DOL Proposes 60-Day Delay of Fiduciary Rule Applicability Date
On March 2nd, the Department of Labor formally published a proposed rule to delay the applicability date of the fiduciary rule for 60 days. NAFA and many stake holders have been eagerly awaiting this action to temporarily halt this onerous rule.
The proposal would delay the applicability date of the rule and prohibited transaction exemptions from April 10, 2017 to June 9, 2017. The public has been provided a 15-day comment period with a March 17, 2017 due date. In response to this comment period, NAFA recently filed a comment letter asking for a 180-day delay instead of 60 days given the lack of economic analysis of the impact of the rule on the fixed annuity market and the fact that the IMO PTE is not final and has many flaws. Once the final delay rule is published it will be effective immediately, so while the timing is tight, we believe ultimately a delay of some duration will be effective prior to the April 10th applicability date that is on everyone’s mind. Presumably, a delay will be published by the last week in March.
Additionally, the DOL announced a 45-day comment period to gather information about current marketplace impacts caused by the rule and to obtain answers to questions raised in the President’s February 3rd Memorandum. In particular, the President and the DOL are trying to determine whether the final fiduciary rule will adversely affect the ability of Americans to access retirement products and information, cause dislocations in the financial services marketplace, and cause increased litigation that will drive up the prices of retirement products and services. Unquestionably, NAFA believes that all of these negative impacts will occur if the rule is not rescinded. Accordingly, NAFA plans to file a second comment letter to voice our concerns and provide information to help the DOL conduct a proper economic analysis.
While the new Administration conducts its review of the fiduciary rule, many stakeholders are considering legislative options. We anticipate various legislative packages to be introduced in the near future. Any legislative reforms will likely take time to work through Congress, especially with the balance of power in the Senate.
NAFA will continue to monitor all developments regarding the fiduciary rule and work to achieve a positive outcome.
In addition to the fiduciary rule, NAFA will be monitoring tax reform. While the dates for reform action have slipped given Congress’ attention to ACA reform, we still anticipate introduction of a tax package this summer. We will work with the tax writing committees and industry partners to ensure that fixed annuities are not adversely impacted and to encourage inclusion of pro retirement savings and pro annuity language.