October 17, 2017

October 16, 2017

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Department of Labor Requests Additional 18-Month Delay of Certain Fiduciary Rule Requirements

On August 9, 2017, the Department of Labor (“DOL”) stated in a court filing that the Office of Management and Budget (“OMB”) is reviewing a proposal to extend the applicability date for certain requirements under DOL’s fiduciary rule until July 1, 2019. As discussed here the fiduciary rule’s “impartial conduct standards” have been in effect since June 9, 2017; but other requirements, including the written contract required under the Best Interest Contract exemption and certain disclosure requirements, have been delayed pending DOL’s review of the rule.  DOL’s request suggests that DOL will need significantly more time to complete its review of the rule.

The delay will not be official unless and until it is approved by OMB—a process that can take as long as 90 days. In the meantime, the fiduciary rule’s “impartial conduct standards” remain in effect.  This means that investment advice (defined under the new regulation’s broad definition) is subject to the following standards:

  • Any recommendation (defined under the new broad definition) must be in the best interest of the investor, meaning that it must be based on the investor’s investment objectives, risk tolerance, and financial circumstances (and not financial considerations of the fiduciary);
  • A fiduciary must not make misleading statements about investment transactions, compensation, or conflicts of interest; and
  • A fiduciary may not charge more than a reasonable amount for services.

The most recent period for submitting comments on the fiduciary rule ended on August 7, 2017. DOL received over 500 comments, available here. In addition to addressing the delay, the comments addressed a number of substantive issues under the regulation and exemptions. DOL will be reviewing the comments to decide what changes, if any, should be made to the final rule and exemptions.

© 2017 Proskauer Rose LLP.

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About this Author

Russell L Hirschhorn ERISA Litigation, employee benefits attorney, Proskauer
Senior Counsel

Russell Hirschhorn is a Senior Counsel in the Labor & Employment Law Department, where he focuses on complex ERISA litigation and advises employers, fiduciaries and trustees on ERISA benefit and fiduciary issues. 

Russell represents employers, plan sponsors, plans, trustees, directed trustees and fiduciaries in all phases of litigation, arbitration and mediation involving employee benefits, including class action and individual claims relating to ERISA’s fiduciary duty and prohibited transaction provisions, denials of claims for benefits, severance plans, ERISA Section 510,...

212.969.3286
Seth Safra, Proskauer Law Firm, Employee Benefits, Executive Compensation and ERISA Litigation Attorney
Partner

Seth Safra is a partner in the Employee Benefits & Executive Compensation Group, where he counsels clients on all aspects of employee benefits and executive compensation.

Seth advises clients on ERISA and other related laws with respect to the design and administration of qualified and non-qualitied retirement plans, including defined contribution (including 401(k) and ESOPs) and cash balance plans. In addition, Seth counsels clients on their health & welfare plans, including advising on issues related to health care reform.

Seth represents companies in connection with executive employment, severance, equity and all other types of executive compensation arrangements, including incentive arrangements, deferred compensation and 409A compliant plans. He advises companies on employee benefits and executive compensation aspects in connection with mergers and acquisitions.

Seth frequently represents clients before the Department of Labor, Internal Revenue Service, and other government agencies.

202-416-5840
huffman, proskauer, portrait
Associate

James R. Huffman is an associate in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

202-416-6676