closer to 

the current Exemption Procedure 

Regulation. The proposed regulation 

broadly expanded the existing exclusion 

to include any ERISA investigation (not 

only sections 8477 and 8478), as well as 

any other Federal or state law. In 

response to the comments, the 

Department decided that a more limited 

expansion was more appropriate. The 

best approach is to require applicants to 

disclose investigations or other court or 

enforcement actions, which is addressed 

in § 2570.34. Following this disclosure, 

the Department can make a fully 

informed decision regarding whether an 

exemption application should be 

accepted based on the facts and 

circumstances, rather than 

automatically rejecting an exemption 

application in this circumstance. 

The Department acknowledges that 

some commenters were concerned that 

these additional disclosures, and their 

inclusion in the administrative record, 

could lead the public to presume 

malfeasance on the part of applicants. 

The Department declines to adopt any 

changes based on this comment, 

because a complete and accurate record 

is essential to a transparent exemption 

process. The Department notes that 

applicants who are concerned about 

potential reputational harm may include 

an explanation or description of 

mitigating facts along with their 

disclosure for inclusion in the 

administrative record. The Department 

also notes that some of the required 

disclosures may already be reflected in 

publicly available disciplinary actions 

by other regulators or may have been 

disclosed by the applicant in another 

context. For example, an applicant that 

is a publicly-traded company may have 

already disclosed certain investigations 

or disciplinary actions as part of its 

filing of a Form 10–K with the 

Securities and Exchange Commission. 

The Department proposed to delete 

the language in the current paragraph (c) 

regarding the administrative record, 

because that topic is now addressed in 

revisions to § 2570.32 discussed above. 

The Department has made this revision 

in the Final Amendment as proposed. 

The Department proposed to revise 

the part of paragraph (c) addressing the 

submission of confidential information. 

The current Exemption Procedure 

Regulation provides that if an applicant 

designates any information required by 

the rule or requested by the Department 

as confidential, the Department will 

determine whether the information is 


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13 87 FR 14727 (Mar. 15, 2022). 

14 Id. 

material to the exemption 

determination. If it determines at its sole 

discretion that the information is 

material, the Department will not 

process the application unless the 

applicant withdraws the claim of 

confidentiality. The Department 

proposed to revise this language to 

clarify that it would not review an 

application that includes confidential 

information, with the exception of 

confidential designations by a Federal, 

State, or other governmental entity. This 

means that if an applicant submits any 

confidential information as part of an 

exemption application, the Department 

would not review the information nor 

process the exemption application. As a 

result, the Department would process 

the application only after the applicant 

withdraws its claim of confidentiality or 

revokes its submission of the 

confidential information. This change 

would support the Department’s goal of 

increasing transparency while 

protecting confidential information and 

has adopted this provision in the Final 

Amendment as proposed. 

One commenter objected to the 

proposed revisions to paragraph (c) on 

the grounds that requiring an applicant 

to remove a claim of confidentiality 

with respect to material information 

will discourage applicants from 

submitting applications. The 

Department maintains that the need for 

transparency in the exemption 

application process overrides the 

commenter’s concerns. The 

Department’s record must be complete 

and accurate and available for public 

inspection. If information that should be 

included in the administrative record is 

excluded based on a claim of 

confidentiality, a third party could not 

review the full administrative record, 

which would impede the Department’s 

goal of establishing a full and 

transparent exemption determination 

process. The Department’s obligation to 

make proper findings is undermined by 

the submission of confidential 

documents and information that are 

insulated from public comment and 

evaluation. 

The revised language in the Final 

Amendment also states that by 

submitting an exemption application, an 

applicant consents to public disclosure 

of the entire administrative record 

pursuant to § 2570.51. This revision, 

consistent with the intent of the 

Proposed Rule, places applicants on 

notice that they are consenting to the 

public disclosure of all information in 

the administrative record when they 

submit an exemption application, which 

will lead to a fully transparent 

exemption process. 

The Department proposed adding a 

new paragraph (d) that governs 

communications with pre-submission 

applicants as newly defined in 

§ 2570.31(k). The proposed language 

provided that the Department would not 

communicate with a pre-submission 

applicant or its representative, whether 

through written correspondence or a 

conference, if the pre-submission 

applicant does not: (1) identify and fully 

describe the transaction for which 

exemptive relief is sought; (2) identify 

the applicant, the applicable plan(s), 

and the relevant parties to the 

exemption transaction; and (3) set forth 

the prohibited transaction provision(s) 

that the applicant believes are 

applicable. 

Commenters objected to this language, 

arguing that it would have a chilling 

effect on informal and anonymous presubmission discussions between the 

Department and the regulated 

community. The Department 

understands the commenters’ concerns, 

but it also must be able to associate 

informal guidance it provides with 

specific applications that are submitted. 

While the Department welcomes presubmission requests for guidance, it is 

imperative that parties approaching the 

Department for such guidance regarding 

a specific exemption transaction 

provide the Department with sufficient 

information to allow it to properly 

attribute the guidance to a specific 

transaction and the relevant prohibited 

transaction provisions that are 

applicable to the transaction. 

Accordingly, the Final Amendment 

requires those seeking pre-submission 

guidance to identify the transaction for 

which exemptive relief is sought, as 

well as the applicable prohibited 

transaction provision(s). However, to 

address commenters’ concerns, the 

Department has not included the 

proposed language in the Final 

Amendment that would have required 

pre-submission applicants to identify 

the applicant, the applicable plan(s), 

and the relevant parties to the 

exemption transaction before the 

Department will communicate with a 

pre-submission applicant. Eliminating 

specific identifying information should 

address commenters’ concerns regarding 

anonymity while ensuring that the 

Department obtains the complete 

information it needs to provide relevant 

advice to an anonymous pre-submission 

applicant. 

Section 2570.34 

Section 2570.34 addresses 

information the Department requires 

applicants to include in an exemption 

application. While the Department 

proposed to expand the information the 

Department requires to be included in 

an application in some cases, the 

Department’s intention in expanding the 

required information was to streamline 

the exemption process by ensuring that 

most of the information the Department 

needs to make an exemption 

determination is available to it when the 

application is submitted, which will 

expedite the exemption determination 

process.13 The Department specifically 

requested comments on the changes to 

the information required to be 

submitted as part of the application, 

including comments on whether the 

Department should consider other types 

of information.14

Specifically, the Department proposed 

to revise paragraphs (a)(1) and (3) to 

require addresses, phone numbers, and 

email addresses for the applicants, 

representatives, and parties in interest. 

The Department proposed to require 

applicants to include this information in 

the initial exemption application to 

ensure that the Department can 

efficiently contact the proper parties. 

In addition, the Department proposed 

to replace the original paragraph (a)(4) 

with new paragraphs (a)(4), (5), and (7) 

to facilitate the Department’s 

understanding of the decision-making 

process the applicant undertook to 

determine that it was necessary to 

submit an exemption application. 

Accordingly, the Department proposed 

for paragraph (a)(4) to require the 

applicant to include in its application a 

description of: (1) the reason(s) for 

engaging in the exemption transaction; 

(2) any material benefit that a party in 

interest involved in the exemption 

transaction may receive as a result of the 

subject transaction (including the 

avoidance of any materially adverse 

outcome by the party in interest as a 

result of engaging in the exemption 

transaction); and (3) the costs and 

benefits of the exemption transaction to 

the affected plan(s), participants, and 

beneficiaries, including quantification 

of those costs and benefits to the extent 

possible. 

Commenters objected to this language 

on the grounds that requiring the 

disclosure is burdensome and 

unnecessary. However, the Department 

views this information as an essential 

component of an exemption application, 

because it will facilitate the 

Department’s understanding of the 

underlying rationale for the exemption 

transaction, including the costs and 

benefits for both the party in interest 

and the plan and its participants and 


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beneficiaries. For example, when an 

applicant that is a plan sponsor 

provides not only a rationale for 

engaging in the exemption transaction, 

but also a statement of the benefits to 

the sponsor, as well as the costs and 

benefits to the plan, the Department can 

more accurately determine whether it 

has sufficient information to make its 

findings under ERISA section 408(a). 

The Department needs to understand 

the scope and severity of the conflicts of 

interest associated with the transaction, 

as well as the potential costs and 

benefits of the transaction, before it can 

make a properly informed decision 

about the merits of the application and 

how best to structure a participantprotective exemption. In addition, the 

requirement should not be too 

burdensome, because a fiduciary that is 

complying with its fiduciary obligations 

under ERISA section 404 should fully 

evaluate all the factors set forth in 

paragraph (a)(4) in the normal course of 

fulfilling its fiduciary responsibilities 

before deciding to seek an exemption or 

engage in the transaction at issue. 

Further, the Department notes that the 

required disclosures would likely be 

requested as part of the Department’s 

normal review of an exemption 

application. 

Based on the foregoing, the 

Department is including the proposed 

revisions in the Final Amendment as 

proposed. The Department notes that it 

is not requiring a full actuarial or 

technical economic accounting with 

respect to a proposed exemption 

transaction but, instead, is requesting 

applicants to disclose information they 

obtain by performing a full review of the 

transaction, which includes, at a 

minimum, reviewing the material 

benefits and cost of the transaction for 

the plan and its participants and 

beneficiaries. The Department also notes 

that this information is already typically 

requested when the Office of Exemption 

Determinations reviews exemption 

applications, such that this information 

would eventually have to be provided 

during the Department’s review of the 

application, and the Department’s 

primary objective in requiring this 

information to be submitted with the 

initial application is to streamline the 

exemption determination process. 

The Department also proposed to add 

a new paragraph (a)(5) that would build 

on paragraph (a)(4) by proposing to 

require applicants to include with their 

exemption applications a detailed 

description of possible alternatives to 

the exemption transaction that would 

not involve a prohibited transaction and 

an explanation as to why the applicant 

did not pursue those alternatives. 

Commenters objected to this language 

by asserting that it would be 

burdensome, if not impossible, for an 

applicant to investigate and evaluate all 

potential approaches to a transaction. 

Further, commenters argued that ERISA 

does not require them to evaluate and 

exhaust all alternatives to an exemption 

transaction before submitting an 

exemption application. 

The Department recognizes that 

ERISA does not require an applicant to 

evaluate every imaginable option with 

respect to an exemption transaction and 

that doing so may prove impractical, 

and it did not intend to suggest 

otherwise. In response to the comments, 

but still recognizing the concerns the 

Department raised in the Proposed Rule, 

the Department has modified the 

language in the Final Amendment to 

provide that an applicant must submit 

a description of the alternatives to the 

exemption transaction that it considered 

or evaluated before submitting the 

exemption application and explain why 

those alternatives were not pursued 

with its exemption application. Thus, 

the Department simply requires an 

applicant to explain to the Department 

the process by which the applicant 

arrived at its decision to propose an 

exemption application. If as part of that 

decision-making process the applicant 

evaluated alternatives, the applicant 

must disclose those alternatives to the 

Department, along with the rationales 

for not selecting such alternatives, to 

provide the Department with insight 

into the applicant’s decision-making 

process. Although the Department is not 

retaining the proposed amendment to 

paragraph (a)(5) that would have 

required an exhaustive review of all 

alternatives to an exemption 

transaction, the Department notes that a 

failure to consider and address 

reasonable alternatives to engaging in a 

prohibited transaction may provide 

grounds for the Department to deny an 

exemption application. The prohibited 

transaction rules are the starting point 

for the Department’s evaluation of an 

exemption application, and those rules 

are designed to prohibit transactions 

that involve significant conflicts of 

interest. Considering the harm conflicts 

of interest can inflict on plans and 

participants and beneficiaries, and the 

challenges the Department faces in 

determining the full scope and severity 

of these conflicts and their potential 

impact on the affected plan and its 

participants and beneficiaries, it is 

reasonable for the Department to require 

the applicant to explain why the most 

protective and appropriate approach is 

not avoiding entering into a prohibited 

transaction that requires an exemption 

from the Department to comply with 

ERISA. The Department encourages 

applicants to evaluate whether the 

exemption transaction could be 

structured in a manner that would not 

result in a prohibited transaction. In 

many cases, the best way to protect 

participants’ interests is not to engage in 

a transaction subject to significant 

conflicts of interest, but rather to avoid 

the conflicts of interest in the first place 

and structure the transaction to avoid 

the need for an exemption from 

otherwise illegal conduct. 

The Department proposed to insert a 

new paragraph (a)(7) that would replace 

the prior requirement that an applicant 

state why the transaction is customary 

to the industry with a requirement for 

the applicant to set forth a description 

of each conflict of interest or potential 

instance of self-dealing that would be 

permitted if the exemption is granted. 

Commenters expressed concern that 

complying with the proposed revision 

may be difficult and burdensome. The 

Department, however, disagrees with 

these concerns and has included the 

new paragraph in the Final Amendment 

as proposed. The Department is making 

this change because the Exemption 

Procedure Regulation’s prior 

‘‘customary to the industry’’ language 

did not require applicants to sufficiently 

inform the Department of the conflicts 

of interest and instances of self-dealing 

involved in an exemption transaction or 

the costs and benefits to a plan and its 

participants and beneficiaries. The 

information required by the new 

language assists the Department in 

identifying the conflicts of interest and 

instances of self-dealing involved in an 

exemption transaction, and thereby 

facilitates the Department’s analysis 

regarding whether the exemption 

transaction is structured to properly 

protect the interests of the plan and its 

participants and beneficiaries as 

required by ERISA section 408(a). As 

with information about applicants’ 

decision-making processes, the 

Department notes it would need to 

request this information at some point 

during the application process to make 

its required statutory findings. By 

requesting this information upfront, as 

opposed to requesting it later in the 

application process, the Department is 

streamlining the exemption 

determination process and thereby 

reducing its associated burdens and 

costs. 

Together, the Final Amendment’s new 

paragraphs (a)(4), (5), and (7) will help 

the Department better understand 

applicants’ proposed exemption 

transactions and their implications for 


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plans, participants, and beneficiaries. 

They also will help ensure that the 

Department has sufficient information 

to make its required findings under 

ERISA section 408(a) regarding whether 

a requested exemption would be (1) 

administratively feasible, (2) in the 

interests of the plan and of its 

participants and beneficiaries, and (3) 

protective of the rights of participants 

and beneficiaries when the applicant 

submits its application to the 

Department. 

The final revisions to paragraph (a) 

are intended to provide consistency 

among exemption applications. The 

revised paragraph (a)(8) simply expands 

the disclosure requirement to include a 

statement regarding whether the 

transaction is the subject of 

investigation or enforcement actions by 

any regulatory authority. This change is 

consistent with the changes to § 2570.33 

that are discussed above and ensures 

that the Department has the information 

it needs to make an informed decision 

regarding an exemption application. 

The Department proposed to add a 

new paragraph (a)(10) that would 

require applicants that use the term 

‘‘affiliate’’ in their exemption 

applications to include a statement that 

either (1) the definition of affiliate set 

forth in § 2570.31(a) is applicable or (2) 

explains why a different affiliate 

definition should be applied. The 

Department added this language to 

encourage the use of a single, consistent 

affiliate definition among all 

applications, which will prevent issues 

that could result from different 

definitions of the term being used in 

different exemptions. The Department 

has adopted this requirement in the 

Final Amendment as proposed. 

Paragraph (b) addresses some of the 

Department’s specific concerns with 

respect to exemption transactions. The 

most substantial change adds paragraph 

(b)(2), which requires applicants to 

include a statement in their applications 

that (A) the exemption transaction will 

be in the best interest of the plan and 

its participants and beneficiaries; (B) all 

compensation received, directly or 

indirectly, by a party involved in the 

exemption transaction will not exceed 

reasonable compensation within the 

meaning of ERISA section 408(b)(2) and 

Code section 4975(d)(2); and (C) all of 

the statements to the Department, the 

plan, or, if applicable, the qualified 

independent fiduciary or qualified 

independent appraiser about the 

exemption transaction and other 

relevant matters will not be materially 

misleading at the time the statements 

are made. If the applicant does not 

include such a statement in its 

exemption application, the applicant 

must explain why these exemption 

standards should not be applicable to 

the exemption transaction. 

For purposes of paragraph (b), an 

exemption transaction is in the best 

interest of a plan if the plan fiduciary 

causing the plan to enter into the 

transaction determines, with the care, 

skill, prudence, and diligence under the 

circumstances then prevailing, that a 

prudent person acting in a like capacity 

and familiar with such matters would, 

in the conduct of an enterprise of a like 

character and with like aims, enter into 

the exemption transaction based on the 

circumstances and needs of the plan. 

Such fiduciary shall not place the 

financial or other interests of itself, a 

party to the exemption transaction, or 

any affiliate ahead of the interests of the 

plan or subordinate the plan’s interests 

to those of any party or affiliate. 

In proposed paragraph (b)(2), the 

Department generally incorporated 

compliance with ‘‘impartial conduct 

standards’’ as formalized in Prohibited 

Transaction Exemption 2020–02 as a 

baseline condition for approved 

exemptions. Commenters, however, 

stated that the proposed new paragraph 

(b)(2) should not be included in the 

Final Amendment, because the 

impartial conduct standards are not 

applicable to all transactions. The Final 

Amendment, however, does not require 

the impartial conduct standards to be 

made applicable to all exemptions as a 

condition for the Department to grant 

them. The impartial conduct standards, 

however, are rooted in well-established 

fiduciary principles designed to address 

problems of agency and conflicts of 

interest, and as such, are often strong 

and flexible safeguards against abuse in 

transactions subject to the prohibited 

transaction rules. Accordingly, while 

the failure to propose adoption of such 

standards is not automatically 

disqualifying, the adoption of such 

standards as part of a proposed 

exemption can lend important support 

to a finding by the Department that the 

exemption transaction is in the interest 

of and protective of the plan and its 

participants and beneficiaries. 

Rather than mandating adoption of 

such standards, paragraph (b)(2) of this 

regulation provides applicants with an 

opportunity to explain why the 

impartial conduct standards should not 

be applicable to their exemption 

transactions. The applicant’s inclusion 

of an explanation as to why the 

standards are not applicable provides 

the Department with necessary insight 

into the applicant’s process of 

evaluating the conflicts of interest that 

may or may not be inherent in the 

proposed exemption transaction. As 

discussed above with respect to 

paragraph (a), understanding and 

addressing conflicts of interest is a 

necessary part of the process the 

Department must undertake when 

evaluating exemption transactions to 

make its required statutory findings 

under ERISA section 408(a). 

Commenters also objected to the 

inclusion of proposed paragraph (b)(2) 

on the grounds that the language runs 

counter to certain court decisions and 

Congressional intent. The Department 

disagrees with these assertions. As 

noted, the Final Amendment does not 

mandate the adoption of impartial 

conduct standards in every case, 

independently impose an enforceable 

obligation to comply with those 

standards, or purport to pre-decide the 

circumstances in which such conditions 

should be imposed. Instead, the 

Department is only requiring applicants 

to explain whether the standards would 

be met by the transaction at issue. This 

is clearly helpful information for the 

Department to have in reviewing 

exemptions for statutorily prohibited 

transactions, and for fiduciaries to 

consider before moving forward with 

transactions. The information allows the 

Department to address essential 

questions regarding whether a proposed 

exemption transaction is in the interests 

of and protective of the rights of the 

participants and beneficiaries. For 

example, knowing whether a transaction 

is in a plan’s best interest can greatly 

inform the Department’s statutorily 

mandated findings regarding whether 

the exemption transaction is in the 

interests of and protective of the rights 

of the participants and beneficiaries. 

Further, if the applicant informs the 

Department that the impartial conduct 

standards are not applicable, that 

knowledge will inform the Department’s 

understanding of the transaction and its 

structure. 

Proposed paragraph (b)(4) (previously 

paragraph (b)(3)) proposed to provide 

that if an advisory opinion has been 

requested by any party to the exemption 

transaction from the Department with 

respect to any issue relating to the 

exemption transaction, the exemption 

application must include (1) a copy of 

the letter concluding the Department’s 

action on the advisory opinion request; 

or (2) if the Department has not yet 

concluded its action on the request, a 

copy of the request or the date on which 

it was submitted together with the 

Department’s correspondence control 

number as indicated in the 

acknowledgment letter. The Department 

proposed to revise this provision for 

readability and to require an applicant 


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15See, e.g., PTE 2022–04 granted to the Children’s 

Hospital of Philadelphia Pension Plan for UnionRepresented Employees, 87 FR 71358 (Nov. 11, 

2022) and PTE 2021–03 granted to the Electrical 

Insurance Trustees Insurance Fund (the EIT Fund) 

and the Electrical Joint Apprenticeship and 

Training Trust, 86 FR 34054 (June 28, 2021). 

to include with its application any 

opinion or guidance issued by the 

Department and any other opinions or 

guidance issued by Federal, State, or 

regulatory bodies regarding the 

exemption transaction. The 

modification expands the prior text to 

ensure that all relevant information 

regarding the exemption transaction, 

including guidance issued in 

connection to the transaction by other 

Federal, State, or regulatory bodies is 

available to the Department when 

making its determination whether to 

grant an exemption. The Department is 

including this change in the Final 

Amendment as proposed. 

The Department proposed to include 

a new paragraph (b)(7) that would 

require applicants that communicate 

with the Department either orally or in 

writing before submitting an exemption 

application to submit a statement setting 

forth the date(s) and with whom the 

applicant communicated before 

submitting the application. The 

Department added this language to work 

in tandem with the proposed revisions 

made to the Final Amendment in 

response to the requests made by 

multiple commenters that presubmission applicants not be required 

to identify themselves. Since the Final 

Amendment permits certain anonymous 

discussions, paragraph (b)(7) now 

requires applicants that engaged in 

anonymous discussions to identify 

themselves to the Department so it can 

link prior anonymous discussions to the 

current applicant. Linking presubmission communications to a 

current application ensures that the 

Department understands the entire 

context of an exemption application. 

The Department emphasizes, however, 

that this provision is only triggered 

when the applicant submits an 

exemption application. 

The Final Amendment also includes 

substantial revisions to the proposed 

requirements set forth in proposed 

paragraphs (c) through (f) regarding 

statements and documents about 

qualified independent appraisers and 

qualified independent fiduciaries that 

are involved in an exemption 

transaction. Even though the final 

version of § 2570.31 generally reverts to 

the previous definitions of qualified 

independent appraiser and qualified 

independent fiduciary, the Department 

has revised, consistent with the intent of 

the Proposed Rule, paragraphs (c) 

through (f) of § 2570.34 to ensure that 

the appraiser and fiduciary are 

independent and that their valuations 

and oversight over the exemption 

transaction are accurate and reliable. 

The proposed revision to paragraph 

(c) addressed statements and documents 

included in the application by the 

qualified independent appraiser. The 

Department proposed to extend the 

provisions of paragraph (c) to auditors 

and accountants. As a result, proposed 

paragraph (c) applied to all statements 

submitted by appraisers, auditors, and 

accountants to ensure that the 

Department can rely on any and all 

financial documents submitted by third 

parties. 

More specifically, the Department 

proposed to revise several provisions 

that govern the information that must be 

included in any statements submitted 

by an appraiser, auditor, or accountant. 

First, the Department proposed to add a 

paragraph (c)(1) to require that 

statements include a signed and dated 

declaration under penalty of perjury 

that, to the best of the qualified 

independent appraiser’s, auditor’s, or 

accountant’s knowledge and belief, all 

of the representations made in such 

statement are true and correct. 

Commenters objected to the proposed 

penalty of perjury requirement because, 

they argued, it would increase appraiser 

liability and discourage participation in 

the ERISA market. The Final 

Amendment does not require a 

declaration under penalty of perjury. 

Instead, it requires a certification that, to 

the best of the qualified independent 

appraiser’s, auditor’s, or accountant’s 

knowledge and belief, all of the 

representations made in such statement 

are true and correct. The revised 

language in the Final Amendment 

balances the Department’s need to 

ensure that an appraiser stands behind 

the accuracy of an appraisal report 

while reducing the potential chilling 

effect of a declaration under penalty of 

perjury. 

Next, the Department proposed to 

expand paragraph (c)(2) to specifically 

address the contractual obligations of 

the appraiser, auditor, or accountant. 

The proposed provision required a copy 

of the qualified independent appraiser’s, 

auditor’s, or accountant’s engagement 

letter and, if applicable, contract with 

the plan describing the specific duties 

the appraiser, auditor, or accountant 

shall undertake to be included with an 

application. The proposal would have 

provided that the appraiser, auditor, or 

accountant’s letter or contract may not: 

(1) include any provision that provides 

for the direct or indirect 

indemnification or reimbursement of 

the independent appraiser, auditor, or 

accountant by the plan or another party 

for any failure to adhere to its 

contractual obligations or to Federal and 

state laws applicable to the appraiser’s, 

auditor’s, or accountant’s work; or (2) 

waive any rights, claims or remedies of 

the plan or its participants and 

beneficiaries under ERISA, the Code, or 

other Federal and state laws against the 

independent appraiser, auditor, or 

accountant with respect to the 

exemption transaction. 

Proposed paragraph (c)(2) would have 

prevented appraisers, auditors, and 

accountants from avoiding 

accountability to the plan and its 

participants by relying on 

indemnification or reimbursement 

provisions, whether direct or indirect, to 

avoid financial liability for their failure 

to comply with their contract or state or 

Federal law. When parties agree to 

relieve appraisers, auditors, and 

accountants from accountability through 

releases, waivers, and indemnification 

or reimbursement agreements, they 

undermine the protective conditions of 

the exemption, compromise the 

independence of their services, and cast 

doubt on the reliability of the service 

providers’ work. 

Commenters objected to proposed 

paragraph (c)(2)’s prohibition of 

contractual indemnification provisions. 

