[Official Guidance]

Text of DOL Final Rule: 'Fiduciary' Definition; Conflict of Interest Rule for Retirement Investment Advice
208 pages. "This document contains a final regulation defining who is a 'fiduciary' of an employee benefit plan under [ERISA] as a result of giving investment advice to a plan or its participants or beneficiaries. The final rule also applies to the definition of a 'fiduciary' of a plan (including an [IRA]) under the Internal Revenue Code ... The final rule treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan or IRA as fiduciaries in a wider array of advice relationships....

"[The DOL] has determined that, in light of the importance of the final rule's consumer protections and the significance of the continuing monetary harm to retirement investors without the rule's changes, an applicability date of April 10, 2017, is adequate time for plans and their affected financial services and other service providers to adjust to the basic change from non-fiduciary to fiduciary status. The Department has also decided to delay the application of certain requirements of certain of the exemptions being finalized with this rule....

"The Department has also sought to preserve beneficial business models for delivery of investment advice by separately publishing new exemptions from ERISA's prohibited transaction rules that would broadly permit firms to continue to receive many common types of fees, as long as they are willing to adhere to applicable standards aimed at ensuring that their advice is impartial and in the best interest of their customers. Rather than create a highly prescriptive set of transaction-specific exemptions, the Department instead is publishing exemptions that flexibly accommodate a wide range of current types of compensation practices, while minimizing the harmful impact of conflicts of interest on the quality of advice.... This broad regulatory package aims to require advisers and their firms to give advice that is in the best interest of their customers, without prohibiting common compensation arrangements by allowing such arrangements under conditions designed to ensure the adviser is acting in accordance with fiduciary norms and basic standards of fair dealing." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Class Exemption: The Best Interest Contract Exemption
317 pages. "Pursuant to its exemption authority, the Department has previously granted several conditional administrative class exemptions that are available to fiduciary advisers in defined circumstances. As a general proposition, these exemptions focused on specific advice arrangements and provided relief for narrow categories of compensation. In contrast to these earlier exemptions, this new Best Interest Contract Exemption is specifically designed to address the conflicts of interest associated with the wide variety of payments Advisers receive in connection with retail transactions involving plans and IRAs." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Class Exemption for Principal Transactions Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs
192 pages. "The provisions at issue generally prohibit fiduciaries with respect to employee benefit plans and [IRAs] from purchasing and selling investments when the fiduciaries are acting on behalf of their own accounts (principal transactions). The exemption permits principal transactions and riskless principal transactions in certain investments between a plan, plan participant or beneficiary account, or an IRA, and a fiduciary that provides investment advice to the plan or IRA, under conditions to safeguard the interests of these investors." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Amendment to PTE 84-24: Transactions Involving Insurance Agents and Brokers, Pension Consultants, Insurance Companies, and Investment Company Principal Underwriters
"The ERISA and Code provisions at issue generally prohibit fiduciaries with respect to employee benefit plans and [IRAs] from engaging in self-dealing in connection with transactions involving these plans and IRAs. Non-fiduciary service providers also may not enter into certain transactions with plans and IRAs without an exemption. The amended exemption allows fiduciaries and other service providers to receive compensation when plans and IRAs purchase insurance contracts, 'Fixed Rate Annuity Contracts,' as defined in the exemption, securities of investment companies registered under the Investment Company Act of 1940, as well as certain related transactions. The amendments increase the safeguards of the exemption. This document also contains the revocation of the exemption as it applies to plan and IRA purchases of annuity contracts that do not satisfy the definition of a Fixed Rate Annuity Contract, and the revocation of the exemption as it applies to IRA purchases of investment company securities." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Amendment and Partial Revocation of PTE 86-128: Transactions Involving Broker-Dealers; DOL Amendment and Partial Revocation of PTE 75-1: Transactions Involving Broker-Dealers, Reporting Dealers and Banks
105 pages. "The ERISA and Code provisions at issue generally prohibit fiduciaries with respect to employee benefit plans and [IRAs] from engaging in self-dealing in connection with transactions involving plans and IRAs. PTE 86-128 allows fiduciaries to receive compensation in connection with certain securities transactions entered into by plans and IRAs. The amendments increase the safeguards of the exemption. This document also contains a revocation of [certain parts of PTE 86-128 and PTE 75-1], in light of existing or newly finalized relief, including the relief provided in the 'Best Interest Contract Exemption[.]' " (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Amendment to PTE 75-1: Prohibitions Respecting Certain Transactions Involving Certain Broker-Dealers, Reporting Dealers and Banks
30 pages. "The provisions at issue generally prohibit fiduciaries of employee benefit plans and [IRAs] from lending money or otherwise extending credit to the plans and IRAs and receiving compensation in return. PTE 75-1, Part V, permits the extension of credit to a plan or IRA by a broker-dealer in connection with the purchase or sale of securities; however, it originally did not permit the receipt of compensation for an extension of credit by broker-dealers that are fiduciaries with respect to the assets involved in the transaction. This amendment permits investment advice fiduciaries to receive compensation when they extend credit to plans and IRAs to avoid a failed securities transaction." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Amendments to PTEs 75-1, 77-4, 80-83 and 83-1
54 pages. "These exemptions generally permit fiduciaries to receive compensation or other benefits as a result of the use of their fiduciary authority, control or responsibility in connection with investment transactions involving plans or IRAs. The amendments require the fiduciaries to satisfy uniform Impartial Conduct Standards in order to obtain the relief available under each exemption.... Generally stated, the Impartial Conduct Standards require fiduciaries to: act in the 'best interest' of plans and IRAs; charge no more than reasonable compensation; and make no misleading statements to the plan or IRA, when engaging in the transactions that are the subject of these exemptions." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Guidance Overview]

