As part of its review of the Department of Labor’s controversial Retirement Security Rule, the White House Office of Management and Budget (OMB) has made public that it will meet with a variety of industry stakeholders between April 2 and April 12.
Much is at stake. If OMB approves the rule, the DOL will be cleared to publish it as final, even though no one outside of the DOL and OMB currently knows what changes the Retirement Security Rule may have undergone as a result of more than 19,000 comments during an abbreviated comment period that ended on Jan. 2.
The DOL’s Employee Benefits Security Administration proposed the new rule, saying it would protect workers’ retirement savings by updating the regulation defining a fiduciary under the Employee Retirement Income Security Act (ERISA).
Many stakeholders securing OMB meetings in the coming two weeks have previously expressed opposition to the rule and have called for it to be withdrawn in its entirety. Others have expressed support for the rule and are urging it to be finalized. Most industry observers expect the rule to stay on the fast track and become effective well ahead of the November presidential election.
OMB’s review, which officially began on March 8 and is allowed to take up to 90 days, is widely expected to be wrapped up in 30 to 60 days. That means the public could get a look at the final rule as soon as mid-April or early May.
According to the OMB website, 14 different meetings with stakeholders are on the docket. Here’s the lineup of scheduled meetings:
• April 2, 2 p.m.: CFP Board
• April 4, 2 p.m.: Senate HELP Committee
• April 5, 11:30 a.m.: National Association for Fixed Annuities
• April 5, 2 p.m.: SIFMA
• April 5, 3 p.m.: WTW
• April 8, 10 a.m.: Investment Company Institute
• April 8, 3 p.m.: Insured Retirement Institute
• April 9, 10 a.m.: American Council of Life Insurers
• April 9, 11:30 a.m.: US Chamber of Commerce
• April 9, 2 p.m.: Faegre Drinker/FINSECA
• April 10, 10 a.m.: Steptoe LLP/NAIFA
• April 10, 1 p.m.: American Bankers Association
• April 10, 3 p.m.: Financial Services Institute (FSI)
• April 12, 1 p.m.: Alternative & Direct Investment Securities Association (ADISA)
Opposition and support
Among the most outspoken opponents of the DOL’s rule has been the Insured Retirement Institute, which released a statement from its President and CEO Wayne Chopus on the day the rule was sent to OMB for review.
“IRI is dismayed that the Administration has decided to move forward with its fiduciary investment advice rule despite the evidence presented to DOL about the significant, unnecessary harm this rule will cause to retirement savers and concerns raised by members of Congress from both sides of the aisle,” Chopus said.
“As proposed, the rule fails to consider the diverse needs of retirement savers and the impact it will have on the ability of workers and retirees to realize the benefits of the SECURE Act and the SECURE 2.0 Act,” the statement continued. “If the final rule is substantially similar to the proposed version, millions of consumers would lose access to valuable lifetime income products and affordable professional guidance to help them knowledgeably acquire and use those products.”
Meanwhile, CFP Board, which is responsible for the Certified Financial Planner designation, has expressed support for the proposed rule.
“The Department of Labor’s proposed Retirement Security Rule helps assure clients that they can trust their advisor to help them achieve their investment and retirement goals confidently and ethically. This new rule would close existing regulatory gaps from antiquated regulations that were created in 1975,” CFP Board CEO Kevin R. Keller, CAE said recently.
“The DOL’s proposed Retirement Security Rule is needed to fill the gaps that Regulation Best Interest and the NAIC Model Regulation don’t cover,” CFP Board General Counsel Leo G. Rydzewski added. “It is an important step toward improving retirement security for all Americans. If the rule is adopted, moderate-income savers will gain—rather than lose—access to retirement investment advice that is in their best interests.”
Additional comment period not expected
EBSA Secretary Lisa Gomez has said the originally proposed rule would see some revisions as a result of feedback received during the comment period and the December online hearings. But the public won’t know exactly what changed until the final rule is published in the Federal Register upon completion of the OMB review, or—in what most observers say is unlikely—another comment period could be triggered if the revisions are substantial.
Under the Administrative Procedure Act (APA), federal agencies are required to provide the public with notice and an opportunity to comment on proposed regulations, IRI Chief Legal and Regulatory Affairs Officer Jason Berkowitz told 401(k) Specialist recently. To the extent that an agency modifies a proposal to include provisions that were not reasonably understood to be contemplated by the original notice, the agency is supposed to re-propose.
“Whether an agency should have re-proposed rather than moving to a final rule is typically a question for the courts,” Berkowitz said. “There is a lot of gray area in this analysis, however, and it can be challenging to persuade a court that an agency violated the APA by going to a final rule instead of issuing a new proposal.”
What is most probable to happen is that the final rule will be published in Federal Register upon completion of the OMB review—probably by the middle of May. The final rule’s effective date will be 60 days after that happens, while the applicability date—when financial professionals have to comply with the new rule—will likely be Jan. 1, 2025.
There is the possibility that a lawsuit filed by an opponent of the final rule could result in a “stay” of the rule’s effective date.
SEE ALSO:
- Final Fiduciary Rule Coming Soon as OMB Completes Review
- DOL Retirement Security Rule Now Under OMB Review, But Changes Unknown for Now
- Most Americans Seek Best Interest in Retirement Advice
- Critics Speak Out Against DOL Retirement Security Proposal During House Committee Hearing
- DOL Retirement Security Hearing: Groups Express Both Support and Strong Opposition
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
