Dec 22 -- The U.S. Department of Labor today announced that its Employee Benefits Security Administration has published the unofficial transcripts of its online hearing on the Notice of Proposed Rulemaking, “Retirement Security Rule: Definition of an Investment Advice Fiduciary” and related proposed prohibited transaction exemption amendments, which was held on Dec. 12 and Dec. 13, 2023. Video recordings of the hearing were also made available on Dec. 19, 2023.
https://www.dol.gov/newsroom/releases/ebsa/ebsa20231222
Dec 7 -- The U.S. Department of Labor today announced that its Employee Benefits Security Administration has published an agenda for its upcoming online hearing on the Notice of Proposed Rulemaking, “Retirement Security Rule: Definition of an Investment Advice Fiduciary,” and related proposed prohibited transaction exemption amendments. The online hearing will be held Dec. 12 and Dec. 13, starting each day at 9 a.m. EST.
https://www.dol.gov/newsroom/releases/ebsa/ebsa20231207
1) Nov 3 -- FRN: Retirement Security Rule: Definition of an Investment Advice Fiduciary
This document contains a proposed amendment to the regulation defining when a person renders “investment advice for a fee or other compensation, direct or indirect” with respect to any moneys or other property of an employee benefit plan, for purposes of the definition of a “fiduciary” in the Employee Retirement Income Security Act of 1974 (Title I of ERISA or the Act). The proposal also would amend the parallel regulation defining for purposes of Title II of ERISA, a “fiduciary” of a plan defined in Internal Revenue Code (Code) section 4975, including an individual retirement account. The Department also is publishing elsewhere in today's Federal Register proposed amendments to Prohibited Transaction Exemption 2020–02 (Improving Investment Advice for Workers & Retirees) and to several other existing administrative exemptions from the prohibited transaction rules applicable to fiduciaries under Title I and Title II of ERISA.
Comments are due on or before January 2, 2024. The Department anticipates holding a public hearing approximately 45 days following the date of publication in the Federal Register.
FRN:
https://www.federalregister.gov/d/2023-23779
2) Oct 31 [press release] -- The U.S. Department of Labor today announced that its Employee Benefits Security Administration has proposed a retirement security rule updating the definition of an investment advice fiduciary under the Employee Retirement Income Security Act.
Aligned with the Biden-Harris administration’s efforts to protect retirement investors, the proposal would require trusted investment advisers to adhere to high standards of care and loyalty when they make investment recommendations and avoid recommendations that favor their financial and other interests at the expense of retirement savers.
The updated definition of an investment advice fiduciary would apply when financial services providers give investment advice for a fee to retirement plan participants, individual retirement account owners and others. While investment professionals deserve to be paid fairly for helping people meet their savings goals and retire with dignity, there are some financial advisers who put their interests before their clients’ interests. This can result in reduced returns and higher costs which are junk fees that chip away at many Americans’ savings. Analysis of just one investment product—fixed index annuities— suggests that conflicted advice could cost savers up to $5 billion per year for this product alone. The proposed rule would also ensure investment professionals are able to compete for business on a level playing field, instead of an unbalanced system that holds advisers to different standards based on their recommended products.
The current definition, adopted in 1975, was written at a time when IRAs were less common and 401(k) plans did not exist, so most Americans relied on traditional defined benefit pensions retirement savings. In today’s marketplace, individual plan participants and IRA owners — rather than professional money managers — are expected to make important, complex financial decisions and seek the help of expert advisers, making the proposed rulemaking necessary. . . .
The department is also proposing amendments to related existing administrative prohibited transaction exemptions that are available to investment advice fiduciaries. The proposed amendments seek to make the exemption conditions more uniform and protective. Under ERISA, investment advice fiduciaries must avoid conflicts of interest or comply with the conditions of a PTE. The proposed amendments to the exemptions would uniformly require investment advice fiduciaries to give advice that meets a professional standard of care or duty of prudence, puts the retirement investor first or duty of loyalty and would prohibit advisers from charging more than reasonable compensation or misleading investors. . . .
The proposed update to the definition of an investment advice fiduciary and the proposed amendments to the prohibited transaction exemptions will be posted on the department’s website today and subsequently published in the Federal Register.
The proposals include a 60-day period for public comments and instructions on how to submit comments. The department also intends to hold a public hearing approximately 45 days after the proposals are published. Further information on the hearing will be published in the Federal Register at a later date.
Press release:
https://www.dol.gov/newsroom/releases/ebsa/ebsa20231031
3) CEA blog
Today, the Biden Administration is announcing a new rule proposed by the Department of Labor to close loopholes and ensure that the financial advice that Americans get for retirement is in their best interest. The rule would expand the existing fiduciary standard that commonly covers advice over purchasing securities like mutual funds, to include new types of non-securities like fixed index annuities, advice to employers and plan fiduciaries, and one-time advice for transactions like 401(k) rollovers. The rule will cut junk fees in retirement products, potentially providing billions more in savings for those saving for retirement. This CEA blog explains why this proposed rule change is important for consumers by focusing on a specific, but substantial, market transaction: rolling over retirement savings into fixed index annuities. . . .
https://www.whitehouse.gov/cea/written-materials/2023/10/31/retirement-rule/