[House Report 114-527]
[From the U.S. Government Publishing Office]
114th Congress } { Rept. 114-527
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
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DISAPPROVING THE RULE SUBMITTED BY THE DEPARTMENT OF LABOR RELATING TO
THE DEFINITION OF THE TERM ``FIDUCIARY''
_______
April 26, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed.
_______
Mr. Kline, from the Committee on Education and the Workforce, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.J. Res. 88]
[Including cost estimate of the Congressional Budget Office]
The Committee on Education and the Workforce, to whom was
referred the joint resolution (H.J. Res. 88) disapproving the
rule submitted by the Department of Labor relating to the
definition of the term ``Fiduciary'', having considered the
same, report favorably thereon without amendment and recommend
that the joint resolution do pass.
PURPOSE
House Joint Resolution 88, as ordered reported by the
Committee on Education and the Workforce (Committee) on April
21, 2016, expresses congressional disapproval of the U.S.
Department of Labor (DOL or Department) rule amending the
regulatory definition of ``fiduciary''\1\ under the Employee
Retirement Income Security Act of 1974 (ERISA)\2\ and the
Internal Revenue Code of 1986 (Code).\3\
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\1\Definition of the Term ``Fiduciary''; Conflict of Interest Rule-
Retirement Investment Advice, 81 Fed. Reg. 20946 (Apr. 8, 2016).
\2\29 U.S.C. Sec. 1001 et seq. ERISA section citations will be used
throughout.
\3\26 U.S.C. Sec. 1 et seq. [hereinafter the Code].
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COMMITTEE ACTION
112TH CONGRESS
Full Committee Hearing Reviewing Policies and Priorities at the U.S.
Department of Labor
On February 16, 2011, the Committee held a hearing entitled
``Policies and Priorities at the U.S. Department of Labor'' to
examine, among other things, DOL's Employee Benefits Security
Administration's (EBSA) October 2010 proposed regulation
significantly expanding the definition of ``fiduciary'' under
ERISA and the Code. The Honorable Hilda L. Solis, then-
Secretary of the U.S. Department of Labor, was the sole
witness. During the hearing, Rep. Judy Biggert (R-IL) and
Carolyn McCarthy (D-NY) expressed concerns regarding DOL's
proposed rule, specifically regarding the Department's lack of
coordination with the Securities and Exchange Commission
(SEC).\4\
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\4\Policies and Priorities at the U.S. Department of Labor: Hearing
Before the H. Comm. on Educ. and the Workforce, 112th Cong. 15, 38
(Feb. 16, 2011).
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Subcommittee hearing assessing the impact of the Labor Department's
Proposal on Workers and Retirees
On July 26, 2011, the Subcommittee on Health, Employment,
Labor, and Pensions (HELP) held a hearing entitled ``Redefining
Fiduciary': Assessing the Impact of the Labor Department's
Proposal on Workers and Retirees'' to examine the consequences
of EBSA's 2010 proposed rule. Witnesses included the Honorable
Phyllis Borzi, Assistant Secretary of Labor, Employee Benefits
Security Administration, Washington, D.C.; Mr. Kenneth Bentsen,
Executive Vice President, Securities Industry and Financial
Markets Association, Washington, D.C.; Mr. Kent Mason, Partner,
Davis & Harman LLP, Washington, D.C.; Mr. Donald Myers,
Partner, Morgan, Lewis & Bockius LLP, Washington, D.C.; Mr.
Norman Stein, Professor, Earle Mack School of Law, Drexel
University, Philadelphia, Pennsylvania; and Mr. Jeffrey
Tarbell, Director, Houlihan Lokey, San Francisco,
California.\5\
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\5\Redefining `Fiduciary': Assessing the Impact of the Labor
Department's Proposal on Workers and Retirees: Hearing Before the
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on
Educ. and the Workforce, 112th Cong. (July 26, 2011).
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Full Committee Hearing Reviewing the President's Fiscal Year 2013
Budget Proposal for the Department of Labor
On March 21, 2012, the Committee held a hearing entitled
``Reviewing the President's Fiscal Year 2013 Budget Proposal
for the Department of Labor.'' Then-Secretary Solis was the
sole witness. During the hearing, members of both parties
thanked Secretary Solis for withdrawing the 2010 proposed
fiduciary rule.\6\
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\6\Reviewing the President's Fiscal Year 2013 Budget Proposal for
the Department of Labor: Hearing Before the H. Comm. on Educ. and the
Workforce, 112th Cong. (Mar. 21, 2012).
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113TH CONGRESS
Full Committee Hearing Reviewing the President's Fiscal Year 2015
Budget Proposal for the Department of Labor
On March 26, 2014, the Committee held a hearing entitled
``Reviewing the President's Fiscal Year 2015 Budget Proposal
for the Department of Labor.'' The Honorable Thomas E. Perez,
Secretary of the U.S. Department of Labor, was the sole
witness. During this hearing, Chairman John Kline reiterated
bipartisan concerns regarding DOL's ongoing fiduciary
rulemaking. Addressing the consequences of the Department's
proposed rule, Chairman Kline urged Secretary Perez to keep in
mind ``what the impact will be on important advice that people,
particularly low-income people, might need.''\7\
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\7\Reviewing the President's Fiscal Year 2015 Budget Proposal for
the Department of Labor: Hearing Before the H. Comm. on Educ. and the
Workforce, 113th Cong. 86 (Mar. 26, 2014) (closing statement of Rep.
