On January 13, 2017, the U.S. Department of Labor (“DOL”) issued a second set of guidance on its new fiduciary rules, which are scheduled to become effective on April 10, 2017. The guidance was issued in the form of FAQs (“FAQs”) and is the second round of guidance to be published by the DOL prior to the effective dates of the new rules. Earlier in January, the DOL issued FAQs directed at consumers instead of practitioners that contain general information about the new fiduciary rules.

Background -

In April 2016, the DOL issued a regulation (the “Regulation”) that greatly expanded the scope of persons who would be deemed fiduciaries under ERISA and the Internal Revenue Code (the “Code”) when dealing with retirement plans and IRAs. As revised, any broker-dealer or financial intermediary, including individual advisers or registered representatives employed by them (“Financial Institution”) that makes any suggestions as to how or where a retirement investor should invest may be a fiduciary. Given the prohibitions under ERISA and the Code regarding self-dealing by fiduciaries, the expanded definition effectively proscribes the use of commissions and other variable compensation in dealings with retail retirement investors unless the transaction can fit into an available exemption.