Acosta Confirms No Further Delay for the Fiduciary Regulation
On May 22, 2017 via on op-ed in the Wall Street Journal, Secretary of Labor Alexander Acosta confirmed there will not be a delay, beyond June 9, 2017, of the implementation of the final regulation defining who is a “fiduciary” under ERISA as well as the applicability of related prohibited transaction exemptions. The Department of Labor has also released 15 new FAQs addressing the transition period between June 9, 2017 to January 1, 2018. Secretary Acosta also stated that the Labor Department has concluded that it is necessary to seek additional public input on the entire Fiduciary Rule.
Also on May 22, the Employee Benefit Security Administration (EBSA) announced in Field Assistance Bulletin No. 2017-2 that the Labor Department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions, during the transition period ending January 1, 2018. The approach being taken by the DOL is one of compliance assistance rather than enforcement. Barring any additional rulings or delays, January 1, 2018 is when full compliance is required.
What Changes on June 9?
Essentially anyone who gives advice to plans and IRAs will be subject to a fiduciary standard, requiring them to give prudent advice that is in the best interest of their clients. Further, if they receive compensation that varies depending on what they recommend, they will have to follow a version of the Best Interest Contract Exemption (BICE). Even though advisors, brokers, and dealers won’t have to give any warranties or special disclosures, they need to determine that their compensation is reasonable and avoid making materially misleading statements.
For further guidance on the specific details relating to the transition period, review the DOL FAQs.
With many opponents calling for a complete delay of the rule along with President Trump’s goal of rolling back many Obama-era regulations, there will still be lots of debate throughout the year until the full compliance date of January 1.
Paychex will continue to help its partners stay in compliance with all new and existing fiduciary rules.