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When Will the Fiduciary Reproposal Surface?

Just ahead of the Thanksgiving holiday, industry headlines proclaimed that the long-awaited fiduciary regulation reproposal was likely to be published in January.

But that “call” may have been premature.

Those headlines seem to have been sparked by the recent update of the Department of Labor’s planned agenda. Federal agencies periodically update their planned agenda for new regulations and other guidance. The fall revisions recently announced by the Department of Labor (DOL) included a mixture of additions, delays and affirmations of guidance from the Employee Benefits Security Administration (EBSA) which oversees ERISA compliance. 

On that list was the controversial EBSA initiative to revise the definition of who may be a fiduciary by virtue of giving investment advice. This soon-to-be-proposed regulation is now referred to as the “conflicted advice” proposal and it has been closely watched by many, including those on Capitol Hill.  The expected publication date had previously been announced as January 2015 — a date that remained unchanged in the latest guidance plan revision.  

However, the Office of Management and Budget (OMB) website currently indicates it has not yet received the proposal for its review — a process that normally takes 90 days. If that normal review cycle holds, the January date may not be realistic. Though, of course, it is always possible that the OMB review could be conducted on an expedited basis.

Other Additions

A noteworthy new addition to the guidance plan is a project with the mind-numbing name, “Fiduciary Requirements for Disclosure in Participant-Directed Individual Accounts Plans — Timing of Annual Disclosure.” Despite the technical name, this guidance project is actually very good news. It is expected to permit a window period for supplying the annual “404(a)(5) disclosure” notice to participants in defined contribution plans with directed investments. The expected guidance is listed as a “Direct Final Regulation” and is slated for release this month, December 2014. It is possible this new option could be effective in time for the next round of notices.

Another new project listed on the revised guidance plan is one to modernize and improve the Form 5500 and related instructions. This is expected to cover a number of changes including revisions to Schedule C to better coordinate the reporting of compensation and 408(b)(2) disclosure regimes.

Other items of interest include revisions to the Voluntary Fiduciary Correction Program (VFCP) which was originally due out in January of 2015 and now has been pushed back to March. Similarly, a proposed regulation regarding participant benefit statements was moved back from January of 2015 to July. That is likely to be a comprehensive edict to provide a structure for the rules that were enacted as part of the Pension Protection Act of 2006.

The revised guidance plan provided for the first time an expected release date for final regulations regarding a new required “guide” to accompany the disclosures that must be provided to responsible plan fiduciaries under the 408(b)(2) regulations. The final regulations are projected to be out in September 2015. The DOL is surveying focus groups made up of plan fiduciaries with respect to issues presented by the new disclosure requirements and whether a “guide” would be helpful. It is quite possible that the comment period will be reopened after the focus group results become available. This in turn could extend the expected release date for the final regulations.

It appears that the DOL will be very busy in the months ahead — and our Government Affairs Committee will keep a watchful eye on these guidance projects and continue to convey the concerns of our members.

Craig P. Hoffman, APM, is ASPPA’s General Counsel and Director of Regulatory Affairs.

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