The Department of Labor (“DOL”) announced that it officially proposed delaying the effective date of the portions of its new fiduciary rule (the “Rule”) to give it more time to consider possible changes to the Rule.
As background, on April 8, 2016, the DOL published a final rule greatly expanding the definition of a “fiduciary” under the Employee Retirement Income Security Act of 1974 (“ERISA”). Among other changes, this new definition extends fiduciary liability under ERISA to investment advisers of individual retirement accounts (“IRAs”). The Rule also requires advisers to adhere to a best interest standard when making investment recommendations, charge no more than reasonable compensation for their services, and refrain from making misleading statements (these requirements are known as the “Impartial Conduct Standards”). The Rule was to be effective April 10, 2017.
This past April, pursuant to an Executive Order signed by President Trump, the DOL announced an extension of the applicability date of the Rule from April 10, 2017, to June 9, 2017, so as to permit it to further review the Rule. Thereafter, the DOL announced a transition period from June 9, 2017, to January 1, 2018, for most provisions of the Rule, other than the Impartial Conduct Standards.
Now, the DOL has proposed that the transition period be further extended another 18 months, ending on July 1, 2019. It is expected that the DOL will make further modifications to the Rule.
Regardless, however, certain portions of the Rule requiring all financial advisers to act in the best interest of their clients’ retirement plans was effective this past June. Stay tuned for more information.
Prior client alerts discussing the Rule may be found here: