The White House's Office of Management and Budget (OMB) has completed its review of the Retirement Security Rule, and it is expected to be released by the Department of Labor (DOL) by the end of the month, according to reliable sources.
The OMB concluded its review and removed the rule from its regulatory review dashboard on April 10.
The news follows a letter sent by 55 House Democrats urging DOL officials and the White House regulatory affairs office to expedite their review of the rule, noting that it will “strengthen critically needed guardrails.”
“The Rule would fill existing regulatory gaps within the Employee Retirement Income Security Act (‘ERISA’), the federal law that sets the minimum standards for most retirement plans that private employers set up for their employees, such as 401(k)s and pension plans,” the letter, addressed to Acting Labor Secretary Julie Su; Office of Management and Budget Director Shalanda Young; and Office of Information and Regulatory Affairs Administrator Richard Revesz, said.
DOL Assistant Secretary of the Employee Benefits Security Administration (EBSA) Lisa Gomez appeared onstage at the 2024 NAPA Summit on Sunday with American Retirement Association CEO Brian Graff, who asked about the latest attempt to implement an investment advice fiduciary rule.
Gomez said the rule would accomplish several objectives from a policy perspective. The first reflects the vast differences in the retirement investment landscape since 1975, when a definition regarding who a fiduciary is when providing investment advice first appeared.
“At that time, 401(k)s did not even exist,” she noted. “Most people were in defined benefit plans, and those plans were managed by professional investment managers. Now we have so many 401(k) plans, an individual account plan, that’s really the dominant vehicle that retirees use to save for retirement. In those plans, most of these individual retirees are the ones who are making investment decisions. It’s just a completely different landscape.”
For that reason, EBSA is “very focused” on releasing a rule that takes those differences into account—the change in landscape and the need to protect retirement investors from harmful conflicts of interest and imprudent investment recommendations.
“If you are a retirement investor and talking with a financial professional trying to get investment advice, you have to have trust and confidence that that professional knows what they’re talking about, knows what your individual circumstances are, and will give you advice that’s in your best interests,” Gomez continued. “That’s really the core of the rule and what we’re trying to get at from a policy perspective while understanding the nuances and the different things that need to be taken into consideration in delivering on that promise for retirement investors.”
While the rule is a step closer to being finalized, one thing that won’t be known until it is released is how it differs from what the DOL proposed last November.
