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DOL Proposes Revised Definition of “Fiduciary”

The Department of Labor has reported in its Spring 2022 regulatory agenda that it plans to reveal its fiduciary rule proposal in December.

The Department of Labor has reported in its Spring 2022 regulatory agenda that it plans to reveal its new fiduciary rule proposal in December, including amending the regulatory definition of the term “fiduciary.”

The proposed rule summary states that “this rulemaking would amend the regulatory definition of the term fiduciary to more appropriately define when persons who render investment advice for a fee to employee benefit plans and [individual retirement accounts] are fiduciaries within the meaning of section 3(21) of ERISA and section 4975(e)(3) of the Internal Revenue Code.”

The amendment would take into account practices of investment advisers, and the expectations of plan officials and participants, and IRA owners who receive investment advice, as well as developments in the investment marketplace, including in the ways advisers are compensated “that can subject advisers to harmful conflicts of interest.”

In conjunction with the rulemaking, the Employee Benefits Security Administration also plans to “evaluate available prohibited transaction class exemptions and propose amendments or new exemptions to ensure consistent protection of employee benefit plan and IRA investors.”

The EBSA plans to issue a notice of proposed rulemaking in December 2022.

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