Contact Us for More Information

What Can you Expect from the ERISA Fiduciary Advice Rule on June 9th?

Posted by Corey F. Schechter | Jun 07, 2017 | 0 Comments

Fiduciary 20rule 20

A new ERISA fiduciary rule was supposed to go into effect in April. However, the Department of Labor delayed the new rule for 60 days to review the regulation and determine how the rule would impact investors. Those 60-days are almost up. On June 9th, the transition period for the Fiduciary Rule will begin.

The Fiduciary Rule will effectively extend the definition of who might be considered a fiduciary with duties essentially equivalent to those found under ERISA. Advisers who were not previously considered to be fiduciaries will be fiduciaries under the new law, and subject to fiduciary duties. The purpose of this new rule is to better protect plans, participants, and beneficiaries from “conflicts of interest, imprudence, and disloyalty.”

According to the DOL summary, “the final rule treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan or IRA as fiduciaries in a wider array of advice relationships.”

The new Fiduciary Rule applies to certain advice for a fee, including recommendations as to the advisability of acquiring, holding, or disposing of an investment property, or recommendation as to how securities should be invested after they are rolled over or distributed from an IRA or retirement plan.

The Fiduciary Rule will expand the number of fiduciaries. Previously, only fiduciaries of ERISA-governed benefit plans were subject to ERISA's fiduciary rules and regulations. ERISA covers most voluntarily established, private employer provided pension and retirement plans. However, these standards generally will now also apply to those providing investment advice or recommendations for a fee or other compensation to individual retirement account (IRA) owners. Whether or not this will ultimately be good for investors has been a heavily debated issue not just in Congress but in the financial services industry as well.

Part of the plan provides for a transition period from June 9th until January 1, 2018. During the transition period, there are limited exemptions from the Fiduciary Rule for advisors under the Best Interest Contract Exemption (BICE), Prohibited Transaction Exemption, and Principal Transaction Class Exemption. Advisers who meet these exemptions will be able to delay notifying investors of their fiduciary status and the Impartial Conduct Standards.

During the transition period, fiduciaries who meet one of the exemptions still need to comply with the Impartial Conduct Standards. This requires fiduciaries to:

  • Provide advice which is in the best interests of their clients;
  • Avoid making misleading statements; and
  • Charge no more than reasonable compensation for services.

The DOL and IRS may be relaxing enforcement during the transition period. The DOL will concentrate on “compliance assistance” rather than enforcement during the transition period. The IRS has also indicated they will not seek penalties for certain prohibited transactions during the transition. After January 1, 2018, the Fiduciary Rule will go into full effect, and advisers looking to avoid fiduciary status must meet all requirements for a given exemption.

Advisers and fund managers who become fiduciaries after June 9th will need to abide by the Impartial Conduct Standards. Fiduciaries should also review their communications and materials to make sure they are in compliance with their fiduciary duties, and if necessary, comply with ERISA regulations.

If you have any questions about the new Fiduciary Rule and how it may affect your company or investments, contact your ERISA attorneys. Butterfield Schechter LLP is San Diego County's largest firm focusing its law practice on ERISA and employee benefits. Our firm can help you maintain compliance with ERISA fiduciary duties, avoid penalties, and represent you in ERISA litigation. Contact our office today with any questions on the new Fiduciary Rule and its requirements.

About the Author

Corey F. Schechter

Corey Schechter practices in the areas of Employee Benefits, Employee Stock Ownership Plans, Pension and Profit Sharing Plans, ERISA, ERISA Litigation, Business Law, Qualified Domestic Relations Orders (QDROs), and Employment and Labor Law.


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Retirement Plans

We help establish a customized plan that meets regulatory requirements as a tax qualified plan. Following implementation, our attorneys can assist clients and their plan administrator with regular reviews and updates to help with regulatory compliance for the plan's operation, and continued effectiveness in meeting the client's specific goals.


We are dedicated to employee ownership. When you come to us for ESOP services, you receive influential legal counsel who stand beside you to help you stay informed, in compliance, and abreast of the latest developments-all to help you realize your plan goals as fully and effectively as possible.


A QDRO is a specially designed court order that is required for the division of retirement benefits in a family law case. Many family law attorneys do not possess the expertise necessary to divide retirement benefits or stock options upon divorce. We have extensive experience in dividing qualified plans, government plans, IRAs and stock options between the employee spouse and non-employee spouse.

Butterfield Schechter LLP provides the information in this website as a service to its clients and visitors to the site. This website is for information purposes only and is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The information in this website is provided "as is," and while the information in this website is updated periodically, additional facts or future developments may affect subjects contained herein, and no guarantee is given that the information provided is correct, complete, or up-to-date. Seek the advice of professional counsel before acting or relying upon any article, form, or information in this web site. To ensure compliance with the requirements imposed by the United States Treasury and the Internal Revenue Service, we inform you that any federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of: (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another person any transaction or matter addressed herein. Butterfield Schechter LLP has endeavored to comply with all known legal and ethical requirements in compiling this website. In the event that this communication does not conform with any laws or regulations of any state or country in which it may be received, Butterfield Schechter LLP will not accept legal representation based on this communication from a person in such a state or country. Electronic mail is provided as a convenience in communicating with the attorneys at Butterfield Schechter LLP. Contact by e-mail does not alone create an attorney-client relationship. Please remember Internet e-mail is not secure and messages sent to the firm or any of its employees or attorneys should not contain sensitive or confidential information. Thank you for visiting our site.