Benefits Counselor April 2017

General Plan Developments

EBSA Issues Temporary Enforcement Policy Regarding Fiduciary Rule

On March 10, 2017, the Department of Labor's ("DOL") Employee Benefits Security Administration ("EBSA") issued a temporary enforcement policy regarding the 60-day extension of the applicability date of the fiduciary rule and related prohibited transaction exemptions ("PTEs") from April 10 to June 9, 2017. In response to concerns from the financial services industry, EBSA issued Field Assistance Bulletin 2017-01 containing the following temporary enforcement policy:

In the event the DOL issues a final rule after April 10 implementing a delay in the applicability date of the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the fiduciary rule or the PTEs during the "gap" period in which the rule becomes applicable before a delay is implemented, including a failure to provide retirement investors with disclosures or other documents intended to comply with provisions of the fiduciary rule or the related PTEs. In the event the DOL decides not to issue a delay in the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution, as of the April 10 applicability date, failed to satisfy conditions of the fiduciary rule or the PTEs; provided that the adviser or financial institution satisfies the applicable conditions of the fiduciary rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a "reasonable period" after the publication of a decision not to delay the April 10 applicability date. EBSA did not define what may constitute a "reasonable period" of time.

IRS Announces Non-Applicability of Prohibited Transaction Excise Taxes to Conform with DOL Temporary Enforcement Policy on Fiduciary Rule

Following the issuance of the temporary enforcement policy (Field Assistance Bulletin 2017-01) described above, stakeholders raised concerns about the potential application of excise taxes under the Internal Revenue Code ("Code") section 4975 and related reporting obligations in cases covered by the temporary enforcement policy.

In response to the concerns, on March 28, the Internal Revenue Service ("IRS") published Announcement 2017-4 providing that the IRS will not apply Code section 4975 and related reporting obligations with respect to...