On May 22, 2017, Secretary of Labor Alexander Acosta announced that the DOL has found no “principled legal basis” to further delay the June 9, 2017 applicability date of its “fiduciary rule.”
The fiduciary rule’s initial applicability date was April 10, 2017. On April 4, 2017, however, the DOL issued a final rule delaying applicability by sixty days until June 9, 2017. That final rule also provides that (1) reliance on the Best Interest Contract Exemption and the Principal Transaction Exemption will only require adhering to the Impartial Conduct Standards during the transition period of June 9 through January 1, 2018 and (2) advisors can continue to rely on PTE 84-24 until January 1, 2018, subject to adhering to the Impartial Conduct Standards beginning June 9th.
The purpose of the delay is to provide the DOL with more time to consider the issues raised in the President’s Memorandum of February 3, 2017, which mandates further study of the effects of the fiduciary rule on the retail retirement market.
In connection with the Secretary’s announcement, the DOL issued Field Assistance Bulletin No. 2017-02 which provides that, during the transition period of June 9, 2017 through January 1, 2018, the DOL will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary rule and exemptions. The FAB also confirms that the IRS will not impose reporting obligations or excise taxes on any prohibited transactions to which the FAB applies.
During the transition period, the DOL intends to issue a Request for Information asking for specific ideas for new exemptions or regulatory changes. The RFI will also seek comments on whether full implementation should be delayed beyond January 1, 2018 in order to reduce the burdens on financial institutions working to implement changes to their business models and products.
Further information on the transition period can be found in a set of FAQs also issued by the DOL on May 22nd.