Exemption for Pre-Existing Transactions
(Limited Grandfathering)

This exemption permits the continued receipt of compensation for the continuation of a systematic purchase program established before April 10, 2017.

This exemption permits the continued receipt of compensation for a recommendation to hold an investment that was established before April 10, 2017.

The DOL’s goal for this exemption is to assure financial institutions and advisers that they may continue to receive the compensation agreed to be paid before April 10, 2017 for continuation of the investment transactions occurring prior to April 10, 2017.

This exemption has the following conditions.

  1. The compensation being paid is due to an an agreement or understanding that was created prior to April 10, 2017, and such agreement or understanding has not expired or come up for renewal after April 10, 2017.
  2. The prior investment transaction was not otherwise a non-exempt prohibited transaction on the date it occurred.
  3. The compensation is not received on account of additional amounts contributed to the previously acquired investments. It is permissible to exchange funds within a mutual fund company or variable annuity contract pursuant to an exchange feature or a rebalancing provision as long as it was established prior to April 10, 2017 and as long as the financial institution and adviser do not receive increased compensation either as a fixed dollar amount or as a percentage of assets than they were entitled to receive prior to April 10, 2017.
  4. The amount of compensation paid to the financial institution, adviser or any affiliate on account of the transaction is reasonable.
  5. Any investment recommendations made after April 10, 2017, by the financial institution or an adviser must reflect the care, skill, prudence and diligence that prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims, based on the investment objectives, risk tolerance, financial circumstances and need of the IRA owner or the retirement investor and are made with no consideration of the needs or interests of the financial institution or its advisers.