The Department of Labor sent the Office of Management and Budget its final rule requesting a 60-day delay of its fiduciary rule’s applicability date of April 10th. Once the rule is reviewed and approved by the OMB, it will be sent back to the DOL for publication in the Federal Register.
The DOL requested the extension at the beginning of the March following a memorandum issued by President Trump directing the DOL to examine the rule to determine if it may adversely affect the ability of Americans to gain access to retirement information and financial advice.
The proposed delay would give the DOL time to collect and consider information related to the issues raised in the memorandum before the rule and exemptions become applicable.
The DOL recently wrapped up a 15-day comment period on the proposed delay, where it received a healthy number of comments and petitions both for and against the regulation that seeks to redefine the fiduciary standard as it pertains to retirement investment advice.
The DOL also issued a temporary enforcement memorandum due to concerns expressed by financial services institutions about the uncertainty surrounding the proposed rule delay.
In response to the temporary enforcement initiative, the Internal Revenue Service revealed that it would not apply an excise tax on prohibited transactions and related reporting requirements where the DOL’s temporary enforcement policy would apply.
Currently, Section 4975 of the Internal Revenue Code imposes a 15 percent excise tax on prohibited transactions for each year in a taxable period. The tax will increase to 100 percent in cases where the initial 15 percent tax is imposed and the prohibited transaction is not corrected within a certain period.