Final Obama Department of Labor (DOL) Regulatory Agenda
In November, the DOL released the final agenda under the Obama Administration for priorities for the next six months. However, because of the uncertainty of a new administration, the agenda may change significantly from the Obama Administration. A significant priority on the current agenda is the plan to issue a new RFI on QDIAs: the DOL expects to release a RFI on whether the QDIAs should be amended to facilitate the use of lifetime income products and features as, or as part of, QDIAs. The next Assistant Secretary of the Employee Benefits Security Administration will determine the action to be taken, if any, for projects listed as “Next Action To Be Determined”:
- Pension Benefit Statements and Lifetime Income Disclosure
- Fee Disclosure for Welfare Plans (Section 408(b)(2))
- Enhanced Target Date Fund Disclosure
- Brokerage Window Standards
- Selection of Annuity Providers
- Guide for Section 408(b)(2)
New Administration May Lead To Policy Changes
With a new administration, many key public policy themes and even timelines are likely to change. Expectations are for significant policy shifts this year with Republicans now in the White House and retaining control of the Congress. There is an expectation that Trump will act quickly in the regulatory area, with direction to stop work on regulations that are not in effect or have not yet been published. In terms of shifting regulations that are already effective, Trump may need to act more cautiously to change policies to ensure that any action does not violate the Administrative Procedure Act. One of the regulations that could be slated for change is the DOL’s Fiduciary Rule.
In contrast to the options of relatively quick executive and regulatory action, any new agenda by the Trump administration should take significantly more time as the administration fills thousands of positions. Potentially taking significant time of the new administration is the possible “repeal and replace” of the Affordable Care Act that is likely to receive considerable congressional attention in 2017.
Uncertainty About the DOL’s Fiduciary Rule
The current DOL Fiduciary Rule will be effective April 10, 2017. However, the DOL’s Fiduciary Rule faces an uncertain future with the election of Trump. While some of Trump’s advisors have called for a repeal of the Fiduciary Rule, the new transition team at the DOL is aware of the retirement community’s concerns.
There is some speculation that there may be efforts to delay the rule. Such a delay could help with compliance and potentially allow for additional comments for stakeholders, what’s more, the new administration may conduct their own evaluation of the Fiduciary Rule. If there were a delay, it could be as short as 60 days or significantly longer.
While there is little doubt that there will be some change for the DOL’s Fiduciary Rule, in all practicality, plan sponsors and service providers have few options other than proceeding with the assumption that the final rule becomes law. Regardless of the outcome, plan sponsors should remember that they are fiduciaries and must act accordingly with respect to participants and beneficiaries, regardless of what happens with the DOL’s Fiduciary Rule.
IMPORTANT DISCLOSURES: These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—Arnerich Massena cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.