EBIA Weekly Newsletter

Congress Passes Joint Resolution to Nullify New DOL Fiduciary Rule; Veto Expected

   June 2, 2016

Joint Resolution of Congress, H.J.Res. 88 (May 24, 2016); Statement of Administration Policy, H.J.Res. 88 – Disapproval of Department of Labor Rule on Fiduciary Responsibility of Financial Advisers (Apr. 27, 2016)

Resolution

Statement

The U.S. House of Representatives and the U.S. Senate have passed a joint resolution that would nullify the DOL’s final fiduciary rule on conflicts of interest in investment advice. (The final rule, which was published in the Federal Register on April 8, 2016 (see our Checkpoint article), expands who is an ERISA fiduciary when providing investment advice for a fee to a retirement or other employee benefit plan or its participants. The rule also applies to individual retirement accounts (IRAs) and health savings accounts (HSAs) through application of the Code’s prohibited transaction rules.) The joint resolution provides that the rule “shall have no force or effect” and now awaits the President’s action. In a Statement of Administration Policy issued on April 27, 2016, the Obama administration strongly opposed the resolution, stating that the President would veto it if passed and describing the new fiduciary rule as “critical” to protecting plan participants’ savings and retirement security.

EBIA Comment: Neither the resolution nor the expected veto is surprising, in light of the hundreds of written and oral comments received during the DOL’s more-than-five-year rulemaking process. Strong advocates spoke out both for and against the new rule, and their positions often reflected the highly polarized state of our national politics. The rule is effective June 7, 2016, and becomes applicable on April 10, 2017. Stay tuned as the implementation phase of this rule proceeds. For more information, see EBIA’s 401(k) Plans manual at Section XXIV.D (“Investment Advice Fiduciaries”) and EBIA’s Consumer Driven Health Care manual at Section XVI.D.2 (“Who Is a ‘Fiduciary’ With Respect to an HSA?”).

Contributing Editors: EBIA Staff.