Applicability Date of Fiduciary Rule Delayed

On April 4, 2017, the Department of Labor (“DOL”) issued a news release announcing that they are extending the applicability date of their Conflicts of Interest Rule (commonly referred to as the “Fiduciary Rule”) for 60 days.  The release also extends the applicability dates of related exemptions, including the Best Interest Contract Exemption (BIC Exemption) and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (Principal Transactions Exemption).  The release outlined the extension dates as follows:

“The relevant applicability dates are changed as follows: The department extends for 60 days the applicability date of the final regulation, published on April 8, 2016, defining who is a “fiduciary” under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986. It also extends for 60 days the applicability dates of the Best Interest Contract Exemption and the Class Exemption for Principal Transactions. It requires that fiduciaries relying on these exemptions for covered transactions adhere only to the impartial conduct standards (including the best interest standard), as conditions of the exemptions during the transition period from June 9 through Jan. 1, 2018. The department also delays the applicability of amendments to Prohibited Transaction Exemption 84-24 (relating to annuities) until Jan. 1, 2018, other than the impartial conduct standards, which will become applicable on June 9. Finally, the department extends for 60 days the applicability dates of amendments to other previously granted exemptions related to fiduciary advice.”

The DOL’s Fiduciary Rule, which was originally published on April 8, 2016, expands the definition of who is considered a fiduciary of an employee benefit plan under ERISA as well as who is a fiduciary of a plan under the Internal Revenue Code of 1986 (Code).  Per the final rule, persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan or IRA are considered fiduciaries.

The delay in the applicability dates of the Fiduciary Rule gives the DOL more time to complete the mandated analysis required by the presidential memo issued on February 3, 2017.  Depending on their findings from the analysis, the result could be an amendment or revision of the rule.

While investment advisers may feel that some pressure has been lifted, it’s important to remember that the Securities and Exchange Commission (“SEC”) is continuing its focused examinations of the services investment advisers are providing to retirement investors and seniors, along with the fees these clients are paying.

To learn more about the SEC’s expectations regarding the management of retirement accounts and important considerations regarding the delayed DOL Fiduciary Rule, please attend our upcoming free webinar.  To register, click here.  If you would like more information, please contact us at (619) 278-0020 to schedule a consultation.

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