Presidential Veto of Joint Resolution of Congress, H.J.Res. 88 (June 8, 2016); Action by Congress on H.J.Res. 88 (June 22, 2016)
As promised, the President has vetoed a Congressional joint resolution that would have nullified the DOL’s final fiduciary rule on conflicts of interest in investment advice (see our Checkpoint article). An attempt to override that veto was unsuccessful, failing to garner the required number of votes in the U.S. House of Representatives. The DOL rule expands who is an ERISA fiduciary when providing investment advice for a fee to a retirement or other employee benefit plan or its participants; it also applies to individual retirement accounts (IRAs) and health savings accounts (HSAs), which are subject to the Code’s prohibited transaction rules (see our Checkpoint article). The rule took effect June 7, 2016, and generally becomes applicable on April 10, 2017.
EBIA Comment: It appears that the fate of the DOL’s rule is now settled, allowing implementation to begin. For many, implementation will require not only familiarity with the new fiduciary definition, but a search for relief among the various prohibited transaction exemptions—including the new Best Interest Contract Exemption—that might permit some existing practices to continue, if the applicable conditions are met. 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.