Department of Labor issues Final Fiduciary Rule

first_imgThe Department of Labor (DOL) has released its long-awaited final fiduciary rule and clarified that IRAs—along with Archer medical savings accounts (MSAs), health savings accounts (HSAs), and Coverdell education savings accounts (ESAs)—are included in the scope of the final rule.The final rule expands the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA), by redefining “investment advice” to encompass activities that occur within pension and retirement plans, but that do not constitute investment advice under the existing definition of investment advice. The DOL’s expanded definition of fiduciary of an employee benefit plan adds brokers and advisers providing advice to IRA, MSA, and HSA owners and ESA participants to the definition.The application of the final rule to MSAs, HSAs, and ESAs has received little media or industry attention, but it should come as no surprise, given the path taken by DOL to apply the rule to IRAs. Although IRAs were first authorized by ERISA, the DOL does not have direct regulatory authority over IRAs. IRA provisions are found only in the Internal Revenue Code (IRC) and fall outside of ERISA’s purview. Therefore, the Department of the Treasury—rather than the DOL—oversees most issues regarding IRAs.However, under Executive Order 12108, authority over certain issues related to prohibited transactions under IRC Section (Sec.) 4975, that govern the treatment of IRAs, was transferred from the Treasury Department to the DOL. The DOL has asserted that its authority over the prohibited transaction rules that govern IRAs extends to other non-ERISA plans covered by IRC Sec. 4975, including MSAs, HSAs, and ESAs, and grants the DOL authority to include these plans in the scope of the final rule.As defined in the final rule, investment advice includes providing investment or investment management recommendations, and includes recommendations to buy or sell investments, receive a distribution or execute a rollover or transfer, and manage investments. In addition to the receipt of direct or indirect compensation, for the relationship to rise to fiduciary status, there must bea representation or acknowledgement that the adviser is acting in a fiduciary capacity;advice given pursuant to a verbal or written agreement, arrangement, or understanding that it is individualized to the recipient; oradvice or a recommendation regarding an investing or account management decision related to a retirement plan, IRA, MSA, HSA, or ESA.The key to determining whether “fiduciary investment advice” has been given is whether a “recommendation” has occurred. This is defined as a communication that “would be reasonably viewed as a suggestion” to take a particular course of action, or refrain from doing so. The more the advice is tailored to the recipient, the more likely it will be viewed as a recommendation.The final rule will add additional compliance burdens to brokers and advisers providing advice to IRA, MSA, and HSA owners and ESA participants, including credit union service organizations (CUSOs) and, potentially, credit unions. Fortunately, the DOL made substantial changes to the proposed rule to incorporate feedback it received through written comments and public hearings, including a number of credit union concerns that the Credit Union National Association (CUNA) highlighted in the two comment letters it submitted during the comment period.As with any new regulation, allowing adequate time for implementation is essential, and the final rule extends the implementation date. Although the final rule is effective June 7, 2016, 60 days after it was published in the Federal Register, brokers and advisers will not be governed by the conduct and disclosure rules until April 10, 2017. And, a transition period for compliance with the best interest contract (BIC) exemption will be in place from that date until January 1, 2018, if certain conditions are met. Full compliance with the exemptions will be required as of January 1, 2018.Compliance with the BIC exemption—the contractual agreement between brokers and advisers and the recipients of their advice—also is simplified under the final rule. In cases where a signed BIC agreement is required—such as in an IRA rollover situation—the contract can be incorporated into other account opening documents, and can be entered into before or at the same time as the investment transaction is executed, instead of the time at which the investments are initially recommended.The final rule also clarifies the definitions of “investment advice” and “investment education” and provides a non-exhaustive list of certain types of communications that generally are not considered recommendations. The final rule clarifies that general communications such as newsletters, marketing materials, public presentations, investment reports, and nonpersonal information will not be considered recommendations giving rise to fiduciary status. For example, advising IRA owners that they are required to take a required minimum distribution from their IRA would not be treated as investment advice under the final rule.This change should allow credit unions to continue to provide members with general information about retirement savings and planning for the future. CUNA was concerned that under the proposed regulation, credit union members who look to their credit unions for information on saving for retirement would not have access to the financial advice that they need.It will take some time to fully analyze the DOL’s final rule, which is more than 600 pages in length. Credit unions generally will not be subject to the rule if they are not offering investment advice for a fee. However, credit unions should note that the final rule clarifies that the term “investment property” includes certificates of deposit and similar products. Credit unions would be well-advised to carefully review the final rule and how it will affect their policies and procedures. This is especially true if they offer investment services through CUSOs or third-party brokers, or plan to offer investment services in the future. 14SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Dennis Zuehlke Dennis is Compliance Manager for Ascensus. Mr. Zuehlke provides clients with technical support on tax-advantaged accounts (including individual retirement accounts, health savings accounts, simplified employee pension plans, and Coverdell education … Web: www.ascensus.com Detailslast_img read more

