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Northwest OH Legal Blog

Tuesday, July 11, 2017

United States Department of Labor Initiates Review of Fiduciary Rule

On June 8, 2017, the United States Department of Labor (“DOL”) took a first step in its review of the DOL’s previously promulgated and highly anticipated fiduciary regulations (“Fiduciary Rule”), which were intended to better define who is a fiduciary and when related prohibited transaction exemptions apply with respect to plan participants’ retirement benefits.  The review was ordered by President Trump earlier in 2017.  That first step was the delivery to the White House Office of Management and Budget (“OMB”) of a request for information (“RFI”) regarding the Fiduciary Rule.

Background.  In April 2017, the DOL had extended by 60 days, to June 9, 2017, the compliance deadline for the Fiduciary Rule, including the applicability dates of the Best Interest Contract Exemption and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs.  However, in subsequent guidance, the DOL indicated that from June 9, 2017 through January 1, 2018, fiduciaries relying on these exemptions would be obligated to adhere to only the Impartial Conduct Standards (including the “best interest” standard, which incorporates charging reasonable compensation and not making any materially misleading statements).

Temporary Enforcement Policy for Fiduciary Rule.  On May 23, 2017, the DOL issued a bulletin regarding its “temporary enforcement policy” of phased implementation of the Fiduciary Rule.  In the bulletin, the DOL affirmed that its general approach to implementation of the Fiduciary Rule would be marked by an emphasis on assisting (rather than citing violations and imposing penalties on) plans, plan fiduciaries, financial institutions, and others “…who are working diligently and in good faith to understand and come into compliance with the [F]iduciary … [R]ule and exemptions.“  Accordingly, during the phased implementation period ending on January 1, 2018, the DOL will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the Fiduciary Rule and its exemptions, or treat those fiduciaries as being in violation of the Fiduciary Rule and its exemptions.

The RFI delivered to OMB on June 8, 2017 evidences the DOL’s commitment to the review of the Fiduciary Rule ordered by President Trump.  Commenting on the RFI, DOL Secretary R. Alexander Acosta said, “The Labor Department has concluded that it is necessary to seek additional public input on the entire Fiduciary Rule, and we will do so.”

Takeaway.  With the change in administrations in our nation’s capital, President Trump has ordered a full review of the DOL’s previously promulgated Fiduciary Rule to determine whether the rule should be modified to better serve individuals who are seeking guidance from service providers with respect to their retirement benefits.  Although the Fiduciary Rule went into effect on June 9, 2017, full enforcement of the rule has now been delayed to January 1, 2018, with a phased implementation period from June 9, 2017 through January 1, 2018.

If you have any questions or concerns regarding this communication, please do not hesitate to call Allotta | Farley Co., LPA at (419) 535-0075 or email megarner@allottafarley.com.


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With offices in Toledo and Lima, OH Allotta Farley Co., L.P.A. serves clients throughout northwest OH with various legal matters. Areas of service include Allen County, Ashland County, Auglaize County, Crawford County, Defiance County, Erie County, Fulton County, Hancock County, Hardin County, Henry County, Huron County, Lucas County, Marion County, Mercer County, Morrow County, Ottawa County, Paulding County, Putnam County, Richland County, Sandusky County, Seneca County, Van Wert County, Williams County, Wood County, Wyandot County.

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