President Barack Obama is not expected during his last State of the Union address to run through a to-do list of upcoming priorities. Rather, he will instead recount the achievements he’s made during his eight-year presidency. One of those achievements he likely will tout will be strengthening protections for retirement savers via the Department of Labor’s rule to redefine the definition of fiduciary under ERISA.
Industry officials say DOL’s final rule is headed this month to the Office of Management and Budget for review. Typical OMB review periods last 90 days, but an expedited review could lob the rule onto the advice industry playing field before April.
A DOL spokesperson would only say that the rule “has not yet been sent” to OMB.
Five years after the DOL pulled its initial fiduciary rule proposal, Obama endorsed last February DOL’s retooled plan and told DOL to push ahead with the rule during an unprecedented public event at AARP. At that event, Obama said that the rules put in place under the 40-year-old Employee Retirement Income Security Act “do not ensure that financial advisors act in the best interest of their clients when they give retirement investment advice.”
Labor Secretary Thomas Perez embraced Obama’s endorsement of the revamped rule proposal and released it last April.
As Obama and Perez expected, the redraft faced fierce opposition last year from lawmakers as well as the broker-dealer and annuities industries.
But DOL’s plan survived, and industry trade groups, as well as compliance and legal professionals are now bracing for its release. The only potential obstacle that remains is “retirement principles” legislation sponsored by Reps. Peter Roskam, R-Ill., and Richard Neal, D-Mass., that would be an alternative to DOL’s rule to change the definition of fiduciary on retirement accounts.
In mid-December, Roskam introduced the Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act while Rep. Phil Roe, R-Tenn., threw his support behind the Affordable Retirement Advice Protection (ARAP) Act.