In June, the Department of Labor (DOL) proposed a new exemption for investment advice fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (the Code). CUNA expressed support for the Department’s goal of protecting workers and retirees and provided several recommendations for the Department to consider prior to finalizing the proposed exemption.

The proposed exemption is the DOL’s response to the vacating of the 2016 Fiduciary Rule by the Fifth Circuit Court of Appeals. CUNA had expressed significant concerns with the 2016 Fiduciary Rule as it sought to considerably expand the class of communications considered to be fiduciary advice and potentially subjected additional credit union employees to a heightened standard of care. We appreciate the DOL has changed course.

The proposed exemption offers a new prohibited transaction class exemption for “investment advice fiduciaries,” as determined by the Five-Part Test, and is based on a temporary policy adopted after the Fifth Circuit vacated the Department’s 2016 fiduciary rule package. The proposal would allow investment advice fiduciaries to give consumers more choices for retirement using Impartial Conduct Standards. Impartial Conduct Standards are a best interest standard; a reasonable compensation standard; and a requirement to make no materially misleading statements.