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DOL Fiduciary Rule Heads for OMB Review

The Department of Labor sent its new fiduciary rule, officially listed as “Retirement Security Rule: Definition of an Investment Advice Fiduciary,” to the Office of Management and Budget (“OMB”) for its final review. OMB reviews may typically take up to 90 days.

This marks a significant step forward for the new rule. The OMB reviews rules considered “significant” under criteria established by executive order. Such rules require additional reviews by other government agencies, along with an assessment of both the rule’s costs and benefits. The specific details of the new rule will not be available until the OMB completes its analysis.

As previously reported by The DI Wire, the new DOL rule, first proposed on Halloween 2023, seeks to amend the definition of an investment advice fiduciary under the Employee Retirement Income Security Act (ERISA) with the reported goal of helping to ensure investment advice providers deliver recommendations that are in the investor’s best interest, especially in the area of retirement savings.

After the initial proposal, the DOL allowed comments for 60 days, including a two-day public, online hearing in December 2023 where the proposal received mixed reviews. The DOL denied several requests to extend the comment period.

This marks the fourth attempt by the DOL to establish a fiduciary standard for rollover transactions involving retirement accounts. Opponents claim the rule will limit access to investment advice, specifically for middle-income investors. Supporters, however say a stricter standard is crucial to protect retirement savers from advisors with potential conflicts of interest.

According to ERISA lawyers, the new fiduciary rule will likely be finalized this year, with an effective date of January 1st, 2025.

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