July 2024

While two district courts have delayed the effective date of the Retirement Security Rule, retirement plan sponsors should be familiar with how it may impact the operation of their plan.

Author: Steven Grieb

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On April 23, 2024, the Department of Labor (DOL) issued the final version of a regulation that would change the definition of "fiduciary" under the Employee Retirement Income Security Act (ERISA). Specifically, it would amend the standards around which service providers are a fiduciary due to providing investment advice for a fee. In general, the final regulation will make it easier for service providers to fall within the definition of fiduciary under ERISA. The DOL is referring to the final regulation as the "Retirement Security Rule."

Through the process of completing the Retirement Security Rule, the DOL claims that it has consulted with other regulatory bodies, including the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Financial Industry Regulatory Authority (FINRA) and the National Association of Insurance Commissioners (NAIC). The DOL also has been discussing the proper approach with multiple stakeholders in the retirement industry, including financial advisors. While two district courts have delayed the effective date of the rule, retirement plan sponsors should be familiar with how it may impact the operation of their plan.

The DOL originally proposed the Retirement Security Rule in November 2023. The proposed rule generated much discussion and commentary, resulting in more than 400 individual comments and just under 20,000 petition submissions. The final version of the Retirement Security Rule largely follows the proposed version, although with some noteworthy adjustments.

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