The DOL recently released a set of FAQs related to its new plan fiduciary definition and related exemptions (the “Final Rule”). Specifically, the FAQs clarify that service providers who are required to provide ERISA Section 408(b)(2) notices to retirement plan sponsors, which disclose the service provider’s fees and services, are not required to update those notices to state the service provider is now a fiduciary until the date when fiduciary status must first be disclosed under the Final Rule’s Best Interest Contract and Principal Transaction Exemptions, which is currently January 1, 2018. (Please note that on August 9, 2017, the DOL filed a motion with the court presiding over the ongoing litigation concerning the Final Rule’s validity, stating that the DOL intends to further delay the effective date of the Best Interest Contract and Principal Transaction Exemptions for an additional 18 months.) In addition, the FAQs clarify that communications regarding… Continue Reading
The DOL’s final fiduciary rule (the “Final Rule”) went into effect on June 9, 2017 after several delays. The Final Rule clarifies when a person who provides investment advice becomes a fiduciary to a plan for purposes of ERISA and the Internal Revenue Code. Under the Final Rule, the term “plan” explicitly includes health savings accounts (“HSAs”). While employers typically have little direct HSA involvement beyond engaging an HSA service provider (e.g., a trustee or custodian) and forwarding payroll contributions, the Final Rule does raise issues for employers to consider: Employers should review the products and services offered by their HSA service provider to HSA participants and determine if the service provider is a fiduciary as defined in the Final Rule. If applicable, the employer should consider including an affirmative acknowledgement in its HSA provider services agreement to the effect that such provider is a fiduciary under the Final Rule… Continue Reading
The DOL has announced that its new fiduciary duty rule and related prohibited transaction exemptions (the “PTEs”) will go into effect on June 9, 2017, although certain provisions in the PTEs will not become effective until after a “transition period” that ends on January 1, 2018. On May 22, 2017, the DOL published Field Assistance Bulletin 2017-02, in which it announced a temporary enforcement policy whereby it will not pursue claims during the transition period against fiduciaries who are working diligently and in good faith to comply with the new fiduciary duty rule and the PTEs. The DOL also released a series of Conflict of Interest FAQs clarifying the standards that apply under the PTEs during the transition period. View Field Assistance Bulletin 2017-02. View the FAQs.
The DOL recently published final rules that implement a 60-day delay in the effective date of the new fiduciary duty rule and related exemptions that the DOL proposed last March. Both the DOL and IRS previously announced enforcement relief from the new fiduciary duty rule in the event the DOL did not publish these final rules prior to April 10, 2017 (the enforcement relief is now moot since the final rules were published prior to that date). The final rules confirm that the new fiduciary duty rule’s effective date has been pushed back from April 10, 2017 to June 9, 2017. The 60-day delay is intended to give the DOL time to reconsider the fiduciary duty rule and to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. View the final rules.
The U.S Department of Labor (“DOL“) recently published Field Assistance Bulletin 2017-01 (“FAB 2017-01“), in which it announced a temporary policy for enforcement of its new fiduciary duty rule and related exemptions (the “Fiduciary Rule“). On March 2, 2017, the DOL proposed regulations to delay the effective date of the Fiduciary Rule from April 10, 2017 to June 9, 2017. In response to concerns expressed by financial service institutions that uncertainty about whether the effective date of the Fiduciary Rule will actually be delayed could result in investor confusion and marketplace disruption, the DOL indicated in FAB 2017-01 that (1) in the event that it issues a final rule after April 10, 2017 to delay the effective date of the Fiduciary Rule, it will not initiate an enforcement action based on non-compliance with the rule during the “gap” period between April 10, 2017 and the date that the delay is… Continue Reading
In proposed regulations recently released, the DOL delayed the effective date of its new fiduciary duty rule and related exemptions by 60 days, from April 10, 2017 to June 9, 2017. The DOL’s announcement follows a presidential memorandum issued on February 3, 2017, directing the DOL to reconsider the new fiduciary duty rule to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. The 60-day extension is intended to give the DOL time to collect information and to consider comments it receives related to issues raised in the presidential memorandum before the rule and exemptions become effective. For additional information on the fiduciary duty rule in its current form, please see our blog post. View the proposed regulations.
On December 28, 2016, the DOL released Interpretive Bulletin 2016-01 (the “Bulletin“), which provides updated guidance for ERISA plan fiduciaries with respect to the voting of proxies on individual securities held in employee benefit plan portfolios and the appropriateness of active engagement with corporate management by plan fiduciaries. In publishing the Bulletin, the DOL withdrew Interpretive Bulletin 2008-2 and generally reinstated the language of Interpretive Bulletin 94-2, with certain clarifications. The DOL was concerned that Interpretive Bulletin 2008-2 had been misunderstood in a manner that dissuaded plan fiduciaries from voting proxies and otherwise prudently exercising shareholders’ rights, particularly with respect to areas concerning environmental, social, and governance issues and active engagement with corporate management. View the Bulletin here. View a news release related to the Bulletin here.
The DOL has issued the first of several FAQs addressing the DOL’s new fiduciary rule, which was finalized in April 2016 (the “Rule”). The Rule, which will generally become effective on April 10, 2017, prohibits parties that provide fiduciary investment advice to plan sponsors, plan participants, and IRA owners from receiving payments that create conflicts of interest, unless the parties comply with a prohibited transaction exemption (“PTE”). The FAQs generally address how the Rule will be implemented and clarify a number of issues related to the new “best interest contract” and “principal transactions” PTEs. View the FAQs. View the DOL’s announcement of the FAQs.
The DOL issued a press release announcing its recent settlement with fiduciaries of a group health plan (the “Plan”) sponsored by Sierra Pacific Industries, a major western lumber producer. The press release followed the conclusion of a DOL investigation that determined the Plan did not comply with the Affordable Care Act (“ACA”) and ERISA in certain respects. In particular, the DOL found problems with the Plan’s claims processing, with the clarity of the Plan’s documents, and with the application of the Plan’s procedures for deciding claims. In addition, the DOL found the Plan had been administered erroneously under ACA “grandfathered status” since January 1, 2013. As a result of this investigation, the Plan’s fiduciaries agreed to (i) revise the Plan’s documents and internal procedures; (ii) re-adjudicate past claims for preventive services, out-of-network emergency services, claims affected by an annual limit, and pay claims in compliance with the ACA and ERISA;… Continue Reading
The IRS announced tax relief for victims of severe storms and flooding in the Texas-Houston area. This relief generally extends from April 17, 2016 through September 1, 2016, and covers taxpayers who reside or have a business in Fayette, Grimes, Harris, or Parker Counties. The relief also includes the filing of Forms 5500 with the IRS. The DOL has mirrored the IRS’s Form 5500 filing relief. In addition, PBGC is waiving certain penalties and extending certain deadlines. PBGC’s announcement provides relief relating to PBGC deadlines to persons responsible for meeting a PBGC deadline who are located in the disaster area for which the IRS has provided relief. If the IRS adds additional areas in connection with those filing extensions, any person responsible for meeting a PBGC deadline that is located in those additional areas will also be entitled to that relief. The IRS announcement is available here. The DOL announcement is… Continue Reading