Department of Labor Seeks Delay of the Fiduciary Rule's Applicability Date

We are issuing the latest update to our recent Alerts regarding the final rules issued by the Department of Labor (“DOL”) with respect to fiduciaries under the Employee Retirement Income Security Act of 1974 (“ERISA”) and the DOL’s Best Interest Contract Exemption (“BIC Exemption”) from ERISA’s prohibited transactions provisions. Following the issuance on February 3, 2017 of a Memorandum by President Donald J. Trump directing the Secretary of the DOL to undertake a review of the Fiduciary Rule, the DOL has filed a notice with the Office of Management and Budget (“OMB”) requesting a delay of the Fiduciary Rule’s April 10, 2017 applicability date.[1] The DOL’s public filing does not specify how long a delay it is seeking. However, there have been reports, based on the 180 day delay language that was originally contained in, but deleted from, the Memorandum, that the DOL’s delay proposal will call for a 180 day delay as well. By Executive Order, the OMB’s Office of Information and Regulatory Affairs (“OIRA”) is required to review the delay proposal before it can be published in the Federal Register.

The period for OIRA review is limited to a maximum of 90 days, and there is no minimum period for completing a review. OIRA review of DOL’s delay proposal, however, is expected to take less than 90 days to complete. Thus, the details of the delay proposal will not be publicly disclosed until OIRA approves it. Once OIRA approves the delay proposal, the DOL will then send the proposed rule to the Federal Register for publication. There would then be a 15 day comment period before the delay proposal is finalized. In light of the April 10, 2017 applicability date, it is anticipated that OIRA review and the period for public comment will be completed sufficiently in advance of the applicability date. Thus, we should be learning the details for the DOL’s plan for delaying the Fiduciary Rule’s April 10, 2017 applicability date in the very near future.