“These are watershed times,” remarked Pentegra Retirement Services' Pete Swisher of the now-years long Department of Labor effort to change the definition of fiduciary. Swisher made his comments in a March 24 workshop session at the NAPA 401(k) Summit in New Orleans.
The Department of Labor first issued proposed regulations on this matter in 2012, but the release of the regs in final form have been delayed. “The best bet is that the final regs will look like the proposed regs,” said Drinker Biddle & Reath partner Fred Reish.
Reish also expects that the final form of the regulations will expand the definition — and that that will change the way people do business.
Swisher agrees. He said that clients need help in this area because “many don’t realize they are fiduciaries in the first place. That a plan sponsor can delegate is “hard-coded in the statutes,” he said, but they can’t delegate all responsibilities.
And what about plan participants? Reish said they want two things: control of their money and someone who will talk to them.
Reish noted that the DOL is conducting economic analysis concerning the regs, which he said suggests that they expect litigation.
But when will the DOL even issue the final regulations? At this point, they’re scheduled to be released in August. But Reish says he thinks that is likely to slide later, and not happen until early 2015.
The reason? The November elections. But some believe that the political implications go beyond this fall. “Some folks say it’s so political, it will never see the light of day,” said Swisher, adding, “but I don’t think that will happen.” Reish was not quite as optimistic, and remarked, “I hope I live long enough to see the Republicans and Democrats get along, but I’m not optimistic."