John Kline, Chairman, H. Comm. on Educ. and the Workforce).
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114TH CONGRESS
Full Committee Hearing Reviewing the President's Fiscal Year 2016
Budget Proposal for the Department of Labor
On March 18, 2015, the Committee held a hearing entitled
``Reviewing the President's Fiscal Year 2016 Budget Proposal
for the Department of Labor.'' Secretary Perez was the sole
witness. During the hearing, Rep. Frederica Wilson (D-FL)
warned that a new proposed fiduciary rule should not ``impact
the availability of affordable investment advice.''\8\
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\8\Reviewing the President's Fiscal Year 2016 Budget Proposal for
the Department of Labor: Hearing Before the H. Comm. on Educ. and the
Workforce, 114th Cong. (Mar. 18, 2015) (statement of Rep. Frederica S.
Wilson, Member, H. Comm. on Educ. and the Workforce).
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Subcommittee hearing examining Restricting Access to Financial Advice:
Evaluating the Costs and Consequences for Working Families and
Retirees
On June 17, 2015, the HELP Subcommittee held a hearing
entitled ``Restricting Access to Financial Advice: Evaluating
the Costs and Consequences for Working Families and Retirees''
to examine the new DOL Notice of Proposed Rulemaking amending
the regulatory definition of ``fiduciary'' under ERISA.
Witnesses before the Subcommittee included Secretary Perez; Mr.
Jack Haley, Executive Vice President, Fidelity Investments,
Boston, Massachusetts; Mr. Dean Harman, CFP, Managing Director,
Harman Wealth Management, The Woodlands, Texas; Mr. Dennis
Kelleher, President and CEO, Better Markets, Washington, D.C.;
Mr. Kent Mason, Partner, Davis & Harman LLP, Washington, D.C.;
and Dr. Brian Reid, Ph.D., Chief Economist, Investment Company
Institute, Washington, D.C. During the hearing, Dr. Reid
testified in opposition to DOL's reproposed fiduciary rule,
saying, ``[A]ny policy that impairs retirement savers' ability
to get the help that they need will significantly harm the
prospects of millions of workers. Unfortunately, the DOL
proposal will do just that.''\9\
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\9\Restricting Access to Financial Advice: Evaluating the Costs and
Consequences for Working Families and Retirees: Hearing Before the
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on
Educ. and the Workforce, 114th Cong. (Jun. 17, 2015) (oral testimony of
Dr. Brian Reid, Ph.D., Chief Economist, Inv. Co. Inst.).
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Subcommittee hearing examining the Principles for Ensuring Retirement
Advice Serves the Best Interests of Working Families and
Retirees
On December 2, 2015, the HELP Subcommittee held a hearing
entitled ``Principles for Ensuring Retirement Advice Serves the
Best Interests of Working Families and Retirees'' to further
examine the DOL NPRM amending the regulatory definition of
``fiduciary'' under ERISA. Notably, the Subcommittee considered
the potential negative effects of the NPRM on small businesses
and low- and middle-income families. Witnesses before the
Subcommittee included the Honorable Bradford (Brad) Campbell,
Counsel, Drinker Biddle & Reath LLP, Washington, D.C.; Ms.
Rachel A. Doba, President, DB Engineering, LLC, Indianapolis,
Indiana; Mr. Jules O. Gaudreau, Jr. ChFC, CIC, President, The
Gaudreau Group, Inc., Wilbraham, Massachusetts; and Ms. Marilyn
Mohrman-Gillis, Esq., Managing Director, Public Policy &
Communications, Certified Financial Planner Board of Standards,
Washington, D.C. During the hearing,\10\ witnesses praised a
set of bipartisan principles outlined by Reps. David (Phil) Roe
(R-TN), Richard Neal (D-MA), Peter Roskam (R-IL), and Michelle
Lujan Grisham (D-NM) for a legislative solution to help
strengthen retirement security.\11\
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\10\Principles for Ensuring Retirement Advice Serves the Best
Interests of Working Families and Retirees: Hearing Before the Subcomm.
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and
the Workforce, 114th Cong. (Dec. 2, 2015).
\11\Press Release, H. Comm. on Educ. and the Workforce, Bipartisan
House Members Outline Legislative Principles to Ensure Retirement
Advisors Protect Clients' Best Interests (Nov. 5, 2015), http://
edworkforce.house.gov/news/documentsingle.aspx?DocumentID=399747.
