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June 04, 2020

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U.S. DOL To Issue Final Rule and Exemptions on Fiduciary Standards

Today, the U.S. Department of Labor will release its highly-anticipated Final Rule and Exemptions addressing when a person providing investment advice with respect to an employee benefit plan or individual retirement account is considered to be a “fiduciary” under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code.  According to a Fact Sheet released in advance of the new rule’s publication, the “DOL has streamlined and simplified the rule to minimize the compliance burden and ensure ongoing access to advice, while maintaining an enforceable best interest standard that protects savers.”  According to the Fact Sheet:

  • The rule requires more retirement investment advisers to put their client’s best interest first, by expanding the types of retirement advice covered by fiduciary protections

  • The rule clarifies what does and does not constitute fiduciary advice

  • The exemptions will allow firms to accept common types of compensation – like commissions and revenue sharing payments – if they commit to putting their client’s best interest first

  • The rule and exemptions ensure that advisers are held accountable to their clients if they provide advice that is not in their clients’ best interest

The Fact Sheet also reports that that the Final Rule and Exemptions contain significant changes based on the feedback received during the comment period:

  • Further clarifying what constitutes fiduciary advice

  • Making best interest contract (BIC) exemption available for more advice

  • Streamlining and simplifying requirements of BIC exemption

  • Grandfathering existing investments

  • Extending implementation time period

This post is the first in a series that we will publish about key aspects of the Final Rule and Exemptions.  Please stay tuned for further developments and analyses.

A copy of the Fact Sheet is available at http://src.bna.com/dUb.

© 2020 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
Robert M Projansky, Employee Attorney, Proskauer Rose Law FIrm
Partner

Robert M. Projansky is a Partner in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center. His practice covers the full spectrum of employee benefit issues, including advising clients regarding all aspects of pension and welfare plan administration, plan investment issues, health care reform, mergers and terminations, government audits, participant communications, fiduciary responsibility matters and prohibited transactions issues.

212-969-3367
Ira G. Bogner, Tax, Employee Benefits, ERISA, Attorney, Proskauer, Law firm
Partner

Ira G. Bogner is Chair of the firm’s Tax Department and a member of the Employee Benefits, Executive Compensation & ERISA Litigation Group.

Ira has provided guidance to clients on a wide variety of matters in the areas of employee benefits and executive compensation, including the investment of plan assets, the implementation of employee benefit plans, employee benefit issues in mergers and acquisitions, the awarding of equity-based compensation, and the negotiation and drafting of employment agreements and severance arrangements.

212-969-3947