The 2024 DOL Fiduciary Rule: A Timeline
Nearly six years after the U.S. Court of Appeals for the Fifth Circuit vacated the Labor Department’s 2016 fiduciary rule, the department has officially released a new version with a new name — the Retirement Security Rule: Definition of an Investment Advice Fiduciary — and new requirements.
On March 15, 2018, the U.S. Court of Appeals for the Fifth Circuit voted 2-1 to vacate the Obama-era rule. In June of that year, the court issued the mandate to vacate the rule — known as the Conflict of Intrest Rule – Retirement Investment Advice.
Labor changed the name to the Retirement Security Rule to signal a move forward from the 2016 rule, as “there have been so many changes” since that rule was issued, according to Lisa Gomez, assistant secretary of Labor for the Employee Benefits Security Administration, who spoke with ThinkAdvisor in October.
Over the past decade, “there have been several attempts to change the fiduciary definition,” ERISA attorney Fred Reish told ThinkAdvisor in an email, “with a particular emphasis by the DOL on requiring that rollover recommendations be treated as fiduciary advice,” as did the 2016 rule.
“One of the best things DOL did in its [2023] proposal was to build on and more closely align its ERISA requirements” with those of the Securities and Exchange Commission’s Regulation Best Interest, Phyllis Borzi, former head of EBSA and architect of the 2016 rule, said in a seperate email.
Under Reg BI, Borzi added, “I haven’t seen any objective evidence of a big impact on the availability of advice to low-income clients or those clients of color, which has been one of the industry’s main talking points on the Hill.”
As for the ramifications of the new rule, “with respect to those individuals and firms making recommendations subject to Reg BI, the additional costs to comply with a new DOL rule along the lines of its proposal are minimal,” Borzi said.
What’s Next
With the Office of Management and Budget’s review of Labor’s new rule completed on April 10, Labor’s final rule will be published in the Federal Register on April 25.
