ESOP appraisers should take note of a proposed rule to amend the Department of Labor (DOL) prohibited transaction exemption procedure, reports the American Society of Appraisers (ASA). The proposal would change several aspects of how appraisers engage with plan fiduciaries and perform engagements in connection with employee stock ownership plans (ESOPs).

Among the changes are revised definitions of “qualified independent appraiser” and “qualified appraisal report.” An appraiser would not be deemed as “independent” if the revenues he or she receives, or is projected to receive, from the exemption transaction exceed 2% of the appraiser’s annual revenues from all sources in the prior tax year or projected revenue for the current tax year, the ASA points out. The updated definition of “qualified appraisal report” requires the report to be prepared solely on behalf of the plan, thus ensuring the qualified independent appraiser only considers the interest of the plan, its participants, and beneficiaries, the ASA says.

The proposed rule is available if you click here. Written comments and requests for a public hearing on the proposed rule must be submitted to the DOL by April 14. The ASA says it intends to file comments in connection with this proposal and will make that response available when completed.