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There is a slew of pending regulations on such issues as the fiduciary rule, retirement savings, and health insurance nearing release. Below is a summary of some of the ones that will have the most impact.

  • Fiduciary Rule: The White House’s Office of Information and Regulatory Affairs (OIRA) is reviewing a new fiduciary proposal submitted by the Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA). NAIFA CEO Kevin Mayeux met with OIRA and DOL last week on October 6 and explained NAIFA’s position that no new regulations are needed because current rules robustly protect consumers, result in advisors putting clients’ interests ahead of their own, and allow for the more affordable, middle-class-preferred broker-dealer standard of care. OIRA listened, as did DOL, but did not express agreement or disagreement. And OMB staff encouraged NAIFA to comment “if and when” the proposed regulation is released.

    This regulatory effort is hotly controversial. Both NAIFA and its allies and the consumer groups on the opposite side of the issue have been asking Members of Congress and Senators to weigh in. Neither side of the issue yet knows what EBSA plans to propose (although recent testimony from Acting DOL Secretary Su suggests that the proposal will end up imposing a fiduciary duty on advice related to rolling over employer plan funds into individual IRAs). Some lawmakers are willing to weigh in without knowing the specifics of the proposal; others want to wait to see what EBSA proposes (assuming OIRA clears it to release a proposed regulation). Congressional intervention is likely to accelerate if EBSA does release a new proposal, but that intervention could come on both sides of the issue. And the paralyzed Congress, with huge pressure to enact a government funding bill, will be harder to persuade to block a bad fiduciary rule proposal.
  • Worker Classification: OIRA is also reviewing the final rule on worker classification that DOL’s Wage and Hour Division (WHD) will issue if and when OIRA approves it. NAIFA and its allies are urging a carve-out for financial advisors from the rule as it was proposed.
  • Short-Term Limited-Duration (STLD), Fixed Payment Health Insurance: A tri-agency (Health and Human Services, Treasury, and DOL) proposed rule would cut the time that STLD health insurance would be permissible to three months plus a one-month renewal. And it would significantly curtail the availability of Affordable Care Act (ACA) compliant (as an excepted benefit) fixed payment health insurance (like indemnity coverage). The comment period on this proposed regulation closed last month. The agencies are now reviewing comments. Modifications to the proposed regulations are possible as a result of these comments. After the agencies complete their review (and, if applicable, make modifications), the proposed regulation will go back to OIRA for its review of what would then become a final regulation. The process could take months.
  •  Retirement Savings: DOL has issued a request for more information (RFI) on the rules surrounding use of paper versus electronic delivery of notice and disclosure retirement savings rules. House Education & the Workforce Committee Chair Rep. Virginia Foxx (R-NC) has written to EBSA to raise concerns about the agency’s potential for going beyond the statutory authority provided in SECURE 2.0 on this retirement savings rule. She concluded, “Congress’ directions to the Secretary in section 338 are both specific and limited. Section 338 does not authorize or contemplate the ill-conceived regulatory overreach foreshadowed in the RFI. DOL must limit its regulatory amendments to those specified in section 338.”
  •  White-Collar Exemption to OT Rules: Currently pending at DOL’s Wage and Hour Division (WHD) is its proposed regulation raising the threshold for the exemption from the Fair Labor Standards Act’s (FLSA’s) white-collar exemption to overtime (OT) rules. The proposed reg raises the threshold from the current $35,568 to about $55,000-$60,000/year (technically, the threshold would go to a level calculated by reference to average wages in the Bureau of Labor Statistics’ salary data from the poorest census region). The proposed rule also includes a provision that would automatically adjust the threshold every three years. WHD is currently reviewing comments on the proposed regulation and has targeted this December as the time by which the agency wants to send a final rule to the White House for review prior to issuing it. A court challenge on it is expected.

Also pending and under White House review is a proposed regulation on the definition of employer for purposes of association health plans. Further, the Federal Trade Commission (FTC) is working on a regulation that would restrict the use of noncompete agreements, a rule that could impact insurance and financial advisors seeking to change the companies whose products they sell.

Prospects: Regulatory activity could be impacted by a government shutdown, reduced fiscal year 2024 budgets for the agencies involved, and/or the current state of paralysis in the House of Representatives due to the Speakership vacancy. Generally, regulatory initiatives operate outside of Congress’ legislative agenda, but with agency funding at stake, these regulatory activities could be delayed.

NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.