Brad Campbell and Fred Reish Comment on DOL Fiduciary Rule Delay With ThinkAdvisor
In “New DOL Fiduciary Rule Faces Another Delay,” ThinkAdvisor turned to benefits and executive compensation partners Brad Campbell and Fred Reish for their commentary on the delay of the United States Department of Labor’s (DOL) new fiduciary rule.
Campbell stated that the DOL’s new rule will not be published in December as it has “not yet been sent to OMB [Office of Management and Budget] for review,” which normally takes up to 90 days, “but rarely less than two months for significant rules,” he explained.
“To be published in December, the proposals would likely need to be sent to OMB in September or early October,” said Campbell, who noted that it is difficult to distinguish whether the “apparent delay is due to the ongoing litigation or to broader political considerations.”
Campbell mentioned that in the preamble to Prohibited Transaction Exemption (PTE) 2020-02, the DOL “rescinded its prior interpretation (that most rollover recommendations are not ERISA fiduciary advice) and replaced it with new guidance reaching the opposite conclusion. The challenge in the litigation is to the interpretive guidance, not to the underlying rule.”
He added that the court “could rule on the guidance even as DOL is moving separately to replace the 1975 regulation” under its new fiduciary rule. Regarding PTE 2020-02, with its anticipated new fiduciary rule, the DOL “seems likely to retain the current structure in significant part, but they may add some additional conditions,” said Campbell.
Reish added, “It can be argued that the lawsuits are an incentive for the DOL to move forward on a new [fiduciary] regulation. If the lawsuits are successful, and the DOL’s expanded fiduciary interpretation [under PTE 2020-02] is set aside, we would revert to the old status, meaning that a rollover recommendation is not fiduciary advice. I think that would be untenable from the DOL’s perspective.”