Compliance June 30, 2017

DOL Issues RFI About Fiduciary Rule

The request for information asks whether provisions of the rule already in place should be delayed further.
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The Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) is publishing a request for information (RFI) in connection with its examination of the final fiduciary rule under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC).

The agency’s examination also includes the new and amended administrative class exemptions from the prohibited transaction provisions of ERISA and the IRC that were published in conjunction with the rule. The request for information specifically seeks public input that could form the basis of new exemptions or changes/revisions to the rule and prohibited transaction exemptions (PTEs), as well as input regarding the advisability of extending the January 1, 2018, applicability date of certain provisions in the best interest contract exemption (BICE), the class exemption for principal transactions in certain assets between investment advice fiduciaries and employee benefit plans and individual retirement accounts (IRAs), and PTE 84-24.

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The fiduciary rule and PTEs had an original applicability date of this April 10.  However, a February memorandum from President Donald Trump directed the agency to analyze the rule’s likely impact on the access to retirement information and financial advice. In response, EBSA delayed the applicability date of the final rule to June 9 and asked for additional input.

At the PLANSPONSOR National Conference (PSNC), earlier this month, Timothy Hauser, deputy assistant secretary for program operations of EBSA, noted that while the BICE and PTEs went into effect June 9, other provisions of the rule were delayed until January 2018 in order for the agency to complete its analysis. He indicated then that the agency would soon be releasing an RFI to further its analysis.

NEXT: What’s in the RFI?

In the RFI, EBSA noted that previous public input about the fiduciary rule and PTEs has suggested that it may be possible in some instances to build upon recent innovations in the financial services industry to create new and more streamlined exemptions and compliance mechanisms. For example, one recent innovation is the possible development of mutual fund “clean shares.” Commenters noted, however, that fund companies will need more time to develop clean shares than contemplated, to meet the current January 1, 2018, deadlines.

Commenters also described innovations in other parts of the retirement investment industry, such as insurance companies’ potential development of fee-based annuities in response to the fiduciary rule. Firms are also developing new technology and advisory and data services to help financial Institutions satisfy the supervisory requirements of the PTEs. “The department welcomes information on these developments and their relevance to the rule, the PTEs’ terms and compliance timelines,” EBSA said in its RFI.

EBSA said it is particularly interested in public input about whether it would be appropriate to adopt an additional, more streamlined exemption or other rule change for advisers committed to taking new approaches such as the ones mentioned above based on the potential for reducing conflicts of interest and increasing transparency. “If commenters believe more time would be necessary to build the necessary distribution and compliance structures for such innovations, the department is interested in information related to the amount of time expected to be required,” the agency said.

There are 18 questions in the RFI. Comments about the first question, asking about the delay of the BICE and PTEs until January 2018, are due 15 days after publication of the RFI in the Federal Register. Comments about the other 17 questions are due 30 days after publication. Ways to submit comments can be found in the text of the RFI.

Break from the Grind June 29, 2017

A Little Friday File Fun

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In Chelsea, Massachusetts, a 2-year-old boy owes his life to a stuffed cow. The Boston Globe reports that the boy was bouncing on his bed and accidentally sailed right through an open window. He landed on a concrete slab in the backyard, but avoided serious injury because he was clutching his two-foot tall stuffed cow.

In Orlando, Florida, a man was stopped for driving without headlights. Police found a white power substance in his car and said a field test showed it tested positive for co.caine. The man said he repeatedly told officers that it was drywall, according to the Associated Press. He spent 90 days in jail before lab results determine it was drywall. The news report did not say whether the man is seeking restitution.

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In Alpharetta, Georgia, police stopped a man for speeding. But the officer was not prepared for what he saw in the car. In the passenger seat was a life-sized alien doll with a seatbelt on. The Atlanta Journal-Constitution reported that the man did not explain why he had this “passenger.” The driver got off with a verbal warning—and some laughs from the officer—who took pictures and posted them on social media.

In Sydney, Australia, Opal cards are part of the smartcard ticketing system used for public transport services in the greater Sydney area and can be used for transport via bus, rail, light rail and ferry services within the city. The near-field communication chip within each of the cards is required for entering and exiting the transport stations. To avoid losing his card, a man had the near-field communication chip from an Opal card cut down, encased in bio-compatible plastic, and inserted into his body just beneath the skin on the side of his left hand, according to the Australian Broadcasting Corporation. But, that wasn’t what struck me about the story. The man’s name is Meow-Ludo Disco Gamma Meow-Meow.

At Shanghai Pudong International Airport in China, an airplane passenger’s superstitious actions ended up grounding a China Southern Airlines flight for several hours. The woman threw a handful of coins into an Airbus 320’s engine to “wish a safe flight,” according to police. Fellow travelers said they saw the elderly woman toss the change from halfway up the boarding staircase. Crew members ordered passengers who had already boarded off the aircraft so engineers could inspect the engine. They found one coin inside the engine and eight on the ground nearby, the South China Morning Post reports. The flight eventually departed about five hours later than scheduled.

Irish weather man experiences winds he’s reporting.

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Unwanted visitors make this man run back on the porch.

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You won’t believe this gymnast is 91.

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