Trump and DOL Fiduciary Rule Déjà Vu
When it became clear that Donald Trump had been elected as our next president, I imagine that the first thought for many was, “What is going to happen to the DOL Fiduciary Rule?”
Okay, maybe that was not quite the first thought! But as a retirement plan geek, I admit that it was top of mind for me. As I read articles with titles such as “Trump Victory Puts Fiduciary Rule in Limbo” and “Fiduciary Rule in ‘Jeopardy’ under Trump,” my preliminary thoughts were that the final fiduciary rule may not be so final after all.
I also experienced a sense of déjà vu. For those who recall the history of the final fiduciary rule, it evolved from a final rule regarding the provision of investment advice, dating to January 21, 2009. The rule was set to become effective on March 23rd, 2009. But, of course, those rules never became effective; and it is probably not difficult to guess the reason, given the context of this article. President Barack Obama was inaugurated on January 20th, 2009, which means the final rule was published just one day after he officially became president! Now, that timing strikes me as odd, but then again I don’t make the rules! Not surprisingly, the effective date of the rule was delayed and the rule was ultimately withdrawn.
Therefore, it makes sense that this time around the same thing could happen under President-Elect Trump. It would certainly be feasible that the final fiduciary rule would be delayed, and ultimately withdrawn, just as its predecessor was the last time the presidency changed hands.
So is the fiduciary rule as dead as a doornail? Well, as the ex-college football coach and analyst Lou Holtz would say, “Not so fast, my friend!” Whereas the prior investment advice rule was issued one day after Obama’s inauguration, the final fiduciary rule was issued on April 6, 2016, several months before Donald Trump became President-Elect. The rule also became effective June 7, 2016; again, well before Trump’s election victory. Thus, since the rule has already been finalized and is effective, it cannot be withdrawn.
However, the rule does have a delayed applicability date of April 10, 2017, in order to provide sufficient time for affected parties to adapt their operating systems to comply with the final rule. Thus, while the rule cannot be withdrawn, the applicability date could most certainly be delayed under a Trump administration, in order to provide adequate time to draft a new rule that would rescind the old. Taking such action would require a significant investment of time and effort, and, with all the priorities of a new Presidential administration, it is unknown as to the priority level that would be assigned to such a task.
Will the final fiduciary rule survive the Trump presidency? That remains to be seen. However, one thing we do know is that it will not be as easy to dismantle this rule as it was to scrap its predecessor, the investment advice rule, seven years ago. Stay tuned!
Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Opinions expressed are those of the author, and do not necessarily represent the opinions of Cammack Retirement Group.
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