The American Retirement Association has confirmed that the Department of Labor (DOL) will release the fiduciary rule, officially called the Retirement Security Rule, on Tuesday.
Acting Secretary of Labor Julie Su will announce the final regulation in a Treaty Room ceremony at 5 p.m. 
It was generally believed the DOL would soon release the rule after the White House’s Office of Management and Budget (OMB) completed its review of the rule and removed it from its regulatory review dashboard on April 10.
The final regulation would amend the regulatory definition of “investment advice.” Under ERISA, if someone is deemed to be providing investment advice, they must do so in accordance with ERISA’s fiduciary standards. Those standards require that investment advice must always be given in the best interest of retirement plans and participants.
Rule proponents say it's needed in part due to a regulatory "gap" that exists with regards to plan-level advice. The SEC’s Regulation Best Interest (Reg BI) currently does not extend to recommendations to plan sponsors. While larger plan sponsors generally have access to the expertise and support of professional retirement plan advisors, an advisor who sells a small employer a 401(k) and has no further action (on-time interaction) with the plan or its participants is not, until this point, required to provide investment advice protection under ERISA’s five-part test.
With the provisions of the SECURE 2.0 Act of 2022 expected to significantly expand the number of new plans, particularly those offered by small businesses, this gap could have left millions of employers and their workers at risk.
DOL Assistant Secretary of the Employee Benefits Security Administration (EBSA) Lisa Gomez told attendees at the 2024 NAPA Summit earlier this month that the rule aims to accomplish several objectives from a policy perspective. The first reflects the vast differences in the retirement investment landscape since a definition regarding a fiduciary 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 considers those differences—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.”
