The Department of Labor has denied a request to extend the comment period on its new rule proposal that would amend the definition of the term "fiduciary" and require rollover advice to be in the best interest of the saver.
Eighteen financial services and business trade groups sent a letter Nov. 8 to Lisa M. Gomez, assistant secretary for employee benefits security, asking for an extension of the proposal's 60-day comment period, which ends Jan. 2.
On Nov. 14, Gomez responded and said the Employee Benefits Security Administration believes its current proposal reflects significant input it has received from public engagement with this project since 2010 and "looks forward to another robust comment period, public hearing, vigorous public debate and stakeholder meetings."
EBSA since the beginning of the Biden administration has engaged informally with numerous stakeholders representing multiple viewpoints on issues related to the proposed rule-making package, Gomez said. "Therefore, at this point, EBSA does not intend to extend the comment period or delay the hearing," she added.
A public hearing on the proposal is scheduled for Dec. 12.
"This is an ill-considered move by EBSA that denies the public a meaningful opportunity to comment," an Investment Company Institute spokesperson said in a statement. "The department should rethink their response."
The Labor Department on Oct. 31 unveiled the Retirement Security Rule proposal and several prohibited transaction amendments that quickly received stiff pushback from industry groups.
"The proposed rule makes significant and unanticipated changes to the current regulatory framework that will require significantly more time for meaningful analysis and comment, and to understand how this proposal would impact access and choice for retirement savers," said the groups who signed the letter, which include the American Benefits Council, the American Council of Life Insurers, the Insured Retirement Institute, the ICI, the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce.
The department's proposal calls for changing its fiduciary definition by removing three prongs in the five-part test used to determine when a financial professional is considered an investment advice fiduciary under the Employee Retirement Income Security Act. The three prongs at issue require that the person providing the advice does so on a regular basis; the advice is pursuant to a mutual understanding; and that the advice will serve as a primary basis for decision-making.
Instead, the department proposes that a person should be an investment advice fiduciary under ERISA if they provide investment advice or make an investment recommendation to a retirement investor, such as to a plan participant or the plan itself; the advice or recommendation is provided "for a fee or other compensation, direct or indirect;" and if the recommendation is made in at least one of several contexts.
The changes would lead one-time advice, such as rollovers to individual retirement accounts or annuity purchases, to fall under the fiduciary definition if the other parts of the test are met.
Separately, late on Nov. 14, the Republican-led House passed three amendments via voice vote that would prevent the department from implementing its fiduciary proposal and accompanying guidance. The votes were part of the House's consideration of the Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, 2024.
The White House has said President Biden will veto the spending bill if it comes across his desk.