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H.R. 4293, Affordable Retirement Advice Protection Act, introduced
On December 18, 2015, Rep. Phil Roe, Chairman of the HELP
Subcommittee, introduced the Affordable Retirement Advice
Protection Act (H.R. 4293)\12\ with five cosponsors.\13\
Recognizing the threat of DOL's proposed rule, Rep. Roe
introduced the bipartisan bill to protect consumers and
preserve access to affordable financial advice for low- and
middle-income families. The legislation amends ERISA to ensure
retirement advisors act in their clients' best interests and
prohibits DOL from implementing its flawed proposal unless
Congress affirmatively approves the final rule.
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\12\H.R. 4293, 114th Cong. (2015).
\13\Original co-sponsors of H.R. 4293 include Representatives
Richard Neal (D-MA), Peter Roskam (R-IL), John Larson (D-CT), Earl L.
``Buddy'' Carter (R-GA), and David Scott (D-GA).
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H.R. 4294, Strengthening Access to Valuable Education and Retirement
Support Act of 2015, introduced
On December 18, 2015, Rep. Peter Roskam, along with Reps.
Phil Roe, Richard Neal, John Larson (D-CT), Tom Reed (R-NY),
and Michelle Lujan Grisham (D-NM), introduced the Strengthening
Access to Valuable Education and Retirement Support Act of 2015
(H.R. 4294).\14\ Recognizing the threat of DOL's proposed rule,
the bipartisan bill was introduced to protect consumers and
preserve access to affordable financial advice for low- and
middle-income families. The legislation amends the Code to
ensure retirement advisors act in their clients' best interests
and prohibits DOL from implementing its flawed proposal unless
Congress affirmatively approves the final rule.
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\14\H.R. 4294, 114th Cong. (2015).
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Committee passes H.R. 4293, Affordable Retirement Advice Protection Act
On February 2, 2016, the Committee considered H.R. 4293,
the Affordable Retirement Advice Protection Act.\15\ Rep. Roe
offered an amendment in the nature of a substitute making
technical changes to the introduced bill. The Committee voted
to adopt the amendment in the nature of a substitute by voice
vote. One additional amendment was offered but was voted down
by voice vote. The Committee favorably reported H.R. 4293, as
amended, to the House of Representatives by a vote of 22-14.
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\15\H.R. 4293, Affordable Retirement Advice Protection Act: Markup
Before the H. Comm. on Educ. and the Workforce, 114th Cong. (Feb. 2,
2016).
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Committee passes H.R.4294, Strengthening Access to Valuable Education
and Retirement Support Act of 2015
On February 2, 2016, the Committee considered H.R. 4294,
the Strengthening Access to Valuable Education and Retirement
Support Act of 2015.\16\ Representative Earl L. (Buddy) Carter
(R-GA) offered an amendment in the nature of a substitute
making technical changes to the introduced bill. The Committee
voted to adopt the amendment in the nature of a substitute by
voice vote. One additional amendment was offered and
subsequently withdrawn. The Committee favorably reported H.R.
4294, as amended, to the House of Representatives by a vote of
22-14.
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\16\H.R. 4294, Strengthening Access to Valuable Education and
Retirement Support Act of 2015: Markup Before the H. Comm. on Educ. and
the Workforce, 114th Cong. (Feb. 2, 2016).
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H.J. Res. 88, Disapproving the rule submitted by the Department of
Labor relating to the definition of the term ``Fiduciary,''
introduced
On April 19, 2016, Rep. Roe, along with Reps. Charles
Boustany (R-LA) and Ann Wagner (R-MO), introduced H.J. Res. 88,
Disapproving the rule submitted by the Department of Labor
relating to the definition of the term ``Fiduciary,'' pursuant
to the Congressional Review Act.
Committee passes H.J. Res. 88, Disapproving the rule submitted by the
Department of Labor relating to the definition of the term
``Fiduciary''
On April 21, 2016, the Committee considered H.J. Res. 88
and reported the resolution favorably to the House of
Representatives by a vote of 22-14.
BACKGROUND
PRESENT LAW
Congressional Review Act
The Congressional Review Act (CRA), enacted in 1996,
established special congressional procedures for disapproving a
broad range of regulatory actions (largely encompassing, but
not limited to, rules) issued by federal agencies.\17\ Before a
rule covered by the CRA can take effect, the federal agency
promulgating the rule must submit it to Congress. If Congress
passes a joint resolution disapproving the rule, and the
resolution is enacted, the rule cannot take effect or continue
in effect. The agency also may not reissue the rule or any rule
``substantially the same,'' except under authority of a
subsequently-enacted law.\18\
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\17\5 U.S.C. Sec. 801.
\18\5 U.S.C. Sec. 801(b)(2).
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The CRA established special expedited procedures for
congressional action on joint resolutions of disapproval.\19\
The CRA dictates that, in both houses, to qualify for expedited
consideration, a disapproval resolution must be submitted
within 60 days after Congress receives the rule, exclusive of
recess periods. It then lays out a set of action periods and
deadlines that must be met before the joint resolution can
receive privileged treatment in the Senate. Only one rule, a
2000 DOL rule on ergonomics, has been successfully disapproved
by Congress using the CRA process.\20\
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\19\5 U.S.C. Sec. 802.
