The Labor Department plans to issue a proposed rulemaking to update the definition of "fiduciary," according to its just-released regulatory flexibility agenda filed with the Office of Management and Budget's Office of Information and Regulatory Affairs.
According to Labor, its planned rulemaking would amend the regulatory definition of the term fiduciary "to more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries within the meaning of section 3(21) of ERISA and section 4975(e)(3) of the Internal Revenue Code."
The amendment, Labor said, "would take into account practices of investment advisors, and the expectations of plan officials and participants, and IRA owners who receive investment advice, as well as developments in the investment marketplace, including in the ways advisors are compensated that can subject advisors to harmful conflicts of interest."
In conjunction with the rulemaking, EBSA also will evaluate "available prohibited transaction class exemptions and consider proposing amendments or new exemptions to ensure consistent protection of employee benefit plan and IRA investors."
Labor is "working on redefining 'fiduciary,'" said ERISA attorney Fred Reish, partner at Faegre Drinker. The anticipated rule is slated as "significant" and may be finished by December, he says.
