The U.S. Department of Labor (DOL) withdrew a final rule that would have removed long-standing safe harbor regulation impacting annuities in workplace plans.
The DOL’s withdrawal comes after the Insured Retirement Institute (IRI), along with other companies, submitted comments on July 31 urging the Labor Department to scrape its plans. In its comments, the IRI argued that removal of the regulatory safe harbor could “unintentionally lead to reluctance in offering lifetime income options, which would be contrary to the goals of the SECURE Act and SECURE 2.0 in promoting guaranteed retirement income.” This rule would ultimately impact retirement savers’ access to retirement products and strategies, including guaranteed lifetime income products, the IRI said.
The organization further defended the safe harbor for its overview on broader fiduciary duties regarding the plan provider and the annuity contract. Established during the Pension Protection Act of 2006, the safe harbor regulation has help plan sponsors and service providers develop internal procedures, oversight processes, and fiduciary practices in selecting annuity providers and contracts.
The rule continues to provide value by reinforcing prudent selection criteria, promoting consistent practices, and reducing ambiguity with ERISA’s fiduciary duties, the IRI states.
The DOL said it withdrew the final rule after receiving “significant adverse reactions” from organizations.
“Withdrawing this direct final rule is the right call,” said Emily Micale, director of Regulatory Affairs for the IRI. “We urge DOL not to revisit this issue and keep this necessary safe harbor for the benefit of retirement savers. IRI looks forward to working with DOL to discuss ways to streamline regulations and to improve retirement security for workers and retirees.”
On July 1, 2025, the Employee Benefits Security Administration posted in the Federal Register a direct final rule (DFR) to remove 29 CFR 2550.404a-4 from the Code of Federal Regulations, classifying the rule as redundant and unnecessary.
Specifically, the DOL said that the regulatory safe harbor “became unnecessary in 2019 when Congress amended ERISA to add a more streamlined fiduciary safe harbor covering the same activity. Although the statutory safe harbor did not technically nullify or repeal the regulatory safe harbor, its existence offers an unnecessary and inefficient alternative and may inadvertently be a trap for the unwary.”
SEE ALSO:
· IRI to DOL: Don’t Undermine Annuity Access in 401(k) Plans