DoL Update Aug 2017:  The Impact of Climate Change

August 10, 2017

The DoL Rule appears to be melting like an iceberg in warming waters reflecting the climate change in Washington.

Proposal to Extend Transition Period and Rule Coverage.  On August 9, the Dept. of Labor provided notice that it planned to make technical amendments to the so-called DoL Rule which would effectively extend the transition period for another 18 months to July 1, 2019.  In addition, the notice also indicated that the DoL is considering modification of the coverage of the Rule so that IRA rollovers and insurance products might be excluded.  Press reports and law firm analyses suggest that this action indicates additional watering down or melting of the Rule will occur......which has been hinted at since the beginning of the change of presidential adminstrations from Obama to Trump.

In more technical terms, the DoL submitted a Notice of Administrative Action in the Thrivent v. Acosta case, where Thrivent Financial for Lutherans sued the DoL challenging the agency's authority to implement the Rule and its provisions. 

The Notice of Administrative Action is a formal indication that the DoL has proposed an amendment to the "best interest contract" exemption and two other exemptions to delay until July 1, 2019 the applicability of significant portions of those exemptions to affected brokers and advisers.  If  implemented, the proposal also would extend until that time certain existing transition relief applicable to the exemptions.


Dechert article;  Drip Drip Drip - Is the DOL's Fiduciary Rule Slowly Going Down the Drain?

The Wagner Law Group article:  DOL Seeks 18-Month Delay of Best Interest Contract Exemption and Other Fiduciary Rule Exemptions


Conflicts of Interest FAQs.   Separately, a week earlier the DoL released a fourth round of FAQs regarding aspects of the DoL Rule and its implementation.  The FAQs provide information on (1) a “fiduciary status disclosure” issue under the Department of Labor’s ERISA section 408(b)(2) service provider disclosure regulation that applies to ERISA pension plans, (2) whether recommendations to plan participants and IRA owners to contribute to or increase contributions to a plan or IRA constitute fiduciary investment advice under the Fiduciary Rule, and (3) whether recommendations to employers and other plan fiduciaries on plan design changes intended to increase plan participation and contribution rates constitute fiduciary investment advice under the Fiduciary Rule.

Citation: DoL Conflicts of Interest FAQs

Posted by Karl Hartmann, Aug. 10, 2017