The Department of Labor’s (DOL’s) proposed fiduciary rule replacement has arrived.
The rule replaces the Obama-era fiduciary rule vacated in 2018. Its aim: to help employees get better investment advice about their retirement plans.
The new rule will likely include a five-part test to determine who’s a fiduciary under ERISA rules. And it will align with the SEC’s 2019 Regulation Best Interest rule.
The new rule, already at the White House for review, will soon open for public comment. You can expect it to be final by the end of the year.
Check your plan before the replacement fiduciary rule
Between this new fiduciary rule replacement and the CARES Act making key changes to retirement plans, you want to reassess that your fiduciary requirements are met.
Here are steps you and your team can take to reduce costs and avoid liability ahead of the replacement fiduciary rule:
- Review plan docs. Post-pandemic, check that your plan still supports the best interests of the firm – as it exists today – and its staff. You should amend plan docs to reflect the CARES Act rules. Those allowed your workers to take a hardship withdrawal up to $100,000 (previously $50,000) and suspend loan repayments due between March 27 and Dec. 31, 2020 for a year.
- Identify mistakes. Administrative mistakes are less costly to fix if your company finds them before the feds do. The DOL often finds the following errors: failure to timely enroll eligible employees, incorrect employee hours or years of service and failure to provide employees with necessary notices. Remember, you have new options for providing disclosures electronically to plan participants.
- Monitor fees. Review your fees so you know exactly how much you and your staffers are paying for services. Compare providers to ensure fees remain affordable; many of your peers are getting sued over excessive fees.