They argued that the proposed 

prohibition would dramatically increase 

the potential liability of large appraisers 

that often are engaged to appraise hardto-value assets. According to the 

commenters, this would lead large 

appraisers to shift their resources to 

providing financial advisory services to 

non-employee benefit plan clients, 

leaving small appraisers to service the 

employee benefit plan market. 

The Department is not persuaded by 

the commenters’ concerns. The 

commenters did not provide any 

evidence that appraisers, accountants, 

or auditors would leave the marketplace 

if indemnification provisions were 

prohibited, and there is a large market 

of such professionals who will continue 

to serve plans, even if some of their 

colleagues choose not to render their 

services if they retain the liability 

assigned under state and Federal law for 

substandard work. In practice, the 

Department has issued numerous 

individual exemptions that prohibit 

such provisions without negative 

consequence.15

Further, the possibility that some 

market participants might decline to 

provide professional appraisal, 

accounting, or auditing services is 


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16 87 FR 14729 (Mar. 15, 2022). 

outweighed by the Department’s need to 

ensure that they render unbiased and 

professional services that meet state and 

Federal standards. For example, the 

function of independent appraisers in 

prohibited transactions is to provide an 

unbiased and objective statement of 

value. That function is undermined 

when the appraisers are relieved from 

responsibility and accountability for the 

proper discharge of their important 

work. Similarly, accountants and 

auditors play a fundamental role in 

ensuring that participants’ interests are 

protected, but that role is compromised 

when the parties relieve them of 

liability and accountability for 

adherence to applicable legal standards. 

However, the Department 

understands that there are certain 

limited situations where a contractual 

indemnification provision may be 

appropriate such as when there are 

nuisance claims. As a result, the 

Department has revised proposed 

paragraph (c)(2) in the Final 

Amendment to provide that an 

appraiser, auditor or accountant’s letter 

or contract may include a provision 

providing for reimbursement of legal 

expenses with respect to claims for any 

failure to adhere to the appraiser’s, 

auditor’s, or accountant’s contractual 

obligations or to Federal and state laws 

applicable to the appraiser’s, auditor’s, 

or accountant’s work, provided that: (A) 

the plan determines that the 

reimbursement is prudent following a 

good faith determination that the 

appraiser, auditor, or accountant likely 

did not fail to adhere to its contractual 

obligations or to Federal and state laws 

applicable to its work and will be able 

to repay the plan if it is found liable or 

enters into a settlement agreement based 

on an alleged breach; and (B) the letter 

or contract requires the appraiser, 

auditor, or accountant to repay all of the 

reimbursements in a timely fashion if 

the appraiser, auditor, or accountant 

enters into a settlement agreement 

regarding any asserted failure to adhere 

to its contractual obligations, or to state 

or Federal laws, or has been found liable 

for a breach of contract or violation of 

any Federal or state laws applicable to 

the appraiser’s, auditor’s, or 

accountant’s work. The new language 

allows appraisers, auditors, and 

accountants and their clients to 

negotiate agreements regarding claims 

that are not likely to result in liability 

for the appraiser, auditor, or accountant. 

The Department also revised 

proposed paragraph (c)(4) in the Final 

Amendment to state that submitted 

documents must contain a detailed 

description of any relationship that the 

qualified independent appraiser, 

auditor, or accountant has had or may 

have with the plan or any party in 

interest involved in the exemption 

transaction or its affiliates that may 

influence its judgment, including a 

description of any past engagements 

with the appraiser, auditor, or 

accountant. The language builds on the 

Department’s insistence, as outlined in 

the Proposed Rule, that independent 

parties involved in the exemption 

transaction must truly be independent. 

The Department notes that it 

proposed to include more expansive 

disclosure language; the proposal would 

have extended the disclosure 

requirement to apply to any parties 

involved in the exemption transaction 

and any parties involved in developing 

the proposed exemption request. 

Commenters objected to the proposal’s 

language on the grounds that 

compliance was overly expansive and 

burdensome. They also disputed 

whether the language addressed any 

harm. To address these comments, the 

Department has revised the language in 

the Final Amendment to limit its 

application to parties in interest 

involved in the exemption transaction 

and their affiliates, and no longer 

extends the provision to include parties 

involved in developing the proposed 

exemption transaction. However, the 

Final Amendment retains the core 

requirement that relationships, past or 

present, with such parties in interest 

that may influence the appraiser, 

auditor, or accountant’s judgment must 

be disclosed in the exemption 

application. This outcome settles at a 

middle ground between the Exemption 

Procedure Regulation and the Proposed 

Rule and balances the burden of 

disclosure with the Department’s need 

to address instances in which a party 

has potentially conflicting relationships 

because it is dependent on or otherwise 

regularly involved with parties in 

interest or their affiliates. 

The Department proposed to include 

language in paragraph (c)(5) that the 

appraisal report must be prepared solely 

in the interest of the plan. This language 

reflected proposed language in 

§ 2570.31(h). As discussed above, 

commenters stated that all appraisal 

reports are based on objective criteria 

and may not be ‘‘on the behalf’’ of any 

party. The Department did not intend to 

suggest that appraisals should be 

slanted in favor of any particular party, 

and accordingly, the Department has 

revised paragraph (c)(5) of the Final 

Amendment to provide that a written 

appraisal report must be prepared by a 

qualified independent appraiser who 

determines, to the best of their ability 

and in accordance with professional 

appraisal standards, the fair market 

value of the subject asset(s) without bias 

towards the plan’s counterparty in the 

transaction or other interested parties. 

The Department notes that the final 

provision, which addresses the same 

concerns raised by the Proposed Rule, 

includes anti-bias language to 

emphasize that the appraisal report 

must not favor one party over another. 

Specifically, the Department is 

concerned that appraisals of employer 

stock often may be influenced by the 

employer in employee stock ownership 

plan transactions or that an appraiser 

may rely on information provided by 

the applicant without verifying the 

veracity of the information. 

The Department is deleting the 

statement in current paragraph 

(c)(4)(iii), now paragraph (c)(5)(iii), that 

requires an applicant to submit a new 

appraisal to the Department if an 

appraisal report is one year or more old. 

This deletion makes clear to applicants 

that they must submit a current 

appraisal report with their application 

when submitting it to the Department, 

and that the Department will not move 

forward with its analysis of an 

exemption transaction without receipt 

of a current appraisal report. 

The Final Amendment also makes 

changes in paragraph (c)(8). The 

revisions are discreet changes that are 

consistent with the revised definition of 

a qualified independent appraiser in 

§ 2570.31(i) and describe how the 

revenue limitations thereunder are 

calculated. 

The Department proposed to add a 

new paragraph (d) that would have 

required an applicant to include 

detailed information regarding the 

appraiser selection process. The 

preamble to proposed paragraph (d) 

explained that the Department’s goal in 

proposing the disclosure was ‘‘to 

promote a prudent and loyal selection 

process to hire a qualified independent 

appraiser.’’ 16 In response to this 

proposal, commenters objected on the 

grounds that the information submitted 

as part of the process can be 

confidential and the fact that a party 

would be documented as not being 

selected in the public record could 

discourage parties from participating in 

the selection process. Commenters also 

argued that the Department does not 

have the statutory authority to insert 

itself into the fiduciary selection 

process. 

The Department has modified the 

proposed provision in response to 

commenters’ concerns. Paragraph (d) of 

the Final Amendment now states that an 


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17 87 FR 14727 (Mar. 15, 2022). 

18See, e.g., Section II(f) of PTE 2023–12 (88 FR 

11699. February 23, 2023); Section II(p) of PTE 

2022–02 (87 FR 23245, April 19, 2022); Section 

III(h) of PTE 2022–03 (87 FR 54264, September 2, 

2022); Section I(h) of PTE 2021–03 (86 FR 34054, 

June 28, 2021); Section III(n) of the Notice of 

Proposed Exemption Involving J.P. Morgan 

Securities LLC, J.P. Morgan Investment 

Management Inc., J.P. Morgan Securities, and Chase 

Wealth Management (86 FR 57446, October 15, 

2021). 

applicant must include the following 

information with its exemption 

application: (1) a representation that the 

independent fiduciary prudently 

selected the appraiser after diligent 

review of the appraiser’s technical 

training and proficiency with respect to 

the type of valuation at issue, the 

appraiser’s independence from the 

plan’s counterparties in the exemption 

transaction, and the absence of any 

material conflicts of interest with 

respect to the exemption transaction; (2) 

a representation that the appraiser is 

independent within the meaning of 

§ 2571.31(i); and (3) a representation 

that the independent appraiser has 

appropriate technical training and 

proficiency with respect to the specific 

details of the exemption transaction. 

This new requirement achieves the goal 

the Department identified in its 

proposal to ensure that applicants 

follow a prudent and loyal selection 

process when they hire a qualified 

independent appraiser. The Department 

specifically requested comments on 

these proposed revisions, ‘‘including 

whether the Department should 

consider other types of information.’’ 17

Commenters pointed to other types of 

information the Department could 

request that would allow the 

Department to fulfill its stated objective 

and that would allay the commenters’ 

concerns over the proposed 

requirements. Accordingly, the Final 

Amendment’s requirement fulfills the 

Department’s need to require applicants 

to follow a prudent and loyal selection 

process while addressing commenters’ 

concerns. 

The Department similarly revises the 

proposed new paragraph (e). Similar to 

proposed paragraph (d), proposed 

paragraph (e) would have required 

applicants to provide detailed 

information regarding the process by 

which an independent fiduciary was 

selected. Commenters raised similar 

concerns regarding this language. 

Therefore, as with paragraph (d), 

paragraph (e) of the Final Amendment 

has been revised to require applicants to 

include the following representations 

with their exemption applications: (1) a 

representation that an appropriate 

fiduciary without material conflicts of 

interest prudently selected the 

independent fiduciary after diligently 

reviewing the independent fiduciary’s 

technical training and proficiency with 

respect to ERISA, the Code, and the 

specific details of the exemption 

transaction, and the sufficiency of the 

independent fiduciary’s fiduciary 

liability insurance coverage; (2) a 

representation that the fiduciary 

retained to act as the independent 

fiduciary is independent within the 

meaning of § 2570.31(j); and (3) a 

representation that the independent 

fiduciary has appropriate technical 

training and proficiency with respect to 

ERISA and the Code and the specific 

details of the exemption transaction. As 

with paragraph (d), the new paragraph 

promotes a prudent and loyal selection 

process while addressing commenters’ 

concerns. 

In the Final Amendment, the 

Department revises paragraph (f), which 

specifies the information an applicant 

must include in the qualified 

independent fiduciary’s statement 

required to be submitted with its 

application. As with the changes to the 

qualified independent appraiser’s 

statement, these changes are designed to 

bolster independence and reliability. 

First, paragraph (f)(1) of the proposal 

would have required the statement to 

include a signed and dated declaration 

under penalty of perjury that, to the best 

of the qualified independent fiduciary’s 

knowledge and belief, all of the 

representations made in such statement 

are true and correct. As with the 

proposal’s paragraph (c)(1), commenters 

objected to the penalty of perjury 

requirement because it would increase 

independent fiduciary liability and 

discourage them from participating in 

the employee benefit plan market. In 

response to those commenters, the Final 

Amendment does not require a 

declaration under penalty of perjury, 

and, instead, requires a certification 

that, to the best of the qualified 

independent fiduciary’s knowledge and 

belief, all of the representations made in 

such statement are true and correct. The 

revised language appropriately ensures 

that an independent fiduciary stands 

behind its statements and actions while 

avoiding the potential chilling impact of 

a declaration under penalty of perjury. 

Next, paragraph (f)(2) aims to prevent 

fiduciaries from avoiding accountability 

to the plan and its participants and 

beneficiaries by relying on 

indemnification or reimbursement 

provisions, whether direct or indirect, to 

avoid financial liability for their failure 

to comply with their contract or state or 

Federal law. When parties agree to 

relieve fiduciaries from accountability 

through releases, waivers, and 

indemnification or reimbursement 

agreements, they undermine the 

protective conditions of an applicable 

exemption, compromise the 

independence of their services, and cast 

doubt on the reliability of the service 

providers’ work. 

As with the proposed paragraph 

(c)(2), commenters objected to the 

prohibition of contractual 

indemnification provisions in proposed 

paragraph (f)(2). They argued similarly 

that the prohibition on contractual 

indemnification provisions would 

dramatically increase the potential 

liability of independent fiduciaries that 

often are engaged to perform work with 

respect to exemption transactions. 

According to the commenters, this 

would lead large independent 

fiduciaries to shift their resources to 

providing fiduciary services to nonemployee benefit plan clients, leaving 

small, inexperienced fiduciaries to 

service the employee benefit plan 

market. 

The Department does not agree with 

the commenters’ concerns. First, the 

Department notes that ERISA section 

410 already places limitations on 

indemnification provisions for 

fiduciaries. Second, the commenters did 

not provide any evidence that 

fiduciaries would leave the employee 

benefit plan marketplace if an 

indemnification provision were 

prohibited, and many independent 

fiduciaries will continue to serve plans, 

even if some of their colleagues choose 

not to render their services if they retain 

the liability assigned under state and 

Federal law for substandard work. As 

with qualified independent appraisers, 

the Department has, in recent practice, 

already required qualified independent 

fiduciaries to adhere to stricter 

requirements in recent exemptions 

without a negative effect on the 

independent fiduciary market.18

Furthermore, the possibility that some 

independent fiduciaries might decline 

to provide fiduciary services to the 

employee benefit plan market is 

outweighed by the Department’s need to 

ensure that they render unbiased and 

professional services that meet state and 

Federal standards. Independent 

fiduciaries play a critical role in 

ensuring that participants’ interests are 

protected, but that role is compromised 

when the parties relieve themselves of 

liability and accountability for 

adherence to applicable legal standards. 

However, the Department does 

recognize that there are certain limited 

situations, such as nuisance claims, 


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19The Department notes that the independent 

fiduciaries themselves are the parties best informed 

about their own ability to remedy any potential 

ERISA liability, and that the exemption process is 

not an adversarial proceeding in which the 

Department is in a position to adjudicate all the 

relevant facts. Accordingly, the Department’s 

acceptance of these disclosures should not be 

viewed as a determination by the Department that 

an independent fiduciary has adequately addressed 

its ability to remedy any potential ERISA liability. 

where a contractual reimbursement 

provision may be appropriate. As a 

result, paragraph (f)(2) of the Final 

Amendment provides that the 

independent fiduciary’s letter or 

contract may include a provision 

providing for reimbursement of legal 

expenses with respect to claims for any 

failure to adhere to the fiduciary’s 

contractual obligations or to Federal and 

state laws applicable to the independent 

fiduciary’s work, provided that (A) the 

plan determines that the reimbursement 

is prudent following a good faith 

determination that the independent 

fiduciary likely did not fail to adhere to 

its contractual obligations or to Federal 

and state laws applicable to the 

independent fiduciary’s work and will 

be able to repay the plan if the fiduciary 

is found liable or enters into a 

settlement for the breach; and (B) the 

letter or contract requires the 

independent fiduciary to repay all of the 

reimbursements, in a timely fashion, in 

the event the independent fiduciary 

enters into a settlement agreement 

regarding any asserted failure to adhere 

to its contractual obligations, or to state 

or Federal laws, or has been found liable 

for a breach of contract or violation of 

any Federal or state laws applicable to 

the fiduciary’s work. The new language 

allows independent fiduciaries and 

their clients to negotiate agreements to 

address claims that are not likely to 

result in liability for the fiduciary and 

is consistent with the underlying 

concerns previously laid out by the 

Proposed Rule. The Department requires 

the fiduciary selecting the independent 

fiduciary to make a good faith 

determination to fulfill its fiduciary 

obligations but does not require an 

exhaustive legal review. The 

Department also notes that despite the 

revised language, no language may be 

included in the letter or contract that 

runs afoul of ERISA section 410. 

In order to ensure that qualified 

independent fiduciaries have sufficient 

resources to compensate plans for any 

losses for which they are liable, the 

Department originally proposed 

language that would require fiduciaries 

to maintain a sufficient amount of 

fiduciary liability insurance to 

indemnify the plan for damages 

resulting from a breach by the 

independent fiduciary of either: (1) 

ERISA, the Code, or any other Federal 

or state law; or (2) its contract or 

engagement letter under proposed 

paragraph (f)(3). The insurance could 

not contain an exclusion for actions 

brought by the Secretary or any other 

Federal, State, or regulatory body, the 

plan, or plan participants and 

beneficiaries. Commenters objected to 

this language on the grounds that 

obtaining insurance that could meet the 

requirements of the language would be 

difficult, if not impossible. They also 

argued that the cost of such insurance 

would drive many independent 

fiduciaries to exit the employee benefit 

plan marketplace. 

The Department acknowledges the 

commenters’ concerns but also wants to 

ensure that qualified independent 

fiduciaries have sufficient resources to 

compensate plans for any losses for 

which they are liable. Therefore, the 

Department has revised the proposed 

language in the Final Amendment to 

simply require applicants to include in 

their exemption applications a 

description of any fiduciary liability 

insurance policy maintained by the 

independent fiduciary that includes: (A) 

the amount of coverage available to 

indemnify the plan for damages 

resulting from a breach by the 

independent fiduciary of either ERISA, 

the Code, or any other Federal or state 

law or its contract or engagement letter; 

and (B) whether the insurance policy 

contains an exclusion for actions 

brought by the Secretary or any other 

Federal, State, or regulatory body, the 

plan, or plan participants or 

beneficiaries. Some entities that provide 

ERISA fiduciary services with respect to 

exemption transactions may not be 

either sufficiently liquid or sufficiently 

capitalized to address liability that 

might arise in connection with an 

exemption transaction. A prudent 

independent fiduciary must have 

sufficient insurance to address those 

issues. Therefore, the Department’s 

position is that a prudent fiduciary 

should make a reasoned determination 

regarding the appropriate amount of 

insurance it should maintain to fulfill 

its fiduciary obligation to a plan and 

protect the plan’s participants and 

beneficiaries. Revising paragraph (f)(2) 

in the Final Amendment to require a 

description of any fiduciary liability 

insurance policy maintained by the 

independent fiduciary allows the 

independent fiduciaries to make their 

own determinations regarding 

insurance, while also providing the 

Department with the information it 

needs to determine whether a proposed 

exemption is in the interest of and 

protective of the rights of participants 

and beneficiaries. Further, the 

information would assist the 

Department in determining whether it 

should request additional information 

regarding the independent fiduciary’s 

assets, capital, or insurance in order to 

determine whether sufficient resources 

exist to cover a potential loss. 

The Department notes that the Final 

Amendment’s independent fiduciary 

insurance disclosure requirement is 

uniquely imposed on independent 

fiduciaries because of their important 

role as a unique bulwark against 

conflicts of interest. Under ERISA’s 

statutory framework, fiduciaries have 

central responsibility—and 

accountability—for the protection of 

plan participants’ interests. 

Consequently, the Department is 

especially concerned that they have the 

financial wherewithal to make good on 

violations that injure plan participants. 

Independent fiduciaries may ultimately 

bear the responsibility of (1) making 

final decisions regarding determinations 

(e.g., approval of an appraisal) and (2) 

approving the overall exemption 

transaction. Independent fiduciaries 

also must make a determination as to 

whether a third-party service provider, 

such as an appraiser, has sufficient 

insurance, assets, and liquidity to 

address any liability that may arise from 

a failure to meet the service provider’s 

contractually imposed obligations when 

determining whether to retain the 

service provider. Independent 

fiduciaries are critically important to 

ensuring that the exemptions are in the 

interest and protective of the plan and 

its participants and beneficiaries. 

Therefore, when they submit an 

exemption application, applicants 

should be positioned to carefully 

consider and disclose the independent 

fiduciary’s ability to remedy any 

injuries caused by its fiduciary 

violations and make the plan whole for 

any losses caused by the independent 

fiduciary’s failure to discharge its role 

properly.19

Due to the qualified independent 

fiduciary’s essential role in many 

exemptions, the Department makes 

additional changes to paragraph (f) in 

the Final Amendment that are 

consistent with the stated goals of the 

Proposed Rule to further bolster the 

qualified independent fiduciary’s 

independence. First, paragraph (f)(6) of 

the Final Amendment expands the 

existing acknowledgement provision to 

require an acknowledgement that the 

fiduciary understands its duties and 


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4678 Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 

responsibilities under ERISA, is acting 

as a fiduciary of the plan with respect 

to the exemption transaction, has no 

material conflicts of interest with 

respect to the exemption transaction, 

and is not acting as an agent or 

representative of the plan sponsor. The 

Final Amendment expands the 

acknowledgment to capture more 

potential conflicts. Under the Final 

Amendment, the fiduciary can no longer 

simply acknowledge that it is an ERISA 

fiduciary, but it also has to acknowledge 

that it is acting with respect to the 

transaction solely in the interest of the 

plan, not acting on behalf of the plan 

sponsor, and not subject to conflicts of 

interest. 

The Department also revises 

paragraph (f)(7) in the Final 

Amendment to provide that the 

qualified independent fiduciary must 

certify in writing that the exemption 

transaction complies with the impartial 

conduct standards set forth in 

paragraphs (b)(2)(i)(A) through (C). The 

Final Amendment revises paragraph 

(f)(9) to reflect the changes to the 

definition of a qualified independent 

fiduciary. 

The Department added a new 

paragraph (f)(10) to the Final 

Amendment that requires the qualified 

independent fiduciary to state that it has 

no conflicts of interest with respect to 

the exemption transaction that could 

affect the exercise of its best judgment 

as a fiduciary. The requirement puts the 

fiduciary on the record that it has no 

conflicts that could impact its judgment 

and, thereby, promotes compliance with 

the exemption’s terms. 

In the proposal, the Department 

proposed to revise paragraph (f)(11) to 

require an applicant to address in its 

exemption application whether the 

qualified independent fiduciary has 

been under investigation or 

examination, or has been engaged in 

litigation or a continuing controversy. 

Specifically, the fiduciary would have 

been required to either (1) include a 

statement that within the last five years, 

the independent fiduciary has not been 

under investigation or examination by, 

and has not engaged in litigation or a 

continuing controversy with, the 

Department, the IRS, the Justice 

Department, the Pension Benefit 

Guaranty Corporation, the Federal 

Retirement Thrift Investment Board, or 

any other Federal or state entity 

involving compliance with provisions of 

ERISA, the Code, FERSA, or other 

Federal or state law; or (2) include a 

statement describing the applicable 

investigation, examination, litigation or 

controversy. Commenters objected to 

the breadth of the language, asserting 

that it would capture a wide universe of 

events that were not related to the 

interests of employee benefit plans. 

In response to the concerns, the 

Department revised paragraph (f)(11) in 

the Final Amendment to limit 

disclosure to require the independent 

fiduciary to include a statement that it 

has not been under investigation or 

examination by, and has not engaged in 

litigation investigations or controversies 

involving: (A) compliance with 

provisions of ERISA or FERSA; (B) its 

representation of or position or 

employment with any employee benefit 

plan, including investigations or 

controversies involving ERISA or the 

Code, or any other Federal or state law; 

(C) conduct of the business of a broker, 

dealer, investment adviser, bank, 

insurance company, or fiduciary; (D) 

income tax evasion; or (E) or any felony 

or conspiracy involving the larceny, 

theft, robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities. 

In the final amendment, the 

Department now is requiring applicants 

only to disclose events that are directly 

applicable to the provision of fiduciary 

services to employee benefit plans. 

Specifically, the Department has limited 

the disclosure to cover a fiduciary’s 

work experience that is relevant to 

determining whether the fiduciary can 

meet the high standard to which it is 

held under ERISA, whether that 

experience is in the employee benefits 

field or another industry in which a 

fiduciary’s ability to uphold its 

heightened obligations is reflected. 

These disclosures are essential to 

informing the Department’s 

determination of whether the proposed 

independent fiduciary will be able to 

meet the heightened standards to which 

a fiduciary is held under ERISA, and the 

important role they would serve in 

overseeing transactions that otherwise 

would be prohibited under ERISA. The 

Department notes, for clarity, that the 

term employee benefit plan also refers 

to governmental and church plans. 

Paragraph (f)(12) connects with the 

Proposed Rule’s paragraph (f)(11), 

which is slightly revised for clarity in 

the Final Amendment by requiring 

applicants to include in their exemption 

applications the qualified independent 

fiduciary’s statement that within the last 

13 years, it has not been: 

(1) convicted or released from 

imprisonment, whichever is later, as a 

result of any felony involving abuse or 

misuse of such person’s position or 

employment with an employee benefit 

plan or a labor organization; any felony 

arising out of the conduct of the 

business of a broker, dealer, investment 

adviser, bank, insurance company or 

fiduciary; income tax evasion; any 

felony involving the larceny, theft, 

robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities; conspiracy or attempt to 

commit any such crimes or a crime of 

which any of the foregoing crimes is an 

element; or any crime identified in 

ERISA section 411, regardless of 

whether the conviction occurred in a 

U.S. or foreign jurisdiction; or 

(2) convicted by a foreign court of 

competent jurisdiction or released from 

imprisonment, whichever is later, as a 

result of any crime that is substantially 

equivalent to an offense described in 

paragraph (f)(12)(i)(A)(1); or 

A statement describing a conviction 

or release from imprisonment described 

in paragraph (f)(12)(i)(A). 

For purposes of paragraph (f), a 

person is deemed to have been 

‘‘convicted’’ from the date of the 

judgment of the trial court (or the date 

of the judgment of any court in a foreign 

jurisdiction that is the equivalent of a 

U.S. Federal or state trial court), 

regardless of whether that judgment 

remains under appeal and regardless of 

whether the foreign jurisdiction 

considers a trial court judgment final 

while under appeal. 

