COLLECTED WISDOM™ on Participant and Investment Advice

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Participant Advice: The Current State

Behavioral finance research has shown that many participants in DC retirement plans lack the financial planning skills, time, and/or interest to make appropriate investment decisions. Sound investment decisions, aided by good investment advice, can help participants forge a clear path toward retirement security. Plan sponsors and plan fiduciaries concerned about their participants' investment acumen should consider whether to offer investment advice. This article from Vanguard reviews the evolution of advice and provides an overview of the current rules affecting advice.

Source: Vanguard.com, May 2024

DOL Finalizes Its Most Recent Definition of an Investment Advice Fiduciary

On April 25, 2024, the DOL published the Retirement Security Rule: Definition of an Investment Advice Fiduciary. The 2024 Fiduciary Rule defines when a person is considered a fiduciary under Title I and Title II of ERISA in connection with providing investment advice or making an investment recommendation to a retirement investor. In addition to the 2024 Fiduciary Rule, the DOL also finalized amendments to certain Prohibited Transaction Exemptions to reflect the DOL's updated definition of an investment advice fiduciary. Here is a review of the key provisions and aspects of the rule.

Source: Winston.com, May 2024

How to Navigate the New ERISA Fiduciary Advice Proposal

If you're confused and overwhelmed about the DOL's latest proposed rule defining who is an invest. advice fiduciary for purposes of the ERISA, you're not alone. But where does one begin, and how do they ensure they're not inadvertently tripped up? What, specifically, does it mean for retirement plan advisors, sponsors, and participants?

Source: Napa-net.org, November 2023

Are There Boogeymen in the New Fiduciary Proposal?

The author writes regarding the DOL's new fiduciary proposal that, "rumors abound, and some law firms (certainly those that represent the interests of those who would be newly subject to new regulations) have, to my read anyway, been inclined to see plenty of clouds in the silver linings -- and to characterize the new proposal as basically being a resurrection of the old one (to that end, the Halloween unveiling made for plenty of 'zombie' references) -- in the process imagining things that aren't actually 'there.'"

Source: Napa-net.org, November 2023

A Guide to the DOL's Retirement Security Rule Proposal

The DOL's new "retirement security rule" package is the latest chapter in an almost 15-year effort by the DOL to amend the five-part test in its 1975 regulation for determining whether a person is a "fiduciary" by providing invest. advice for a fee. Very generally speaking, the Proposed Rule would significantly expand the circumstances under which a person could be treated as providing invest. advice that is subject to ERISA's fiduciary standards.

Source: Erisapracticecenter.com, November 2023

DOL's Retirement Security Rule Muddies Definitional Waters

The White House and the DOL framed the new fiduciary rule as a narrowly tailored regulation necessary to protect consumers in light of changes to the retirement system over the past five decades. However, the new proposal is better viewed as a sweeping regulatory overhaul that would change how much of the retirement services industry interacts with plans, participants, and individual retirement account owners. In this article, Michael Kreps, Groom principal and chair of the firm's Retirement Services group, explores the DOL's proposed rule for defining a fiduciary and current opposition to the rule.

Source: Groom.com, November 2023

DOL Braces for Hostile Reception to Fiduciary Rule Rewrite

A top DOL official pushed back against criticism of a soon-to-be-released proposal that could expand federal benefits law's reach over retirement plan advisers who give investment advice for a fee, saying the regulations shouldn't be judged until they have been publicly unveiled.

Source: Wagnerlawgroup.com, September 2023

A Condensed History of the DOL's Fiduciary Rule

ERISA is less than one year away from turning 50. For nearly the entirety of those 50 years, it has defined fiduciary investment advice using a five-part test. Attempts in 2010 and 2016 to modify the 1975 regulation containing the definition were unsuccessful. Recently, the DOL sent a new proposed regulation to the Office of Management and Budget. Here is a condensed history of the DOL's Fiduciary Rule.

Source: Plansponsor.com, September 2023

DOL Sends New Fiduciary Rule to OMB

The DOL has sent a new, proposed fiduciary rule to the Office and Management and Budget for review. The text of the proposal is not yet public. OMB must first conduct an interagency review process. The proposal will then be returned to DOL and published in the Federal Register. The entire process can be completed in a matter of weeks, but it typically takes several months.

Source: Groom.com, September 2023

DOL Temporarily Extends Non-Enforcement Relief for Investment Advice Fiduciaries

On October 25, 2021, the DOL issued Field Assistance Bulletin 2021-02, temporarily extending its non-enforcement policy regarding certain rules applicable to fiduciaries who provide investment advice for 401k plans, per Prohibited Transaction Exemption 2020-02, released in December 2020. The temporary non-enforcement policy now extends generally through January 31, 2022; it was originally set to expire on December 20, 2021.

Source: Compliancedashboard.net, November 2021

Field Assistance Bulletin No. 2021-02

This document announces a temporary enforcement policy related to the Department of Labor's prohibited transaction exemption (PTE) 2020-02.

Source: Dol.gov, October 2021

DOL Further Delays Enforcement of PTE 2020-02

The DOL has issued Field Assistance Bulletin No. 2021-02 to further delay enforcement of Prohibited Transaction Exemption 2020-02, which sets forth several requirements that financial institutions and investment professionals must satisfy when providing fiduciary investment advice, including advice to roll over a retirement plan account into an individual retirement account. The transition relief currently in effect was set to expire on December 20, 2021. Citing practical difficulties caused by the year-end timing, the DOL has extended its non-enforcement policy for compliance with PTE 2020-02 to January 31, 2022, for all requirements other than the specific documentation and disclosure requirements for rollover recommendations.

Source: Bradley.com, October 2021

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