DOL Asks for Information Regarding the Fiduciary Rule and Prohibited Transaction Exemptions

On July 6, 2017, the DOL published a request for information relating to the new fiduciary rule on investment advice conflicts and prohibited transaction exemptions. After a 60-day delay, the new rule and exemptions became effective June 7, 2016. When the DOL announced the 60-day delay, they also amended certain parts of the fiduciary rule and exemptions. Specifically, the DOL amended two exemptions – the best interest contract (BIC) exemption and the prohibited transaction exemption for principal transactions (those involving a financial institution selling from or purchasing for their own accounts) – to include transition relief (through Jan. 1, 2018) requiring adherence to a lesser standard. That lesser standard is referred to as the “impartial conduct standard,” which requires that the fiduciary provide prudent advice in the investor’s best interest, that the fiduciary receive no more than reasonable compensation and that the fiduciary make no misleading statements. Following that amendment, the DOL issued guidance relating to implementation of the rule and exemptions during the transition relief period.

The request for information asks general questions regarding the rule’s implementation, the additional conditions that are supposed to become applicable on Jan. 1, 2018, and the pros and cons of potentially delaying that applicability date. The request also asks specific questions relating to certain potential exclusions from the rule, including whether there should be an exclusion from the rule for communications that encourage an investor to increase or make contributions.

Interestingly, for health and welfare benefits, the request asks questions relating to the contract requirement for IRAs and HSAs and alternatives for bank deposit-type investments for IRAs and HSAs. Although the DOL generally considers HSAs within the scope of the rules, those questions indicate that perhaps the DOL might consider HSA-specific exceptions.

The information request contains no new employer compliance obligations. Those with interest in the DOL’s fiduciary rule and prohibited transaction exceptions should review the request for additional insight and understanding. Comments are due by Aug. 7, 2017 (except for those relating to extending the Jan. 1, 2018 applicability date as to certain provisions, which are due by July 21, 2017).

DOL Request for Information »
DOL Press Release »