US Labor Department publishes final rule amending procedures for filing and processing prohibited transaction exemptions under ERISA

The U.S. Department of Labor’s Employee Benefits Security Administration is announcing the publication of a final rule updating the procedures for filing and processing applications for prohibited transaction exemptions under the Employee Retirement Income Security Act.  The final rule, which revises decades-old procedures, was published in the October 27, 2011, edition of the Federal Register. Please visit to view the final rule.

“This rule is designed to simplify and bring transparency to the exemption application process,” said Phyllis C. Borzi, assistant secretary of labor for the Employee Benefits Security Administration. “It is reflective of the administration’s commitment to update and refine regulations to make compliance easier, while also promoting openness around transactions involving worker benefit plans.”

The final rule consolidates the existing policies and guidance on the exemption process into a single source, and clarifies the types of information and documentation required to submit a complete filing.  It also expands the method for transmitting filings to include electronic submissions, and makes exemptions more understandable for participants and other interested parties.

The updates include:

  • A requirement that applicants provide interested persons with a brief objective summary of complex transactions.
  • Guidance on the amount of compensation that may be received by a fiduciary or an appraiser when they are paid by a related party (or its affiliate) to the exemption transaction.
  • Clarification of the content of specialized statements, as needed, from “qualified independent fiduciaries,” “qualified independent appraisers” and other relevant experts.
  • A description of the current standards for obtaining retroactive exemptive relief.

The final rule will be effective December 27, 2011, and applies to all exemptions filed on or after that date.