DOL Extends Investment Advice Effective Date, Then Withdraws Rule

A few days after saying it would extend the applicability and effective dates of the final rule on investment advice under the Pension Protection Act (PPA) to May 17, 2010, the Department of Labor's Employee Benefits Security Administration (EBSA) announced November 19 that it is withdrawing the final rule on the provision of investment advice under the Employee Retirement Income Security Act's prohibited transaction provisions.

The DOL's notice "withdraws the January 21, 2009, final rule that implemented a statutory prohibited transaction exemption under the PPA, and provided an additional administrative class exemption." DOL says it "decided to withdraw the rule based on public comments that raised sufficient doubts as to whether the conditions of the final rule and the class exemption associated with the rule could adequately protect the interests of plan participants and beneficiaries."

Now, the extended applicability and effective dates of the final rule until May 17, 2010, expires upon the effective date of this withdrawal, which won't be published in the Federal Register until November 20. As Fred Reish of Reish & Reicher in Los Angeles, which specializes in employee benefits law, notes, "The withdrawal will likely be effective when published on November 20." On November 20, Reish continues, "the old reg will 'die' and the extension will die also. There will then be no reg at all and, since there is no reg, there will not be any effective date. Then somewhere in the next 30 to 45 days, the Office of Management and Budget (OMB) will approve the new proposed reg that the DOL sent to them about four weeks ago, and the DOL will publish that proposed reg for comments." DOL says it "intends to publish separately a proposed rule that conforms to the PPA statutory exemption relating to investment advice."