Compliance Corner: Department Of Labor

Editorial Staff

15 February 2021

Department of Labor
The new US administration will allow the Department of Labor’s fiduciary rule to remain in force, although it will give more guidance on the matter as soon as this week.

The rule, due to take force tomorrow, replaces the version that governed advice for 401s and rollover IRAs. It provides an exemption under the Employee Retirement Income Security Act for investment advice fiduciaries to receive third-party compensation.

“The US Department of Labor’s Employee Benefits Security Administration has confirmed that `Improving Investment Advice for Workers and Retirees,’ an exemption for investment advice fiduciaries, will go into effect as scheduled on February 16, 2021. In the coming days, the agency will publish related guidance for retirement investors, employee benefit plans and investment advice providers,” it said in a statement.

“This exemption allows for important investor protections, including a stringent ‘best interest’ standard of care for fiduciary recommendations of rollovers from ERISA-protected retirement accounts,” deputy assistant secretary of Labor for the Employee Benefits Security Administration Ali Khawar, said. “We recognize that investment advice providers have been preparing for the exemption, and this step will allow them to implement important system changes. That said, we will continue our stakeholder outreach to determine how we might improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach.”