The Labor Department’s new potential “retirement security rule” carries significant changes to existing guidelines known as prohibited transaction exemptions for fiduciary investment advice.
While the main part of the rulemaking package would alter the definition of “fiduciary” under the Employee Retirement Income Security Act, three other potential amendments included in the proposal would enforce new requirements for disclosures and apply “best interest” standards to more types of transactions. The exemptions enable advisors to retirement plans to provide investment advice to participants, so long as they comply with “impartial conduct standards” that require the services to be in the investors’ best interests without any materially misleading statements but allow for the payment of a reasonable amount of compensation.
The proposed amendments to the guidelines begin with substantial changes to the department’s last update to prohibited transaction exemptions under President Donald Trump’s administration in December 2020. That prior rule came in response to a 2018 appeals court decision that vacated the “fiduciary rule” issued by President Barack Obama’s administration in 2016. President Joe Biden’s team is seeking an overhaul of the exemptions as part of its rulemaking.
To read 31 important sections of the potential amendments to the Labor Department’s guidelines for prohibited transaction exemptions under the retirement security rule proposal, scroll down the slideshow. And find other coverage of the possible new regulation here: