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April 05, 2017

DOL Delays Fiduciary Rule for 60 Days

The Department of Labor (DOL) has announced a final regulation to delay implementation of the Fiduciary Rule from April 10, 2017, until June 9, 2017. In addition to the 60-day delay, the final regulation eases certain compliance requirements until January 1, 2018, pending the DOL’s full review of the Fiduciary Rule.

The final regulation is scheduled for publication in the Federal Register on April 7, 2017. An unpublished version is available here.


The Fiduciary Rule, issued almost a year ago, expands the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (Code). Under the Fiduciary Rule, any person who is paid to provide investment recommendations or advice to investors in employer retirement plans or IRAs will be considered a fiduciary. The Fiduciary Rule also creates or amends prohibited transaction exemptions (PTEs) to allow fiduciaries to receive compensation for their services, provided they meet the conditions of the applicable exemption. For more, see our full analysis of the Fiduciary Rule.

The Fiduciary Rule was scheduled to apply on April 10, 2017, with certain exemption requirements becoming effective on January 1, 2018. Under a Presidential memorandum issued shortly after inauguration, the DOL was directed to consider rescinding or revising the Fiduciary Rule after conducting a new economic and legal analysis.

As reported in a previous client alert, the DOL announced its proposal to delay the Fiduciary Rule to provide time to conduct the analysis mandated by the Presidential memorandum. To date, the DOL reports receiving approximately 193,000 comments about the proposed delay and the Fiduciary Rule’s costs and benefits.

Impact of the Delay Regulation

Consistent with the DOL’s proposal, the final regulation delays the Fiduciary Rule and related PTEs for 60 days, resetting the general applicability date to June 9, 2017.

The final regulation also provides additional transitional relief by delaying certain conditions of the Fiduciary Rule’s primary PTEs until January 1, 2018, including conditions of the Best Interest Contract Exemption and the Class Exemption for Principal Transactions. During the transition period between June 9, 2017, and January 1, 2018, these PTEs will generally require adherence only to the impartial conduct standards. As a reminder, the impartial conduct standards require fiduciary advisers to make investment recommendations in the best interest of their clients, charge no more than reasonable compensation for their services and refrain from making misleading statements. The remaining conditions in the PTEs, such as requirements to make specific written disclosures and representations of fiduciary compliance, will not apply until January 1, 2018.

Looking Ahead

According to the DOL, the agency expects to complete its full review of the Fiduciary Rule, as directed by President Trump’s memorandum, and propose any revisions by January 1, 2018. During this review, the DOL states that it may extend January 1, 2018 compliance deadlines or grant additional interim relief. Accordingly, the DOL may decide the ultimate fate of the Fiduciary Rule after it becomes generally applicable on June 9, 2017.

Advisers and firms should therefore plan for the Fiduciary Rule to become applicable on June 9, 2017. Interested parties may also submit comments to the DOL regarding its economic and legal analysis until April 17, 2017.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

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