By Jane Meacham
The U.S. Department of Labor (DOL) on February 9 filed a notice delaying the April 10 applicability date of its rule broadening the definition of a fiduciary. The move was expected after President Donald Trump on February 3 signed a memorandum requesting the agency to postpone and re-examine the rule on investment advice.
The notice was filed to the Office of Management and Budget (OMB), which will review and approve the proposed rule before it’s implemented and published in the Federal Register. The notice did not say how long the rule will be delayed from OMB review, but a period of 180 days has been floated by many in the retirement plan industry.
The notice to delay must include public notice and public comment steps before it becomes official.
Further details from the notice will be disclosed after OMB approves it and posts it in the Federal Register. Trump’s nominee to head the OMB, Mick Mulvaney, has publicly voiced serious concerns about the DOL fiduciary rule.
The delay notice came one day after Texas federal trial Judge Barbara M.G. Lynn ruled in favor of the DOL in a suit brought by nine plaintiffs against the agency’s fiduciary rule. It was the third judicial ruling in favor of the DOL proposal.
As reported, the president’s memo directed the DOL to “examine the Fiduciary Duty Rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.” The agency is to conduct an updated economic and legal analysis that assesses potential harm to investors from possible reduced access to retirement savings offerings, products, information, or advice, among other effects of the proposed rule.
The rule, finalized in April 2016 after years of public comment and revisions, is of particular concern to the financial services sector, but its expansion of the Employee Retirement Income Security Act’s (ERISA) fiduciary duties raises liability concerns for plan sponsors as well. The upcoming compliance deadline has led them to take stock of the affected fiduciary activities that they or their service providers may be performing, along with updating contracts with administrators and reviewing their communications with plan participants.
Jane Meacham is the editor of BLR's retirement plan compliance publications. She has nearly 30 years' experience as a writer/editor of financial services news.