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DOL Fiduciary Rule Rewrite Ready for Liftoff?

Regulatory Agencies

The Labor Department’s proposed new fiduciary rule has moved one step closer to being finalized and could be released any day now. 

The DOL sent the final version on its proposed advice package, “Improving Investment Advice for Workers & Retirees,” to the White House’s Office of Management and Budget on Nov. 24, and apparently the final rule has now been approved. 

First released for public comment on June 29, the proposed rule restored the 1975 five-part test on the conditions for advice to constitute “investment advice” and proposed a new prohibited transaction exemption allowing investment advice fiduciaries under ERISA to receive compensation, including as a result of advice to roll over assets from a plan to an IRA.

Since then, the Labor Department had conducted a hearing on that package—one that was full of comments and criticisms of the proposal, not the least of which was that it felt a bit “rushed,” and ostensibly sought to conform to the Securities and Exchange Commission’s Regulation BI (best interest), which had only just become effective.

While we don’t yet know what’s in the final version, the original filing suggested that the final rule is “economically significant,” which could delay the effective date for 60 days and allow the incoming Biden administration to review it before taking effect.  

This regulatory package is among several the DOL has finalized in the last several weeks, including the proxy voting rule released Dec. 11, a final rule on financial factors in selecting plan investments published Nov. 13, and an interim final rule on lifetime income illustrations, released Aug. 18.