\20\``Ergonomics Program,'' 65 Fed. Reg. 68262 (Nov. 14, 2000);
Joint Resolution providing for congressional disapproval of the rule
submitted by the Department of Labor under chapter 8 of title 5, United
States Code, relating to ergonomics, Pub. L. 107-5 (Mar. 20, 2001).
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Retirement savings and fiduciary requirements under the Employee
Retirement Income Security Act of 1974 (ERISA) and the Code
The Code provides two general vehicles for tax-favored
retirement savings: employer-sponsored retirement plans and
individual retirement arrangements (IRAs).\21\ Various
requirements must be met for tax-favored treatment to apply.
ERISA, generally administered by the Secretary of Labor,
similarly applies various requirements with respect to employee
pension benefit plans (pension plans).\22\ The most common type
of employer-sponsored plan is a qualified retirement plan,
which may be a defined contribution plan or a defined benefit
plan.\23\
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\21\Code Sections 219, 408, and 408A provide rules for IRAs.
\22\ERISA applies also to employee welfare benefit plans. ERISA
generally does not apply to church plans or plans of governmental
employers.
\23\Code Sec. 401(a). A qualified annuity plan under section 403(a)
is similar to a qualified retirement plan (and subject to similar
requirements) except that plan assets consist of annuity contracts,
rather than investments held in a trust or custodial account.
References herein to a qualified retirement plan include a qualified
annuity plan. Simplified employee pension (SEP) plans under section
408(k) and SIMPLE IRA plans under section 408(p) are employer-sponsored
plans funded through contributions by the employer to an IRA
established for each employee.
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Under a defined contribution plan, benefits are based on an
individual account for each participant, to which are allocated
contributions, earnings, and losses.\24\ Defined contribution
plans commonly allow participants to direct the investment of
their accounts, usually by choosing among investment options
offered under the plan. Under a defined benefit plan, benefits
are determined under a plan formula and funded by the general
assets of the trust established under the plan, which are
invested by plan fiduciaries; individual accounts are not
maintained for employees participating in the plan.\25\
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\24\Defined contribution plan (or individual account plan) is
defined at ERISA section 3(34).
\25\As defined in ERISA section 3(35), a defined benefit plan
generally is any plan that is not a defined contribution plan.
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In general, under ERISA and the Code, a fiduciary is a
person who (1) exercises any discretionary authority or
discretionary control respecting management of the plan or
exercises any authority or control respecting management or
disposition of plan assets, (2) renders investment advice for a
fee or other compensation, direct or indirect, with respect to
any moneys or other property of such plan, or has any authority
or responsibility to do so, or (3) has any discretionary
authority or discretionary responsibility in the administration
of the plan.\26\
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\26\ERISA Sec. 3(21), Code 4975(e)(3).
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ERISA requires a fiduciary of a plan to discharge his
duties with respect to the plan solely in the interest of the
participants and beneficiaries, for the exclusive purpose of
providing benefits to participants and their beneficiaries as
well as defraying reasonable expenses of administering the
plan, and with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent man acting in
a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
aims.\27\ With respect to plan assets, ERISA requires a
fiduciary to diversify the investments of the plan so as to
minimize the risk of large losses unless under the
circumstances it is clearly prudent not to do so.
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\27\ERISA Sec. 404(a)(1). ERISA section 402(a)(1) requires a plan
to be established pursuant to a written instrument that provides for
one or more named fiduciaries who jointly or severally have authority
to control and manage the operation and administration of the plan. For
this purpose, the term ``named fiduciary'' means a fiduciary who is
named in the plan instrument, or who, pursuant to a procedure specified
in the plan, is identified as a fiduciary by a person who is an
employer or employee organization with respect to the plan or by an
employer and an employee organization acting jointly.
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A plan fiduciary who breaches any of the fiduciary
responsibilities, obligations, or duties imposed by ERISA
(including the prohibited transaction rules discussed infra) is
personally liable to make good to the plan any losses to the
plan resulting from such breach and to restore to the plan any
profits the fiduciary has made through the use of plan
assets.\28\ A plan fiduciary may be liable also for a breach of
responsibility by another fiduciary (a ``co-fiduciary'') in
certain circumstances, for example, if the fiduciary's failure
to fulfill his own fiduciary duties enabled the co-fiduciary to
commit the breach.\29\ Certain fiduciary violations may result
in the imposition of civil penalties.\30\
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\28\ERISA Sec. 409. Under ERISA section 502(a)(2), an action for a
breach of fiduciary responsibility may be brought by DOL, a plan
participant or beneficiary, or another fiduciary.
\29\ERISA Sec. 405.
\30\ERISA Sec. 502(i) and (l).
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ERISA provides a special rule in the case of a defined
contribution plan that permits participants to exercise control
over the assets in their individual accounts (often referred to
as ``participant-directed investments'').\31\ Under the special
rule, if a participant exercises control over the assets in his
or her account, the participant is not deemed to be a fiduciary
by reason of such exercise, and no person who is otherwise a
fiduciary is liable for any loss, or by reason of any breach,
resulting from the participant's exercise of control.
