Subject: DOL Fiduciary Rule

The Best Interest Process for Plan-to-IRA Rollover

The effective date of the DOL’s new definition of fiduciary advice and the amendments to PTE 2020-02 have been stayed pending the outcome of the lawsuits challenging the rule and the amended PTE. However, there will still be instances when advisers will be considered fiduciaries under the current DOL fiduciary rule when recommending rollovers and as such, may need to comply with the current version of the PTE and undertake the best interest process described in this article. This article also describes the similarities in the best interest process required by the SEC for rollover recommendations.

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Rollover Recommendations: PTE 2020-02 Compliance Considerations Following the DOL Fiduciary Rule Stay

The effective date of the DOL’s new expansive fiduciary rule and the amendments to Prohibited Transaction Exemption (PTE) 2020-02 has been stayed pending the outcome of the lawsuits challenging the rule and the amended PTE.

However, broker-dealers and their registered representatives (advisors) may still be fiduciaries under the current DOL fiduciary rule when recommending rollovers and may need to comply with the current version of PTE 2020-02 to receive the management fee that results from the  rollover recommendation. This blog post describes circumstances when compliance with the PTE may be needed and the PTE conditions that apply now.

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New DOL Fiduciary Rule Stayed: What Advisors and Insurance Agents Recommending Rollovers Should Do Now

The stay of the new DOL fiduciary rule will remain in effect until the lawsuits challenging the rule are decided and appeals are resolved. This litigation process is likely to take several years. In the meantime, the fiduciary status of advisors and agents will be measured under the current regulation’s five-part test. However, in some cases the application of that test could result, as this article explains, in apparent one-time recommendations being deemed to satisfy the five-part test. As a result, advisors, agents and their firms should carefully consider where fiduciary status for retirement accounts may apply and, in those cases, should consider complying with the conditions of an applicable prohibited transaction exemption.

To view the full alert, visit the Faegre Drinker website.

The Proposed DOL Fiduciary Rule: Significant Changes for Advisers

Benefits and executive compensation partner Fred Reish and counsel Joan Neri coauthored an article for IAA Today on the proposed fiduciary rule issued by the Department of Labor (DOL).

The authors highlight key provisions of the proposal and the amendments to prohibited transaction exemption (PTE) 2020-02 that will potentially impact investment advisers. They also note that the next step is for the DOL to receive comments on the proposed changes and develop a final regulation, and they reasonably expect final rules in mid-year 2024.

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