DOL Chart Showing Changes to the 2015 Proposed Fiduciary Rule (PDF)
8 pages. "The [DOL] carefully evaluated the full range of public comments as well as the extensive record developed on the conflict of interest proposal. Many changes were made to clarify, streamline, and simplify the proposed rule and proposed exemptions while still adhering to the 'North Star' of an enforceable best interest standard for people receiving advice about their retirement savings ... [This] chart shows some of the most frequently raised issues and how the Department addressed them[.]" (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Guidance Overview]

The DOL's Fact Sheet on the Final Fiduciary Rule
"Covered investment advice is defined as a recommendation to a plan, plan fiduciary, plan participant and beneficiary and IRA owner for a fee or other compensation, direct or indirect, as to the advisability of buying, holding, selling or exchanging securities or other investment property, including recommendations as to the investment of securities or other property after the securities or other property are rolled over or distributed from a plan or IRA....

"[T]he fundamental threshold element in establishing the existence of fiduciary investment advice is whether a 'recommendation' occurred. A 'recommendation' is a communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action.... if the communications do not meet [this] definition of 'recommendations' ... the communications will be considered non-fiduciary....

"Education as defined in the rule will not constitute advice regardless of who provides the educational information (e.g. the plan sponsor or service provider), the frequency with which the information is shared, or the form in which the information and materials are provided[.] ...

"The Best Interest Contract Exemption permits firms to continue to rely on many current compensation and fee practices, as long as they meet specific conditions intended to ensure that financial institutions mitigate conflicts of interest and that they, and their individual advisers, provide investment advice that is in the best interests of their customers.... In addition to the Best Interest Contract Exemption, the Department is issuing a Principal Transactions Exemption, which permits investment advice fiduciaries to sell or purchase certain recommended debt securities and other investments out of their own inventories to or from plans and IRAs....

"Compliance with the new requirements will not begin to be required until one year after the final rule is published in the Federal Register -- in other words, April 2017."

(Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Guidance Overview]

The White House's Fact Sheet on the Final Fiduciary Rule
"[The final fiduciary rule] has: [1] Further clarified what constitutes fiduciary advice.... [2] Made best interest contract (BIC) exemption available for more advice.... Advisers recommending any asset -- not just those on an asset list included in the proposal -- can take advantage of the BIC exemption ... BIC exemption will be available for advice to small businesses that sponsor 401(k) plans, as well as for advice to IRA customers and plan participants.... BIC exemption includes special provisions clarifying how it can be used for recommendation of proprietary products ... [3] Streamlined and simplified requirements of BIC exemption.... Eliminates the contract requirement for ERISA plans and their participants and beneficiaries.... For advice to IRA holders, provides firms flexibility on when to enter into the contract.... Minimizes number of contractual parties.... Significantly streamlines and simplifies the required disclosures.... Eliminates data retention requirements.... BIC exemption contains a streamlined 'level fee' provision, ... [4] Grandfathered existing investments.... [5] Extended implementation time period." (The White House Blog)