THE END OF THE DOL FIDUCIARY RULE
On June 21, 2018, the Court of Appeals for the Fifth Circuit officially vacated the Department of Labor’s (DOL) 2016 fiduciary rule in its entirety, including the related prohibited transaction exemptions and the Best Interest Contract (BIC) exemption. The Court held that the DOL exceeded its rulemaking authority under ERISA in enacting the rule. Read more
Fifth Circuit Strikes Down Fiduciary Rule
In a two-to-one decision, the Court of Appeals for the Fifth Circuit vacated the Department of Labor’s (DOL) partially implemented Fiduciary Rule, including the “best interest contract” exemption and other exemptions. Read more
Tax Reform Efforts Persist
As noted in the second quarter legislative update, President Trump continues to press Congress to join together and pass tax reform. However, delays, distractions, and complications have considerably reduced any potential changes this year. We have seen other legislation take priority over tax reform to address the debt limit; fund the government; provide funds for disaster relief, and also to reauthorize the Federal Aviation Administration. Additionally, the U.S. budget deficit is proving to be a major obstacle to tax reform and could ultimately derail a tax reform plan. The GOP had hoped to use a budget reconciliation bill to move tax reform; however, this process is not likely to be successful, as sixty votes would be needed in the Senate to pass a tax reform package, which would require buy-in from some democrats. Read more
The Wall Street Journal reported that the average employer contribution to employees’ 401(k) plans rose from 3.9% of employee salaries in 2015 to an estimated 4.7% in 2016. This represents the largest jump since at least 2007 and is great news for savers. Employers cited a few important reasons for increasing their contributions, including improving recruitment and employee retention, as well as helping older employers afford to retire to make room for younger workers. Read more
Fiduciary Rule Effective
The Department of Labor’s (DOL) Fiduciary Rule went into effect on June 9, 2017. However, the DOL published field assistance bulletin 2017-02 in May that stated that, until January 1, 2018, they “will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.” Read more
THE DEPARTMENT OF LABOR (DOL) DELAYS FIDUCIARY RULE FOR 60 DAYS
On April 4, 2017, the DOL issued a final rule delaying the Fiduciary Rule until June 9, 2017. The rule also delays transitional requirements of the Best Interest Contract Exemption and other prohibited transaction exemptions to June 9, 2017. This delay may provide some relief for institutions trying to meet the previous deadline of April 10, 2017. However, given the short length of the delay of only 60 days, institutions need to make a quick decision to finalize their compliance plans or delay their compliance efforts until the DOL releases its analysis. Read more
REVIEW OF FINAL FIDUCIARY RULE
In early April, the DOL released final rules regarding fiduciary standards to address conflicts of interest. In addition, the DOL issued a revised Best Interest Contract Exemption (BICE) and the final amendments to existing exemptions under ERISA’s prohibited transaction rules. The new rule expands the types of activities that trigger fiduciary status. Read more