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On September 8, the Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) sent to the White House’s Office of Information and Regulatory Affairs (OIRA) a notice of proposed rulemaking (NPRM) on new fiduciary duty rules applicable to advisors on retirement savings. Details of what the agency is proposing are as yet unknown, but speculation suggests its focus is on insurance-related advice, and on rollovers from retirement plans to individual IRAs.

The retirement savings community, including NAIFA—aided by interested lawmakers at both the federal and state levels—has been lobbying hard for EBSA to refrain from proposing new fiduciary rules. Whether that lobbying has narrowed or softened EBSA’s proposal remains to be seen. OIRA has to green-light release of the NPRM, and that could take some time. The NPRM itself will not be available for review until after OIRA approves its release. Once it is released (assuming, as is likely, that OIRA will allow it to move forward), the NPRM will be subject to a comment period. Comment periods on this type of proposal typically extend for 60 days, but the exact length of the comment period will not be known until the NPRM is made public.

NAIFA and others in the retirement savings community are redoubling their efforts to persuade EBSA to halt this new rulemaking process. Swift statements, including one by NAIFA CEO Kevin Mayeux, have gone to the Hill and to the public, decrying the EBSA move to open new rulemaking on the fiduciary issue.

Even without knowing what EBSA is proposing, there has been both behind-the-scenes and public assistance from Members of Congress and the States. For example, on August 31, Rep. Virginia Foxx (R-NC), chair of the House Education & the Workforce Committee, and Sen. Bill Cassidy (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, wrote to DOL’s acting secretary, Julie Su, urging DOL—in very strong terms—to halt its regulatory activity on the fiduciary rule.

Rep. Foxx and Sen. Cassidy pointed out that “Over the last two years, DOL has offered at least three separate positions on what it means to be an investment advice fiduciary. By failing to articulate itself consistently, the Department has created unnecessary instability for retirement plans, retirees, and savers,” the two lawmakers wrote. “The Department’s misguided efforts to revise the definition of investment advice fiduciary have created confusion in the marketplace and unwarranted compliance expenses,” they added.

In conclusion, the two lawmakers said, “Not only has the Department’s continually shifting position significantly harmed investors, but it has also wasted taxpayer resources on legal challenges that could be dedicated to other pressing priorities like implementing the recently enacted SECURE 2.0 Act and protecting retirement savers. For these reasons, we request that DOL cease further action on this rulemaking.”

This letter joins input to DOL from 40 States and from NCOIL (National Conference of Insurance Legislators) urging DOL to refrain from further fiduciary rule changes. The States and NCOIL state that the existing fiduciary rule, along with the Securities and Exchange Commission’s (SEC’s) Regulation Best Interest, fully protect savers/investors, and allow for the flexibility that benefits savers/investors, especially those in the middle class, of the broker-dealer model as well as the fiduciary advisor model.

Prospects: It appears likely that despite intense lobbying against the move, EBSA will be given the green light to propose a new (or newly modified) fiduciary standard. NAIFA will keep you informed as to what the NPRM proposes when it is released.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.