Department of Labor Delays Fiduciary Rule Enforcement
The Department of Labor has delayed the implementation of its investment advice rule.
The Department of Labor has delayed the implementation of its investment advice rule from December 20, 2021 until February 1, 2022.
The DOL’s prohibited transaction exemption, dubbed Improving Investment Advice for Workers & Retirees (PTE 2020-02), became effective on February 16, 2021, but the DOL granted transitional relief through December 20, 2021.
According to field assistance bulletin published earlier this week, from December 21, 2021 through January 31, 2022, the DOL will not pursue prohibited transactions claims against investment advice fiduciaries who are working “diligently and in good faith” to comply with the impartial conduct standards for exempted transactions or treat fiduciaries as violating the applicable prohibited transaction rules.
“The [DOL] understands that the December 20 expiration date of the current transitional relief poses practical difficulties for financial institutions,” the bulletin states. “These institutions have expressed specific concern that they would incur significant additional costs to distribute disclosures because December 20 does not align with their regular distribution cycle for disclosures. They also have asserted that the expiration date would make it difficult to conduct the required retrospective review on a calendar-year basis.”
The DOL claims that “financial institutions maintain that they face significant challenges in implementing the rollover documentation and disclosure requirements in a sufficiently automated and systematic manner by the Dec. 20 deadline, and that these challenges and concerns may delay their ability to rely on the exemption as the department intended.”
Thus, the DOL will not enforce the specific documentation and disclosure requirements for rollovers in PTE 2020-02 through June 30, 2022. All other requirements of the exemption, however, will be subject to full enforcement as of February 1, 2022.
