The Department of Labor (DOL) Fiduciary Rule became effective February 16, 2021, with a compliance date of December 20, 2021.
Under 3.0, advice to rollover or transfer an account is fiduciary advice…even though the prospect is not yet a client.
ERISA fiduciaries are subject to the prohibited transaction rules, primarily 408(b) which prohibits self-dealing. This is all very similar to the DOL Fiduciary Rule from 2016, that was vacated by the U.S. Court of Appeals Fifth Circuit in May 2018.
The new 3.0 requires four elements of disclosure:
- Affirmation of ERISA fiduciary duty
- Description of services to be provided
- Disclosure of material conflicts of interest
- Explanation of the reasons for the recommendation and how it is in the Retirement Investor’s best interest
A firm’s Policies and Procedures must be updated to include the information required for 3.0.
All this said, it appears that ERISA may be changing the requirements by starting all over again. So It is suggested to have a plan to be ready to implement by December 20th, but to understand that the requirements and compliance date could change.