The Department of Labor ("DOL") issued a final rule delaying the applicability date of the DOL's rule defining who is a fiduciary under ERISA and Section 4975 of the Internal Revenue Code in connection with the provision of investment advice and certain related prohibited transaction exemptions (including the Best Interest Contract Exemption and the Principal Transaction Exemption) by 60 days (see previous coverage). The extension will be published in the Federal Register on April 7, 2017.
As a result, the fiduciary rule, the Best Interest Contract Exemption and Principal Transaction Exemption and certain amendments to other previously granted prohibited transaction class exemptions (e.g., PTE 75-1 and PTE 77-4) will become applicable on June 9, 2017. As conditions of the Best Interest Contract Exemption and the Principal Transaction Exemption, the DOL's extension requires, among other things, that fiduciaries relying on these exemptions for covered transactions adhere only to the Impartial Conduct Standards (including the "best interest" standard), during the transition period from June 9, 2017, through January 1, 2018. Compliance with the other exemption conditions will apply on January 1, 2018, unless revised or withdrawn by the DOL.
The DOL noted that the extensions are necessary to enable the Department to perform the examination of the fiduciary rule directed by the President by a Presidential Memorandum dated February 3, 2017 (see previous coverage) and to consider possible changes with respect to the fiduciary rule and related Prohibited Transaction Exemptions based on new evidence or analysis developed pursuant to the examination.
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