While it took longer than many expected, the Department of Labor (DOL) issued a proposed rule that would provide a 60-day delay to the application of the new fiduciary rule and related prohibited transaction exemptions. As we reported in our previous blog, the rule was set to impose new fiduciary obligations on those who provide participant investment advice, which would have a trickle-down effect on the sponsors of qualified retirement plans in which those individuals participate. In anticipation of the original April 10, 2017 applicability date, many service providers and plan sponsors have already taken significant steps towards compliance.
While the proposed delay is welcome news for many, it does not provide any real guarantees on the fate or future of the fiduciary rule. The comment period for the proposed delay ends on March 17, 2017. After the DOL receives comments, it will likely issue a final regulation that will delay the fiduciary rule for a period of time while the DOL continues to decide whether to pursue revisions, or even a complete revocation, of the fiduciary rule. In other words, final guidance delaying the fiduciary rule would likely not be issued until fairly close to the original April 10, 2017 applicability date. And any substantive changes to the rule would likely come at an even later date. This puts service providers and plan sponsors in the uncomfortable position of having to continue on their current course to compliance, while taking a parallel path focused on influencing the final structure (or possibly complete revocation) of the rule.
To be continued…