June 8, 2017

Fiduciary Rule Applicable on June 9

On June 9, 2017, the much-debated Department of Labor (DOL) rule changing the definition of a fiduciary for investment purposes under the Employment Retirement Income Security Act (ERISA) will begin to apply. Only two parts will apply immediately: (1) the revised definition of an investment fiduciary; and (2) the “best interest” standard requirement for IRA advisers, including those providing rollover advice to plan participants. The remainder of the rule, and related prohibited transaction exemptions, will not apply until at least January 1, 2018.

In the interim, the DOL will be reexamining the regulation, and the related exemptions, to determine if they are consistent with the policies of President Donald Trump. On June 6, 2017, the DOL took the first step toward this reexamination by sending a request for information related to the fiduciary regulation and its economic impact to the Office of Management and Budget for clearance before release. 

Much of the controversy over the fiduciary regulation relates to the nature of the advice given by a broker to a plan participant with regard to the possible rollover of the participant’s plan benefit to an individual retirement account (IRA). On June 1, 2017, Security and Exchange Commission (SEC) Chairman Jay Clayton, who sees the DOL rule as addressing an issue within the SEC’s jurisdiction, released a series of questions for public comment from financial advisers and brokers. The questions relate to the SEC’s review of the proper standards (“suitability” vs. “best interest”) for all brokers and the impact of having a different rule for brokers dealing with IRA investing, including rollovers to IRAs.

See the DOL website at for links to all the relevant documents. For discussions of the final rule and delays, see Segal’s April 7, 2016 hot topic and March 2, 2017 hot topic.

On June 9, 2017, the much-debated Department of Labor (DOL) rule changing the definition of a fiduciary for investment purposes under the Employment Retirement Income Security Act (ERISA) will begin to apply. Only two parts will apply immediately: (1) the revised definition of an investment fiduciary; and (2) the “best interest” standard requirement for IRA advisers, including those providing rollover advice to plan participants. The remainder of the rule, and related prohibited transaction exemptions, will not apply until at least January 1, 2018.

In the interim, the DOL will be reexamining the regulation, and the related exemptions, to determine if they are consistent with the policies of President Donald Trump. On June 6, 2017, the DOL took the first step toward this reexamination by sending a request for information related to the fiduciary regulation and its economic impact to the Office of Management and Budget for clearance before release. 

Much of the controversy over the fiduciary regulation relates to the nature of the advice given by a broker to a plan participant with regard to the possible rollover of the participant’s plan benefit to an individual retirement account (IRA). On June 1, 2017, Security and Exchange Commission (SEC) Chairman Jay Clayton, who sees the DOL rule as addressing an issue within the SEC’s jurisdiction, released a series of questions for public comment from financial advisers and brokers. The questions relate to the SEC’s review of the proper standards (“suitability” vs. “best interest”) for all brokers and the impact of having a different rule for brokers dealing with IRA investing, including rollovers to IRAs.

Although public sector retirement plans are not subject to ERISA’s fiduciary rules, their members may receive investment advice from individuals who, under the rule, are ERISA fiduciaries when members roll over money out of the public plan.

See the DOL website at for links to all the relevant documents. For discussions of the final rule and delays, see Segal’s April 7, 2016 hot topic and March 2, 2017 hot topic.

Contact an Expert

Melanie Walker

Melanie Walker

VP, National Compliance Practice

Serena Simons

Serena Simons

SVP, National Retirement Compliance Practice Leader