On February 3, 2017, President Donald J. Trump issued a Presidential Memorandum ordering the US Department of Labor (DOL) to conduct a full review of its final fiduciary rule and related guidance, anticipated to go into effect as of April 10, 2017 (the “Final Rule”). Although the Presidential Memorandum does not expressly delay the Final Rule’s April 10, 2017 implementation date, Acting U.S. Secretary of Labor Ed Hugler has issued a statement that “[t]he Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.” It is unlikely that a comprehensive review would be completed by April 10, 2017, which means there is a possibility the Final Rule could be delayed or suspended. Should the DOL make an adverse finding, or conclude that the Final Rule is inconsistent with the priorities of the Trump Administration set forth in the Presidential Memorandum, the DOL is directed to take steps to rescind or revise the Final Rule, as appropriate.

The Final Rule (originally published April 8, 2016) amended and expanded the definition of a fiduciary that provides “investment advice.” In particular, the Final Rule focused on conflicts of interest arising from various fee arrangements offered by providers of investment advice, and also included new prohibited transaction exemptions (along with certain amendments to existing exemptions). If implemented, the Final Rule was widely anticipated to sweep in a large number of investment advisers who were not previously treated as fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA), and also have an impact on retirement plan sponsors and individual investors.

Next Steps

We are aware that some investment advisers and advisory firms have already taken steps to comply with the Final Rule ahead of its April 10, 2017 anticipated implementation date. Until further findings or guidance is issued from the DOL expressly delaying or suspending the Final Rule, investment advisers with whom plan sponsors and IRA owners work may want to continue with those preparations. Also, although a delay of the Final Rule appears likely, plan sponsors and IRA owners may want to continue the process of determining whether any of their investment advisers who are not currently designated as fiduciaries to the plan or IRA will become fiduciaries under the Final Rule, and ensuring that those advisors comply with the Final Rule, assuming that the Final Rule is not ultimately suspended or rescinded. In the meantime, plan sponsors and IRA owners should closely monitor the DOL for any announcements formally delaying the Final Rule prior to April 10, 2017.

If you have any questions about the Final Rule, or if you require any assistance on determining whether the Final Rule may impact your plan or IRA, please contact an attorney in the Sherman & Howard Employee Benefits Group.

Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation and does not create an attorney-client relationship between any reader and the Firm.

©2017 Sherman & Howard L.L.C.                                                                                   February 9, 2017