DOL Delays Fiduciary Rule by 60 Days
Earlier this week, the DOL issued a final regulation delaying the applicability date of the so-called "fiduciary rule" by 60 days. The fiduciary rule applies to individual retirement arrangements and most employer-sponsored retirement plans. The new regulation finalizes the DOL's proposed regulation, which was issued last month in response to a White House memorandum, directing the DOL to analyze the likely impact of the fiduciary rule and consider rescinding or revising the rule. (For additional details on the White House memorandum, please see the our alert from February 6, 2017.) The fiduciary rule was initially scheduled to apply beginning on April 10, 2017, but will now apply beginning on June 9, 2017.
Additional BIC Exemption Transition Relief.
The final regulation also provides additional transitional relief by delaying certain conditions of the fiduciary rule. Specifically, between June 9, 2017 and January 1, 2018, the Best Interest Contract (or "BIC") Exemption will be deemed satisfied if an advisor adheres to "impartial conduct standards." As a reminder, the impartial conduct standards outlined under the fiduciary rule require advisors to act in the best interest of the retirement investor, charge no more than reasonable compensation for their services, and refrain from making misleading statements. The transition relief delays compliance with other requirements of the BIC Exemption – the transition notice, the disclosure requirements, etc. – during this interim period, or until January 1, 2018.
What this means for employers –
The DOL indicated that it would complete its full review of the fiduciary rule, as directed by the White House memorandum, and propose any revisions by January 1, 2018. Although the DOL's continued review could result in extended compliance deadlines or additional interim relief, the DOL also signaled that the new June 9, 2017 applicability date will not be delayed further. Accordingly, employers and retirement plan fiduciaries should plan for the fiduciary rule to become applicable on June 9, 2017. In the meantime, we continue to advise employers and retirement plan fiduciaries to monitor developments in this area from a fiduciary risk perspective.