The new DOL conflict of interest rule (DOL fiduciary rule) continues to command headlines with the recent one in the Wall Street Journal “Obama Retirement-Savings Rule Faces Industry-Led Court Battle – U.S. Chamber of Commerce, others planning challenge to retirement-advice rules as early as Wednesday”. So we asked expert ERISA legal counsel David Levine at the Groom Law Group what the rule really means to employers sponsoring a defined contribution (DC) and, most importantly, what if anything they should do now.
David’s first and most prescient advice is “Breathe”. The interpretation of DOL fiduciary rule is evolving and the industry is trying to figure out what to do. Nothing needs to be done now according to Levine but within the next few months, plan sponsors should be huddling with their advisor, service providers and attorneys to figure out what changes, if any, need to be made with the April 10, 2017 deadline looming.
Levine notes that the DOL fiduciary rule will impact DC plan sponsors in two big ways:
- Their relationship with service providers including their advisor, record keeper or anyone providing education or advice.
- Selection of these providers especially how they perform their duties which could change as a result of the rule.
So will all DC plan advisors have to act as a fiduciary as a result of the rule? Though Levine answered no, the reality is that the rule makes it harder for anyone providing advice and education not to be considered an ERISA co-fiduciary.
The 2012 DOL fee disclosure rules (408b2) made it easier for plan sponsors to know if their advisor was acting as a co-fiduciary but Levine counseled plan sponsors to look at the contract because what’s in writing is what really matters.
So should all DC plans hire a lawyer? The answer may depend on the size of the plan and the company but whether they hire a lawyer or not, it’s time to huddle with all major DC service providers working on the plan to get an assessment, in writing, of what will change as a result of the rule. That discussion may take a while as these vendors are still trying to figure it out and, of course, pending the lawsuit which will try to block the rule entirely.
