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.