Commenters raised concerns that the 

required disclosure of foreign 

convictions is overly expansive, 

burdensome, and confusing. The 

Department disagrees with these 

concerns and maintains that the burden 

imposed by this disclosure is minimal 

and moreover that the burden is 

outweighed by the Department’s need to 

have information relevant to the 

qualifications and independence of the 

fiduciary and to the prudence and 

loyalty of the applicant’s selection of the 

independent fiduciary. Further, the 

Department does not believe the 

requirement is overly expansive or 

confusing, because it is limited to 

convictions that are specifically related 

to a fiduciary’s duties that are relevant 

to the Department’s determination. 

Lastly, the Final Amendment narrows 

paragraph (g)(3) regarding other thirdparty experts. The paragraph now 

provides that the detailed description of 

any relationship is limited to parties in 

interest (or affiliates) involved in the 

exemption transaction. This revision is 

consistent with the changes made in the 

Final Amendment with respect to 

appraisers and fiduciaries. 


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20See, Donovan v. Bierwirth, 680 F.2d 263, 272 

(2d Cir. 1982). 

Section 2570.35 

Section 2570.35 addresses 

information that must be included in an 

individual exemption application. The 

Department proposed multiple changes 

to § 2570.35 for readability and 

consistency with changes made in other 

sections of the Exemption Procedure 

Regulation and included these changes 

in the Final Amendment. In addition, 

the Department included some minor 

changes in the Final Amendment that 

require applicants to provide the mail 

and email addresses of the plan and 

parties in interest to which the 

exemption application applies, as well 

as a reminder that applicants should not 

submit social security numbers with 

their applications. 

Beyond those changes, the 

Department proposed to revise 

paragraph (a)(6) to address foreign 

convictions more clearly, which was 

further revised in the Final Amendment 

solely for clarity. While the 

Department’s position is that the current 

Exemption Procedure Regulation 

language includes foreign convictions, 

the proposal amended the provision to 

clearly require applicants to disclose 

whether, within the last 13 years, they 

or any party involved in the exemption 

transaction had been convicted by a 

foreign court of competent jurisdiction 

or released from imprisonment, 

whichever is later, as a result of any 

crime, however denominated by the 

laws of the relevant foreign government, 

that is substantially equivalent to an 

offense described in paragraph (a)(6)(i) 

and a description of the circumstances 

of any such conviction. For purposes of 

this section, a person is deemed to have 

been ‘‘convicted’’ from the date of the 

trial court’s judgment (or the date of the 

judgment of any court in a foreign 

jurisdiction that is the equivalent of a 

U.S. Federal or state trial court), 

regardless of whether that judgment 

remains under appeal and the foreign 

jurisdiction considers a trial court 

judgment final while under appeal. 

Commenters objected to the inclusion 

of foreign convictions in the proposal 

because they asserted that their 

inclusion is not relevant to the 

exemption process and is inconsistent 

with guidance issued by the Department 

with respect to Prohibited Transaction 

Exemption 84–14. 

The Department disagrees with the 

commenters’ position, and it has 

adopted the proposed changes in the 

Final Amendment. The Department’s 

position is that clarifying the treatment 

of foreign convictions removes 

uncertainty from the exemption 

application process, which ensures that 

the Department receives all relevant 

information it needs to make an 

exemption determination. Applicants’ 

foreign convictions for crimes involving 

self-interested and conflicted 

transactions are relevant to the 

Department’s statutory findings because 

such convictions may indicate risk to 

the plan and its participants and 

beneficiaries. This information also 

informs the Department about how to 

handle potential conflicts of interest and 

enhances its ability to design protective 

conditions by clarifying whether a party 

is likely to comply with the terms of the 

exemption. For example, if a party has 

a history of fiduciary violations in 

foreign jurisdictions, the Department 

may look closer or impose different 

conditions with respect to an exemption 

that allows a party to engage in a 

transaction with potential fiduciary 

conflicts of interest. The Department 

also notes that the language of the Final 

Amendment is applicable solely to the 

exemption application process and is 

not an interpretation of Prohibited 

Transaction Exemption 84–14. 

The Department also proposed to 

revise paragraph (a)(7) to be consistent 

with the Department’s approach to 

fiduciaries that have been the subject of 

investigation, examination, or litigation 

as set forth in § 2570.34(f)(11). 

Commenters objected to the breadth of 

the language by asserting that it captures 

a wide universe of events that are not 

related to employee benefit plans. 

After considering these comments, 

consistent with § 2570.34(f)(11), the 

Department has limited the language in 

the proposed amendment to only 

require applicants to include 

information in their applications that is 

essential to the Department’s evaluation 

of an independent fiduciary’s ability to 

meet ERISA’s fiduciary standards, 

which are the highest known to law.20

As revised, the provision in the Final 

Amendment is limited to those 

investigations, examinations, or 

litigation involving: (i) compliance with 

provisions of ERISA or FERSA; (ii) 

representation of or position or 

employment with any employee benefit 

plan, including investigations or 

controversies involving ERISA or the 

Code, or any other Federal or state law; 

(iii) conduct of the business of a broker, 

dealer, investment adviser, bank, 

insurance company, or fiduciary; (iv) 

income tax evasion; or (v) or any felony 

or conspiracy involving the larceny, 

theft, robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities. This change represents a 

subset of the investigations, 

examinations, and litigation matters that 

the Department proposed to include. 

This revision ensures that the 

Department has full knowledge of any 

potential issues or conflicts that may 

impact an independent fiduciary’s duty 

to meet its ERISA obligations, while not 

requiring disclosures that are overly 

inclusive or burdensome. 

The Department also proposed to 

revise paragraph (a)(12), which required 

the applicant to state the percentage of 

plan assets affected by the exemption 

transaction to provide that if the 

exemption transaction includes the 

acquisition of an asset by the plan, the 

fair market value of the asset to be 

acquired must be included in both the 

numerator and denominator of the 

applicable fraction. The new language 

simply clarifies the Department’s 

understanding of how to calculate the 

fair market value percentage in an 

acquisition so that the percentage 

accurately reflects the impact of the 

exemption transaction on overall plan 

assets. This language has been adopted 

in the Final Amendment without 

change. 

Paragraph (a)(18) requires applicants 

to provide information on which parties 

will bear the cost of the exemption 

application and notifying interested 

persons. The Proposed Rule would have 

explained that the disclosure is 

intended to capture all of the costs and 

fees associated with the exemption 

transaction, not just those immediately 

derived from the submission of the 

exemption application. This facilitates 

the Department’s understanding of the 

true cost of a particular exemption 

transaction. This provision has thus 

been included in the Final Amendment 

without change. 

In addition, paragraph (a)(18) of the 

proposal included language that stated 

that a plan may not bear the costs of the 

exemption application, commissions, 

fees, and notification of interested 

persons unless the Department 

determines, in its sole discretion, that a 

compelling circumstance exists that 

necessitates the payment of these 

expenses by the plan. Commenters 

argued that allowing a plan to bear these 

costs is acceptable because many 

applications are solely for the benefit of 

a plan, and that prohibiting the plan 

from incurring such expenses was 

arbitrary. After consideration, the 

Department has determined not to 

include this language in the Final 

Amendment. 

Finally, the Department proposed to 

add a new paragraph (a)(20), which 


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would have required the applicant to 

state in its exemption application 

whether any prior transactions have 

occurred between (1) the plan or plan 

sponsor and (2) a party in interest 

involved in the exemption transaction. 

Requiring this information allows the 

Department to determine where the 

exemption transaction fits in the 

relationship between the plan and the 

parties in interest involved in the 

exemption transaction, and to evaluate 

whether the exemption transaction is 

part of a larger set of transactions or a 

pattern of practice. Therefore, the 

Department included that provision in 

the Final Amendment as proposed. 

The Department proposed a minor 

change to paragraph (b)(4). The current 

Exemption Procedure Regulation 

requires the application to contain a net 

worth statement with respect to any 

party in interest providing a personal 

guarantee with respect to the exemption 

transaction. The Department expanded 

this language to cover not just parties in 

interest, but any party providing such a 

guarantee. This change allows the 

Department to more accurately 

determine the value of any guarantee 

associated with the exemption 

transaction, and, therefore, has been 

included in the Final Amendment. 

In accordance with its discussion of 

§ 2570.30 regarding retroactive 

exemption requests, the Department 

proposed to make specific revisions to 

the requirements for retroactive 

exemptions in paragraph (d). For 

example, the Department proposed to 

amend current paragraph (d)(1) to state 

that the Department will consider 

exemption requests for retroactive relief 

only when (1) the safeguards necessary 

for the grant of a prospective exemption 

were in place at the time the parties 

entered into the exemption transaction, 

and (2) the plan and its participants and 

beneficiaries have not been harmed by 

the exemption transaction. An applicant 

for a retroactive exemption must 

demonstrate that the responsible plan 

fiduciaries acted in good faith by taking 

all appropriate steps necessary to 

protect the plan from abuse, loss, and 

risk at the time of the exemption 

transaction. An applicant should further 

explain and describe whether the 

exemption transaction could have been 

performed without engaging in a 

prohibited exemption transaction, and 

whether the goals of the exemption 

transaction could have been achieved 

through an alternative transaction that 

served the aims of the plan equally well. 

The Department’s proposed revisions 

were intended to emphasize that the 

applicant must demonstrate that the 

plan and its participants and 

beneficiaries were not harmed by the 

exemption transaction for which an 

applicant requests retroaction relief. The 

Department cannot readily make the 

findings required by ERISA section 

408(a) that the transaction is in the 

interests of the plan and its participants 

and beneficiaries and protective of their 

rights if, in fact, the transaction were 

harmful to plan participants and 

beneficiaries. The Department’s 

determination of whether a transaction 

was harmful will be based on the facts 

and circumstances of the transaction, 

including whether the participant and 

beneficiaries were made whole. Further, 

the applicant must: (1) demonstrate that 

the plan fiduciaries took all appropriate 

steps necessary to prevent abuse, loss, 

and risk when the transaction took 

place; and (2) fully explain and describe 

whether the exemption transaction 

could have been performed without 

engaging in a prohibited exemption 

transaction, and whether the goals of the 

transaction could have been achieved 

through an alternative transaction that 

served the plan’s objectives equally 

well. 

Including such information in the 

exemption application demonstrates to 

the Department that the fiduciaries were 

acting prudently to protect the plan and 

its participants and beneficiaries when 

the transaction took place. Therefore, 

the Department has finalized these 

revisions as proposed while making 

minor edits to the wording. 

In order to assist applicants in 

demonstrating that they acted in good 

faith when entering into a previously 

consummated exemption transaction, 

proposed paragraph (d)(2) provided 

factors the Department would consider 

when reviewing a retroactive exemption 

application. As proposed, paragraph 

(d)(2)(i) was revised to state that one of 

the factors the Department would 

consider is the involvement of an 

independent fiduciary before an 

exemption transaction occurs who acts 

on behalf of the plan and is qualified to 

negotiate, approve, and monitor the 

exemption transaction; provided, 

however, the Department could 

consider, at its sole discretion, an 

independent fiduciary’s appointment 

and retrospective review after 

completion of the exemption transaction 

due to exigent circumstances. The 

Department proposed making these 

revisions to the prior language to clarify 

that, in certain exigent circumstances, 

the Department may consider, at its sole 

discretion, the approval of an 

independent fiduciary after the fact. The 

Department recognizes that under 

certain rare and extreme circumstances, 

an independent fiduciary’s retroactive 

approval of the transaction may assist 

the Department in determining whether 

an applicant acted in good faith. 

The Department also proposed to 

revise paragraph (d)(2)(v) to assist with 

the good faith determination. The 

proposed revision required an applicant 

to submit evidence that the plan 

fiduciary did not engage in an act or 

transaction that the fiduciary should 

have known was prohibited under 

ERISA section 406 and/or Code section 

4975. The proposed revision applied the 

more appropriate ERISA standard that a 

fiduciary is responsible not only for 

what it knows, but what it should have 

known. Setting forth this standard 

ensures that the plan fiduciary actively 

engaged and evaluated the exemption 

transaction. The Department is adopting 

this provision in the Final Amendment 

as proposed. 

Finally, the Department proposed to 

revise the last paragraph on retroactive 

exemptions. Specifically, proposed 

paragraph (d)(3) addressed the 

Department’s position that it will not 

consider retroactive exemption requests 

if the exemption transaction resulted in 

a loss for the plan. The proposed 

revision made clear that the 

Department’s starting presumption is 

that it will simply not consider such 

requests. However, the Department also 

proposed to clarify that the 

determination as to loss is only applied 

at the time of the exemption 

application. Thus, if the facts later show 

that the exemption transaction resulted 

in a loss months or years after the 

completion of the exemption 

application, that information is not 

relevant to the exemption 

determination, which is made based on 

the facts available at the time. The 

Department has adopted this revision in 

the Final Amendment as proposed. 

Section 2570.36 

Section 2570.36 addresses where to 

file an exemption application. In the 

proposal, the Department proposed to 

modernize the submission process by no 

longer requiring a paper submission, 

and instead directing applicants to make 

their submissions to e-oed@dol.gov. The 

revision retains applicants’ right to 

submit a paper application and provides 

current information on the correct 

delivery addresses while noting that the 

address published in the Exemption 

Procedure Regulation may change over 

time. The Department has finalized the 

revision as proposed, and notes that it 

will provide the current submission 

address on its website. 


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Section 2570.37 

Section 2570.37 addresses an 

applicant’s duty to supplement its 

exemption application. The Department 

proposed to revise paragraph (a) to state 

that applicants have a duty to promptly 

notify the Department of any material 

changes to facts or representations 

either during the Department’s 

consideration of the application or 

following the Department’s grant of an 

exemption. This duty only extends to 

the information that was provided at the 

time of the grant of the exemption. In 

paragraph (b), the Department includes 

the duty for applicants to disclose to the 

Department whether a party in interest 

participating in the exemption 

transaction is the subject of an 

investigation or enforcement action 

relating to an employee benefit plan by 

including investigative and enforcement 

actions by any Federal or state 

governmental entity, not just the 

Department, the IRS, the Justice 

Department, the Pension Benefit 

Guaranty Corporation, and the Federal 

Retirement Thrift Investment Board. 

The Department has included this 

provision in the Final Amendment as 

proposed, but it notes that solely for this 

purpose, SEC examinations are not 

included. 

Section 2570.38 

Section 2570.38 addresses the 

issuance of tentative denial letters 

before the Department issues a final 

denial letter to an applicant. Tentative 

denial letters, often referred to as TD 

letters, inform the applicant that the 

Department has tentatively decided not 

to move forward with proposing an 

exemption, and describe the applicant’s 

rights to request a conference and 

submit additional information. The 

Department proposed to revise the text 

to clarify that it may extend the 20-day 

period during which an applicant 

normally would be required to request 

a hearing or notify the Department of its 

intent to submit additional information 

following the issuance of a tentative 

denial letter at its sole discretion. The 

Department proposed to make this 

change to inform applicants that the 20- 

day period provides a hard deadline for 

the applicant to reply unless the 

Department chooses to extend the 

period at its sole discretion based on the 

facts and circumstances. The 

Department has made this change to the 

Final Amendment as proposed. 

Section 2570.39 

Section 2570.39 addresses the 

applicant’s ability to submit additional 

information. Consistent with other 

proposed revisions to the Exemption 

Procedure Regulation, the Department 

proposed a revision to update the 

manner by which the applicant may 

communicate with the Department. The 

Department also proposed to revise 

paragraph (b) to provide that, while the 

applicant is required to submit the 

additional information within 40 days 

after the date the Department issued a 

tentative denial letter, the Department 

may extend the time period at its sole 

discretion. The Department also 

proposed to make conforming changes 

throughout the section. As with 

§ 2570.38, the Department proposed this 

change to inform the applicant that the 

time period is a hard deadline, unless 

the Department chooses to extend the 

period pursuant to its own discretion 

based on the facts and circumstances. 

Finally, the Department proposed to 

delete paragraph (d). The paragraph 

provides that if an applicant could not 

submit all of the supplementary 

information within the 40-day time 

period (unless extended by the 

Department), it could withdraw the 

application and reinstate it at a later 

time. The Department proposed to 

delete this provision to be consistent 

with proposed changes to § 2570.44, 

which covers withdrawn applications. 

As described below, the Department is 

amending its approach regarding 

withdrawals and reapplications in that 

section. 

The Department notes that the 

requirement in paragraph (b) that the 

certification accompanying the 

submission of additional information be 

made pursuant to a penalty of perjury is 

revised for consistency with 

§ 2570.34(c) and (f) to require a 

certification that all information 

provided to the Department is true and 

correct. Otherwise, the Department is 

including all of the proposed revisions 

to § 2570.39 as proposed. 

Section 2570.40 

Section 2570.40 addresses 

conferences between the applicant, or 

its representative, and the Department. 

Current paragraph (b) provides that, 

generally, an applicant is entitled to 

only one conference under the 

Exemption Procedure Regulation. The 

Department proposed to retain this text, 

but the Department added additional 

language providing that the Department 

may request the applicant to participate 

in additional conferences at its sole 

discretion. The proposal provided that 

the Department would make such a 

request if it determines that additional 

conferences are appropriate based on 

the facts and circumstances of the 

exemption application. 

The Department also proposed to 

revise paragraphs (d) through (h), which 

govern the timing of conferences and 

the submission of information. As with 

changes to §§ 2570.39 and 2570.40(b), 

the Department proposed to revise these 

sections to provide that the Department 

may, at its sole discretion, extend time 

periods. These changes were proposed 

to similarly inform the applicant that 

the time periods outlined in the section 

provide a hard deadline for the 

applicant, unless the Department, based 

on the facts and circumstances, chooses 

to extend the period pursuant to its own 

discretion. 

The Department also proposed to add 

a new paragraph (i) providing that the 

Department, at its sole discretion, may 

hold a conference with any party, 

including the qualified independent 

fiduciary or the qualified independent 

appraiser, regarding any matter related 

to an exemption request without the 

presence of the applicant or other 

parties to the exemption transaction or 

their representatives. Under the 

proposal, any such conferences could 

occur in addition to the conference with 

the applicant described in § 2570.40(b). 

Commenters objected to this new 

paragraph, arguing that it is unnecessary 

and presumes malfeasance on the part 

of the applicant. 

The Department disagrees. The 

Department proposed to add this 

language to clarify that it is entitled to 

hold conferences with whomever it 

deems necessary. The new paragraph 

acknowledges that, under certain 

circumstances, the Department may 

need to meet with a third party to 

accurately assess the exemption 

application. The language does not 

presume or connote an applicant’s 

malfeasance; it only recognizes the fact 

that certain parties, such as independent 

fiduciaries or appraisers, may be less 

restrained when discussing issues solely 

with the Department. For example, the 

Department may determine that a 

discussion with a qualified independent 

fiduciary without the presence of the 

applicant or its representative may 

provide additional insight into the 

qualified independent fiduciary’s work 

if the applicant is not present to 

influence the explanation of the 

fiduciary’s work product or limit the 

topics which are discussed. 

After considering the comments, the 

Department has included the revisions 

to § 2570.40 in the Final Amendment as 

proposed. 

Section 2570.41 

Section 2570.41 addresses final denial 

letters, which are the final action taken 

by the Department with respect to an 


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application if the Department has 

determined that an exemption will not 

be granted for an exemption transaction. 

The Department proposed to add a new 

paragraph (a), which provides that the 

Department would issue a final denial 

letter without issuing a tentative denial 

letter under § 2570.38, or conducting a 

hearing on the exemption under either 

§ 2570.46 or § 2570.47, (in other words, 

a direct denial) if the Department 

determines in its sole discretion, that: 

(1) the applicant has failed to submit 

information requested by the 

Department in a timely manner; (2) the 

information provided by the applicant 

does not meet the requirements of 

§§ 2570.34 and 2570.35; or (3) a 

conference has been held between the 

Department and the applicant before the 

issuance of a tentative denial letter 

during which the Department and the 

applicant addressed the reasons for 

denial that otherwise would have been 

set forth in a tentative denial letter 

pursuant to § 2570.38. While the 

language of §§ 2570.38, 2570.46, and 

2570.47 does not require a tentative 

denial letter to be sent or a hearing to 

occur under all circumstances, the 

current language does not clearly state 

that the Department may issue a final 

denial letter without taking those steps. 

To eliminate uncertainty, the 

Department proposed to add the new 

text to make clear that, based on the 

reasons outlined above, the Department 

may issue final denial letters without 

tentative denial letters or hearings. 

Commenters objected to the new 

proposed paragraph (a) on the grounds 

that being issued a direct denial would 

deprive applicants of an opportunity to 

respond to concerns raised by the 

Department. In response, the 

Department clarifies that it would not 

issue a direct denial where there is 

active engagement between the 

applicant and the Department. The 

Department proposed to include this 

language solely to clarify that there are 

certain instances where, for 

administrative expediency, the 

Department can issue a final denial 

letter without issuing a tentative denial 

letter if the facts and circumstances 

preclude the Department from 

processing the application submitted by 

the applicant, or if an applicant fails to 

provide anything more than cursory 

information. For example, if an 

applicant submits an exemption 

application that is only one or two pages 

long and is unresponsive to the 

Department’s request for additional 

information, under the proposed new 

paragraph, the Department may issue a 

final denial letter either immediately or 

following an initial short conference 

during which the applicant fails to 

provide any additional or requested 

information. Further, the Department 

proposed that it may issue a direct 

denial letter if an applicant submits a 

request for a retroactive exemption 

where the participants and beneficiaries 

were substantially harmed by the 

subject transaction. 

The Department also notes that it has 

modified § 2570.45 to provide that 

applications denied under § 2570.41(a) 

can be resubmitted for reconsideration. 

Those changes are discussed further 

below. 

The Department also proposed to add 

a new paragraph (e), which would 

provide that the Department will issue 

a final denial letter where the applicant 

either (1) asks to withdraw the 

exemption application, or (2) 

communicates to the Department that it 

is not interested in continuing the 

application process. This revision is 

consistent with the changes the 

Department is making in § 2570.44. The 

Department proposed to add this text to 

formally memorialize the ultimate 

disposition of the application by issuing 

a final denial letter if the applicant 

decides it is no longer interested in an 

exemption, whether communicated 

through either a withdrawal or a 

statement of disinterest. The proposed 

revision would allow the Department to 

track and manage exemption 

applications more clearly. 

The Department has included all of 

the Proposed Rule’s revisions to 

§ 2570.41 in the Final Amendment. 

Section 2570.42 

When the Department makes an 

initial determination that the issuance 

of an exemption is warranted, § 2570.42 

provides that the Department must give 

interested parties notice and 

opportunity to comment through the 

publication of a proposed exemption in 

the Federal Register. The Department 

proposed to revise a portion of 

paragraph (d). Previously, the paragraph 

provided that when the proposed 

exemption includes relief from ERISA 

section 406(b), Code section 

4975(c)(1)(E), or FERSA section 

8477(c)(2), the proposed exemption 

must inform interested persons who 

would be adversely affected by the 

transaction of their right to request a 

hearing under § 2570.46. The 

Department proposed to delete the 

reference to interested persons who 

would be adversely affected by the 

exemption transaction, thus making the 

text applicable to all interested persons 

who have been materially affected by 

the exemption. This revision was made 

to both reflect the difficulty in 

determining which parties are adversely 

affected and to ensure that all parties 

that might have relevant information to 

the Department’s final determination are 

provided with an opportunity to 

communicate that information. 

The Department has retained its 

proposed revisions to § 2570.42 in the 

Final Amendment. 

Section 2570.43 

Upon publication of a proposed 

exemption in the Federal Register, 

§ 2570.43 provides that the applicant 

must provide notice to interested 

persons of the pendency of the 

exemption. The section outlines the 

process by which the notice is drafted 

and provided. The Department 

proposed to revise paragraph (a) to 

delete ‘‘adversely’’ and replace it with 

‘‘materially’’ when applying the term to 

the interested parties’ right to a hearing 

to remain consistent with the proposal’s 

revision to § 2570.42 discussed above. 

The Department also proposed to make 

minor changes regarding how a 

commenter may submit their comment 

and added language to the existing text 

advising commenters not to disclose 

personal data or submit confidential or 

otherwise protected information. 

The Department has included these 

proposed amendments to § 2570.43 in 

the Final Amendment. 

Section 2570.44 

Section 2570.44 addresses the 

withdrawal of an exemption 

application. The current Exemption 

Procedure Regulation is silent as to 

whether an applicant can withdraw its 

exemption application without the 

Department’s issuance of a formal final 

denial letter. It has, however, been the 

Department’s practice that applicants 

can withdraw their applications without 

the issuance of a final denial letter. In 

a revision to this practice, the 

Department proposed to revise 

paragraph (b) to provide explicitly that 

the Department will terminate all 

proceedings regarding the application 

upon receiving an applicant’s 

withdrawal request and issue a final 

denial letter. The issuance of the final 

denial letter would formally close the 

application and allow the Department to 

better manage its inventory of 

exemption applications. 

The Department proposed to revise 

paragraph (d) to provide that if an 

applicant chooses to reapply after 

withdrawing their application, the 

applicant must update all previously 

furnished information with respect to 

the prior application and the exemption 

transaction. Applicants currently can 


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reapply without providing additional 

information after withdrawing their 

applications unless the request occurs 

more than two years after withdrawal. 

Applicants should be required to 

completely update all information when 

they reapply for an exemption, 

regardless of the time that has elapsed 

after their withdrawal. Therefore, the 

Proposed Rule would treat the 

withdrawal as a formal denial, which 

would shift the burden to the applicant 

to present an updated application to the 

Department for its review. 

