It’s campaign season — do you know where your proposed regulation is?
The pending regulation from the DOL that would expand the definition of investment advice and fiduciary status with respect to retirement plans has disappeared down a rabbit hole that magically appears in Washington every four years: the presidential election campaign.
Customarily, an incumbent administration seeks to avoid creating any controversy in the weeks leading up to Election Day. This year is no different, which means that plan advisors waiting for the DOL’s proposed rule can relax — it’s very unlikely that the rule will be released before then.
The DOL originally proposed a fiduciary duty regulation in October 2010, but withdrew the rule about a year later following criticism from brokers and members of both parties in Congress. At the time, the DOL said that it would re-propose the rule around mid-2012, but it has not yet done so.
Would a Romney victory change the equation? It’s difficult to say. If the current administration chose to issue the proposed regulation before next year, it would not be finalized before the beginning of the new presidential term. If Romney were to win, his new appointees at DOL would certainly have an opportunity to review the proposal and potentially make significant changes. If President Obama is re-elected, then expect the process to move forward quickly; it’s likely that the final rule would resemble the most recent proposal from the administration.
All of which leaves plan advisers in a position that may be the most common state of existence in Washington — "wait and see" — for at least another month.
