While the Department of Labor is "rapidly" moving to finalize before year-end — and perhaps before the election — its fiduciary prohibited transaction exemption to align with the Securities and Exchange Commission's Regulation Best Interest, a Biden administration will likely seek to overturn both rules, according to Morningstar analysts.
Jasmine Sethi, associate director of policy research, noted Wednesday at Morningstar's annual conference, held online, that Labor's rule "has been criticized from all sides."
The problem, according to Sethi, is that "the proposal is vague…particularly with rollovers." The plan "brought back the five part test but reinterpreted it to cover rollovers. It does not include all rollovers, just those that meet the five-part test. The tricky prong is the regular basis prong."