Commenters raised concerns that the 

proposed denial and resubmission 

revisions would presume malfeasance 

or bias against resubmitted applications. 

The Department disagrees. The denial is 

an administrative action only, and it 

presents no bias against an application. 

Clearly shifting the resubmission 

burden to the applicant, without relying 

on an older submission that was 

withdrawn, is appropriate because the 

exemption application process starts 

from the premise that applicants must 

show how they meet the Exemption 

Procedure Regulation requirements. 

Additionally, requiring current 

information upon resubmission will 

benefit both the applicants and the 

Department by streamlining the review 

of resubmitted applications. 

Finally, the Department proposed to 

add a new paragraph (f) which states 

that, following the withdrawal of an 

exemption application, the 

administrative record will remain 

subject to public inspection pursuant to 

§ 2570.51. The Department proposed 

this change to clearly set forth its policy 

that the administrative record for an 

exemption will always be available for 

public inspection after it is created. The 

language was intended to clarify current 

practice and to make this section 

consistent with other revisions 

regarding the administrative record 

described above. 

After considering the comments, the 

Department has retained the Proposed 

Rule’s revisions to § 2570.44 in the Final 

Amendment. 

Section 2570.45 

Section 2570.45 addresses formal 

requests for reconsideration following 

the Department’s issuance of a final 

denial letter. The Department proposed 

to add new language to paragraph (a), 

which provides that applicants whose 

applications were denied without a 

tentative denial under § 2570.41(a) may 

request reconsideration, and a new 

paragraph (g), which provides that a 

request for reinstatement of an 

exemption application following a 

withdrawal pursuant to § 2570.44(d) is 

not a request for reconsideration 

governed by § 2570.45. The Department 

proposed to add this text to draw a clear 

distinction between §§ 2570.44 and 

2570.45, and it has retained the 

proposed revisions in the Final 

Amendment. 

In addition, in response to 

commenters’ concerns about final 

denials pursuant to § 2570.41(a), the 

Department has added a new paragraph 

(h). Commenters expressed concern 

about § 2570.41(a) foreclosing 

applicants’ opportunities to respond to 

the Department. New paragraph (h) 

provides that the Department will 

reconsider applications that were 

previously denied under § 2570.41(a)(1) 

or (2) for failure to timely respond to the 

Department’s request for information or 

provide sufficient information, as long 

as the applications are cured upon 

submission for reconsideration. For 

applications that are cured upon 

resubmission, the Department will 

undertake the steps in the exemption 

procedure that remained when the 

Department issued the final denial 

letter. If the Department concludes that 

an exemption is not warranted, it will 

either hold a conference or issue a 

tentative denial letter before issuing a 

final denial. This change clarifies that 

those applicants whose applications are 

denied under § 2570.41(a)(1) or (2) 

without a tentative denial letter or an 

equivalent conference will be afforded 

an opportunity to respond to the 

Department upon reconsideration. 

Section 2570.46 

Section 2570.46 covers the right to a 

hearing with respect to a proposed 

exemption that provides relief from 

ERISA section 406(b), Code section 

4975(c)(1)(E) or (F), or FERSA section 

8477(c)(2) for any interested person who 

may be adversely affected by the 

exemption. The Department proposed to 

expand the right to a hearing to any 

person who may be materially affected 

by an exemption that provides the relief 

described in this section. The 

determination of whether a person is 

materially affected would be at the sole 

discretion of the Department. The 

proposal would delete the reference to 

interested persons to allow any party 

materially affected by the exemption to 

provide material information. Similarly, 

the Department proposed to change the 

word ‘‘adversely’’ to ‘‘materially’’ to 

capture all relevant information with 

respect to the exemption transaction. 

Combined, these revisions would assist 

the Department in its review of the 

exemption transaction by ensuring that 

potentially helpful information is not 

excluded. 

The Department also proposed to 

make a minor revision to paragraph (b) 

that would explicitly state that the 

Department will hold a hearing when it 

is necessary to explore material factual 

information with respect to the 

proposed exemption. Factual 

information is limited to the proposed 

exemption to ensure that the hearing is 

relevant to the Department’s exemption 

determination; information that is not 

material to the exemption transaction 

would not be sufficient to meet this 

requirement. 

The Department has adopted the 

Proposed Rule’s revisions to § 2570.46 

in the Final Amendment. 

Section 2570.47 

The Department did not propose any 

changes to section § 2570.47, and the 

Final Amendment does not make any 

material revisions to § 2570.47. 

Section 2570.48 

Section 2570.48 restates the 

Department’s ERISA section 408(a) 

statutory finding requirements. The 

Department’s only proposed material 

change to this section is to clarify that 

the Department must make a finding 

that the exemption is administratively 

feasible ‘‘for the Department,’’ rather 

than administratively feasible for the 

applicant. 

The Department has retained the 

Proposed Rule’s revisions to § 2570.48 

in the Final Amendment. 

Section 2570.49 

Section 2570.49 addresses the various 

effects of and limits on the grant of an 

exemption. The Department proposed to 

revise paragraph (e) to clarify that the 

determination regarding whether a 

particular statement contained in (or 

omitted from) an exemption application 

constitutes a material fact or 

representation based on the totality of 

the facts and circumstances would be 

made by the Department in its sole 

discretion. The proposed addition of the 

‘‘sole discretion’’ language clarifies that 

the Department retains sole discretion 

with respect to the determination. 

The Department has retained this 

revision to § 2570.49 in the Final 

Amendment. 

Section 2570.50 

Section 2570.50 addresses the 

revocation and modification of existing 

exemptions. The Department proposed 

to substantially revise paragraph (a) to 

provide that, if material changes in 

facts, circumstances, or representations 

occur after an exemption takes effect, 

including if a qualified independent 

fiduciary resigns, is terminated, or is 


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convicted of a crime, the Department, at 

its sole discretion, may take steps to 

revoke or modify the exemption. If the 

qualified independent fiduciary resigns, 

is terminated, or is convicted of a crime, 

the proposal required the applicant to 

notify the Department within 30 days of 

the resignation, termination, or 

conviction. The applicant’s failure to 

provide such notice could result in a 

determination that the conditions of the 

exemption have not been met and lead 

to the exemption’s revocation. Further, 

under the proposal, the Department 

would reserve the right to request the 

applicant to provide the Department 

with any of the information required 

pursuant to § 2570.34(e) and (f) at a time 

determined by the Department at its sole 

discretion. 

The Department proposed to revise 

paragraph (a) beyond the material facts 

to address the qualified independent 

fiduciary. In many exemptions that 

employ qualified independent 

fiduciaries, the fiduciaries represent one 

of the exemption’s core protective 

conditions. It is imperative that an 

applicant inform the Department if the 

independent fiduciary ceases to serve in 

that role because it resigns, is 

terminated, or is convicted of a crime. 

The Proposed Rule was written to 

ensure that the Department will be 

informed of the changed circumstances 

and require the applicant to take 

necessary actions to ensure the 

exemption continues to be in the 

interests of and protective of the rights 

of the plan and its participants and 

beneficiaries. 

In connection with the qualified 

independent fiduciary issue, the 

proposal also would have reserved the 

Department’s right to request that the 

applicant provide any of the 

information required pursuant to 

§ 2570.34(e) and (f) at a time determined 

by the Department at its sole discretion. 

This change was proposed to assist the 

Department’s ultimate disposition of the 

issue and ensure that the exemption 

remains protective. 

Commenters objected to the 

cumulative changes in paragraph (a) on 

the grounds that disclosing information 

after the issuance of an exemption 

would be burdensome, and that such a 

requirement would transform the Office 

of Exemption Determinations into an 

enforcement arm of the Department. 

While the revised paragraph (a) imposes 

additional requirements on an applicant 

after the issuance of an exemption, the 

new language would ensure that granted 

exemptions remain protective of plans 

and their participants and beneficiaries. 

Ensuring that an exemption remains 

protective of plans and their 

participants and beneficiaries in the face 

of changed circumstances relates to the 

Department’s ability to make its 

statutorily required findings. Without 

the revised language, material changes 

could undermine the basis or 

availability of an issued exemption, 

whether intentional or not, without the 

Department’s knowledge. Further, the 

new provision will help prevent, or at 

least provide notice of, the swapping of 

an independent fiduciary that was 

specifically agreed upon with the 

Department as an exemption condition 

for a fiduciary the Department might not 

otherwise approve. 

The Department proposed to amend 

paragraph (a) to provide a tool for the 

Department to evaluate exemptions on 

an ongoing basis, which would allow 

the Department to determine whether it 

can continue to make its statutory 

findings under ERISA section 408(a) 

with respect to an exemption it 

previously granted. While in some cases 

such submissions could result in the 

referral of potentially non-exempt 

prohibited transactions to EBSA’s 

enforcement program, that is not the 

chief purpose of the submissions. 

Nevertheless, non-enforcement EBSA 

offices remain aware of potential ERISA 

violations and can, and do, 

appropriately refer parties to the Office 

of Enforcement or applicable regional 

offices when appropriate. 

Lastly, the Proposed Rule would have 

revised paragraph (c), which currently 

permits the Department’s to revoke or 

modify an exemption under certain 

circumstances, which possibly could 

give the modifications retroactive effect. 

The proposal deleted the reservation of 

the Department’s right to make 

retroactive changes, and instead 

provided that changes may only be 

made prospectively. The revision 

reflects the Department’s concern that 

the ability to make retroactive changes 

undermines the legitimate interests of 

applicants, plans, participants, and 

beneficiaries to rely on exemptions that 

have been granted pursuant to specific 

conditions. Commenters indicated that 

the proposed language may create 

uncertainty about whether the 

Department might choose to revoke an 

exemption. The Department disagrees. 

The current Exemption Procedure 

Regulation already permits revocation, 

and the new provision, in fact, provides 

more certainty by eliminating the 

retroactive revocation language. In 

addition, the Department emphasizes 

that, per new paragraph (b), a revocation 

cannot occur without notice and 

comment. 

Accordingly, the Department has 

retained the Proposed Rule’s revisions 

to § 2570.50 in the Final Amendment. 

Section 2750.51 

Section 2570.51 addresses public 

inspection and the provision of copies 

of the administrative record. The 

Department proposed to revise the 

current language in coordination with 

§ 2570.32(d), which addresses the 

administrative record and the 

information included in the 

administrative record. In the proposal, 

the Department clarified that the 

administrative record is open for public 

inspection and available to copy from 

the date the administrative record is 

established, as determined by 

§ 2570.32(d). In addition, the 

Department proposed to update 

paragraph (b) to allow copies of the 

administrative record to be furnished 

electronically. 

The Department has retained the 

Proposed Rule’s revisions to § 2570.51 

in the Final Amendment. 

Effective Date 

This regulation is effective April 18, 

2024. 

Regulatory Impact Analysis 

1.1. Background and Need for 

Regulation 

As discussed above, the Department’s 

Exemption Procedure Regulation sets 

forth the process by which the 

Department makes exemption 

determinations with respect to 

applications for administrative relief 

from the prohibited transaction 

provisions of ERISA and the Code. The 

Final Amendment revises the current 

Exemption Procedure Regulation to 

promote the Department’s goal of 

promptly and efficiently making 

exemption determinations pursuant to a 

transparent process that is available for 

public inspection and subject to public 

scrutiny. 

In order to accomplish this objective, 

the Final Amendment makes applicants 

aware of information the Department 

requires during the exemption 

application process based on recent 

practices the Department has used to 

process administrative exemption 

requests. The Final Amendment also 

revises the baseline Exemption 

Procedure Regulation to ensure creation 

of a thorough and complete 

administrative record. The revision will 

increase transparency and help any 

impacted party, including plan 

participants and beneficiaries, 

understand the information the 

Department considers when reviewing 


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21Regulatory Planning and Review, 58 FR 51735 

(Oct. 4, 1993). 

22 Improving Regulation and Regulatory Review, 

76 FR 3821 (Jan. 18, 2011). 

23 44 U.S.C. 3506(c)(2)(A) (1995). 

24 5 U.S.C. 601 et seq. (1980). 

25 2 U.S.C. 1501 et seq. (1995). 

26Federalism, 64 FR 153 (Aug. 4, 1999). 

27 5 U.S.C. 804(2) (1996). 

28Regulatory Planning and Review, 58 FR 51735 

(Oct. 4, 1993). 

29Modernizing Regulatory Review, 88 FR 21879 

(April 6, 2023). 

30This estimate is the rounded five-year average 

of applications received. 

exemption applications and the 

decisions the Department makes in 

making exemption determinations. 

As discussed below, the Department 

has examined the effects of this Final 

Amendment as required by Executive 

Order 12866,21 Executive Order 

13563,22 the Paperwork Reduction Act 

of 1995,23 the Regulatory Flexibility 

Act,24 section 202 of the Unfunded 

Mandates Reform Act of 1995,25

Executive Order 13132,26 and the 

Congressional Review Act.27

1.2. Executive Orders 12866 and 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, 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 (the 

Executive order), ‘‘significant’’ 

regulatory actions are subject to review 

by the Office of Management and 

Budget (OMB).28 As amended by 

Executive Order 14094,29 entitled 

‘‘Modernizing Regulatory Review,’’ 

Executive order section 3(f) defines a 

‘‘significant regulatory action’’ as an 

action that is likely to result in a rule 

that may (1) have an annual effect on 

the economy of $200 million or more 

(adjusted every three years by the 

Administrator of Office of Information 

and Regulatory Affairs (OIRA) for 

changes in gross domestic product); or 

adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, territorial, or tribal 

governments or communities; (2) create 

a serious inconsistency or otherwise 

interfere with an action taken or 

planned by another agency; (3) 

materially alter the budgetary impacts of 

entitlement grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise legal or 

policy issues for which centralized 

review would meaningfully further the 

President’s priorities or the principles 

set forth in the Executive order, as 

specifically authorized in a timely 

manner by the Administrator of OIRA in 

each case. 

Pursuant to the terms of Executive 

Order 12866, OMB has determined that 

this action is ‘‘significant’’ within the 

meaning of section 3(f) of the Executive 

order. Therefore, the Department has 

provided an assessment of the potential 

costs, benefits, and transfers associated 

with the Final Amendment, which is 

presented below and has been reviewed 

by OMB in accordance with the 

requirements of the Executive order. 

1.3. Affected Entities 

The Final Amendment affects 

individual retirement accounts, 

employee benefit plans, plan sponsors 

and fiduciaries, and participants and 

beneficiaries that are subject to the 

prohibited transaction rules set forth in 

ERISA, the Code, or FERSA. Based on 

recent exemption application activity, 

the Department estimates that it receives 

approximately 21 exemption 

applications annually.30

1.4. Benefits of Final Amendment 

The Department expects that the Final 

Amendment will achieve the 

Department’s goal of bringing enhanced 

efficiency, clarity, and transparency to 

the exemption determination process. 

The Department will achieve this 

objective by including provisions in the 

Final Amendment that, among other 

things, (1) clarify the types of 

information and documentation 

required for a complete application, (2) 

revise the definitions of a qualified 

independent fiduciary and qualified 

independent appraiser to ensure their 

independence, (3) clarify the content of 

specific reports and documents 

applicants must submit to ensure that 

the Department receives sufficient 

information to make the requisite 

findings under ERISA section 408(a) to 

issue an exemption, (4) update various 

timing requirements to ensure clarity in 

the application review process, (5) 

clarify items that are included in the 

administrative record for an application 

and when the administrative record is 

available for public inspection, and (6) 

expand opportunities for applicants to 

submit information to the Department 

electronically. 

Also, the Department is requiring 

applicants to include more information 

upfront as part of their exemption 

applications, which will lead to an 

efficient determination process. 

Specifically, the Department is requiring 

applicants to include information 

relevant to the cost and benefits of the 

transaction, alternative transactions to 

the exemption transaction that were 

considered, the benefits derived by the 

parties involved, and explicit 

descriptions of all known conflicts 

involved with the transaction. 

The baseline Exemption Procedure 

Regulation already requires applicants 

to submit most of this information to the 

Department. The Department, however, 

is amending the Exemption Procedure 

Regulation to align more closely with 

the information the Department 

frequently requests from applicants to 

make its statutorily mandated findings, 

and to require such information to be 

submitted sooner in the process rather 

than after the Department requests it. 

Having the information provided with 

the application clarifies expectations 

about required information. Also, time 

is saved as back-and-forth discussions 

about required information are reduced. 

In doing this, the Department will make 

the exemption determination process 

more efficient. Increased efficiency also 

will result from the amendment to 

§ 2570.36 of the Exemption Procedure 

Regulation, which allows applicants to 

submit applications and supporting 

materials to the Department 

electronically. 

The Final Amendment also enhances 

the transparency of the exemption 

determination process by clarifying that 

the administrative record for an 

exemption application becomes open 

for public inspection and available for 

copying when an applicant submits its 

exemption application to the 

Department. At that time, in addition to 

the application itself, any information 

the applicant provided to the 

Department before it submitted its 

application, as well as any presubmission communications regarding 

the exemption transaction, will become 

part of the administrative record. 

1.5. Costs Associated With the Final 

Amendment 

As discussed above, the Final 

Amendment requires applicants to 

include information in their exemption 

applications that frequently was 

requested during review. For example, 

under the Final Amendment, applicants 

must include in their applications a 

description of: (1) the reason(s) for 

engaging in the exemption transaction; 

(2) any material benefit that a party in 

interest involved in the exemption 

transaction may receive as a result of the 


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31Unless otherwise noted, all wage rates are 

based on internal Department calculations based on 

subject transaction (including the 

avoidance of any materially adverse 

outcome by the party in interest as a 

result of engaging in the exemption 

transaction); (3) the costs and benefits of 

the exemption transaction to the 

affected plan(s), participants, and 

beneficiaries, including quantification 

of those costs and benefits to the extent 

possible; (4) a description of the 

alternatives to the exemption 

transaction that it considered or 

evaluated before submitting the 

exemption application and an 

explanation of why those alternatives 

were not pursued; and (5) a description 

of each conflict of interest or potential 

instance of self-dealing that would be 

permitted if the exemption is granted. 

The Final Amendment also revises 

the baseline Exemption Procedure 

Regulation to expand the number of 

specialized parties from whom 

statements and documents must be 

included in exemption applications, 

such as auditors and accountants acting 

on the behalf of the plan (as well as 

independent fiduciaries and 

independent appraisers who already 

were covered). The required disclosures 

are expanded to cover any documents 

submitted by these parties in support of 

the application. These parties also are 

required to disclose, among other 

things, information regarding their 

contracts with the applicant, including, 

but not limited to, information on 

indemnification provisions, waivers, 

and relationships with other parties 

involved in the exemption transaction. 

In addition, the qualified independent 

fiduciaries and qualified independent 

appraisers are required to include 

specific information regarding conflicts 

of interest, fiduciary liability insurance, 

and whether the fiduciary has been 

under investigation or convicted of 

certain crimes. 

While including this information in 

the application could impose additional 

costs on some applicants compared to 

the baseline requirements of the current 

Exemption Procedure Regulation, as 

discussed below, these increased costs 

are modest and justified by the 

Department’s need for this critical 

information to make its findings under 

ERISA section 408(a) and to promote 

increased efficiency as explained 

previously. Such information also will 

facilitate the Department’s 

understanding of the underlying 

rationale for the exemption transaction, 

including the costs and benefits for both 

the party in interest and the plan and its 

participants and beneficiaries. 

The Final Amendment also requires 

information to be submitted by 

applicants with whom the Department 

engages on a pre-submission basis. 

Specifically, if an applicant 

communicated with the Department 

either orally or in writing before 

submitting an exemption application for 

the exemption transaction, the applicant 

or its representative must (1) identify 

and fully describe the exemption 

transaction; and (2) set forth the 

prohibited transactions that the 

applicant believes are applicable. 

Applicants who communicated with 

the Department prior to submitting an 

application also must submit a 

statement setting forth the date(s) and 

with whom the applicant 

communicated before submission. 

Linking pre-submission 

communications to a current 

application ensures that the Department 

understands the entire context of an 

exemption application. The Department 

emphasizes, however, that this 

provision is only triggered when the 

applicant submits a formal exemption 

application. 

Although the final amendment 

requires exemption applicants to submit 

information earlier than the baseline 

exemption procedure, as mentioned 

above, the Department expects that the 

final amendment will generate 

efficiency gains. Such gains will result 

because the open, transparent, and clear 

process implemented by final 

amendment will eliminate friction that 

is caused when the Department has back 

and forth discussion with applicants 

regarding information that is not 

included in an exemption application 

after the applicants submit their 

exemption application under the 

baseline Exemption Procedure 

Regulation. On balance, this final 

amendment will be cost neutral as a 

result of the efficiency gains that will be 

generated; however, the Department 

does not have sufficient data to quantify 

them. Based on the foregoing, the 

Department expects that this Final 

Amendment will result in modest 

increased labor costs to applicants 

compared to the baseline Exemption 

Procedure Regulation, which represent 

an upper bound because the efficiency 

gains that would offset such costs are 

not taken into account. 

Specifically, the Department estimates 

a total estimated cost increase to prepare 

the application of approximately 

$29,000. This estimate does not include 

cost savings generated by efficiency 

gains. Each of the 21 affected applicants 

could experience an increase of six 

hours per application divided among 

various professionals. It does include 

the cost savings associated with 

increased electronic submission of 

applications and supporting materials 

that the Department had sufficient data 

to quantify. The cost of individual 

components of the Final Amendment 

are presented in Table 1 and explained 

below. 

TABLE 1—LABOR HOURS AND EQUIVALENT COST CHANGES

Additional 

hours 

(per plan) 

Additional 

hours 

(total) 

Additional 

costs 

(per plan) 

Additional 

costs 

(total) 

Prepare Application: In House Legal Professional .................. 1 21 $159.34 $3,346 

Prepare Application: Clerical ................................................... 1 21 63.45 1,332 

Prepare Application: Outside Legal Professional .................... 1 21 535.85 11,253 

Prepare Application: Outside Fiduciary/Experts ...................... 2 42 610.04 12,811 

Pre-Submission Conference, Do Not Apply ............................ 1 5 159.34 797 

Change to Submission Method (from mail to electronic) ........ 0 0 ¥16.45 ¥345 

Total .................................................................................. 6 110 1,511.57 29,194 

On average, an in-house attorney with 

a labor and overhead cost estimated at 

a rate of $159.34 per hour is expected 

to spend approximately one additional 

hour in preparing the application for a 

total cost of $159.34 per plan, or $3,346 

total for the 21 plans estimated to apply 

each year.31


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Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 4687 

2020 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. 

32Outside legal billing rates are a blended rate 

based on the Laffey Matrix, which is available at 

http://www.laffeymatrix.com/see.html. 

An additional hour of an attorney’s 

time required to organize and prepare 

information is estimated for plans that 

choose to have a pre-submission 

consultation and do not later apply. The 

Department assumes that five plans per 

year will conduct pre-submission 

consultations but not formally apply, at 

a per plan cost of $159.34 and $797 per 

year increase for this group of plans. 

Outside professionals are hired by the 

plan to handle certain fiduciary and 

service provider duties associated with 

the transaction, the valuation(s), and the 

preparation of the application materials. 

The amendments are estimated to 

increase the net time an outside legal 

professional takes to prepare the 

application by one hour per plan at a 

billing rate of $535.85 per hour.32 This 

results in a per plan cost of $535.85 and 

a total annual cost increase of $11,253 

for the 21 plans assumed to apply. Both 

the outside fiduciary and appraiser or 

other service provider are assumed to 

require an additional hour to comply 

with the amended rules. The hourly rate 

for both is assumed to be $305.02, 

which results in an increase of $610.04 

for each plan and a total of $12,811 for 

the 21 plans that are expected to apply 

annually. 

The final labor component that is 

expected to change relates to clerical 

staff for whom the Department estimates 

labor and overhead cost of $63.45 per 

hour. The Department also estimates 

that an additional hour of clerical work 

will be associated with assisting outside 

professionals with preparation of the 

application, resulting in a cost increase 

of $63.45 per application, and a total of 

$1,332 for the 21 applications expected 

annually. 

The changes to § 2570.36 of the 

baseline Exemption Procedure 

Regulation that allow for the application 

to be submitted electronically are 

expected to generate a cost savings of 

$16.45 per plan, for a total of $345 

annually. 

1.6. Uncertainty 

The number of exemption 

applications the Department receives 

may vary over time due to the 

macroeconomic health of the economy, 

and they may vary over the business 

cycle. For example, prohibited 

transaction exemption applications may 

deal with the sale of illiquid assets for 

which there is a limited market. Because 

of this, these assets are more likely to be 

liquidated while the market is 

distressed. Therefore, exemption 

applications for this type of transaction 

may increase if the macroeconomic 

economy is unhealthy. This variation in 

the number of applications is supported 

by the Department’s application data. 

The Final Amendment itself may 

impact the number of applications the 

Department receives. For example, 

application volume could increase if 

potential applicants observe enhanced 

transparency in the exemption 

determination process and increased 

clarity about the information that is 

required to be included in an exemption 

application. As a result, the Department 

may receive more exemption 

applications because applicants may 

have increased confidence that their 

applications will be approved by the 

Department, since they are fully aware 

of the information the Department 

requires to be included in their 

applications and the Department’s 

process for considering their 

applications. 

Finally, as discussed above, the 

Department maintains that this Final 

Amendment will be cost neutral due to 

the efficiency gains it will generate 

relative to the baseline Exemption 

Procedure Regulation, but it is uncertain 

regarding the amount of cost savings 

that will result from the efficiency gains, 

as the Department does not have 

sufficient information to quantify them. 

