The Department of Labor plans to release in January a redraft of its rule to amend the definition of fiduciary under the Employee Retirement Income Security Act, according to an updated regulatory notice posted on the Office of Management and Budget’s website.
Speculation had ensued as to whether DOL would actually move forward with a redraft of its Conflict of Interest-Investment Advice rule in January. In mid-October, Labor Secretary Thomas Perez referred to the January redraft release date as cited in DOL’s regulatory agenda.
Once the draft gets to OMB, OMB has 90 days to review it.
Brian Graff, CEO of the American Society of Pension Professionals and Actuaries, said on an early November webcast that ASPAA believes “there will be a set of [DOL fiduciary] proposals in early spring next year” and that the proposal will be “highly controversial.”
Nevin Adams, ASPPA’s communications chief, added that “since the reg hasn’t been submitted to OMB, it is odd that they stuck with the January projected release date. It is possible that OMB could review the reg faster, but one would think they might actually will take more than the normal 90-day period given the wide interest in the reg.”
The White House has been “spending hours” working on the DOL fiduciary issue and meeting with stakeholders, including ASPPA and its sister organization the National Association of Plan Advisors, Graff said. The White House, he said, is “particularly focused on rollovers–abuses in rollovers.”
Phyllis Borzi, assistant secretary of labor for DOL’s Employee Benefits Security Administration, the main architect of the fiduciary redraft, has stated that it will address rollovers.
Graff said on the webcast that ASPPA is concerned how the redraft will address rollovers, and potentially prohibit “advisors [from] continuing relationships with participants.”
Graff added that the redraft’s “prohibited transaction exemptions” will fail to address industry concerns with the proposal, stating that he sees the controversial proposal eventually landing in Congress, where it will either be “fixed” or “killed.”
— Check out Lawmakers Air Concerns About DOL Fiduciary Redraft on ThinkAdvisor.