OMB Finishes Retirement Security Proposal Review, Final Rule Incoming

The Office of Information and Regulatory Affairs, a division of the Office of Management and Budget, concluded its final meetings for the retirement security proposal on Wednesday. OIRA previously had meetings scheduled to April 15, but the remaining meetings have either been canceled or rescheduled to an earlier date.

Now that OIRA has completed its review, the Department of Labor may publish a final rule in the coming days. Industry insiders expect this to happen by Wednesday of next week, but it could be as early as tomorrow.

The final rule is likely to feature many of the core elements of the proposal: namely, applying fiduciary status under the Employee Retirement Income Security Act to annuity sales, investment menu design, and individual retirement account rollover recommendations.

One major difference that is expected, however, is for the DOL to emphasize that educational materials and conversations would not be covered by the rule. This would likely include descriptions of investments, informative tools, “hire me” conversations and conversations with human resource employees.

Lisa M. Gomez, assistant secretary for the Employee Benefits Security Administration, said on Sunday at the National Association of Plan Advisors’ 401(k) Summit that the regulator wants to draw a clear line between what is a fiduciary recommendation and what is not. Gomez also suggested that the final release would contain examples that illustrate this distinction.

Tim Hauser, the deputy assistant secretary for program operations at the DOL, also noted during a hearing for the proposal in December that the DOL has no intention of sweeping in items such as informational brochures, marketing materials, regulatory disclosures or other educational items. He said recommendations would be understood as a clear “call to action.”

Some industry sources were critical of canceling the final meetings. Though an abbreviated OIRA review is not a violation of the Administrative Procedures Act, it does add to the perception that the DOL did not take stakeholder comments very seriously. This complaint goes back to the 60-day comment period that overlapped with both Christmas and New Year’s Day, as well as a public hearing on the proposal, which was held on December 15.