1.7. Alternatives 

Although Executive order section 

6(a)(3)(C) only requires the Department 

to assess the cost and benefits of feasible 

alternatives for rules that are significant 

under section 3(f)(1), the Department 

considered several alternatives to the 

provisions in the Final Amendment that 

are discussed in this section. 

First, the Department considered 

retaining the status quo. However, the 

status quo was not a feasible alternative 

because the Department has found that 

the baseline Exemption Procedure 

Regulation has not been working with 

maximum efficiency since the 

Exemption Procedure Regulation was 

last amended in 2011. Under the current 

Exemption Procedure Regulation, the 

Department has had to adopt the 

practice of requiring applicants to 

submit additional information that was 

not specifically provided for in the 

baseline Exemption Procedure 

Regulation to ensure that it has 

sufficient information to make the 

statutorily mandated findings under 

ERISA section 408(a) that an exemption 

request is (1) administratively feasible, 

(2) in the interest of the plan that is 

requesting the exemption and its 

participants and beneficiaries, and (3) 

protective of the rights of the plan’s 

participants and beneficiaries. The 

Department found that many exemption 

applications did not contain sufficient 

information for the Department to make 

these findings, and a lot of back-andforth communication was taking place 

between applicants and the Department 

to make sure that adequate information 

was provided to the Department for it to 

make its findings. This led the 

Department to make a policy decision 

that the baseline Exemption Procedure 

Regulation needs to be amended to 

require the specific information the 

Department needs to process exemption 

applications. The Department expects 

the selected alternative of requiring 

more information submitted with the 

application will in many instances, but 

not all, either maintain or reduce the 

costs for applications that are granted 

relative to the status quo. 

The Department also made a policy 

decision that an amendment to the 

Exemption Procedure Regulation is 

necessary to clarify when the 

administrative record opens for an 

exemption application and the items 

that are included in the administrative 

record. The creation of the 

administrative record for an exemption 

application is critically important 

because it commences the exemption 

determination process for an exemption 

application. The Department has 

received many questions from 

applicants over the years about when 

the administrative record opens and 

when the record is available for public 

review. Therefore, it is critical for the 

Department to clearly define when the 

administrative record is open in an 

amendment to the Exemption Procedure 

Regulation to ensure that the 

Department maintains an open and 

transparent exemption determination 

process. 

The Department also considered 

finalizing the entire amendment as 

proposed but, instead, made major 

changes to the proposal in the Final 

Amendment based on the public input 

the Department received in comment 

letters and testimony that was provided 

at the public hearing. These changes 

were made, in part, to reduce the 

burdens imposed on applicants by the 

proposal. For example, the proposal 

added a new § 2570.34(a)(5) that would 

have required applicants to include 

with their exemption applications a 

detailed description of possible 

alternatives to the exemption 

transaction that would not involve a 


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33 87 FR 14722. 

prohibited transaction, and why the 

applicant did not pursue those 

alternatives. Commenters objected, in 

part, to this language by asserting that 

it would be burdensome for an 

applicant to investigate and evaluate all 

potential approaches to a transaction 

before submitting an exemption 

application. The Department recognized 

this burden and modified the language 

in the Final Amendment to provide that 

an applicant must submit a description 

of the alternatives to the exemption 

transaction that it considered or 

evaluated before submitting the 

exemption application and explain why 

those alternatives were not pursued 

with its exemption application. The 

language no longer requires an 

exhaustive review; it only requires an 

applicant to explain to the Department 

the process by which the applicant 

arrived at its decision to propose an 

exemption application. 

As another example, the Department 

proposed to add a new § 2570.34(d) that 

would have required an applicant to 

include detailed information regarding 

the appraiser selection process. In 

response to the proposal, commenters 

raised multiple objections. Therefore, 

paragraph (d) of the Final Amendment 

states that an applicant must include the 

following information with its 

exemption application: (1) a 

representation that the independent 

fiduciary prudently selected the 

appraiser after diligent review of the 

appraiser’s technical training and 

proficiency with respect to the type of 

valuation at issue, the appraiser’s 

independence from the plan’s 

counterparties in the exemption 

transaction, and the absence of any 

material conflicts of interest with 

respect to the exemption transaction; (2) 

a representation that the appraiser is 

independent within the meaning of 

§ 2570.31(i); and (3) a representation 

that the independent appraiser has 

appropriate technical training and 

proficiency with respect to the specific 

details of the exemption transaction. 

The Final Amendment’s language has 

the effect of decreasing an applicant’s 

burden by no longer requiring 

substantial disclosure and a specific 

delineated process. In addition to this 

burden reduction, the Department notes 

that it also made a similar change to 

§ 2570.34(e), which had a similar 

burden-reducing effect. 

The Department has determined that 

the totality of the expected benefits of 

the Final Amendment justify its costs. 

The Department’s decision to publish 

the Final Amendment with 

modifications to the Proposed Rule will 

allow it to achieve its objective of 

making the exemption application 

process more efficient and transparent 

than the baseline process while 

minimizing the burden the Proposed 

Rule imposed on applicants. 

Accordingly, the Final Amendment is a 

necessary and beneficial regulation. 

Paperwork Reduction Act Statement 

In accordance with the Paperwork 

Reduction Act of 1995 (PRA 95) (44 

U.S.C. 3506(c)(2)(A)), the Department 

solicited comments concerning the 

information collection request (ICR) 

included in the revision of the 

Exemption Procedure Regulation.33 At 

the same time, the Department also 

submitted an ICR to the OMB under 

OMB Control Number 1210–0060, in 

accordance with 44 U.S.C. 3507(d). No 

comments were received that led to an 

adjustment in burden estimates. 

In connection with the publication of 

the Final Amendment, the Department 

is submitting the ICR to OMB requesting 

a revision of the information collection 

under OMB control number 1210–0060 

reflecting the changes made by the final 

rules. A copy of the ICR may be 

obtained by contacting the person listed 

in the PRA Addressee section below or 

at www.RegInfo.gov. 

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 by 

email at: ebsa.opr@dol.gov. A copy of 

the ICR also may be obtained at https:// 

www.RegInfo.gov. 

Background 

Both ERISA and the Code contain 

various statutory exemptions from the 

prohibited transaction rules. In 

addition, ERISA section 408(a) 

authorizes the Secretary to grant 

administrative exemptions from the 

restrictions of ERISA sections 406 and 

407(a), while Code section 4975(c)(2) 

authorizes the Secretary of the Treasury 

or their delegate to grant exemptions 

from the prohibitions of Code section 

4975(c)(1). ERISA section 408(a) and 

Code section 4975(c)(2) also direct the 

Secretary and the Secretary of the 

Treasury, respectively, to establish 

procedures to carry out the purposes of 

these sections. 

Under section 102 of Reorganization 

Plan No. 4 of 1978, the authority of the 

Secretary of the Treasury to issue 

exemptions under Code section 4975 

was transferred, with certain 

enumerated exceptions not discussed 

herein, to the Secretary. Accordingly, 

the Secretary now possesses the 

authority under Code section 4975(c)(2), 

as well as under ERISA section 408(a), 

to issue individual and class 

exemptions from the prohibited 

transaction rules of ERISA and the 

Code. 

Under the baseline Exemption 

Procedure Regulation, the Department 

requires certain information to be 

provided in a written application for an 

exemption. The written application is 

an ICR for purposes of the PRA. 

Sections 2570.34 and 2570.35 of the 

baseline Exemption Procedure 

Regulation describe the information that 

must be supplied by the applicant, such 

as, but not limited to: identifying 

information (name, type of plan, 

Employer Identification Number (EIN) 

number, etc.); an estimate of the number 

of plan participants; a detailed 

description of the exemption transaction 

and the parties for which an exemption 

is requested; a statement regarding 

which section of ERISA is thought to be 

violated and whether transaction(s) 

involved have already been entered 

into; a statement of whether the 

transaction is customary in the industry; 

a statement of the hardship or economic 

loss, if any, which would result if the 

exemption were denied; and a statement 

explaining why the proposed exemption 

would be administratively feasible and 

in the interests of the plan and 

protective of the rights of plan 

participants and beneficiaries. In 

addition, the applicant must certify that 

the information supplied is accurate and 

complete. 

The Final Amendment expands the 

ICR contained in §§ 2570.34 and 

2570.35 in several respects. First, the 

Final Amendment expands the 

information sought about the proposed 

exemption transaction, such as 

requiring a more detailed description of 

the exemption transaction, including 

the benefits derived by the parties and 

the costs and benefits to the plan; 

alternative transactions considered; and 

descriptions of all conflicts of interest 

and self-dealing. Second, the Final 

Amendment requires the inclusion of 

additional information in exemption 

applications, such as a statement 

regarding whether the exemption 

transaction is in the best interest of the 

plan and its participants and 

beneficiaries; expanded disclosures 

about any Advisory Opinions that the 

applicant requests with respect to any 

issue related to the exemption 

transaction; and expanded disclosures 

about relevant investigations by any 

Federal, State, or regulatory body. 


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The Final Amendment also revises 

the ICR to expand the number of 

specialized parties from whom 

statements and documents must be 

included in exemption applications. 

The specialized parties covered by the 

existing requirements are expanded to 

include not just independent appraisers 

and fiduciaries, but also auditors and 

accountants acting on behalf of the plan, 

and the documents required to be 

disclosed are expanded to cover any 

documents submitted by those parties in 

support of the application. Specialized 

parties are required to disclose, among 

other things, additional information 

regarding their contracts with the 

applicant, including, but not limited to, 

information on indemnification 

provisions, waivers, and relationships 

with other parties involved in the 

exemption transaction. In addition, the 

qualified independent fiduciaries and 

qualified independent appraisers are 

required to include specific information 

regarding conflicts of interest, fiduciary 

liability insurance, and whether the 

fiduciary has been under investigation 

or convicted of certain crimes. 

In addition to the requirements 

created by the application described in 

§§ 2570.33 and 2570.35, additional 

requirements are added by amending 

§ 2570.33(d) with respect to applicants 

that communicate with the Department 

on a pre-submission basis. Specifically, 

if an applicant desires to engage in a 

pre-submission conference or 

correspondence, the applicant or its 

representative must (1) identify and 

fully describe the exemption 

transaction; and (2) set forth the 

prohibited transactions that the 

applicant believes are applicable. 

Pre-submission applicants also must 

submit in their applications a statement 

setting forth the date(s) and with whom 

the applicant communicated before 

submitting the application. Linking presubmission communications to a 

current application ensures that the 

Department understands the entire 

context of an exemption application. 

The Department emphasizes, however, 

that this provision is only triggered 

when the applicant submits a formal 

exemption application. 

Finally, the Department is amending 

§ 2570.36 to provide that the application 

and supporting documents may be 

submitted electronically. The 

Department expects that no longer 

requiring paper copies of documents to 

be submitted should reduce the burden 

associated with this ICR. 

In order to assess the hour and cost 

burden of the revision to the baseline 

ICR associated with the Exemption 

Procedure Regulation, the Department 

updated its estimate of the number of 

exemption requests it expects to receive, 

and the hour and cost burden associated 

with providing information required to 

be submitted by applicants, including 

the new information required. The 

Department also adjusted its estimate of 

the labor rates for professional and 

clerical help and the size of plans filing 

exemption requests with the 

Department. In the revised estimate, the 

costs of hiring outside service providers 

(such as law firms specializing in 

ERISA, outside appraisers, and financial 

experts) are accounted for as a cost 

burden. Requirements related to these 

services are more explicitly specified in 

the final rule than they were in the 

previous procedure, and any paperwork 

costs associated with these requirements 

are built into the estimated fees for 

outside services. 

The costs associated with the Final 

Amendment are dependent on presubmission conference and application 

activity. Pre-submission activity is a 

potential initial contact with the 

Department to discuss a potential 

exemption application. These have 

traditionally been informal discussions 

which were not cataloged or tracked by 

the Department. For purposes of this 

Final Amendment, we assume that five 

plans conduct pre-submission 

conferences but do not ultimately apply 

for an exemption. Given the change in 

structure of the pre-submission 

conferences, these five plans would 

incur an additional cost, which is 

captured in the ‘‘Pre-Submission 

Application’’ line item below. Based on 

2018–2022 application activity, the 

Department assumes that it will receive 

21 applications annually. Based on 

2019–2021 data, the Department 

assumes that five exemption 

applications reach the pendency stage 

which requires publication in the 

Federal Register and distribution of 

notices to participants. These five 

exemption applications could be 

approved following the public comment 

period. 

The typical plan size is assumed to be 

700 participants, which is based on a 

weighted average plan size. The rule 

also requires that, in cases where the 

facts associated with the application are 

complex, the plan, at the point of 

publication in the Federal Register, 

provide a summary of the proposed 

exemption (SPE) with the notice. The 

Department assumes this to occur in 

roughly half the cases, therefore three 

summaries will be required to be 

prepared. 

The estimated hours burden and 

equivalent costs associated with this 

level of activity are presented in Table 

2. 

TABLE 2—HOUR AND EQUIVALENT COST BURDEN

Number of 

requests Hours Hourly labor cost Hour burden Equivalent costs 

(A) (B) (C) A * B A * B * C 

Prepare Request: In House Legal Professional ............................................. 21 11 $159.34 231 $36,808 

Prepare Request: Clerical ...................... 21 11 63.45 231 14,657 

Prepare Request: Outside Legal Professional .................................................. 21 51 535.85 1,071 573,895 

Prepare Request: Outside Fiduciary/Experts ................................................... 21 42 305.03 882 269,036 

Prepare Request (SPE): In House 

Legal Professional .............................. 3 2 159.34 6 956 

Distribute Notice: Clerical ...................... 5 5/60 63.45 292 18,506 

Pre-Submission Application ................... 5 1 159.34 5 797 

Total ................................................ .............................. .............................. .............................. 2,718 914,655 


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34The Department estimates approximately 

95.8% of participants receive disclosures 

electronically under the combined effects of the 

2002 electronic disclosures safe harbor and the 

2020 electronic safe harbor. The Department 

estimates that 58.3% of participants will receive 

electronic disclosures under the 2002 safe harbor. 

According to the National Telecommunications and 

Information Agency (NTIA), 37.4% of individuals 

aged 25 and over have access to the internet at 

work. According to a Greenwald & Associates 

survey, 84.0% of plan participants find it 

acceptable to make electronic delivery the default 

option, which is used as the proxy for the number 

of participants who will not opt-out of electronic 

disclosure that are automatically enrolled (for a 

total of 31.4% receiving electronic disclosure at 

work). Additionally, the NTIA reports that 44.1% 

of individuals aged 25 and over have access to the 

internet outside of work. According to a Pew 

Research Center survey, 61.0% of internet users use 

online banking, which is used as the proxy for the 

number of internet users who will affirmatively 

consent to receiving electronic disclosures (for a 

total of 26.9% receiving electronic disclosure 

outside of work). Combining the 31.4% who receive 

electronic disclosure at work with the 26.9% who 

receive electronic disclosure outside of work 

produces a total of 58.3%. The remaining 41.7% of 

participants are subject to the 2020 safe harbor. 

According to the 2021 American Community 

Survey, 90.3% of the population has an internet 

subscription. The Department estimates that 0.5% 

of electronic disclosures will bounce back and will 

need to be sent a paper disclosure. Accordingly, for 

the 41.7% of participants not affected by the 2002 

safe harbor, 89.8%, or an additional 37.4% (41.7% 

x 89.8%), are estimated to receive electronic 

disclosures under the 2020 safe harbor. In total, the 

Department estimates that 95.8% (58.3% + 37.4%) 

would receive electronic disclosures. 

35The basis for this definition is found in ERISA 

section 104(a)(2), which permits the Secretary to 

prescribe simplified annual reports for pension 

plans that cover fewer than 100 participants. 

Pursuant to the authority of ERISA section 

104(a)(3), the Department has previously issued at 

29 CFR 2520.104–20, 2520.104–21, 2520.104–41, 

2520.104–46 and 2520.104b–10 certain simplified 

reporting provisions and limited exemptions from 

reporting and disclosure requirements for small 

plans, including unfunded or insured welfare plans 

covering fewer than 100 participants and satisfying 

certain other requirements. The Department has 

consulted with the SBA Office of Advocacy 

concerning use of this participant count standard 

for RFA purposes and has a memorandum of 

understanding with the Office of Advocacy to use 

the standard. Memorandum received from the U.S. 

Small Business Administration, Office of Advocacy 

on July 10, 2020. 

As discussed above, the Final 

Amendment allows applicants to submit 

their applications and supporting 

material electronically, which the 

Department assumes all applicants will 

choose as their default application 

method. This results in an estimated 

cost savings of $16.45 per applicant, for 

a total of $345. The distribution of the 

notices to plan participants is expected 

to be $144 and is summarized in Table 

3 below. The majority (95.8%) of the 

notices to participants are expected to 

be delivered electronically.34

TABLE 3—COST BURDEN

Number of 

notices 

Number of 

pages per 

notice 

Material and 

printing costs Mailing costs Cost burden 

(A) (C) (D) (E) A * B * (C * D + E) 

Distribute Notice ......................... 203 1 $0.05 $0.63 ........................................... $138 

Distribute SPE ............................ 122 1 0.05 Included with Notice ................... 6 

Total ..................................... ........................ ........................ ........................ ..................................................... 144 

The paperwork burden estimates are 

summarized below: 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Title: Procedures Governing the Filing 

and Processing of Prohibited 

Transaction Exemption Applications. 

OMB Control Number: 1210–0060. 

Affected Public: Businesses or other 

for-profits. 

Type of Review: Revision. 

Estimated Number of Respondents: 

21. 

Estimated Number of Annual 

Responses: 3,592. 

Frequency of Response: Annual or as 

needed. 

Estimated Total Annual Burden 

Hours: 2,718 hours. 

Estimated Total Annual Burden Cost: 

$144. 

2. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.), and 

which are likely to have a significant 

economic impact on a substantial 

number of small entities. Unless the 

head of an agency certifies that a final 

rule will not have a significant 

economic impact on a substantial 

number of small entities, RFA section 

604 requires that the agency present a 

final regulatory flexibility analysis at the 

time of the publication of the notice of 

final rulemaking describing the impact 

of the rule on small entities and seeking 

public comment on such impact. 

Under RFA section 605, the 

Department certified at the proposed 

rule stage that the rule would not have 

a significant economic impact on a 

substantial number of small entities. 

After considering comments that were 

submitted to the Department on the 

proposed rule and testimony from 

witnesses at the public hearing, as well 

as changes the Department made to the 

proposal in the Final Amendment in 

response to such comments and 

testimony, the Department is confident 

that the certification remains valid with 

respect to the Final Amendment. 

Therefore, the Assistant Secretary of the 

Employee Benefits Security 

Administration hereby certifies that the 

Final Amendment will not have a 

significant economic impact on a 

substantial number of small entities. 

The Department presents its basis for 

making this determination below. 

For purposes of the RFA, the 

Department continues to consider a 

small entity to be an employee benefit 

plan with fewer than 100 participants.35

Further, while some large employers 

may have small plans, in general, small 

employers maintain most small plans. 

Thus, the Department maintains that 

assessing the impact of this Final 

Amendment on small plans is an 

appropriate substitute for evaluating the 

effect on small entities. The definition 

of small entity considered appropriate 

for this purpose differs, however, from 

the definition of ‘‘small business’’ that 

is based on size standards promulgated 

by the Small Business Administration 

(SBA) (13 CFR 121.201) pursuant to the 

Small Business Act (15 U.S.C. 631 et 

seq.). The Department requested 

comment at the proposed rule stage on 

the appropriateness of the size standard 

used in evaluating the impact on small 

entities and received no comments. 

Using this standard, most plans 

seeking an exemption are large plans. 

Even if the Department assumes that all 

the 21 estimated plans seeking 

exemptions each year are small, based 

on the approximately 652,934 ERISAVerDate Sep<11>2014 17:47 Jan 23, 2024 Jkt 262001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:\FR\FM\24JAR2.SGM 24JAR2

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covered small pension plans, the 21 

plans annually seeking an exemption 

make up a very small percentage of all 

plans (0.0031 percent of small plans). 

The Department does not consider this 

to constitute a substantial number of 

small entities that would be sufficient to 

invoke that application of the RFA. 

3. Congressional Review Act 

This Final Amendment is subject to 

the Congressional Review Act 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.) and will be 

transmitted to Congress and the 

Comptroller General for review. 

4. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), the Final Amendment does not 

include any Federal mandate that may 

result in expenditures by State, local, or 

tribal governments, or impose an annual 

burden exceeding $100 million or more, 

adjusted for inflation, on the private 

sector. 

5. Federalism Statement 

Executive Order 13132 (August 4, 

1999) outlines fundamental principles 

of federalism and requires Federal 

agencies to adhere to specific criteria in 

the process of their formulation and 

implementation of policies that have 

substantial direct effects on the States, 

or the relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. This Final 

Amendment does not have 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. ERISA section 514 

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 

requirements implemented in the Final 

Amendment do not alter the 

fundamental provisions of the statute 

with respect to employee benefit plans, 

and as such would have no implications 

for the States or the relationship or 

distribution of power between the 

National Government and the States. 

List of Subjects in 29 CFR Part 2570 

Administrative practice and 

procedure, Employee benefit plans, 

Exemptions, Fiduciaries, Party in 

interest, Pensions, Prohibited 

transactions, Trusts and trustees. 

For the reasons set forth in the 

preamble, the Department amends 29 

CFR part 2570 as follows: 

PART 2570—PROCEDURAL 

REGULATIONS UNDER THE 

EMPLOYEE RETIREMENT INCOME 

SECURITY ACT 

■ 1. The authority citation for part 2570 

continues to read as follows: 

Authority: 5 U.S.C. 8477; 29 U.S.C. 

1002(40), 1021, 1108, 1132, and 1135; sec. 

102, Reorganization Plan No. 4 of 1978, 5 

U.S.C. App at 672 (2006); Secretary of Labor’s 

Order 3–2010, 75 FR 55354 (September 10, 

2010). 

Subpart I is also issued under 29 U.S.C. 

1132(c)(8). 

■ 2. Revise subpart B to read as follows: 

Subpart B—Procedures Governing the 

Filing and Processing of Prohibited 

Transaction Exemption Applications 

Sec. 

2570.30 Scope of this subpart. 

2570.31 Definitions. 

2570.32 Persons who may apply for 

exemptions and the administrative 

record. 

2570.33 Applications the Department will 

not ordinarily consider. 

2570.34 Information to be included in every 

exemption application. 

2570.35 Information to be included in 

applications for individual exemptions 

only. 

2570.36 Where to file an application. 

2570.37 Duty to amend and supplement 

exemption applications. 

2570.38 Tentative denial letters. 

2570.39 Opportunities to submit additional 

information. 

2570.40 Conferences. 

2570.41 Final denial letters. 

2570.42 Notice of proposed exemption. 

2570.43 Notification of interested persons 

by applicant. 

2570.44 Withdrawal of exemption 

applications. 

2570.45 Requests for reconsideration. 

2570.46 Hearings in opposition to 

exemptions from restrictions on 

fiduciary self-dealing and conflicts of 

interest. 

2570.47 Other hearings. 

2570.48 Decision to grant exemptions. 

2570.49 Limits on the effect of exemptions. 

2570.50 Revocation or modification of 

exemptions. 

2570.51 Public inspection and copies. 

2570.52 Effective date. 

§ 2570.30 Scope of this subpart. 

(a) The rules of procedure set forth in 

this subpart apply to applications for 

prohibited transaction exemptions 

issued by the Department under the 

authority of: 

(1) Section 408(a) of the Employee 

Retirement Income Security Act of 1974 

(ERISA); 

(2) Section 4975(c)(2) of the Internal 

Revenue Code of 1986 (the Code); or 

Note 1 to paragraph (a)(2). See H.R. Rep. 

No. 1280, 93d Cong., 2d Sess. 310 (1974), and 

also section 102 of Presidential 

Reorganization Plan No. 4 of 1978 (3 CFR, 

1978 Comp., p. 332, reprinted in 5 U.S.C. 

app. at 672 (2006), and in 92 Stat. 3790 

(1978)), effective December 31, 1978, which 

generally transferred the authority of the 

Secretary of the Treasury to issue 

administrative exemptions under section 

4975(c)(2) of the Code to the Department. 

(3) The Federal Employees’ 

Retirement System Act of 1986 (FERSA) 

(5 U.S.C. 8477(c)(3)). 

(b) Under the rules of procedure in 

this subpart, the Department may 

conditionally or unconditionally 

exempt any fiduciary or transaction, or 

class of fiduciaries or transactions, from 

all or part of the restrictions imposed by 

ERISA section 406 and the 

corresponding restrictions of the Code 

and FERSA. While administrative 

exemptions granted under the rules in 

this subpart are ordinarily prospective 

in nature, it is possible that an applicant 

may obtain retroactive relief for past 

prohibited transactions if, among other 

things, the Department determines that 

appropriate safeguards were in place at 

the time the exemption transaction was 

consummated, and no plan participants 

or beneficiaries were harmed by the 

exemption transaction. 

(c) The rules in this subpart govern 

the filing and processing of applications 

for both individual and class 

exemptions that the Department may 

propose and grant pursuant to the 

authorities cited in paragraph (a) of this 

section. The Department may also 

propose and grant exemptions on its 

own motion, in which case the 

procedures relating to publication of 

notices, hearings, evaluation, and public 

inspection of the administrative record, 

and modification or revocation of 

previously granted exemptions will 

apply. 

