erisa private equity

endstream endobj startxref The DOL raises a few concerns with having a private-equity fund as an investment choice in an individual account plan, including liquidity and valuation. Review our Pro Bono Finally, we have a global reach without the overhead that often gets passed along to clients. To do this, fiduciaries need to have the knowledge to evaluate and manage private-equity investments or have third-party advisers who do. �[�s��qu ��~y�����盦h�w༨m`�����zm�N�e'�*wa�`�o6��j�{��x�`�)Ml;3�L��X� �s>?�|�Q/� *���i��2�$������wb�r^��7���)��|\��(�,��y�\4��&7�}�XN[W� Duty to Diversify Plan Assets:  ERISA fiduciaries must diversify plan assets unless, under the circumstances, doing so is clearly imprudent. Most of all, though, Stradley is committed to diversity because we believe there is strength in the differences among our experiences and world views. h�b```f``�f`a`��� Ȁ �@1V �����.c�#��*:f��e�T�xT�� �e�Hu��>����3�������%������ ``��B`�y��=�7�Q�Yp���C�ls�\�w�V�o������jK �yBLA�@� :�6�ѢL�[ ��l j2p In Information Letter 06-03-2020, the U.S. Department of Labor (DOL) addressed the issue of using a private-equity fund option in defined contribution plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). �'Nc[����_o���G��c�7���ٽ/Vl�������+?���g�Ó���Is)�^����1��rͶ�o��%g�n�7�Q�p�Ў�Ul��Y��_➜��s��eꟾ�n����?���{aѺ�΋��,!�����}4a}����OL��Ɓœ�/�ͷ�?��r���ӟ�>�s���=�h���N� y�9v iP`�#��h(Q� c��[����@�A&1Y�w��$��d�@�\�`R1=1�0�1}0}�[Q�m�b7������gQ������p�4t؉nX.n�}| =�"K�����3����{�����c-J��Q/4�|�2����}��y�R��{��L�P��aZ0!�z�� �qF��C;jЌr4b ���c#���p�x�qf� �A ��,X������+N�+�Z\� �0B,�w��L�:���UT�$&b5�X�k��qL�&��+��)��]. The extent to which the letter will result in significant changes in plan or market practices is unclear, however. It also sets forth the guidelines that a prudent fiduciary should follow when making such an investment decision. Even as to plan fiduciaries, the Department cautions that, “as with any designated investment alternative, the plan fiduciary must consider whether it has the skills, knowledge, and experience to make the required determinations or whether the plan fiduciary needs to seek assistance from a qualified investment adviser or other investment professional.”  Further, direct investing would raise significant issues under the securities laws. Fiduciaries will still have to deal with any prohibited transaction concerns under ERISA, as well as securities, banking and other laws, which the guidance does not address. Accordingly, plan fiduciaries can mitigate their risks by ensuring that the disclosures to plan participants provide clear, plain English descriptions of the asset classes included in the QDIA and the risks associated with such asset classes. How Private Equity and Hedge Funds Can, and Cannot, Avoid ERISA Coverage. Stradley is committed to diversity for many reasons: because it provides a voice to the unique perspectives of all our attorneys; because it reflects the evolving face of the legal profession; and because it allows us to provide the highest-quality services to our clients, who are as diverse as we are. Twitter Numerous research studies, white papers, consultant reports and other studies have emerged in recent years supporting the investment case for inclusion of private equity, direct real estate and other less liquid asset classes in target date and other multi-asset investment portfolios, see Fiduciary Framework for Investment by Defined Contribution Plans in Alternative Assets. . This allows for participants to enter and exit the fund as needed. This letter is dealing with a private-equity investment as part of an asset allocation fund, not a direct investment in private equity. The guidance concerns the viability of multi-asset target-date, target-risk and balanced funds made … © Association of International Certified Professional Accountants. While the selection of such products remains subject to ERISA’s fact-intensive fiduciary duties, the letter may remove a perceived chill on the consideration of longer-term, complex assets that may otherwise form part of a prudent investment strategy for individual account plans. In general, an operating company is an entity engaged primarily, directly or through a majority owned subsidiary or subsidiaries, in the production or sale of a product or service other than the investment of capital.