DOL Fiduciary Rule Still Scheduled To Take Effect June 10, 2017

Earlier today, the Department of Labor (DOL) issued FAQ guidance related to its previously announced new “fiduciary rule” regulations that will go into effect on June 10, 2017, following a 60-day delay.  (In government-ese, the FAQ guidance provides that the regulations will be effective June 9, but then states that Firms and their advisors will become fiduciaries as of 11:59 p.m. on June 9, and must comply only after June 9.)  These new regulations extend ERISA’s fiduciary standards to persons who provide investment advice to retirement plan participants, IRA owners and HSA owners.  For more information on the regulations, please see our prior HRBenefitsAuthority dated April 14, 2016.

The DOL’s FAQs confirm that:

• The regulations and the accompanying prohibited transaction exemptions will still take effect on June 10, 2017.
• Fiduciaries impacted by the regulations will temporarily benefit from a “good faith” compliance standard through at least January 1, 2018.
  • During a transition period from June 10, 2017, through at least January 1, 2018, fiduciaries will only need to comply with the impartial conduct standards, which require fiduciaries to:
    • Give retirement investors advice that is in the investor’s “best interest”.  This means that fiduciaries (i) must give advice based on the investor’s interests instead of competing financial interests of the advisor or his/her firm, and (ii) the advice must satisfy the professional standard of care specified in the prohibited transaction exemption;
    • Charge no more than a reasonable amount; and
    • Avoid making misleading statements regarding (i) investment transactions, (ii) the fiduciary’s compensation, and (iii) the fiduciary’s conflicts of interest.
  • During the transition period, the DOL intends to focus on compliance assistance rather than penalty enforcement.
  • The DOL will not bring enforcement proceedings against fiduciaries who are making diligent and good faith efforts to comply with the new regulations.
• The written disclosure requirements for certain prohibited transaction exemptions are still scheduled to take effect on January 1, 2018.
• Providing retirement plan information and general financial, investment and retirement information to plan participants is not considered fiduciary investment advice under the fiduciary rule.  This is consistent with our initial analysis of the regulations and will allow employees of plan sponsors and recordkeepers to provide this type of routine information without becoming fiduciaries.

Even though the regulations are still scheduled to take effect on June 10, 2017, the DOL plans to request information from the public as part of its re-examination of the fiduciary rule in light of President Trump’s February 3, 2017 directive.  The DOL may consider further delays and/or revisions to the regulations based on the responses it receives. For more information on the President’s directive, please see our prior HRBenefitsAuthority dated February 6, 2017.

Contact Information.  For more information, please contact Don Mazursky (404.888.8840), David Putnal (404.888.8836), Toby Walls (404.888.8870), Teri King (404.888.8847), or Alex Smith (404.888.8839).

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