(d) The issuance of an administrative 

exemption by the Department under the 

procedural rules in this subpart does not 

relieve a fiduciary or other party in 

interest or disqualified person with 

respect to a plan from the obligation to 

comply with certain other provisions of 

ERISA, the Code, or FERSA, including 

any prohibited transaction provisions to 

which the exemption does not apply, 

and the general fiduciary responsibility 

provisions of ERISA, if applicable, 

which require, among other things, 

fiduciaries to discharge their duties 

respecting the plan solely in the 


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interests of the participants and 

beneficiaries of the plan and in a 

prudent fashion; nor does it affect the 

requirements of Code section 401(a), 

including that the plan must operate for 

the exclusive benefit of the employees 

of the employer maintaining the plan 

and their beneficiaries, or the rules with 

respect to other Code provisions, 

including that an administrative 

exemption with respect to a 

contribution to a pension plan does not 

affect the deductibility of the 

contribution under Code section 404. 

(e) The Department will not propose 

or issue exemptions upon oral request 

alone, nor will the Department grant 

exemptions orally. An applicant for an 

administrative exemption may request 

and receive oral feedback from 

Department employees in preparing an 

exemption application, which will not 

be binding on the Department in its 

processing of an exemption application 

or in its examination or audit of a plan. 

(f) The Department will generally treat 

any exemption application that is filed 

solely under ERISA section 408(a) or 

solely under Code section 4975(c)(2) as 

an exemption request filed under both 

ERISA section 408(a) and Code section 

4975(c)(2) if it relates to a plan that is 

subject to both ERISA and the Code and 

the exemption transaction would be 

prohibited by both ERISA and the 

corresponding Code provisions. 

(g) The Department issues an 

administrative exemption at its sole 

discretion based on the statutory criteria 

set forth in ERISA section 408(a) and 

Code section 4975(c)(2). The existence 

of previously issued administrative 

exemptions is not determinative of 

whether the Department will propose 

future exemptions for applications with 

the same or similar facts, or whether a 

proposed exemption will contain the 

same conditions as a previously issued 

administrative exemption. Previously 

issued administrative exemptions, 

however, may inform the Department’s 

determination of whether to propose 

future exemptions based on the unique 

facts and circumstances of each 

application. 

§ 2570.31 Definitions. 

For purposes of the procedures in this 

subpart, the following definitions apply: 

(a) An affiliate of a person means— 

(1) Any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the person. For 

purposes of this paragraph (a)(1), the 

term ‘‘control’’ means the power to 

exercise a controlling influence over the 

management or policies of a person 

other than an individual; 

(2) Any officer, director, partner, 

employee, or relative (as defined in 

ERISA section 3(15)) of any such 

person; or 

(3) Any corporation, partnership, 

trust, or unincorporated enterprise of 

which such person is an officer, 

director, partner, or five percent or more 

owner. 

(b) A class exemption is an 

administrative exemption, granted 

under ERISA section 408(a), Code 

section 4975(c)(2), and/or 5 U.S.C. 

8477(c)(3), which applies to any 

transaction and party in interest within 

the class of transactions and parties in 

interest specified in the exemption 

when the conditions of the exemption 

are satisfied. 

(c) Department means the U.S. 

Department of Labor and includes the 

Secretary of Labor or their delegate 

exercising authority with respect to 

prohibited transaction exemptions to 

which this subpart applies. 

(d) Exemption transaction means the 

transaction or transactions for which an 

exemption is requested. 

(e) An individual exemption is an 

administrative exemption, granted 

under ERISA section 408(a), Code 

section 4975(c)(2), and/or 5 U.S.C. 

8477(c)(3), which applies only to the 

specific parties in interest and 

exemption transactions named or 

otherwise defined in the exemption. 

(f) A party in interest means a person 

described in ERISA section 3(14) or 5 

U.S.C. 8477(a)(4) and includes a 

disqualified person, as defined in Code 

section 4975(e)(2). 

(g) Pooled fund means an account or 

fund for the collective investment of the 

assets of two or more unrelated plans, 

including (but not limited to) a pooled 

separate account maintained by an 

insurance company and a common or 

collective trust fund maintained by a 

bank or similar financial institution. 

(h) A qualified appraisal report is any 

appraisal report that: 

(1) Is prepared by a qualified 

independent appraiser; and 

(2) Satisfies all the requirements set 

forth in § 2570.34(c)(5). 

(i) A qualified independent appraiser 

is any individual or entity with 

appropriate training, experience, and 

facilities to provide a qualified appraisal 

report regarding the particular asset or 

property appraised in the report, that is 

independent of and unrelated to any 

party in interest engaging in the 

exemption transaction (and their 

affiliates). In general, the Department 

determines an appraiser’s independence 

based on all relevant facts and 

circumstances, such as the extent to 

which the plan’s counterparty in the 

transaction participated in or influenced 

the selection of the appraiser. In making 

the independence determination, the 

Department will consider the amount of 

the appraiser’s revenues and projected 

revenues for the current Federal income 

tax year (including amounts received for 

preparing the appraisal report) that will 

be derived from parties in interest (and 

their affiliates) relative to the appraiser’s 

revenues from all sources for the 

appraiser’s prior Federal income tax 

year. The Department generally will not 

conclude that an appraiser’s 

independence is compromised solely 

based on the revenues it receives from 

the parties in interest (and their 

affiliates) that engaged in the exemption 

transaction, to the extent that the 

appraiser neither receives nor is 

projected to receive more than two (2) 

percent of its revenues within the 

current Federal income tax year from 

the parties in interest (and their 

affiliates). Although larger percentages 

merit more stringent scrutiny, an 

appraiser may be considered 

independent based upon other facts and 

circumstances provided that the 

appraiser neither receives nor is 

projected to receive more than five (5) 

percent of its revenues within the 

current Federal income tax year from 

parties in interest (and their affiliates) 

participating in the exemption 

transaction. 

(j) A qualified independent fiduciary 

is any individual or entity with 

appropriate training, experience, and 

facilities to act on behalf of the plan 

regarding the exemption transaction in 

accordance with the fiduciary duties 

and responsibilities prescribed by 

ERISA, that is independent of and 

unrelated to any party in interest 

engaging in the exemption transaction 

(and its affiliates). In general, the 

Department will make the 

determination of whether a fiduciary is 

independent based on all relevant facts 

and circumstances, such as the extent to 

which the plan’s counterparty in the 

transaction participated in or influenced 

the selection of the fiduciary. In making 

this determination, the Department will 

also take into account, among other 

things, the amount of both the 

fiduciary’s revenues and projected 

revenues for the current Federal income 

tax year (including amounts received for 

preparing fiduciary reports) that will be 

derived from parties in interest engaging 

in the exemption transaction (and their 

affiliates) relative to the fiduciary’s 

revenues from all sources for the prior 

Federal income tax year. The 

Department generally will not conclude 

that a fiduciary’s independence is 


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compromised solely based on the 

revenues it receives from parties in 

interest (and their affiliates) that 

engaged in the exemption transaction, to 

the extent that the fiduciary neither 

receives nor is projected to receive more 

than two (2) percent of its revenues 

within the current Federal income tax 

year from the parties in interest (and 

their affiliates). Although larger 

percentages merit more stringent 

scrutiny, a fiduciary may be considered 

independent based upon other facts and 

circumstances provided that the 

fiduciary neither receives nor is 

projected to receive more than five (5) 

percent of its revenues within the 

current Federal income tax year from 

the parties in interest (and their 

affiliates) that engaged in the exemption 

transaction. 

(k) A pre-submission applicant is a 

party that contacts the Department, 

either orally or in writing, to inquire 

whether a party with a particular fact 

pattern would need to submit an 

exemption application and, if so, what 

conditions and relief would be 

applicable. A party that contacts the 

Department to inquire broadly, without 

reference to a specific fact pattern, about 

prohibited transaction exemptions is not 

a pre-submission applicant. 

§ 2570.32 Persons who may apply for 

exemptions and the administrative record. 

(a) The following persons may apply 

for exemptions: 

(1) Any party in interest to a plan who 

is or may be a party to the exemption 

transaction; 

(2) Any plan which is a party to the 

exemption transaction; or 

(3) In the case of an application for an 

exemption covering a class of parties in 

interest or a class of transactions, in 

addition to any person described in 

paragraphs (a)(1) and (2) of this section, 

an association or organization 

representing parties in interest who may 

be parties to the exemption transaction. 

(b) An application by or for a person 

described in paragraph (a) of this 

section may be submitted by the 

applicant or by an authorized 

representative. An application 

submitted by an authorized 

representative of the applicant must 

include proof of authority in the form 

of: 

(1) A power of attorney; or 

(2) A written certification from the 

applicant that the representative is 

authorized to file the application. 

(c) If the authorized representative of 

an applicant submits an exemption 

application to the Department together 

with proof of authority to file the 

application as required by paragraph (b) 

of this section, the Department will 

direct all correspondence and inquiries 

concerning the application to the 

representative unless requested to do 

otherwise by the applicant. 

(d)(1) The administrative record is 

open for public inspection, pursuant to 

§ 2570.51(a), from the date an applicant 

submits an application to the Office of 

Exemption Determinations. 

(2) The administrative record 

includes, but is not limited to, the initial 

exemption application and any 

modifications or supplements thereto; 

all correspondence with the applicant 

after the applicant submits the 

exemption application; and any 

information provided by the applicant 

in connection with the exemption 

application, whether provided orally or 

in writing (as well as any comments and 

testimony received by the Department 

in connection with an application). 

(3) Although the administrative 

record is open and available to the 

public only after an applicant submits 

an exemption application, the record 

includes any material documents or 

supporting information that was 

submitted to the Department in 

connection with the subject transaction 

of the application, whether orally or in 

writing, before formal submission of the 

application. The administrative record 

does not include records of 

communications with the Department 

which were either not with respect to 

the subject transaction of the 

application or not followed by the 

submission of an exemption application 

related to those communications. 

(4) If documents are required to be 

provided in writing, by either the 

applicant or the Department, the 

documents may be provided either by 

mail or electronically, unless otherwise 

indicated by the Department at its sole 

discretion. 

§ 2570.33 Applications the Department will 

not ordinarily consider. 

(a) The Department ordinarily will not 

consider an application that fails to 

include all the information required by 

§§ 2570.34 and 2570.35 (or fails to 

include current information) or 

otherwise fails to conform to the 

requirements in this subpart. 

(b) An application for an individual 

exemption relating to a specific 

exemption transaction or transactions 

ordinarily will not be considered if the 

Department has under consideration a 

class exemption relating to the same 

type of transaction or transactions. 

Notwithstanding the preceding 

sentence, the Department may consider 

such an application if the issuance of 

the final class exemption is not 

imminent, and the Department 

determines that time constraints 

necessitate consideration of the 

exemption transaction on an individual 

basis. 

(c) If a party, excluding a Federal, 

state, or other governmental entity, 

designates any information submitted in 

connection with its exemption 

application as confidential, the 

Department will not process the 

application unless and until the 

applicant withdraws its claim of 

confidentiality. By submitting an 

exemption application, an applicant 

consents to public disclosure of the 

entire administrative record pursuant to 

§ 2570.51. 

(d) The Department will not engage a 

pre-submission applicant or its 

representative, whether through written 

correspondence or a conference, if the 

pre-submission applicant does not: 

(1) Identify and fully describe the 

exemption transaction; and 

(2) Set forth the prohibited 

transactions that the applicant believes 

are applicable. 

§ 2570.34 Information to be included in 

every exemption application. 

(a) All applications for exemptions 

must contain the following information: 

(1) The name(s), address(es), phone 

number(s), and email address(es) of the 

applicant(s); 

(2) A detailed description of the 

exemption transaction, including the 

identification of all the parties in 

interest involved, a description of any 

larger integrated transaction of which 

the exemption transaction is a part, and 

a chronology of the events leading up to 

the exemption transaction; 

(3) The identity, address, phone 

number, and email address of any 

representatives for the affected plan(s) 

and parties in interest and what 

individuals or entities they represent; 

(4) A description of: 

(i) The reason(s) for engaging in the 

exemption transaction; 

(ii) Any material benefit that may be 

received by a party in interest (or its 

affiliates) as a result of the exemption 

transaction (including the avoidance of 

any materially adverse outcome by a 

party in interest (or its affiliates) as a 

result of engaging in the exemption 

transaction); and 

(iii) The costs and benefits of the 

exemption transaction to the affected 

plan(s), participants, and beneficiaries, 

including quantification of those costs 

and benefits to the extent possible; 

(5) A description of the alternatives to 

the exemption transaction that did not 

involve a prohibited transaction that 

were considered or evaluated by the 


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applicant before submitting its 

exemption application and the reason(s) 

why those alternatives were not 

pursued; 

(6) The prohibited transaction 

provisions from which exemptive relief 

is requested and the reason(s) why the 

exemption transaction would violate 

each such provision; 

(7) A description of each conflict of 

interest or potential instance of selfdealing that would be permitted if the 

exemption is granted; 

(8) Whether the exemption 

transaction is or has been the subject of 

an investigation or enforcement action 

by the Department, the Internal Revenue 

Service, or any other regulatory 

authority; and 

(9) The hardship or economic loss, if 

any, which would result to the person 

or persons on behalf of whom the 

exemption is sought, to affected plans, 

and to their participants and 

beneficiaries from denial of the 

exemption. 

(10) With respect to the exemption 

transaction’s definition of affiliate, if 

applicable, either a statement that the 

definition of affiliate set forth in 

§ 2570.31(a) is applicable or a statement 

setting forth why a different affiliate 

definition should be applied. 

(b) All applications for exemption 

must also contain the following: 

(1) A statement explaining why the 

requested exemption would meet the 

requirements of ERISA section 408(a) by 

being— 

(i) Administratively feasible for the 

Department; 

(ii) In the interests of affected plans 

and their participants and beneficiaries; 

and 

(iii) Protective of the rights of 

participants and beneficiaries of affected 

plans. 

(2) A statement that either: 

(i)(A) The exemption transaction will 

be in the best interest of the plan and 

its participants and beneficiaries; 

(B) That all compensation received, 

directly or indirectly, by a party in 

interest (and its affiliates) involved in 

the exemption transaction does not 

exceed reasonable compensation within 

the meaning of ERISA section 408(b)(2) 

and Code section 4975(d)(2); and 

(C) That all statements to the 

Department, the plan, or, if applicable, 

the qualified independent fiduciary or 

qualified independent appraiser about 

the exemption transaction and other 

relevant matters are not materially 

misleading at the time the statements 

are made; or 

(ii) Explains why the exemption 

standards in paragraphs (b)(2)(i)(A) 

through (C) of this section are not 

applicable to the exemption transaction. 

(iii) For purposes of this paragraph 

(b)(2), an exemption transaction is in the 

best interest of a plan if the plan 

fiduciary causing the plan to enter into 

the exemption transaction determines, 

with the care, skill, prudence, and 

diligence under the circumstances then 

prevailing, that a prudent person acting 

in a like capacity and familiar with such 

matters would, in the conduct of an 

enterprise of a like character and with 

like aims, enter into the exemption 

transaction based on the circumstances 

and needs of the plan. Such fiduciary 

shall not place the financial or other 

interests of itself, a party in interest, or 

any affiliate ahead of the interests of the 

plan or subordinate the plan’s interests 

to itself, or any other party or affiliate. 

(3) With respect to the notification of 

interested persons required by 

§ 2570.43: 

(i) A description of the interested 

persons to whom the applicant intends 

to provide notice; 

(ii) The manner in which the 

applicant will provide such notice; and 

(iii) An estimate of the time the 

applicant will need to furnish notice to 

all interested persons following 

publication of a notice of the proposed 

exemption in the Federal Register. 

(4) If any party to the exemption 

transaction has requested either an 

advisory opinion from the Department 

or any similar opinion or guidance from 

another Federal, state, or regulatory 

body with respect to any issue relating 

to the exemption transaction— 

(i) A copy of the opinion, letter, or 

similar document concluding the 

Department’s or other entity’s action on 

the request; or 

(ii) If the Department or other entity 

has not yet concluded its action on the 

request: 

(A) A copy of the request or the date 

on which it was submitted and, solely 

with respect to an advisory opinion 

request to the Department, the 

Department’s correspondence control 

number as indicated in the 

acknowledgment letter; and 

(B) An explanation of the effect the 

issuance of an advisory opinion by the 

Department or similar opinion or 

guidance from another Federal, state, or 

regulatory body would have upon the 

exemption transaction. 

(5) If the application is to be signed 

by anyone other than the party in 

interest seeking exemptive relief on 

their own behalf, a statement which— 

(i) Identifies the individual signing 

the application and their position or 

title; and 

(ii) Briefly explains the basis of their 

familiarity with the matters discussed in 

the application. 

(6)(i) A declaration in the following 

form: 

I certify that I am familiar with the 

matters discussed in this application 

and, to the best of my knowledge and 

belief, the representations made in this 

application are true and correct. 

(ii) This certification must be dated 

and signed by: 

(A) The applicant, in its individual 

capacity, in the case of an individual 

party in interest seeking exemptive 

relief on their own behalf; 

(B) A corporate officer or partner if 

the applicant is a corporation or 

partnership; 

(C) A designated officer or official if 

the applicant is an association, 

organization, or other unincorporated 

enterprise; or 

(D) The plan fiduciary that has the 

authority, responsibility, and control 

with respect to the exemption 

transaction if the applicant is a plan. 

(7) If an applicant communicated with 

the Department either orally or in 

writing before submitting an exemption 

application for the exemption 

transaction, a statement setting forth the 

date(s) and with whom the applicant 

communicated before submitting the 

application. 

(c) Statements and documents from a 

qualified independent appraiser, 

auditor, or accountant, such as appraisal 

reports, analyses of market conditions, 

audits, or financial documents 

submitted to support an application for 

exemption must be accompanied by a 

statement of consent from such 

appraiser, auditor, or accountant 

acknowledging that the statement is 

being submitted to the Department as 

part of an exemption application. The 

statements by the qualified independent 

appraiser, auditor, or accountant must 

also contain the following written 

information: 

(1) A signed and dated certification 

stating that, to the best of the qualified 

independent appraiser’s, auditor’s, or 

accountant’s knowledge and belief, the 

representations made in such statement 

are true and correct; 

(2) A copy of the qualified 

independent appraiser’s, auditor’s, or 

accountant’s engagement letter and, if 

applicable, contract with the plan 

describing the specific duties the 

appraiser, auditor, or accountant shall 

undertake. The letter or contract may 

not: 

(i) Include any provision that 

provides for the direct or indirect 

indemnification or reimbursement of 

the independent appraiser, auditor, or 


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accountant by the plan or another party 

for any failure to adhere to its 

contractual obligations or to Federal and 

state laws applicable to the appraiser’s, 

auditor’s, or accountant’s work. 

However, the letter or contract may 

include a provision providing for 

reimbursement of legal expenses with 

respect to claims for any failure to 

adhere to the appraiser’s, auditor’s, or 

accountant’s contractual obligations or 

to Federal and state laws applicable to 

the appraiser’s, auditor’s, or 

accountant’s work, provided that: 

(A) The plan determines that the 

reimbursement is prudent following a 

good faith determination that the 

appraiser, auditor, or accountant likely 

did not fail to adhere to the independent 

fiduciary’s contractual obligations or to 

Federal and state laws applicable to the 

appraiser’s, auditor’s, or accountant’s 

work and will be able to repay the plan; 

and 

(B) The letter or contract requires the 

appraiser, auditor, or accountant to 

repay all of the reimbursements, in a 

timely fashion, in the event the 

appraiser, auditor, or accountant enters 

into a settlement agreement regarding 

any asserted failure to adhere to its 

contractual obligations, or to state or 

Federal laws, or has been found liable 

for breach of contract or violation of any 

Federal or state laws applicable to the 

appraiser’s, auditor’s, or accountant’s 

work; or 

(ii) Waive any rights, claims, or 

remedies of the plan or its participants 

and beneficiaries under ERISA, the 

Code, or other Federal and state laws 

against the independent appraiser, 

auditor, or accountant with respect to 

the exemption transaction; 

(3) A summary of the qualified 

independent appraiser’s, auditor’s, or 

accountant’s qualifications to serve in 

such capacity; 

(4) A detailed description of any 

relationship that the qualified 

independent appraiser, auditor, or 

accountant has had or may have with 

the plan or any party in interest 

involved in the exemption transaction 

or its affiliates that may influence the 

appraiser, auditor, or accountant, 

including a description of any past 

engagements with the appraiser, 

auditor, or accountant; 

(5) A written appraisal report 

prepared by the qualified independent 

appraiser, which determines, to the best 

of the qualified independent appraiser’s 

ability and in accordance with 

professional appraisal standards, the fair 

market value of the subject asset(s), 

without bias towards the plan’s 

counterparty in the transaction or other 

interested parties: 

(i) The report must describe the 

method(s) used in determining the fair 

market value of the subject asset(s) and 

an explanation of why such method best 

reflects the fair market value of the 

asset(s); 

(ii) The report must consider any 

special benefit that a party in interest 

involved in the exemption transaction 

may derive from control of the asset(s), 

such as from owning an adjacent parcel 

of real property or gaining voting 

control over a company; and 

(iii) The report must be current and 

not more than one year old from the 

date of the exemption transaction, and 

a written update must be prepared by 

the qualified independent appraiser 

affirming the accuracy of the appraisal 

as of the date of the exemption 

transaction; 

(6) If the subject of the appraisal 

report is real property, the qualified 

independent appraiser shall submit a 

written representation that they are a 

member of a professional organization 

of appraisers that can sanction its 

members for misconduct; 

(7) If the subject of the appraisal 

report is an asset other than real 

property, the qualified independent 

appraiser shall submit a written 

representation describing the appraiser’s 

prior experience in valuing assets of the 

same type; and 

(8) The qualified independent 

appraiser shall submit a written 

representation disclosing the percentage 

of its current revenue that is derived 

from any party in interest (or its 

affiliates) involved in the exemption 

transaction; in general, such percentage 

shall be computed with respect to the 

two separate disclosures by comparing, 

in fractional form: 

(i) The amount of the appraiser’s 

projected revenues from the current 

Federal income tax year (including 

amounts received from preparing the 

appraisal report) that will be derived 

from any party in interest (or its 

affiliates) involved in the exemption 

transaction (expressed as a numerator); 

and 

(ii) The appraiser’s revenues from all 

sources for the prior Federal income tax 

year (expressed as a denominator). 

(d) For those exemption transactions 

requiring the retention of a qualified 

independent appraiser, the applicant 

must include: 

(1) A representation that the 

independent fiduciary prudently 

selected the appraiser after diligent 

review of the appraiser’s technical 

training and proficiency with respect to 

the type of valuation at issue, the 

appraiser’s independence from the 

plan’s counterparties in the exemption 

transaction, and the absence of any 

material conflicts of interest with 

respect to the exemption transaction; 

(2) A representation that the appraiser 

is independent within the meaning of 

§ 2571.31(i); and 

(3) A representation that the 

independent appraiser has appropriate 

technical training and proficiency with 

respect to the specific details of the 

exemption transaction. 

(e) For those exemption transactions 

requiring the retention of a qualified 

independent fiduciary to represent the 

interests of the plan, the applicant must 

include: 

(1) A representation that an 

appropriate fiduciary, without material 

conflicts of interest, prudently selected 

the independent fiduciary after diligent 

review of the independent fiduciary’s 

technical training and proficiency with 

respect to ERISA, the Code, and the 

specific details of the exemption 

transaction, as well as the sufficiency of 

the independent fiduciary’s fiduciary 

liability insurance; 

(2) A representation that the fiduciary 

retained to act as the independent 

fiduciary is independent within the 

meaning of § 2570.31(j); 

(3) A representation that the 

independent fiduciary has appropriate 

technical training and proficiency with 

respect to: 

(i) ERISA and the Code; and 

(ii) The specific details of the 

exemption transaction. 

