The Department of Labor (DOL) has published a proposed rule that will delay the application of the fiduciary rule. As was expected, the proposal would delay the fiduciary rule’s effectiveness by 60 days – from April 10 to June 9.
What happens now? Well, we first will see some red-tape procedural formalities. Federal law requires a 15-day period during which the public may comment on the appropriateness of a delay. The DOL will consider those comments and could decide not to proceed with the delay, but most likely will swiftly seek approval of a final rule that will postpone the effective date. Because of various challenges within the new administration, including the withdrawal of the proposed labor secretary, the DOL will face a bit of a time crunch to get this all done before April 10. If it desires to follow federal regulations, every day will matter.
So, what really happens now? The DOL will most likely finalize the delay and then open up a 45-day period during which the public may comment on the substance of the fiduciary rule and related prohibited transaction exemptions. Following that comment period, the DOL will decide whether to proceed with the regulations and exemptions as drafted (unlikely), seek additional delay (very likely), attempt to modify the fiduciary rule and exemptions (quite possible), or revoke the rule and exemptions (also quite possible).
In the meantime, plan sponsors who utilize a fiduciary advisor should take comfort in knowing that, without regard to what the new DOL will require, they are already using someone who must put the client’s interests first. As always with this topic, stay tuned!