Background. Under the Obama administration, the Department of Labor (DOL) finalized regulations that expand the situations under which individuals and entities providing investment advice to retirement plan participants and IRA owners will become fiduciaries subject to ERISA’s fiduciary standards. The persons who become fiduciaries by virtue of the rule would be required to act in the best interests of their clients, rather than in their own interests. Although the new fiduciary regulations have a greater impact on advisors to individuals and smaller retirement arrangements, such as IRAs, they do impact some aspects of larger plans. For more detail on these regulations and their impact on larger plans, please see our prior HRBenefitsAuthority, dated April 14, 2016. The new regulations are scheduled to go into effect on April 10, 2017, and many recordkeepers and other service providers have already taken some steps to comply.
Presidential Directive. On February 3, 2017 (i.e., this past Friday) President Trump directed the DOL to re-examine the new fiduciary regulations to determine whether they may adversely affect the ability of Americans to gain access to retirement information and financial advice. The DOL is directed to rescind or revise the regulations if it determines that they do have such an adverse impact.
Possible Implementation Delay. Although an earlier draft of the President’s memorandum to the DOL appears to have included a 180-day delay of the regulations’ effective date, the final memorandum does not include a delay. Nevertheless, the DOL has announced that it is exploring its options to delay the April 10, 2017, effective date.
Next Steps. At this point, changes to the final fiduciary regulations and/or at least a delayed effective date seem likely, and plan sponsors may want to hold off on implementing any changes in the near future. For example, we recommend that plans delay entering into any agreement with Fidelity or any other recordkeeper or provider that is proposing to perform services that would make it a fiduciary under these regulations. However, implementing some of the other steps that would be required under these regulations should not be problematic even if the effective date is delayed.