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Prem to allow temporary deals if season extends beyond current expiry dates

first_img3PREMIER LEAGUE clubs will be allowed to sign players on temporary contracts if the season continues beyond the end of their current deals, according to reports.Hundreds of players including stars at Chelsea and Tottenham have contracts that expire this summer.⚠️ Read our Coronavirus in Sport live blog for the latest news, updates and cancellations3 Willian’s contract is up on June 30 while Jan Vertonghen’s deal expires the day after on July 1The Premier League is currently suspended until April 4 with the EFL on hold until April 3.However, there are fears both will have to extend their delays further as football attempts to combat the spread of coronavirus.Euro 2020 was postponed by a year on Tuesday to allow domestic seasons to be completed over the summer if possible.But this may lead to a contractual nightmare with many players further down the pyramid fearing for their livelihoods.In a bid to combat such a situation, football authorities like the FA, Premier League, EFL and PFA are expected to be flexible and allow temporary deals in order to complete the season, according to the Telegraph.3It quotes one Football League official who said: “It’s pretty easy for all the football authorities to get together and agree that clubs can give players temporary contracts to take them to the end of any extended season, should that happen.”The transfer windows and things can also be altered accordingly.“But it will be a scary time for many players towards the bottom end who have mortgages to pay and will have decisions about their livelihood and futures delayed until clubs get clarity over when football might be played again and the real financial impact.”While this approach may offer security to those at the top of the football pyramid, clubs further down the ladder are unlikely to offer any new deals while their financial future remains so unstable.At Chelsea, Willian, Pedro, Olivier Giroud and Willy Caballero all have contracts that expire on June 30.Manchester United have acted swiftly to extend Nemanja Matic’s deal beyond the end of this season.MOST READ IN FOOTBALLTHROUGH ITRobbie Keane reveals Claudine’s father was ’50-50′ in coronavirus battleTOP SELLERGavin Whelan has gone from League of Ireland to David Beckham’s InstagramPicturedAN EYEFULMeet Playboy model and football agent Anamaria Prodan bidding to buy her own clubI SAW ROORodallega saw Rooney ‘drinking like madman’ & Gerrard ‘on bar dancing shirtless’ExclusiveRIYAD RAIDMan City’s Riyad Mahrez has three luxury watches stolen in £500,000 raidNEXT STEPJonny Hayes set to move to English Championship having been let go by CelticREF RELEASEDChampions League ref Vincic released by cops after arrest in prostitution raidKEANE DEALEx Man United youth ace David Jones says Roy Keane negotiated a contract for himBut July 1 will see Tottenham’s Jan Vertonghen and Newcastle’s Andy Carroll out of contract.That date also sees Watford trio Ben Foster, Herurelho Gomes and Adrian Mariappa become free agents.As well as Ryan Fraser and Simon Francis at Bournemouth, Southampton striker Shane Long and Burnley players Ashley Westwood, Jeff Hendrick and Aaron Lennon.Man Utd see £1bn wiped off value as stock market crashes amid coronavirus outbreaklast_img read more

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