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\31\ERISA Sec. 404(c), implemented by regulations at 29 C.F.R. sec.
2550.404c-1. 29 C.F.R. sec. 2550.404c-5 provides rules for qualified
default investment alternatives (QDIAs) if a participant does not
select any investment options.
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General prohibited transaction rules
ERISA and the Code prohibit a plan fiduciary from causing
the plan to engage in certain transactions (``prohibited
transactions'') between the plan and a ``party in interest''
(referred to as a ``disqualified person'' in the Code).\32\
Parties in interest include a fiduciary of the plan; a person
providing services to the plan; an employer with employees
covered by the plan; an employee organization for which any of
whose members are covered by the plan; and certain owners,
officers, directors, highly compensated employees, family
members, and related entities.\33\ The prohibited transaction
rules under the Code apply also to IRAs, Archer MSAs, HSAs, and
Coverdell ESAs.\34\
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\32\ERISA Sec. 406; Code Sec. 4975. Unless otherwise noted, ``party
in interest'' refers to both a party in interest for ERISA purposes and
a disqualified person under the Code. Under Code section 4975, similar
rules apply to qualified retirement plans under Code sec. 401(a) and
qualified annuities under Code sec. 403(a) of private employers, as
well as individual retirement arrangements (IRAs) under Code section
408, health savings accounts (HSAs) under Code section 223, Archer
Medical Savings Accounts (MSAs) under Code section 220, and Coverdell
education savings accounts (Coverdell ESAs) under Code section 530. The
prohibited transaction rules under the Code generally do not apply to
governmental plans or church plans. However, under section 503, the
trust holding assets of a governmental or church plan may lose its tax-
exempt status in the case of a prohibited transaction listed in section
503(b).
\33\ERISA Sec. 3(14); Code Sec. 4975(e)(2).
\34\These are included in the definition of ``plan'' under Code
section 4975(e)(1).
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Under both ERISA and the Code, prohibited transactions
include the following, whether direct or indirect, between a
plan and a party in interest: (1) the sale or exchange or
leasing of property, (2) the lending of money or other
extension of credit, (3) the furnishing of goods, services, or
facilities, or (4) the transfer to, or use by or for the
benefit of, a party in interest of any assets of the plan.
Under ERISA only, a prohibited transaction also includes an
acquisition, on behalf of the plan, of any employer security or
employer real property in violation of ERISA restrictions.\35\
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\35\ERISA sec. 407 restricts the acquisition or holding of employer
securities and employer real property by a plan.
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These rules also provide that a fiduciary, with respect to
a plan, must not (1) deal with the assets of the plan in his
own interest or for his own account, (2) in his individual or
in any other capacity, act in any transaction involving the
plan on behalf of a party (or represent a party) whose
interests are adverse to the interests of the plan or the
interests of its participants or beneficiaries, or (3) receive
any consideration for his own personal account from any party
dealing with the plan in connection with a transaction
involving the assets of the plan.\36\
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\36\ERISA Sec. 406(b); 26 U.S.C. Sec. 4975(c)(1)(E) and (F).
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Certain transactions are statutorily exempt from prohibited
transaction treatment; for example, certain loans to plan
participants and arrangements with a party in interest for
legal, accounting, or other services necessary for the
establishment or operation of a plan if no more than reasonable
compensation is paid for the services.\37\ In addition, an
administrative exemption may be granted, on either an
individual or class basis, subject to a finding that the
exemption is administratively feasible, in the interests of the
plan and of its participants and beneficiaries, and protective
of the rights of participants and beneficiaries of the
plan.\38\ Before an administrative exemption is granted, notice
must be provided to interested persons, notice must be
published in the Federal Register of the pendency of the
exemption, and interested persons must be given an opportunity
to provide comments.
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\37\ERISA Sec. 408(b); Code Sec. 4975(d)(2).
\38\ERISA Sec. 408(a).
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Excise tax on prohibited transactions
If a prohibited transaction occurs, the disqualified person
who participated in the transaction is generally subject to a
two-tiered excise tax.\39\ The first tier tax is 15 percent of
the amount involved in the transaction. The second tier tax,
imposed if the prohibited transaction is not corrected within a
certain period, is 100 percent of the amount involved.
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\39\In the case of an IRA, HSA, Archer MSA or Coverdell ESA, the
sanction for some prohibited transactions is the loss of tax-favored
status, rather than an excise tax. See Code section 408(e)(2), also
cross-referenced in Code sections 220(e)(2), 223(e)(2) and 530(e).
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For purposes of the excise tax, the amount involved with
respect to a prohibited transaction is generally the greater of
(1) the amount of money and the fair market value of the other
property given or (2) the amount of money and the fair market
value of the other property received.\40\ For purposes of the
excise tax, ``correction'' and ``correct'' mean, with respect
to a prohibited transaction, undoing the transaction to the
extent possible, but in any case, placing the plan in a
financial position not worse than it would be if the
disqualified person were acting under the highest fiduciary
standards.
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\40\In the case of certain transactions for services for which more
than reasonable compensation is paid, the amount involved is only the
excess compensation.
