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Update: Fiduciary Rule Changes, Again

What does this mean? The final fiduciary rule — as discussed in our July article — will not go into effect on September 23rd as provided in DOL’s final regulation.

So, where does this leave us? This will almost assuredly be appealed to the Fifth Circuit Court of Appeals and, depending on that outcome, potentially to the United Stated Supreme Court. In the meantime, advisors should continue to follow the fiduciary rules in effect before this final rule and may consider continuing to implement changes that would have been required.

The good news for advisors is that they do not need to change their current procedures to meet a new standard. More specifically, advisors do not need to implement compliance procedures for the expanded list of services that would have been considered fiduciary investment advice. The final rule generally would have expanded this to include not only “traditional” types of investment advice (such as recommending particular securities or investment strategies) but also investment advice for things like the advisability of rollovers, the investment of plan assets after a distribution, and the selection of other persons to provide investment advice or management services.

While we wait for a resolution in the courts, advisors would be well-served to take stock of current fiduciary practices. Have any procedures been changed in anticipation of the final rule’s effective date that should now be amended again? The procedures that would have been required by the final rule may still eventually be required, therefore some advisors may wish to consider moving forward with implementation of some or all of those procedures, even if they are only a best practice in the interim. The fiduciary rule is complex, and advisors should continue to ensure continued compliance with ERISA.

Reminders:
• October 2, 2024: Beginning of the period to distribute annual notices to participants for calendar year plans (e.g., safe harbor notices, ACA notices, QACA, QDIA notices). These are generally required to be distributed from 90 to 30 days before the end of the plan year.
• October 15, 2024: Deadline for filing retroactive amendment to correct Code Section 410(b) or 401(a)(4) failures.
• October 15, 2024: Deadline for filing Form 5500 for calendar year plans that filed a Form 5558 extension request.

1.Federation of Americans for Consumer Choice, Inc., et. al. v. United States Department of Labor, E.D. Tex., No. 6:24-cv-163-JDK, 7/25/24.
2.American Council of Life Insurers v. United States Department of Labor, N.D. Tex., No. 4:24-cv-00482, 7/26/24.

Kelsey Mayo
Partner, Poyner Spruill
Kelsey’s practice is focused in the areas of Employee Benefits and Executive Compensation. She works with business owners and HR executives to understand and manage employee benefits and executive compensation arrangements. She routinely represents clients before the Internal Revenue Service, Department of Labor, and Pension Benefit Guarantee Corporation and has extensive experience in virtually all aspects of employee benefit plans and executive compensation arrangements.