Having put its proposed extension of the applicability date out for public comment, the Labor Department has submitted its final rule to the Office of Management and Budget for review.
According to an update on the OMB’s website, the final rule was received on March 28.
The 60-day delay in the April 10 applicability date of the fiduciary regulation was proposed on March 1. In explaining the rationale behind the modest 60-day extension, the Labor Department noted that there are (only) approximately 45 days until the applicability date of the final rule and prohibited transaction exemptions (PTEs), and that they believed it may take more time than that to complete the examination.
The proposal noted that, absent an extension in the applicability date, if the examination prompts the Department to propose rescinding or revising the rule, affected advisers, retirement investors and other stakeholders might face two major changes in the regulatory environment rather than one. “This proposed 60-day extension of the applicability date aims to guard against this risk,” the Labor Department noted, going on to say that the extension makes it possible for them to take additional step – completing its examination, implementing any necessary additional extension(s) and proposing and implementing a revocation or revision of the rule – without the rule becoming applicable beforehand.
In the interim, the Labor Department published a Field Assistance Bulletin that outlined its approach to enforcement of the fiduciary regulation if the April 10 applicability date for the fiduciary regulation isn’t delayed (before April 10). This week the IRS and Treasury announced how they would deal with excise taxes and prohibited transaction exemptions as the Labor Department reassesses the applicability date of the fiduciary regulation.
In response to its request for input, the Labor Department received more than 1,100 comments, including the American Retirement Association’s comment letter. Those comments run the gamut from the notion that any delay at all would wreak havoc and cost the industry and investors billions of dollars, to the notion that any implementation at all will… wreak havoc and cost the industry and investors billions of dollars.
What they will make of those comments – and how that will be factored into the direction from President Trump to basically reconsider the original proposal in its entirety – remains to be seen. That said, it seems reasonable to expect that the OMB – which, along the way, took time to conduct a series of meetings on the potential impact of the delay – will take a week to review, and thus, barring any unforeseen delays, we will likely see it next week.