Earlier this week the Department of Labor (DOL) issued its long-anticipated final regulation (the “Regulation”) defining who is a fiduciary as a result of giving investment advice to plans subject to ERISA, to participants or beneficiaries of these plans, or to IRAs.1 The Regulation significantly expands the categories of persons considered fiduciaries from the regulation it replaced, which was issued in 1975, but generally relaxes many of the requirements contained in the 2015 Proposed Regulation, which immediately preceded the final Regulation. We will describe the Regulation and exemptions, which cover more than 1,000 pages, in a comprehensive fashion in the near future, but wanted to provide you with this summary of the more significant changes between the 2016 Final Regulation, as well as the Best Interest Contract Exemption (BICE) and the 2015 Proposed Regulation and Proposed BICE.

..Seller Carve-Out Substantially Expanded.

Under the 2015 Proposed Regulation the seller’s carve-out was limited to plans with 100 or more participants or plans whose fiduciary had at least $100 million plan assets under management. Under the 2016 Final Regulation the seller’s carve-out is available with respect to plans or IRAs whose independent fiduciary is (i) a bank, (ii) an insurance carrier qualified in more than one state to perform investment management services, (iii) a registered investment adviser, (iv) a broker-dealer registered under the Exchange Act, or (v) an independent fiduciary that has at least $50 million under management.