Efforts to stop the Department of Labor from reproposing its fiduciary rule continue. The American Institute of Certified Public Accountants (AICPA) is pressuring members of Congress to ensure that DOL’s fiduciary reproposal does not define independent appraisers of Employee Stock Ownership Plans (ESOP) as fiduciaries.
AICPA president and CEO Barry Melancon sent a June 10 letter to Sen. Tom Harkin, D-Iowa, chairman of the Health Education Labor and Pensions (HELP) Committee — which has jurisdiction over DOL and the Employee Retirement Income Security Act (ERISA) — and other committee members urging them to co-sponsor two bills, H.R 2014 and S. 273.
The House bill, introduced in February, and the Senate bill, introduced in May, both support AICPA’s effort to block inclusion of appraisers to ESOP plans in DOL’s fiduciary rule.
The DOL’s Employee Benefits Security Administration’s Semiannual Regulatory Agenda, released July 3, states that a reproposal to amend the definition of fiduciary under the Employee Retirement Income Security Act (ERISA) will come in October. Industry watchers say that the DOL’s fiduciary “train has left the station,” and that the reproposal should be at the Office of Management and Budget in a matter of weeks.
H.R. 2041, which currently has 16 co-sponsors, was introduced by Reps. Brett Guthrie and David Loebsack, who are members of the committee of jurisdiction on the House side, the House Education and Workforce Committee.
In a May “dear colleague” letter to members of their subcommittee asking them to sign onto their bill, Guthrie and Loebsack argue that DOL’s proposal to designate ESOP appraisers as fiduciaries “is a costly and unnecessary new layer of regulation.” Under current law, the two write, “the trustees of private ESOPs are already liable as fiduciaries. Extending this liability to appraisers would, in the best case scenario, drive up costs of ESOP plans and have the net effect of moving stock gains away from the workers who earn them.”
In the worst-case scenario, they continued, “this new and costly regulation would drive appraisers out of the market entirely or discourage companies from participating in an ESOP profit-sharing program entirely.”
Sen. Kelly Guthrie, a member of the Armed Services, Budget, Commerce, Homeland Security and Special Aging Committee, who introduced S. 273 (which has seven co-sponsors), argued in a June 27 dear colleague letter that if the DOL’s proposal moves ahead, “would result in compliance and regulatory costs for the 11,000 ESOPs around the country (including the 10 million participating employees) and could jeopardize their availability in the future.”