May 15, 2023

Fred Reish Comments on DOL’s Newly Proposed Fiduciary Guidance

In “DOL’s Apparent U-Turn in Court Hints at New Fiduciary Rule in Works” and “Department of Labor Drops Florida 401(k) Fiduciary Appeal,” InvestmentNews and National Association of Plan Advisors (NAPA) turned to benefits and executive compensation partner Fred Reish for his commentary on the Department of Labor’s (DOL) newly proposed fiduciary guidance.

“The most likely interpretation of that move is that the DOL will be sending a new proposed fiduciary regulation to the Office of Management and Budget in the next few days or, at the most, weeks,” Reish told InvestmentNews. “I don’t think it is reasonable to view this as the DOL backing away from the position that rollover recommendations are fiduciary acts. That is inconceivable in light of their statements over the years, for example, in the preamble to the Obama era fiduciary regulation and in the preamble to Prohibited Transaction Exemption 2020-02.”

Likely, “the DOL has drafted a new proposed regulation defining fiduciary advice and that the proposal will define fiduciary advice to include rollover recommendations,” Reish added.

Reish told NAPA, “While the DOL won on the question of whether the procedure outlined in FAQ 15 was appropriate, they lost on the bigger issue of the re-interpretation of the fiduciary rule for rollovers.”

“If an advisor or agent isn’t a fiduciary, then a rollover recommendation won’t be a prohibited transaction, and PTE 2020-02 and the FAQ 15 process won’t be needed,” he explained.

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