(f) For exemption transactions 

requiring the retention of a qualified 

independent fiduciary to represent the 

interests of the plan, a statement must 

be submitted by such independent 

fiduciary that contains the following 

written information: 

(1) A signed and dated certification 

that, to the best of the qualified 

independent fiduciary’s knowledge and 

belief, all the representations made in 

such statement are true and correct; 

(2) A copy of the qualified 

independent fiduciary’s engagement 

letter and, if applicable, contract with 

the plan describing the fiduciary’s 

specific duties. The letter or contract 

may not: 

(i) Contain any provisions that violate 

ERISA section 410; 

(ii) Include any provision that 

provides for the direct or indirect 

indemnification or reimbursement of 

the independent fiduciary by the plan or 

other party for any failure to adhere to 

its contractual obligations or to state or 

Federal laws applicable to the 

independent fiduciary’s work, except 

that the letter or contract may include 

a provision providing for 

reimbursement of legal expenses with 


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respect to claims for any failure to 

adhere to the independent fiduciary’s 

contractual obligations or to Federal and 

state laws applicable to the independent 

fiduciary’s work, provided that: 

(A) The plan determines that the 

provision is prudent following a good 

faith determination that the 

independent fiduciary likely did not fail 

to adhere to the independent fiduciary’s 

contractual obligations or to Federal and 

state laws applicable to the independent 

fiduciary’s work and will be able to 

repay the plan; and 

(B) The letter or contract requires the 

independent fiduciary to repay all of the 

reimbursements, in a timely fashion, if 

the independent fiduciary enters into a 

settlement agreement regarding any 

asserted failure to adhere to its 

contractual obligations, or to state or 

Federal law, or has been found liable for 

breach of contract or violation of any 

Federal or state laws applicable to the 

independent fiduciary’s work; or 

(iii) Waive any rights, claims, or 

remedies of the plan under ERISA, state, 

or Federal law against the independent 

fiduciary with respect to the exemption 

transaction; 

(3)(i) A description of any fiduciary 

liability insurance policy maintained by 

the independent fiduciary that includes: 

(A) The amount of coverage available 

to indemnify the plan for damages 

resulting from a breach by the 

independent fiduciary of either ERISA, 

the Code, or any other Federal or state 

law or its contract or engagement letter; 

and 

(B) Whether the insurance policy 

contains an exclusion for actions 

brought by the Secretary or any other 

Federal, state, or regulatory body; the 

plan; or plan participants or 

beneficiaries; 

(4) An explanation of the bases for the 

conclusion that the fiduciary is a 

qualified independent fiduciary, which 

also must include a summary of that 

person’s or entity’s qualifications to 

serve in such capacity and a description 

of any prior experience by that person 

or entity or other demonstrated 

characteristics of the fiduciary (such as 

special areas of expertise) that render 

that person or entity suitable to perform 

its duties as a qualified independent 

fiduciary on behalf of the plan with 

respect to the exemption transaction; 

(5) A detailed description of any 

relationship that the qualified 

independent fiduciary has had or may 

have with the plan and any party in 

interest involved in the exemption 

transaction (or its affiliates); 

(6) An acknowledgement by the 

qualified independent fiduciary that it 

understands its duties and 

responsibilities under ERISA; is acting 

as a fiduciary of the plan with respect 

to the exemption transaction; has no 

material conflicts of interest with 

respect to the exemption transaction; 

and is not acting as an agent or 

representative of the plan sponsor; 

(7) The qualified independent 

fiduciary’s opinion on whether the 

exemption transaction would be in the 

interests of the plan and its participants 

and beneficiaries, protective of the 

rights of participants and beneficiaries 

of the plan, and in compliance with the 

standards set forth in paragraphs 

(b)(2)(i)(A) through (C) of this section, if 

applicable, along with a statement of the 

reasons on which the opinion is based; 

(8) If the exemption transaction is 

continuing in nature, a declaration by 

the qualified independent fiduciary that 

it is authorized to take all appropriate 

actions to safeguard the interests of the 

plan, and will, during the pendency of 

the exemption transaction: 

(i) Monitor the exemption transaction 

on behalf of the plan and its participants 

and beneficiaries on a continuing basis; 

(ii) Ensure that the exemption 

transaction remains in the interests of 

the plan and its participants and 

beneficiaries and, if not, take any 

appropriate actions available under the 

particular circumstances; and 

(iii) Enforce compliance with all 

conditions and obligations imposed on 

any party dealing with the plan with 

respect to the exemption transaction; 

(9) The qualified independent 

fiduciary shall submit a written 

representation disclosing the percentage 

of its current revenue that is derived 

from any party in interest involved in 

the exemption transaction (or its 

affiliates) with respect to both the prior 

Federal income tax year and current 

Federal income tax year; in general, 

such percentage shall be computed with 

respect to the two disclosures by 

comparing in fractional form: 

(i) The amount of the independent 

fiduciary’s projected revenues from the 

current Federal income tax year that 

will be derived from parties in interest 

involved in the exemption transaction 

and their affiliates (expressed as a 

numerator); and 

(ii) The independent fiduciary’s 

revenues from all sources (excluding 

fixed, non-discretionary retirement 

income) for the prior Federal income tax 

year (expressed as a denominator); 

(10) A statement that the independent 

fiduciary has no conflicts of interest 

with respect to the exemption 

transaction that could affect the exercise 

of its best judgment as a fiduciary; 

(11) Either: 

(i) A statement that, within the last 

five years, the independent fiduciary 

has not been under investigation or 

examination by, and has not engaged in 

litigation, or a continuing controversy 

with the Department, the Internal 

Revenue Service, the Justice 

Department, the Pension Benefit 

Guaranty Corporation, the Federal 

Retirement Thrift Investment Board, or 

any other Federal or state entity 

involving: 

(A) Compliance with provisions of 

ERISA or FERSA; 

(B) Its representation of or position or 

employment with any employee benefit 

plan, including investigations or 

controversies involving ERISA or the 

Code, or any other Federal or state law; 

(C) Conduct of the business of a 

broker, dealer, investment adviser, bank, 

insurance company, or fiduciary; 

(D) Income tax evasion; or 

(E) Any felony or conspiracy 

involving the larceny, theft, robbery, 

extortion, forgery, counterfeiting, 

fraudulent concealment, embezzlement, 

fraudulent conversion, or 

misappropriation of funds or securities; 

or 

(ii) A statement describing the 

applicable investigation, examination, 

litigation, or controversy; and 

(12)(i)(A) Either a statement that, 

within the last 13 years, the 

independent fiduciary has not been: 

(1) Convicted or released from 

imprisonment, whichever is later, as a 

result of any felony involving abuse or 

misuse of such person’s position or 

employment with an employee benefit 

plan or a labor organization; any felony 

arising out of the conduct of the 

business of a broker, dealer, investment 

adviser, bank, insurance company, or 

fiduciary; income tax evasion; any 

felony involving the larceny, theft, 

robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities; conspiracy or attempt to 

commit any such crimes or a crime of 

which any of the foregoing crimes is an 

element; or any crime identified in 

ERISA section 411, regardless of 

whether the conviction occurred in a 

U.S. or foreign jurisdiction; or 

(2) Convicted by a foreign court of 

competent jurisdiction or released from 

imprisonment, whichever is later, as a 

result of any crime that is substantially 

equivalent to an offense described in 

paragraph (f)(12)(i)(A)(1) of this section; 

or 

(B) A statement describing a 

conviction or release from 

imprisonment described in paragraph 

(f)(12)(i)(A) of this section. 


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Federal Register / Vol. 89, No. 16 / Wednesday, January 24, 2024 / Rules and Regulations 4697 

(ii) For purposes of this paragraph (f), 

a person shall be deemed to have been 

‘‘convicted’’ from the date of the 

judgment of the trial court (or the date 

of the judgment of any court in a foreign 

jurisdiction that is the equivalent of a 

U.S. Federal or state trial court), 

regardless of whether that judgment 

remains under appeal, and regardless of 

whether the foreign jurisdiction 

considers a trial court judgment final 

while under appeal. 

(g) Statements, as applicable, from 

other third-party experts, including but 

not limited to economists or market 

specialists, submitted on behalf of the 

plan to support an exemption 

application must be accompanied by a 

statement of consent from such expert 

acknowledging that the statement 

prepared on behalf of the plan is being 

submitted to the Department as part of 

an exemption application. Such 

statements must also contain the 

following written information: 

(1) A copy of the expert’s engagement 

letter and, if applicable, contract with 

the plan describing the specific duties 

the expert will undertake; 

(2) A summary of the expert’s 

qualifications to serve in such capacity; 

and 

(3) A detailed description of any 

relationship that the expert has had or 

may have with any party in interest (or 

its affiliates) involved in the exemption 

transaction that may influence the 

actions of the expert. 

(h) An application for exemption may 

also include a draft of the requested 

exemption which describes the 

exemption transaction and parties in 

interest for which exemptive relief is 

sought and the specific conditions 

under which the exemption would 

apply. 

§ 2570.35 Information to be included in 

applications for individual exemptions only. 

(a) Except as provided in paragraph 

(c) of this section, every application for 

an individual exemption must include, 

in addition to the information specified 

in § 2570.34, the following information: 

(1) The name, address, email address, 

telephone number, and type of plan or 

plans to which the requested exemption 

applies; 

(2) The Employer Identification 

Number (EIN) and the plan number (PN) 

used by such plan or plans in all 

reporting and disclosure required by the 

Department (individuals should not 

submit Social Security numbers); 

(3) Whether any plan or trust affected 

by the requested exemption is currently 

under investigation for violation of, or 

has ever been found by the Department, 

the Internal Revenue Service, or by a 

court to have violated, the exclusive 

benefit rule of Code section 401(a), Code 

section 4975(c)(1), ERISA sections 406 

or 407(a), or 5 U.S.C. 8477(c)(3), 

including a description of the 

circumstances surrounding such 

violation; 

(4) Whether any relief under ERISA 

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

or 5 U.S.C. 8477(c)(3) has been 

requested by, or provided to, the 

applicant or any parties in interest (or 

their affiliates) involved in the 

exemption transaction and, if so, the 

exemption application number or the 

prohibited transaction exemption 

number; 

(5) Whether the applicant or any party 

in interest (or its affiliates) involved in 

the exemption transaction is currently, 

or has been within the last five years, a 

defendant in any lawsuits or criminal 

actions concerning its conduct as a 

fiduciary or party in interest with 

respect to any plan (other than lawsuits 

with respect to a routine claim for 

benefits), and a description of the 

circumstances of the lawsuits or 

criminal actions; 

(6)(i) Whether the applicant 

(including any person described in 

§ 2570.34(b)(6)(ii)) or any of the parties 

in interest involved in the exemption 

transaction has, within the last 13 years, 

been: 

(A) Convicted or released from 

imprisonment, whichever is later, as a 

result of any felony involving abuse or 

misuse of such person’s position or 

employment with an employee benefit 

plan or a labor organization; any felony 

arising out of the conduct of the 

business of a broker, dealer, investment 

adviser, bank, insurance company, or 

fiduciary; income tax evasion; any 

felony involving the larceny, theft, 

robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities; conspiracy or attempt to 

commit any such crimes or a crime of 

which any of the foregoing crimes is an 

element; or any crime identified in 

ERISA section 411, regardless of 

whether the conviction occurred in a 

U.S. or foreign jurisdiction; or 

(B) Convicted by a foreign court of 

competent jurisdiction or released from 

imprisonment, whichever is later, as a 

result of any crime, however 

denominated by the laws of the relevant 

foreign government, that is substantially 

equivalent to an offense described in 

paragraph (a)(6)(i)(A) of this section and 

a description of the circumstances of 

any such conviction in paragraph 

(a)(6)(i)(A) or this paragraph (a)(6)(i)(B); 

and 

(ii) For purposes of this paragraph (a), 

a person shall be deemed to have been 

‘‘convicted’’ from the date of the 

judgment of the trial court (or the date 

of the judgment of any court in a foreign 

jurisdiction that is the equivalent of a 

U.S. Federal or state trial court), 

regardless of whether that judgment 

remains under appeal and regardless of 

whether the foreign jurisdiction 

considers a trial court judgment final 

while under appeal; 

(7) Whether, within the last five years, 

any plan affected by the exemption 

transaction, the applicant, or any party 

in interest (or its affiliates) involved in 

the exemption transaction, has been 

under investigation or examination by, 

or has been engaged in litigation or a 

continuing controversy with, the 

Department, the Internal Revenue 

Service, the Justice Department, the 

Pension Benefit Guaranty Corporation, 

the Federal Retirement Thrift 

Investment Board, or any other 

regulatory body involving compliance 

with provisions of ERISA, FERSA, the 

Code, or any other Federal or state law 

involving: 

(i) Compliance with provisions of 

ERISA or FERSA; 

(ii) Representation of or position or 

employment with any employee benefit 

plan, including investigations or 

controversies involving ERISA or the 

Code, or any other Federal or state law; 

(iii) Conduct of the business of a 

broker, dealer, investment adviser, bank, 

insurance company, or fiduciary; 

(iv) Income tax evasion; or 

(v) Any felony or conspiracy 

involving the larceny, theft, robbery, 

extortion, forgery, counterfeiting, 

fraudulent concealment, embezzlement, 

fraudulent conversion, or 

misappropriation of funds or securities. 

If so, the applicant must provide a brief 

statement describing the investigation, 

examination, litigation, or controversy. 

The Department reserves the right to 

require the production of additional 

information or documentation 

concerning any of the matters in this 

paragraph (a)(7). In this regard, a denial 

of the exemption application may result 

from an applicant’s failure to provide 

additional information requested by the 

Department; 

(8) Whether any plan affected by the 

requested exemption has experienced a 

reportable event under ERISA section 

4043, and, if so, a description of the 

circumstances of any such reportable 

event; 

(9) Whether a notice of intent to 

terminate has been filed under ERISA 

section 4041 with respect to any plan 

affected by the requested exemption, 

and, if so, a description of the 


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circumstances for the issuance of the 

notice; 

(10) Names, addresses, phone 

numbers, and email addresses of all 

parties in interest (or their affiliates) 

involved in the exemption transaction; 

(11) The estimated number of 

participants and beneficiaries in each 

plan affected by the requested 

exemption as of the date of the 

application; 

(12) The percentage of the fair market 

value of the total assets of each affected 

plan that is involved in the exemption 

transaction. If the exemption transaction 

includes the acquisition of an asset by 

the plan, the fair market value of the 

asset to be acquired must be included in 

both the numerator and denominator of 

the fraction; 

(13) Whether the exemption 

transaction has been consummated or 

will be consummated only if the 

exemption is granted; 

(14) If the exemption transaction has 

already been consummated: 

(i) The circumstances which resulted 

in plan fiduciaries causing the plan(s) to 

engage in the exemption transaction 

before obtaining an exemption from the 

Department; 

(ii) Whether the exemption 

transaction has been terminated; 

(iii) Whether the exemption 

transaction has been corrected as 

defined in Code section 4975(f)(5); 

(iv) Whether Form 5330, Return of 

Excise Taxes Related to Employee 

Benefit Plans, has been filed with the 

Internal Revenue Service with respect to 

the exemption transaction; and 

(v) Whether any excise taxes due 

under Code section 4975(a) and (b), or 

any civil penalties due under ERISA 

section 502(i) or (l) by reason of the 

exemption transaction have been paid. 

If so, the applicant should submit 

documentation (e.g., a canceled check) 

demonstrating that the excise taxes or 

civil penalties were paid; 

(15) The name of every person who 

has authority or investment discretion 

over any plan assets involved in the 

exemption transaction and the 

relationship of each such person to the 

parties in interest involved in the 

exemption transaction and the affiliates 

of such parties in interest; 

(16) Whether the assets of the affected 

plan(s) are invested, directly or 

indirectly, in: 

(i) loans to any party in interest (or its 

affiliates) involved in the exemption 

transaction; 

(ii) Property leased to any party in 

interest (or its affiliates) involved in the 

exemption transaction; or 

(iii) Securities issued by any party in 

interest (or its affiliates) involved in the 

exemption transaction, and, if such 

investments exist, a statement for each 

of these three types of investments 

which indicates: 

(A) The type of investment to which 

the statement pertains; 

(B) The aggregate fair market value of 

all investments of this type as reflected 

in the plan’s most recent annual report; 

(C) The approximate percentage of the 

fair market value of the plan’s total 

assets as shown in such annual report 

that is represented by all investments of 

this type; and 

(D) The statutory or administrative 

exemption covering these investments, 

if any; 

(17) The approximate aggregate fair 

market value of the total assets of each 

affected plan; 

(18) The person(s) or entity who will 

bear the costs of: 

(i) The exemption application; 

(ii) Any commissions, fees, or costs 

associated with the exemption 

transaction, and any related transaction; 

and 

(iii) Notifying interested persons; 

(19) Whether an independent 

fiduciary is or will be involved in the 

exemption transaction and, if so, the 

names of the persons who will bear the 

cost of the fee payable to such fiduciary; 

and 

(20) Any prior transaction between: 

(i) The plan or plan sponsor; and 

(ii) Any party in interest (or its 

affiliates) involved in the exemption 

transaction. 

(b) Each application for an individual 

exemption must also include: 

(1) True copies of all contracts, deeds, 

agreements, and instruments, as well as 

relevant portions of plan documents, 

trust agreements, and any other 

documents bearing on the exemption 

transaction; 

(2) A discussion of the facts relevant 

to the exemption transaction that are 

reflected in the documents listed in 

paragraph (b)(1) of this section and an 

analysis of their bearing on the 

requested exemption; 

(3) A copy of the most recent financial 

statements of each plan affected by the 

requested exemption; and 

(4) A net worth statement with respect 

to any party that is providing a personal 

guarantee with respect to the exemption 

transaction. 

(c) Special rules for applications for 

individual exemption involving pooled 

funds are as follows: 

(1) The information required by 

paragraphs (a)(8) through (12) of this 

section is not required to be furnished 

in an application for individual 

exemption involving one or more 

pooled funds. 

(2) The information required by 

paragraphs (a)(1) through (7) and (13) 

through (19) of this section and by 

paragraphs (b)(1) through (3) of this 

section must be furnished in reference 

to the pooled fund, rather than to the 

plans participating therein. (For 

purposes of this paragraph (c)(2), the 

information required by paragraph 

(a)(16) of this section relates solely to 

other pooled fund transactions with, 

and investments in, parties in interest 

involved in the exemption transaction 

which are also sponsors of plans which 

invest in the pooled fund.) 

(3) The following information must 

also be furnished— 

(i) The estimated number of plans that 

are participating (or will participate) in 

the pooled fund; and 

(ii) The minimum and maximum 

limits imposed by the pooled fund (if 

any) on the portion of the total assets of 

each plan that may be invested in the 

pooled fund. 

(4) Additional requirements for 

applications for individual exemptions 

involving pooled funds in which certain 

plans participate are as follows: 

(i) This paragraph (c)(4) applies to any 

application for an individual exemption 

involving one or more pooled funds in 

which any plan participating therein— 

(A) Invests an amount which exceeds 

20 percent of the total assets of the 

pooled fund; or 

(B) Covers employees of: 

(1) The party sponsoring or 

maintaining the pooled fund, or any 

affiliate of such party; or 

(2) Any fiduciary with investment 

discretion over the pooled fund’s assets, 

or any affiliate of such fiduciary. 

(ii) The exemption application must 

include, with respect to each plan 

described in paragraph (c)(4)(i) of this 

section, the information required by 

paragraphs (a)(1) through (3), (5) 

through (7), (10), (12) through (16), (18), 

and (19) of this section. The information 

required by this paragraph (c)(4)(ii) 

must be furnished in reference to the 

plan’s investment in the pooled fund 

(e.g., the names, addresses, phone 

numbers, and email addresses of all 

fiduciaries responsible for the plan’s 

investment in the pooled fund 

(paragraph (a)(10) of this section), the 

percentage of the assets of the plan 

invested in the pooled fund (paragraph 

(a)(12) of this section), whether the 

plan’s investment in the pooled fund 

has been consummated or will be 

consummated only if the exemption is 

granted (paragraph (a)(13) of this 

section, etc.)). 

(iii) The information required by this 

paragraph (c)(4) is in addition to the 

information required by paragraphs 


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(c)(2) and (3) of this section relating to 

information furnished by reference to 

the pooled fund. 

(5) The special rule and the additional 

requirements described in paragraphs 

(c)(1) through (4) of this section do not 

apply to an individual exemption 

request solely for the investment by a 

plan in a pooled fund. Such an 

application must provide the 

information required by paragraphs (a) 

and (b) of this section. 

(d)(1) Generally, the Department will 

consider exemption requests for 

retroactive relief only when: 

(i) The safeguards necessary for the 

grant of a prospective exemption were 

in place at the time the parties entered 

into the exemption transaction; and 

(ii) The plan and its participants and 

beneficiaries have not been harmed by 

the exemption transaction. An applicant 

for a retroactive exemption must 

demonstrate that the responsible plan 

fiduciaries acted in good faith by taking 

all appropriate steps necessary to 

protect the plan from abuse, loss, and 

risk at the time of the exemption 

transaction. An applicant should further 

explain and describe whether the 

exemption transaction could have been 

performed without engaging in a 

prohibited exemption transaction, and 

whether the goals of the transaction 

could have been achieved through an 

alternative transaction that served the 

aims of the plan equally well. 

(2) Among the factors that the 

Department will consider in making a 

finding that an applicant acted in good 

faith include the following: 

(i) The involvement of an 

independent fiduciary before an 

exemption transaction occurs who acts 

on behalf of the plan and is qualified to 

negotiate, approve, and monitor the 

exemption transaction; provided, 

however, the Department may consider, 

at its sole discretion, an independent 

fiduciary’s appointment and 

retrospective review after completion of 

the exemption transaction due to 

exigent circumstances; 

(ii) The existence of a 

contemporaneous appraisal by a 

qualified independent appraiser or 

reference to an objective third party 

source, such as a stock or bond index; 

(iii) The existence of a bidding 

process or evidence of comparable fair 

market transactions with unrelated third 

parties; 

(iv) That the applicant has submitted 

an accurate and complete exemption 

application that contains documentation 

of all necessary and relevant facts and 

representations upon which the 

applicant relied. In this regard, the 

Department will accord appropriate 

weight to facts and representations 

which are prepared and certified by a 

source independent of the applicant; 

(v) That the applicant has submitted 

evidence that the plan fiduciary did not 

engage in an act or transaction with 

respect to which the fiduciary should 

have known, consistent with its ERISA 

fiduciary duties and responsibilities, 

was prohibited under ERISA section 406 

and/or Code section 4975. In this regard, 

the Department will accord appropriate 

weight to the submission of a 

contemporaneous, reasoned legal 

opinion of counsel, upon which the 

plan fiduciary relied in good faith before 

engaging in the act or transaction; 

(vi) That the applicant has submitted 

a statement of the circumstances which 

prompted the submission of the 

application for exemption and the steps 

taken by the applicant about the 

exemption transaction upon discovery 

of the violation; 

(vii) That the applicant has submitted 

a statement, prepared and certified by 

an independent person familiar with the 

types of transactions for which relief is 

requested, demonstrating that the terms 

and conditions of the exemption 

transaction (including, in the case of an 

investment, the return in fact realized 

by the plan) were at least as favorable 

to the plan as that obtainable in a 

similar transaction with an unrelated 

party; and 

(viii) Such other undertakings and 

assurances with respect to the plan and 

its participants that may be offered by 

the applicant which are relevant to the 

criteria under ERISA section 408(a) and 

Code section 4975(c)(2). 

(3) The Department, as a general 

matter, will not consider requests for 

retroactive exemptions if transactions or 

conduct with respect to which an 

exemption is requested resulted in a 

loss to the plan, as determined pursuant 

to the facts existing at the time of the 

exemption application. In addition, the 

Department will not consider requests 

for exemptions if the transactions are 

inconsistent with the general fiduciary 

responsibility provisions of ERISA 

sections 403 or 404 or the exclusive 

benefit requirements of Code section 

401(a). 

§ 2570.36 Where to file an application. 

The Department’s prohibited 

transaction exemption program is 

administered by the Employee Benefits 

Security Administration (EBSA). Any 

exemption application governed by this 

subpart may be emailed to the 

Department at e-OED@dol.gov. The 

applicant is not required to submit a 

paper copy if an electronic copy is 

submitted. An applicant may submit a 

paper copy of the application by mailing 

it via first-class mail to: Employee 

Benefits Security Administration, Office 

of Exemption Determinations, U.S. 

Department of Labor, 200 Constitution 

Avenue NW, Suite 400 Washington, DC 

20210 or via private carrier service to 

Employee Benefit Security 

Administration, U.S. Department of 

Labor, Office of Exemption 

Determinations, 122 C Street NW, Suite 

400, Washington, DC 20001–2109. The 

mail or private carrier service addresses, 

however, are subject to change, and the 

applicant should confirm the address 

with the Office of Exemption 

Determinations before submitting a 

paper copy of an application. 

§ 2570.37 Duty to amend and supplement 

exemption applications. 

(a) During the Department’s 

consideration of an exemption 

application and following any grant by 

the Department of an exemption 

request, an applicant must promptly 

notify the Department in writing if they 

discover that any material fact or 

representation contained in the 

application or in any documents or 

testimony provided in support of the 

application was inaccurate at the time it 

was provided to the Department in 

support of the application. If any 

material fact or representation changes 

during this period, or if anything occurs 

that may affect the continuing accuracy 

of any such fact or representation, the 

applicant must promptly notify the 

Department in writing of the change. In 

addition, an applicant must promptly 

notify the Department in writing if it 

learns that a material fact or 

representation has been omitted from 

the exemption application. 

(b) If, at any time during the pendency 

of an exemption application, the 

applicant or any other party in interest 

who would participate in the exemption 

transaction becomes the subject of an 

investigation or enforcement action by 

the Department, the Internal Revenue 

Service, the Justice Department, the 

Pension Benefit Guaranty Corporation, 

the Federal Retirement Thrift 

Investment Board, or any other Federal 

or state governmental entity involving: 

(1) Compliance with provisions of 

ERISA or FERSA; 

(2) Representation of or position or 

employment with any employee benefit 

plan, including investigations or 

controversies involving ERISA or the 

Code, or any other Federal or state law; 

(3) Conduct of the business of a 

broker, dealer, investment adviser, bank, 

insurance company, or fiduciary; 

(4) Income tax evasion; or 


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(5) Any felony or conspiracy 

involving the larceny, theft, robbery, 

extortion, forgery, counterfeiting, 

fraudulent concealment, embezzlement, 

fraudulent conversion, or 

misappropriation of funds or securities, 

the applicant must promptly notify the 

Department. 

(c) The Department may require an 

applicant to provide any documentation 

it considers necessary to verify any 

statements contained in the application 

or in supporting materials or 

documents. 

§ 2570.38 Tentative denial letters. 

(a) If, after reviewing an exemption 

file, the Department tentatively 

concludes that it will not propose or 

grant the exemption, it will notify the 

applicant in writing. At the same time 

the Department provides the 

notification, the Department will also 

provide a brief statement of the reasons 

for its tentative denial. 

Note 1 to paragraph (a). As 

referenced in § 2570.33(a)(1), the 

Department will not hold a conference 

with, or issue a tentative denial letter to, 

an applicant who does not submit a 

complete application, or an applicant 

who does not provide current 

information. 

