A: No

The court ruled only a portion of the department’s Q&A guidance was inappropriate. This only affects a small portion of rollovers. Under certain conditions, some rollovers from a qualified plan to an IRA may no longer need to meet the requirements of PTE 2020 – 02. If an advisor is a fiduciary to the plan, providing account related advice to participants as part of its services or if an advisor is not a fiduciary to the plan but periodically reviews a participants 401(k) account as part of its wealth management or financial planning services, paid directly or indirectly for said advice, the PT exemption is still required. Nothing has changed for any other rollover category.

The wheels are already in motion to advance the definition of fiduciary, which we expect will require those rollovers effected by lawsuit will need to comply with PTE 2020-02

A: The regulation references that an advisor must create an assessment and conclude using it’s own professional judgment as to whether the rollover is in the investor’s best interest. Currently we interpret this to mean that an auto drive process that makes the assessment based on answers to a series of questions runs the risk of not meeting the requirements of the exemption and potentially disqualifying rollover recommendations.

We are concerned that using AI technology will lead regulators to question as to who is making the decision, the advisor, or the AI program. When the department issues notice that AI can be used to make the assessment that a rollover is in the investor’s best interest, we will deploy the use of this technology.