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Jurisdiction over the prohibited transaction rules
Jurisdiction over the Code provisions governing qualified
retirement plans and similar ERISA provisions is divided
between the Department of the Treasury (Treasury) and DOL by an
executive order, referred to as Reorganization Plan No. 4 of
1978 (Reorganization Plan).\41\ As part of this division, with
certain exceptions, Treasury authority was transferred to DOL
with respect to regulations, rulings, opinions, and exemptions
under the prohibited transaction provisions of the Code.\42\ As
a result, DOL regulations and other guidance relating to
prohibited transactions applies for Code purposes, as well as
for ERISA purposes, and DOL has the authority to grant
individual and class exemptions applicable under the Code.
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\41\Reorganization Plan No. 4 of 1978, 43 Fed. Reg. 47713 (Oct. 17,
1978).
\42\Sec. Sec. 102 and 105 of Reorganization Plan No. 4 of 1978, 43
Fed. Reg. 47713. Rules for coordination concerning certain fiduciary
actions are provided under section 103 of the Reorganization Plan. In
addition, under section 3003 of ERISA, Treasury and DOL are directed to
consult with each other from time to time with respect to the
prohibited transaction rules and exemptions.
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Rules relating to investment advice prior to DOL's final rule
Fiduciary status
As described above, a fiduciary includes a person who
renders investment advice for a fee or other compensation,
direct or indirect, with respect to any moneys or other
property of the plan, or has any authority or responsibility to
do so.
An existing DOL regulation issued in 1975 provides that a
person is deemed to be rendering ``investment advice'' to an
employee benefit plan for this purpose only if he--
Renders advice to the plan as to the value
of securities or other property, or makes a
recommendation as to the advisability of investing in,
purchasing, or selling securities or other property;
and
Either directly or indirectly, for example,
through or together with any affiliate, (a) has
discretionary authority or control, whether or not
pursuant to agreement, arrangement, or understanding,
with respect to purchasing or selling securities or
other property for the plan, or (b) has rendered advice
such that (1) the advice is rendered on a ``regular
basis;'' (2) the advice is for a fee, either direct or
indirect; (3) the advice is provided pursuant to a
``mutual agreement, arrangement, or understanding;''
(4) the advice is individualized to the plan's
particular needs; and (5) the advice serves as a
``primary basis'' for the investment decision (known as
the ``five-part test'').\43\
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\43\29 C.F.R. Sec. 2510.3-21(c).
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The 1975 regulation further provides that a person who is a
fiduciary with respect to a plan by reason of rendering
investment advice (as described supra) for a fee or other
compensation, direct or indirect, with respect to any moneys or
other property of the plan, or having any authority or
responsibility to do so, is not deemed to be a fiduciary
regarding any assets of the plan with respect to which the
person does not have any discretionary authority, discretionary
control, or discretionary responsibility; does not exercise any
authority or control; does not render investment advice (as
described supra) for a fee or other compensation; and does not
have any authority or responsibility to render such investment
advice. However, this rule does not exempt the person from
ERISA liability attributable to a breach of responsibility by a
co-fiduciary or exclude the person from the definition of the
term ``party in interest'' based on providing services to the
plan with respect to any assets of the plan.
In addition to the 1975 regulation, other guidance issued
by DOL in 1996 (Interpretive Bulletin 96-1) provides that the
furnishing of mere investment education to a participant or
beneficiary in a participant-directed individual account plan
does not constitute the rendering of investment advice.\44\ For
this purpose, investment education includes the following
categories of information and materials: plan information,
general financial and investment information, asset allocation
models, and interactive investment materials. Interpretive
Bulletin 96-1 more fully describes these categories and notes
the information and materials merely represent examples that
may be furnished to participants and beneficiaries without such
information and materials constituting investment advice and
that there may be many other examples of information,
materials, and educational services, which, if furnished to
participants and beneficiaries, would not constitute investment
advice. Accordingly, Interpretive Bulletin 96-1 provides that
no inferences should be drawn from the description of the four
categories with respect to whether the furnishing of any
information, materials, or educational services not described
therein may constitute investment advice.
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\44\29 C.F.R. Sec. 2905.96-1. This treatment applies irrespective
of who provides the information (for example, the plan sponsor,
fiduciary or service provider), the frequency with which the
information is shared, the form in which the information and materials
are provided (for example, on an individual or group basis, in writing
or orally, or via video or computer software), or whether an identified
category of information and materials is furnished alone or in
combination with other identified categories of information and
materials.
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Statutory exemptions relating to investment advice
If certain requirements are met, specific transactions
relating to investment advice are exempt from prohibited
transaction treatment if the advice is provided by a fiduciary
advisor through an eligible investment advice arrangement.\45\
The exemptions apply to (1) the provision of investment advice
to a plan participant or beneficiary with respect to a security
or other property available as an investment under the plan,
(2) an investment transaction (that is, a sale, acquisition, or
holding of a security or other property) pursuant to the
advice, and (3) the direct or indirect receipt of fees or other
compensation in connection with the provision of the advice or
an investment transaction pursuant to the advice.
