The following Employee Benefits Update was published by IslerDare PC of Vienna Virginia. It is republished here with their permission. For questions related to the content of this article Andrea I. O’Brien , Vi D. Nguyen, or Ashlie Lawton. For questions related to executive benefits planning, contact Fulcrum Partners LLC.
DOL Proposes 60-Day Delay of Fiduciary Rule
Last year, the U.S. Department of Labor (the “DOL”) finalized its long-awaited fiduciary rule, which is intended to change the standards for determining when a party is a fiduciary to an ERISA plan or individual retirement account. The rule was originally set to take effect on April 10, 2017. However, on March 1, 2017, in response to a Presidential Memorandum directing the DOL to re-examine the fiduciary rule in light of the Trump administration’s priorities, the DOL proposed a 60-day delay of the rule and its related prohibited transaction exemptions, from April 10, 2017 to June 9, 2017. The 60-day delay is intended to give the DOL time to review the rule pursuant to the Presidential directive, to determine whether the rule “may adversely affect the ability of Americans to gain access to retirement informational and financial advice”, and to prepare an updated economic and legal analysis on the likely impact of the rule.
The DOL will accept comments on the proposed 60-day delay until March 17, 2017. The proposed delay would make it possible for the DOL to take additional steps, such as revoking or revising the rule, before the rule becomes effective. In addition, the DOL will accept comments on the underlying fiduciary rule itself until April 17, 2017.
What Does the Proposal Mean for The Future of The Fiduciary Rule?
For now, because the delay has only been proposed and not finalized, April 10, 2017 remains the effective date for the fiduciary rule and related prohibited transaction exemptions. However, if the DOL publishes a final version of the delay in the Federal Register before April 10th, then the 60-day delay will take effect and the fiduciary rule (and related prohibited transaction exemptions) will take effect on June 9th.
In the long run, the future of the fiduciary rule is unclear. Widely-circulated predictions were that the effective date of the fiduciary rule would be delayed 180 days, so a 60-day delay was a surprise to industry professionals and practitioners and seems like a short time frame for the DOL to accomplish the directive from the Presidential Memorandum. This suggests that uncertainty and confusion will remain surrounding the fiduciary rule for the time being. Ultimately, the rule’s effective date could be extended out even further, or the rule could be modified or revoked. In the meantime, plan sponsors should speak to their investment advisors and other retirement plan service providers to determine whether there will be any immediate changes to their approaches to complying with the fiduciary rule in its current form.
If you would like to discuss how the applicability of the fiduciary rule may impact the administration of your retirement plans, or if you’d like to discuss your employee benefit plans generally, please feel free to contact the members of our Employee Benefits group below.