(b) An applicant will have 20 days 

from the date of a tentative denial letter, 

unless the Department extends the time 

period at its sole discretion, to request 

a conference under § 2570.40 and/or to 

notify the Department of its intent to 

submit additional information under 

§ 2570.39. If the Department does not 

receive a request for a conference or a 

notification of intent to submit 

additional information within that time, 

it will issue a final denial letter 

pursuant to § 2570.41. 

§ 2570.39 Opportunities to submit 

additional information. 

(a) An applicant may notify the 

Department of its intent to submit 

additional information supporting an 

exemption application by telephone, by 

letter sent to the address furnished in 

the applicant’s tentative denial letter, or 

electronically to the email address 

provided in the applicant’s tentative 

denial letter. At the same time, the 

applicant should indicate generally the 

type of information that will be 

submitted. 

(b) The additional information an 

applicant intends to provide in support 

of the application must be in writing 

and received by the Department within 

40 days from the date the Department 

issues the tentative denial letter unless 

the Department extends the time period 

at its sole discretion. All such 

information must be accompanied by a 

certification that all information 

provided to the Department is true and 

correct, and the certification must be 

dated and signed by a person qualified 

under § 2570.34(b)(6) to sign such a 

declaration. The information may be 

submitted either electronically or by 

mail to the address specified in the 

letter. 

(c) If, for reasons beyond its control, 

an applicant is unable to submit all the 

additional information they intend to 

provide in support of their application 

within the period described in 

paragraph (b) of this section, they may 

request an extension of time to furnish 

the information. Such requests must be 

made before the expiration of the time 

period described in paragraph (b), and 

the request will be granted, in the 

Department’s sole discretion, only in 

unusual circumstances and for a limited 

period as determined by the 

Department. The request may be made 

by telephone, mail, or electronically. 

(d) The Department will issue, 

without further notice, either by mail or 

electronically, a final denial letter 

denying the requested exemption 

pursuant to § 2570.41 if— 

(1) The Department has not received 

the additional information that the 

applicant stated their intention to 

submit within the period described in 

paragraph (b) of this section, or within 

any additional period granted pursuant 

to paragraph (c) of this section; and 

(2) The applicant did not request a 

conference pursuant to § 2570.38(b). 

§ 2570.40 Conferences. 

(a) Any conference between the 

Department and an applicant pertaining 

to a requested exemption will be held in 

Washington, DC, except that a telephone 

or electronic conference will be held at 

the applicant’s request. 

(b) An applicant is entitled to only 

one conference with respect to any 

exemption application. The Department 

may hold additional conferences at its 

sole discretion if it determines 

additional conference(s) are appropriate. 

An applicant will not be entitled to a 

conference, however, if the Department 

has held a hearing on the exemption 

under either § 2570.46 or § 2570.47. 

(c) Insofar as possible, conferences 

will be scheduled as joint conferences 

with all applicants present if: 

(1) More than one applicant has 

requested an exemption with respect to 

the same or similar types of 

transactions; 

(2) The Department is considering the 

applications together as a request for a 

class exemption; 

(3) The Department contemplates not 

granting the exemption; and 

(4) More than one applicant has 

requested a conference. 

(d) In instances where the applicant 

has requested a conference pursuant to 

§ 2570.38(b) and also has submitted 

additional information pursuant to 

§ 2570.39, the Department will schedule 

a conference under this section for a 

date and time that occurs within 20 

days after the date on which the 

Department has provided either oral or 

written notification to the applicant 

that, after reviewing the additional 

information, it still is not prepared to 

propose the requested exemption or a 

later date determined at the 

Department’s sole discretion. If, for 

reasons beyond its control, the applicant 

cannot attend a conference within the 

time limit described in this paragraph 

(d), the applicant may request an 

extension of time for the scheduling of 

a conference, provided that such request 

is made before the expiration of the time 

limit. The Department, at its sole 

discretion, will only grant such an 

extension in unusual circumstances and 

for a brief period. 

(e) In instances where the applicant 

has requested a conference pursuant to 

§ 2570.38(b) but has not expressed an 

intent to submit additional information 

in support of the exemption application 

as provided in § 2570.39, the 

Department will schedule a conference 

under this section for a date and time 

that occurs within 40 days after the date 

of the issuance of the tentative denial 

letter described in § 2570.38(a) or a later 

date determined at the sole discretion of 

the Department. If, for reasons beyond 

its control, the applicant cannot attend 

a conference within the time limit 

described in this paragraph (e), the 

applicant may request an extension of 

time for the scheduling of a conference, 

provided that such request is made 

before the expiration of the time limit. 

The Department, at its sole discretion, 

will only grant such an extension in 

unusual circumstances and for a brief 

period. 

(f) In instances where the applicant 

has requested a conference pursuant to 

§ 2570.38(b), notified the Department of 

its intent to submit additional 

information pursuant to § 2570.39, and 

failed to furnish such information 

within 40 days after the date of issuance 

of the tentative denial letter, the 

Department will schedule a conference 

under this section for a date and time 

that occurs within 60 days after the date 

of the issuance of the tentative denial 

letter described in § 2570.38(a) or a later 

date as determined at the sole discretion 

of the Department. If, for reasons 


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1To be added in instances where the Department 

requires the applicant to furnish a Summary of 

Proposed Exemption to interested persons as 

described in paragraph (d) of this section. 

2The applicant will write in this space the date 

of the last day of the time period specified in the 

notice of proposed exemption. 

3To be added in the case of an exemption that 

provides relief from ERISA section 406(b) or 

corresponding sections of the Code or FERSA. 

4The applicant will fill in the room number of 

the Office of Exemptions Determinations. As of 

January 24, 2024, the room number of the Office of 

Exemption Determinations is N–5461. 

5The applicant will fill in the exemption 

application number, which is stated in the notice 

of proposed exemption, as well as in all 

correspondence from the Department to the 

applicant regarding the application. 

beyond its control, the applicant cannot 

attend a conference within the time 

limit described in this paragraph (f), the 

applicant may request an extension of 

time to schedule a conference, provided 

that such request is made before the 

expiration of the time limit. The 

Department, at its sole discretion, will 

only grant such an extension in unusual 

circumstances and for a brief period. 

(g) If the applicant fails to either 

timely schedule or appear for a 

conference agreed to by the Department 

pursuant to this section, the applicant 

will be deemed to have waived its right 

to a conference. 

(h) Within 20 days after the date of 

any conference held under this section, 

or a later date determined at the sole 

discretion of the Department, the 

applicant may submit to the Department 

(electronically or in paper form) any 

additional written data, arguments, or 

legal authorities discussed at the 

conference but not previously or 

adequately presented in writing. If, for 

reasons beyond its control, the applicant 

is unable to submit the additional 

information within this time limit, the 

applicant may request an extension of 

time to furnish the information, 

provided that such request is made 

before the expiration of the time limit 

described in this paragraph (h). The 

Department, at its sole discretion, will 

only grant such an extension in unusual 

circumstances and for a brief period. 

(i) The Department, at its sole 

discretion, may hold a conference with 

any party, including the qualified 

independent fiduciary or the qualified 

independent appraiser, regarding any 

matter related to an exemption request 

without the presence of the applicant or 

other parties involved in the exemption 

transaction, or their representatives. 

Any such conferences may occur in 

addition to the conference with the 

applicant described in paragraph (b) of 

this section. 

§ 2570.41 Final denial letters. 

The Department will issue a final 

denial letter denying a requested 

exemption, either by mail or 

electronically, if: 

(a) Before issuing a tentative denial 

letter under § 2570.38 or conducting a 

hearing on the exemption under either 

§ 2570.46 or § 2570.47, the Department 

determines at its sole discretion that: 

(1) The applicant has failed to submit 

information requested by the 

Department in a timely manner; 

(2) The information provided by the 

applicant does not meet the 

requirements of §§ 2570.34 and 2570.35; 

or 

(3) A conference was held between 

the Department and the applicant before 

the Department issued a tentative denial 

letter during which the Department and 

the applicant addressed the reasons for 

denial that otherwise would have been 

set forth in a tentative denial letter 

pursuant to § 2570.38; 

(b) The conditions for issuing a final 

denial letter specified in § 2570.38(b) or 

§ 2570.39(d) are satisfied; 

(c) After issuing a tentative denial 

letter under § 2570.38 and considering 

the entire record in the case, including 

all written information submitted 

pursuant to §§ 2570.39 and 2570.40, the 

Department decides not to propose an 

exemption or to withdraw an exemption 

it already proposed; 

(d) After proposing an exemption and 

conducting a hearing on the exemption 

under either § 2570.46 or § 2570.47 and 

after considering the entire record in the 

case, including the record of the hearing 

and any public comments, the 

Department decides to withdraw the 

proposed exemption; or 

(e) The applicant either: 

(1) Requests for the Department to 

withdraw the exemption application; or 

(2) Communicates to the Department 

that it is not interested in continuing the 

application process. 

§ 2570.42 Notice of proposed exemption. 

If the Department tentatively decides 

that an administrative exemption is 

warranted, it will publish a notice of a 

proposed exemption in the Federal 

Register. In addition to providing notice 

of the pendency of the exemption before 

the Department, the notice will: 

(a) Explain the exemption transaction 

and summarize the information and 

reasons in support of proposing the 

exemption; 

(b) Describe the scope of relief and 

any conditions of the proposed 

exemption; 

(c) Inform interested persons of their 

right to submit comments to the 

Department (either electronically or in 

writing) relating to the proposed 

exemption and establish a deadline for 

receipt of such comments; and 

(d) If the proposed exemption 

includes relief from the prohibitions of 

ERISA section 406(b), Code section 

4975(c)(1)(E) or (F), or FERSA section 

8477(c)(2), inform interested persons 

who are materially affected by the grant 

of the exemption of their right to request 

a hearing under § 2570.46 and establish 

a deadline for hearing requests to be 

submitted. 

§ 2570.43 Notification of interested 

persons by applicant. 

(a) If a notice of proposed exemption 

is published in the Federal Register in 

accordance with § 2570.42, the 

applicant must notify interested persons 

of the pendency of the exemption in the 

manner and within the time period 

specified in the application. If the 

Department determines that this 

notification would be inadequate, the 

applicant must obtain the Department’s 

consent as to the manner and time 

period of providing the notice to 

interested persons. Any such 

notification must include: 

(1) A copy of the notice of proposed 

exemption as published in the Federal 

Register; and 

(2) A supplemental statement in the 

following form: 

You are hereby notified that the 

United States Department of Labor is 

considering granting an exemption from 

the prohibited transaction restrictions of 

the Employee Retirement Income 

Security Act of 1974, the Internal 

Revenue Code of 1986, or the Federal 

Employees’ Retirement System Act of 

1986. The exemption under 

consideration is summarized in the 

enclosed [Summary of Proposed 

Exemption and described in greater 

detail in the accompanying] 1 Notice of 

Proposed Exemption. As a person who 

may be affected by this exemption, you 

have the right to comment on the 

proposed exemption by [date].2 [If you 

may be materially affected by the grant 

of the exemption, you also have the 

right to request a hearing on the 

exemption by [date].] 3

All comments and/or requests for a 

hearing should be addressed to the 

Office of Exemption Determinations, 

Employee Benefits Security 

Administration, Room N–5461,4 U.S. 

Department of Labor, 200 Constitution 

Avenue NW, Washington, DC 20210, 

ATTENTION: Application No.ll.5

Comments and hearing requests may 

also be transmitted to the Department 

electronically at e-OED@dol.gov or at 

https://www.regulations.gov (follow 

instructions for submission), and should 

prominently reference the application 


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number listed above. Individuals 

submitting comments or requests for a 

hearing on this matter are advised not 

to disclose sensitive personal data, such 

as social security numbers or 

information that they consider 

confidential or otherwise protected. 

The Department will make no final 

decision on the proposed exemption 

until it reviews the comments received 

in response to the enclosed notice. If the 

Department decides to hold a hearing on 

the exemption request before making its 

final decision, you will be notified of 

the time and place of the hearing. 

(b) The method used by an applicant 

to furnish notice to interested persons 

must be reasonably calculated to ensure 

that interested persons actually receive 

the notice. In all cases, personal 

delivery and delivery by first-class mail 

will be considered reasonable methods 

of furnishing notice. If the applicant 

elects to furnish notice electronically, 

they must provide satisfactory proof that 

the entire class of interested persons 

will be able to receive the notice. 

(c) After furnishing the notification 

described in paragraph (a) of this 

section, an applicant must provide the 

Department with a written statement 

confirming that notice was furnished in 

accordance with the requirements in 

paragraph (b) of this section. This 

statement must be accompanied by a 

certification that the information 

provided in the statement and signed by 

a person qualified under § 2570.34(b)(6) 

to sign such a declaration is true and 

correct. No exemption will be granted 

until the applicant furnishes such a 

certification to the Department. 

(d) In addition to the provision of 

notification required by paragraph (a) of 

this section, the Department, in its sole 

discretion, may also require an 

applicant to furnish interested persons 

with a brief summary of the proposed 

exemption (Summary of Proposed 

Exemption), written in a manner 

calculated to be understood by the 

average recipient, which objectively 

describes: 

(1) The exemption transaction and the 

parties in interest thereto; 

(2) Why the exemption transaction 

would violate the prohibited transaction 

provisions of ERISA, the Code, and/or 

FERSA from which relief is sought; 

(3) The reasons why the plan seeks to 

engage in the exemption transaction; 

and 

(4) The conditions and safeguards 

proposed to protect the plan and its 

participants and beneficiaries from 

potential abuse or unnecessary risk of 

loss in the event the Department grants 

the exemption. 

(e) Applicants who are required to 

provide interested persons with the 

Summary of Proposed Exemption 

described in paragraph (d) of this 

section shall furnish the Department 

with a copy of such summary for review 

and approval before its distribution to 

interested persons. Such applicants 

shall also provide confirmation to the 

Department that the Summary of 

Proposed Exemption was furnished to 

interested persons as part of the written 

statement and declaration required of 

exemption applicants by paragraph (c) 

of this section. 

§ 2570.44 Withdrawal of exemption 

applications. 

(a) An applicant may withdraw an 

application for an exemption at any 

time by oral or written (including 

electronic) notice to the Department. A 

withdrawn application generally shall 

not prejudice any subsequent 

applications for the same exemption 

transaction submitted by an applicant. 

(b) Upon receiving an applicant’s 

notice of withdrawal regarding an 

application for an individual 

exemption, the Department will issue a 

final denial letter in accordance with 

§ 2570.41(e) and will terminate all 

proceedings relating to the application. 

If a notice of proposed exemption has 

been published in the Federal Register, 

the Department will publish a notice in 

the Federal Register withdrawing the 

proposed exemption. 

(c) Upon receiving an applicant’s 

notice of withdrawal regarding an 

application for a class exemption or an 

individual exemption that is being 

considered with other applications as a 

request for a class exemption, the 

Department will inform any other 

applicants for the exemption of the 

withdrawal. The Department will 

continue to process other applications 

for the same exemption. If all applicants 

for a particular class exemption 

withdraw their applications, the 

Department may either terminate all 

proceedings relating to the exemption or 

propose the exemption on its own 

motion. 

(d) If, following the withdrawal of an 

exemption application, an applicant 

decides to reapply for the same 

exemption, they may contact the 

Department in writing (including 

electronically) to request the 

Department to reinstate the application. 

The applicant should refer to the 

application number assigned to the 

original application. If, at the time the 

original application was withdrawn, any 

additional information required to be 

submitted to the Department under 

§ 2570.39 was outstanding, that 

information must accompany the 

request for reinstatement of the 

application. The applicant must also 

update all previously furnished 

information to the Department in 

connection with a withdrawn 

application. 

(e) Any request for reinstatement of a 

withdrawn application submitted in 

accordance with paragraph (d) of this 

section will be granted by the 

Department, and the Department will 

take whatever steps remained to process 

the application when the applicant 

withdrew the application. 

(f) Following the withdrawal of an 

exemption application, the 

administrative record will remain 

subject to public inspection and copy 

pursuant to § 2570.51. 

§ 2570.45 Requests for reconsideration. 

(a) The Department will entertain one 

request for reconsideration of an 

exemption application that the 

Department has denied pursuant to 

§ 2570.41 if the applicant either: 

(1) Presents significant new facts or 

arguments in support of the application, 

which, for good reason, could not have 

been submitted for the Department’s 

consideration during its initial review of 

the exemption application; or 

(2) The applicant received a final 

denial letter pursuant to § 2570.41(a) 

before the Department issued a tentative 

denial letter under § 2570.38 or 

conducted a hearing on the exemption 

under either § 2570.46 or § 2570.47. 

(b) An applicant must submit a 

request for reconsideration of a 

previously denied application within 

180 days after the issuance of the final 

denial letter and include with the 

request a copy of the Department’s final 

denial letter and a statement setting 

forth the new information and/or 

arguments that provide the basis for 

reconsideration. 

(c) A request for reconsideration must 

also be accompanied by a certification 

that the new information provided to 

the Department is true and correct, 

which is signed by a person qualified 

under § 2570.34(b)(6) to sign the 

certification. 

(d) If, after reviewing a request for 

reconsideration, the Department decides 

that the facts and arguments presented 

do not warrant reversal of its original 

decision to deny the exemption, it will 

send a letter to the applicant reaffirming 

that decision. 

(e) If, after reviewing a request for 

reconsideration, the Department decides 

to reconsider its final denial letter based 

on the new facts and arguments 

submitted by the applicant, it will notify 

the applicant of its intent to reconsider 


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the application in light of the new 

information presented. The Department 

will then take whatever steps remained 

to be completed to process the 

exemption application when it issued 

its final denial letter. 

(f) If, at any point during its 

subsequent processing of the 

application, the Department decides 

again that the exemption is 

unwarranted, it will issue a letter to the 

applicant affirming its final denial. 

(g) The Department does not consider 

a request for reinstatement of an 

exemption application pursuant to 

§ 2570.44(d) as a request for 

reconsideration governed by this 

section. 

(h) If an applicant whose application 

was finally denied pursuant to 

§ 2570.41(a)(1) or (2) cures the 

application by providing all required 

and requested information upon 

submission for reconsideration, the 

Department will reconsider the 

application under paragraph (e) of this 

section. If, upon reconsideration, the 

Department concludes that an 

exemption is not warranted, the 

Department will either hold a 

conference with the applicant under 

§ 2570.40 or issue a tentative denial 

pursuant to the procedures in § 2570.38. 

§ 2570.46 Hearings in opposition to 

exemptions from restrictions on fiduciary 

self-dealing and conflicts of interest. 

(a) Any person who may be materially 

affected by an exemption which the 

Department proposes to grant from the 

restrictions of ERISA section 406(b), 

Code section 4975(c)(1)(E) or (F), or 

FERSA section 8477(c)(2) may request a 

hearing before the Department within 

the time period specified in the Federal 

Register notice of the proposed 

exemption. Any such request must state: 

(1) The name, address, telephone 

number, and email address of the 

person making the request; 

(2) The nature of the person’s interest 

in the exemption and how the person 

would be materially affected by the 

exemption; and 

(3) A statement of the issues to be 

addressed and a general description of 

the evidence to be presented at the 

hearing. 

(b) The Department will grant a 

request for a hearing made in 

accordance with paragraph (a) of this 

section if a hearing is necessary to fully 

explore material factual issues with 

respect to the proposed exemption 

identified by the person requesting the 

hearing. The Department will publish a 

notice of such hearing in the Federal 

Register. The Department may decline 

to hold a hearing if: 

(1) The request for the hearing is not 

timely, or otherwise fails to include the 

information required by paragraph (a) of 

this section; 

(2) The only issues identified for 

exploration at the hearing are matters of 

law; or 

(3) The factual issues identified can 

be fully explored through the 

submission of evidence in written 

(including electronic) form. 

(c) An applicant for an exemption 

must notify interested persons if the 

Department schedules a hearing on the 

exemption. Such notification must be 

provided in the form, time, and manner 

prescribed by the Department. 

Ordinarily, however, adequate 

notification can be given by providing to 

interested persons a copy of the notice 

of hearing published by the Department 

in the Federal Register within 10 days 

after its publication, using any of the 

methods approved in § 2570.43(b). 

(d) After furnishing the notice 

required by paragraph (c) of this section, 

an applicant must submit a statement 

confirming that notice was given in the 

form, manner, and time prescribed. This 

statement must be accompanied by a 

certification that the information 

provided in the statement is true and 

correct, which is signed by a person 

qualified under § 2570.34(b)(6) to sign a 

certification. 

§ 2570.47 Other hearings. 

(a) In its sole discretion, the 

Department may schedule a hearing on 

its own motion if it determines that 

issues relevant to the exemption can be 

most fully or expeditiously explored at 

a hearing. The Department shall publish 

a notice of such hearing in the Federal 

Register. 

(b) An applicant for an exemption 

must notify interested persons of any 

hearing on an exemption scheduled by 

the Department in the manner described 

in § 2570.46(c). In addition, the 

applicant must submit a certification 

subscribed as true and correct like that 

required in § 2570.46(d). 

§ 2570.48 Decision to grant exemptions. 

(a) The Department may not grant an 

exemption under ERISA section 408(a), 

Code section 4975(c)(2), or 5 U.S.C. 

8477(c)(3)(C) unless, following 

evaluation of the facts and 

representations comprising the 

administrative record of the proposed 

exemption (including any comments 

received in response to a notice of 

proposed exemption and the record of 

any hearing held in connection with the 

proposed exemption), it finds that the 

exemption meets the statutory 

requirements by being: 

(1) Administratively feasible for the 

Department; 

(2) In the interests of the plan (or the 

Thrift Savings Fund in the case of 

FERSA) and of its participants and 

beneficiaries; and 

(3) Protective of the rights of 

participants and beneficiaries of such 

plan (or the Thrift Savings Fund in the 

case of FERSA). 

(b) In each instance where the 

Department determines to grant an 

exemption, it shall publish a notice in 

the Federal Register which summarizes 

the transaction or transactions for which 

exemptive relief has been granted and 

specifies the conditions under which 

such exemptive relief is available. 

§ 2570.49 Limits on the effect of 

exemptions. 

(a) An exemption does not take effect 

with respect to the exemption 

transaction unless the material facts and 

representations contained in the 

application and in any materials and 

documents submitted in support of the 

application were true and complete at 

the time of the submission of such 

material. 

(b) An exemption is effective only for 

the period of time specified and only 

under the conditions set forth in the 

exemption. 

(c) Only the specific parties to whom 

an exemption grants relief may rely on 

the exemption. If the notice granting an 

exemption does not limit exemptive 

relief to specific parties, all parties to 

the exemption transaction may rely on 

the exemption. 

(d) For exemption transactions that 

are continuing in nature, an exemption 

ceases to be effective if, during the 

continuation of the exemption 

transaction, there are material changes 

to the original facts and representations 

underlying such exemption or if one or 

more of the exemption’s conditions 

cease to be met. 

(e) The determination as to whether, 

under the totality of the facts and 

circumstances, a particular statement 

contained in (or omitted from) an 

exemption application constitutes a 

material fact or representation is made 

by the Department in its sole discretion. 

§ 2570.50 Revocation or modification of 

exemptions. 

(a) If, after an exemption takes effect, 

material changes in facts, 

circumstances, or representations occur, 

including whether a qualified 

independent fiduciary resigns, is 

terminated, or is convicted of a crime, 

the Department, at its sole discretion, 

may take steps to revoke or modify the 

exemption. If the qualified independent 


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fiduciary resigns, is terminated, or is 

convicted of a crime, the applicant must 

notify the Department within 30 days of 

the resignation, termination, or 

conviction, and the Department reserves 

the right to request the applicant to 

provide the Department with any of the 

information required pursuant to 

§ 2570.34(e) and (f) pursuant to a time 

determined by the Department at its sole 

discretion. 

(b) Before revoking or modifying an 

exemption, the Department will publish 

a notice of its proposed action in the 

Federal Register and provide interested 

persons with an opportunity to 

comment on the proposed revocation or 

modification. Before the Department 

publishes such notice, it will notify the 

applicant of the Department’s proposed 

action and the reasons therefore. After 

the publication of the notice, the 

applicant will have the opportunity to 

comment on the proposed revocation or 

modification. 

(c) The revocation or modification of 

an exemption will have prospective 

effect only. 

§ 2570.51 Public inspection and copies. 

(a) From the date the administrative 

record of each exemption is established 

pursuant to § 2570.32(d), the 

administrative record of each exemption 

will be open for public inspection and 

copying at the EBSA Public Disclosure 

Room, U.S. Department of Labor, 200 

Constitution Avenue NW, Washington, 

DC 20210. 

(b) Upon request, the staff of the 

Public Disclosure Room will furnish 

photocopies of an administrative record, 

or any specified portion of that record, 

for a specified charge per page; or, at the 

discretion of the Department, provide 

the administrative record electronically 

for a specified charge. 

§ 2570.52 Effective date. 

This subpart is effective with respect 

to all exemptions filed with or initiated 

by the Department under ERISA section 

408(a), Code section 4975(c)(2), and/or 5 

U.S.C. 8477(c)(3) at any time on or after 

April 8, 2024. Applications for 

exemptions under ERISA section 408(a), 

Code section 4975(c)(2), and/or 5 U.S.C. 

8477(c)(3) filed on or after December 27, 

2011, but before April 8, 2024, are 

governed by 29 CFR part 2570 (revised 

effective December 27, 2011). 

Signed at Washington, DC, this 9th day of 

January 2024. 

Lisa M. Gomez, 

Assistant Secretary, Employee Benefits 

Security Administration, U.S. Department of 

Labor. 

[FR Doc. 2024–00586 Filed 1–23–24; 8:45 am] 

BILLING CODE 4510–29–P 


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