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Qualified Professional Asset Manager (QPAM)
Practical Law Glossary Item 2-505-6255 (Approx. 3 pages)
Glossary
Qualified Professional Asset Manager (QPAM)
In the context of certain employee benefit plans, one of the following:
- A bank, savings and loan, or insurance company with equity capital or net worth in excess of $1 million, with the $1 million threshold increasing as follows:
- $1,570,300 effective as of the last day of the fiscal year ending no later than December 31, 2024.
- $2,140,600 effective as of the last day of the fiscal year ending no later than December 31, 2027.
- $2,720,000 effective as of the last day of the fiscal year ending no later than December 31, 2030.
- A registered investment advisor that has as of the last day of its most recent fiscal year total client assets under its management and control in excess of $85 million (increasing to $101,956,000 effective as of the last day of the fiscal year ending on or before December 31, 2024) and either:
- shareholders' or partners' equity greater than $1 million (increasing to $1,346,000 effective as of the last day of the fiscal year ending on or before December 31, 2024); or
- payment of all of its liabilities, including any liabilities that may arise by reason of a breach of ERISA fiduciary duties, guaranteed by certain related parties such as an affiliate of the QPAM, a bank, savings and loan association, insurance company, or a broker-dealer registered under the Securities Exchange Act of 1934 meeting certain requirements.
The $85 million threshold for total client assets under management and the $1 million threshold for shareholders' or partners' equity will increase in subsequent years (see Practice Note, Guide to the Qualified Professional Asset Manager (QPAM) Exemption: Definition of a QPAM: Asset and Capitalization Requirements).
The qualifications for a QPAM are found in Prohibited Transaction Class Exemption 84-14 (and amendments) issued by the Department of Labor (QPAM Exemption). Absent an exemption, the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 generally prohibit transactions between a plan and a disqualified person. If a plan's investment manager qualifies as an QPAM and meets several strict conditions under the QPAM Exemption, a broad range of prohibited transactions will be permitted, including:
- Sales.
- Exchanges.
- Leases.
- Extensions of credit.
- Provisions of goods and services.
For more information on the QPAM Exemption and the rules governing prohibited transactions under ERISA and the Code, see Practice Note, Guide to the Qualified Professional Asset Manager (QPAM) Exemption and Practice Note, Prohibited Transactions and Exemptions Under ERISA and the Code. For a sample QPAM Agreement, see Standard Document, Qualified Professional Asset Manager (QPAM) Agreement.