DOL Releases Final Regulations to Expand ERISA ‘Fiduciary’ Definition

May 4, 2016 by rfg

The final regulations require investment advisers for ERISA-governed retirement plans and individual retirement accounts (IRA) to act in the best interest of their clients as “fiduciaries” within the meaning of ERISA and the Code, and provides carve-outs to these rules in certain situations. While the regulations hold many implications for advisers and their firms, this summary focuses on the relevant provisions for plan sponsors.

Under the final regulations, only when an adviser makes recommendations to plans, plan fiduciaries, plan participants or beneficiaries, and IRA owners are they considered a fiduciary rendering investment advice.

The DOL has identified multiple exclusions from the fiduciary definition which are of great interest to plan sponsors, including:
Employees of plan sponsors, affiliates, employee benefit plans, employee organizations, or plan fiduciaries, as long as they receive only their normal compensation for the work performed for their employers;
Health and welfare plans are not subject to the rules, to the extent that these plans lack an investment component;
Education about retirement savings and general investment information;
General communications that would not reasonably be viewed as investment recommendations;
General platforms of investment alternatives that service providers offer to participants, as long as the provider represents in writing to the plan fiduciary that it is not providing impartial investment advice or giving advice in a fiduciary capacity; and
Asset valuations. 

The DOL has identified multiple exclusions from the fiduciary definition which are of great interest to plan sponsors, including:

  • Employees of plan sponsors, affiliates, employee benefit plans, employee organizations, or plan fiduciaries, as long as they receive only their normal compensation for the work performed for their employers;
  • Health and welfare plans are not subject to the rules, to the extent that these plans lack an investment component;
  • Education about retirement savings and general investment information;General communications that would not reasonably be viewed as investment recommendations;
  • General platforms of investment alternatives that service providers offer to participants, as long as the provider represents in writing to the plan fiduciary that it is not providing impartial investment advice or giving advice in a fiduciary capacity; and
  • Asset valuations. 

 

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