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\45\ERISA Sec. 408(b)(14) and (g), enacted by section 601 of the
Pension Protection Act of 2006, Pub. L. No. 109-280.
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For purposes of the exemptions, an eligible investment
advice arrangement is generally an arrangement that either (1)
provides that any fees (including any commission or
compensation) received by the fiduciary advisor for investment
advice or with respect to an investment transaction with
respect to plan assets do not vary depending on the basis of
any investment option selected (sometimes referred to as ``fee-
leveling'') or (2) uses a computer model under an investment
advice program that meets specified requirements in connection
with the provision of investment advice to a participant or
beneficiary.\46\ The arrangement must be expressly authorized
by a plan fiduciary other than (A) the person offering the
investment advice program, (B) any person providing investment
options under the plan, or (C) any affiliate of (A) or (B).\47\
In addition, the fiduciary advisor must provide disclosures
applicable under securities laws; any investment transaction
must occur solely at the direction of the investment advice
recipient; the compensation received by the fiduciary advisor
and affiliates in connection with the investment transaction
must be reasonable; and the terms of the investment transaction
must be at least as favorable to the plan as an arm's length
transaction would be.
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\46\Various requirements with respect to notices and disclosure,
recordkeeping and audits must also be met.
\47\Affiliate for this purpose means an affiliated person as
defined under section 2(a)(3) of the Investment Company Act of 1940, 15
U.S.C. Sec. 80a-2(a)(3).
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DOL'S 2016 FINAL REGULATION AND ``BIC'' EXEMPTION
On April 6, 2016, DOL finalized a regulation that will
replace the current regulation relating to investment advice
with a new standard as to whether a person is a fiduciary based
on rendering investment advice, generally applicable on April
10, 2017.\48\ Under the regulation, a person is a fiduciary
based on rendering investment advice if the person--
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\48\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20946.
The regulation will apply for purposes of ERISA and the prohibited
transaction rules of the Code.
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Provides to a plan, a plan fiduciary, an
IRA, or an IRA owner certain types of recommendations
or statements (as described below) that constitute
investment advice with respect to plan or IRA assets in
exchange for a fee or other compensation; and
Either directly or indirectly (such as
through an affiliate) (1) represents or acknowledges
that it is acting as a fiduciary with respect to the
investment advice, or (2) renders the advice pursuant
to a written or verbal agreement, arrangement, or
understanding that the advice is individualized to, or
that the advice is specifically directed to, the advice
recipient for consideration in making investment or
management decisions with respect to securities or
other property of the plan or IRA.\49\
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\49\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20997.
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Under the final regulation, investment advice includes--
A recommendation as to the advisability of
acquiring, holding, disposing of, or exchanging
securities or other property, including a
recommendation to take a distribution of benefits or a
recommendation as to the investment of securities or
other property to be rolled over or otherwise
distributed from the plan or IRA;\50\ and
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\50\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20964;
DOL Advisory Opinion 2005-23A (Dec. 7, 2005) addresses the question of
whether a recommendation that a participant in a pension plan roll over
his or her account balance to an IRA to take advantage of investment
options not available under the plan constitutes investment advice with
respect to plan assets. The advisory opinion expresses the view that,
with respect to a person who is not otherwise a plan fiduciary, merely
advising a plan participant to take an otherwise permissible plan
distribution, even when the advice is combined with a recommendation as
to how the distribution should be invested, does not constitute
investment advice within the meaning of the existing DOL investment
advice regulations defining when a person is a fiduciary by virtue of
providing investment advice with respect to employee benefit plan
assets. The advisory opinion provides that DOL does not view a
recommendation to take a distribution as advice or a recommendation
concerning a particular investment (that is, purchasing or selling
securities or other property) as contemplated by the regulations and
that any investment recommendation regarding the proceeds of a
distribution would be advice with respect to funds that are no longer
plan assets. Part IV.A(2) of the preamble to the regulation notes the
regulation supersedes Advisory Opinion 2005-23A.
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A recommendation as to the management of
securities or other property, including recommendations
as to the management of securities or other property to
be rolled over or otherwise distributed from the plan
or IRA.
Subject to specified requirements, the final regulation
provides exceptions from the definition of fiduciary for (1)
certain counterparties in transactions with ``independent
fiduciaries with financial expertise;'' (2) swap and security-
based swap transactions with an employee benefit plan; (3)
employees of an employee benefit plan sponsor. Additionally,
platform providers to employee benefit plans, persons providing
selection and monitoring assistance to employee benefit plans,
persons providing general financial communications (such as
talk show hosts), and persons providing certain investment
education (including to an IRA or IRA owner, but under
standards somewhat different from the standards in the existing
DOL guidance) are deemed not to be providing ``investment
advice.'' However, these exceptions do not apply if the person
represents or acknowledges that the person is acting as a
fiduciary with respect to the advice.
