March 2, 2017
On March 2, 2017, the Department of Labor (DOL) published a proposed rule that would delay the “applicability date” of the 2016 final rule for 60 days (until June 9, 2017 instead of April 10, 2017). The final rule redefines who is a fiduciary as a result of providing investment advice to plan participants and individual retirement account owners. The applicability date is the date on which affected parties actually have to comply with the final rule.
The DOL’s action is in response to a February 3, 2017 Presidential Memorandum to the Secretary of Labor (Memorandum) directing the Secretary to determine whether the final rule adversely affects the ability of Americans to gain access to retirement information and financial advice, and requiring the determination to include updated economic and legal analyses. If the Secretary concludes that the rule does have such an adverse impact, the Secretary must rescind or revise the final rule.
The DOL asks for comments on the 60-day delay within 15 days, March 17, 2017. It also asks for comments on the other issues raised by the Memorandum, including the economic and legal analyses by April 17, 2017.
The DOL proposed the delay because it does not believe it has sufficient time before the April 10, 2017 current applicability date to complete the examination mandated by the Memorandum. The 60-day delay minimizes the negative consequences of delaying the applicability date while giving the DOL sufficient time to receive updated information for the new economic analysis it is required to make. The DOL may need to further delay the applicability date so it has time to complete the necessary economic analysis to justify revising or revoking the final rule.
Because the primary impact of the final rule would be on the providers of investment advice and not on employer-sponsored retirement plans, plan sponsors are not likely to be significantly affected by a delay in implementation of the final rule. The impact of any further action must be evaluated when it occurs.