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Compliance December 20, 2024
DOL’s Khawar, Among Architects of New Retirement Fiduciary Rule, To Step Down
The career EBSA official who had been appointed by Biden to principal deputy assistant secretary will be leaving January 20.
Reported by Alex Ortolani
Department of Labor official Ali Khawar will be stepping down as the next Donald Trump administration comes into office in 2025.
Khawar will be leaving his position as principal deputy assistant secretary with the DOL’s Employee Benefits and Security Administration effective January 20, 2025, a DOL spokesperson confirmed.
Khawar was appointed to his most recent role by President Joe Biden, but had served at EBSA during the first Trump administration. He did not immediately respond to request for further comment.
Ali Khawar
The deputy assistant secretary will depart after working for the federal government since 2005 when he started as an Employee Retirement Income Security Act investigator. He later had roles including chief of staff and counselor to former Labor Secretary Thomas Perez, a Barack Obama appointee, and led EBSA on a temporary basis at the start of the Biden administration.
The deputy to EBSA head Lisa Gomez, who has also announced her departure when Trump takes office, Khawar was part of EBSA after Congress enacted two major retirement reform packages— the Setting Every Community Up for Retirement Enhancement Act of 2019 and the SECURE 2.0 Act of 2022. Those laws have been reverberating through the industry since passage and will continue to do so as mandates and provisions continue to take effect in coming years. He was also a participant in rulemaking and guidance around cybersecurity, fiduciary standards and environment, social and governance investing for retirement plans.
In the area of fiduciary obligations, Khawar worked on the DOL’s Retirement Security Rule, commonly known as the fiduciary rule. That regulation, which was finalized earlier this year, sought to enforce an ERISA standard on annuity sellers and those giving one-time individual retirement account rollover advice. He, along with Gomez and Tim Hauser, deputy assistant secretary for program operations of EBSA, had championed the rule as a reworked version of a proposal that had been stymied by the courts during the Obama administration.
The rule, however, hit legal issues again this year when two Texas courts stayed it in part on the grounds that it was similar to the prior amendment; an argument the DOL has refuted, say the latest version took into account the prior U.S. 5th Circuit Court of Appeals decision. The DOL is appealing the court decisions, but now, with the Trump administration returning, ERISA experts have said the rule is unlikely to move forward.
Khawar was also part of the DOL’s final rule on prudence and loyalty, which sought to remove any obstacles to plan sponsors considering ESG factors when selecting employer-sponsored retirement plan investments. That so-called ESG rule overturned prior Trump DOL guidance that said fiduciaries should only consider investments based on “pecuniary factors.”
Republican attorney generals have also challenged that rule in court, with the case now under consideration by the 5th Circuit Court of Appeals in New Orleans. Meanwhile, Trump’s nominee for the new head of the DOL, Representative Lori Chavez-DeRemer, R-Oregon, supported a resolution seeking to overturn the Biden administration’s ESG rule.
