The department on Sept. 8 submitted its proposal for review to the Office of Information and Regulatory Affairs within the White House's Office of Management and Budget.
Gomez on Oct. 16 declined to provide further information about what the proposal might entail or when it would be published, but in its latest regulatory agenda, the department said the rule would take into account "practices of investment advisers, and the expectations of plan officials and participants, and IRA owners who receive investment advice, as well as developments in the investment marketplace, including in the ways advisers are compensated that can subject advisers to harmful conflicts of interest."
Also, it will "evaluate available prohibited transaction class exemptions and propose amendments or new exemptions to ensure consistent protection of employee benefit plan and IRA investors," the department said in its agenda.
The review process for the department's proposal can take up to 90 days but is unlikely to take that long.
"It is a very high priority for the White House and for the department, and so you can expect to see something very soon," Gomez said.
When asked why this issue is a priority for the administration, Gomez said the Employee Benefits Security Administration's mission is to protect workers' retirement benefits and targeting "conflicts with respect to investment advice" is crucial.
Under the Obama administration in 2016, the department finalized a regulation known as the fiduciary rule that broadened the definition of a person or entity taking on fiduciary responsibilities and replaced a five-part test used to determine whether an investment professional or financial institution serves as a fiduciary.
But in 2018, a three-judge panel at the Fifth U.S. Circuit Court of Appeals in New Orleans vacated the rule in a 2-1 decision, saying the department exceeded its legal authority.
Gomez said in crafting the latest proposal the department is "taking into consideration" what's happened in the courts and in the regulatory space in recent years.
Of note, the Securities and Exchange Commission's Regulation Best Interest took effect in 2020. The SEC's rule package was designed to address the obligations of broker-dealers and investment advisers when they provide recommendations or investment advice to retail investors, including rollover recommendations. Reg BI's centerpiece best-interest standard aims to compel brokers to put clients' financial interests ahead of their own and requires them to mitigate financial conflicts.
Gomez on Oct. 16 declined to say how the department's proposal would align with Reg BI. In written responses to the House Education and the Workforce Committee that were posted Oct. 10, Acting Labor Secretary Julie Su said the department is coordinating with the Treasury Department and IRS and separately working with the SEC to ensure that any new fiduciary rule appropriately reflects the changes that the financial services industry has made to comply with Reg BI.
But whenever the proposal comes out it's likely to face heavy pushback from the financial industry.
"I think there's been a lot of talk before the rule has even come out, there's a lot of people that are publicly saying they hate the rule," Gomez said. "I promise you that no one outside of the government has seen this rule."
She added the proposal is "not just throwing out a new name, but it's part of what we're trying to signal to people: that this is a new approach. So stay tuned. We'll see what folks think of it when it comes out."