In conjunction with the regulation, DOL finalized new
prohibited transaction class exemptions, including a ``best
interest contract'' or BIC exemption,\51\ as well as changes to
various existing class exemptions. The BIC exemption generally
applies to compensation received by an investment advisor or
related party in connection with a transaction (that is, a
purchase, sale, or holding of assets) resulting from investment
advice provided to ``retirement investors,'' meaning plan
participants or beneficiaries who direct the investment of the
assets in their accounts, IRA owners who make investment
decisions with respect to their IRAs, and ``retail
fiduciaries,'' such as independent plan fiduciaries managing
less than $50 million. Only advice in the ``best interest'' of
the saver under the regulation qualifies for the exemption.
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\51\Best Interest Contract Exemption, 81 Fed. Reg. 21002 (Apr. 8,
2016).
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The BIC class exemption requires that the advisor and
financial institution enter into a written contract with the
retirement investor at the time of the transaction. Among other
requirements:
The contract must affirmatively state that
the advisor and financial institution are fiduciaries
under ERISA, the Code, or both, with respect to any
investment advice to the retirement investor;
Under the contract, the advisor and
financial institution must specifically agree to adhere
to certain impartial conduct standards, which include
providing investment advice that is in the best
interest of the retirement investor, not recommending
an investment in an asset if they (or affiliates) will
receive more than reasonable compensation in relation
to the total services they provide to the retirement
investor with respect to the investment, and not
providing any statements about an asset, fees, material
conflict of interest, and any other matter related to
the retirement investor's investment decision that are
misleading;
Under the contract, the advisor and
financial institution must provide certain warranties
and make certain disclosures related to fees and
conflicts of interest;
The contract must not have exculpatory
provisions disclaiming or otherwise limiting liability
of the advisor or financial institution for a violation
of the contract's terms, or a provision under which a
plan, IRA, or retirement investor waives or qualifies
its right to bring or participate in a class action or
other representative action in court in a dispute with
the advisor or financial institution;\52\ and
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\52\As described in DOL's background discussion of the exemption,
the contract terms to which advisors and financial institutions must
agree in order to qualify for the BIC class exemption create a cause of
action that DOL expects will be used by aggrieved retirement investors.
Best Interest Contract Exemption, 81 Fed. Reg. at 21022.
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The advisor must comply with a myriad of
internet disclosure requirements, including a
discussion of the firm's business model, a schedule of
typical fees, a list of all product manufacturers and
other parties with whom there exists an arrangement to
provide third-party payments (and how such payments
affect advisor compensation), and disclosures regarding
incentives provided to advisors to recommend certain
products.
SUMMARY OF H.J. RES. 88
Under the joint resolution, Congress expresses its
disapproval of the rule submitted by DOL relating to the
definition of the term ``fiduciary.'' If enacted, the joint
resolution would prohibit the regulation from going into
effect.
COMMITTEE VIEWS
HISTORY OF DOL'S RULEMAKING
DOL's withdrawn 2010 proposal
The Obama administration has long argued the regulatory
definition of an ``investment advice'' fiduciary is
insufficiently restrictive.\53\ To address this concern, in
2010, DOL's EBSA issued a complicated proposed regulation
expanding the definition of ``fiduciary.''\54\ On September 19,
2011, in the face of bipartisan opposition from the Committee
and others in Congress related to access to advice and cost,
EBSA withdrew its original proposal and announced it would
repropose a revised rulemaking.\55\
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\53\E.g., Redefining `Fiduciary': Assessing the Impact of the Labor
Department's Proposal on Workers and Retirees: Hearing Before the
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on
Educ. and the Workforce, 112th Cong. (July 26, 2011) (testimony of the
Hon. Phyllis Borzi, Asst. Secr'y of Labor of the Emp. Benefits Sec.
Admin.).
\54\Definition of the Term ``Fiduciary,'' 75 Fed. Reg. 65263 (Oct.
15, 2010) [hereinafter 2010 Proposal].
\55\See Press Release, Dept. of Labor, U.S. Labor Department's EBSA
to re-propose rule on definition of a fiduciary (Sept. 19, 2011),
http://www.dol.gov/ebsa/newsroom/2011/11-1382-NAT.html.
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DOL's April 2015 notice of proposed rulemaking
At a February 2015 speech at AARP, President Obama
announced his intention to go forward with this rulemaking.\56\
In this speech and subsequent public statements, the
administration rebranded the proposed regulation as a consumer
protection against ``backdoor payments and hidden fees''
generated by structural conflicts of interest in the retirement
advice industry. Then a Council of Economic Advisors report
argued ``conflicted advice'' costs Americans $17 billion
annually.\57\ This figure assumed IRA investors were duped into
rolling over 401(k) funds into high cost mutual funds by
advisors and brokers and, as a result, pay on average 1 percent
more annually. These assumptions came under intense scrutiny
from analysts who argue IRA holders actually pay only 0.16
percent more and that these fees are justifiable due to a
higher level of service.\58\
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\56\Press Release, White House Office of the Press Secretary,
Remarks by the President at the AARP (Feb. 23, 2015), http://
www.whitehouse.gov/the-press-office/2015/02/23/remarks-president-aarp.
\57\Council of Economic Advisors, The Effects of Conflicted
Investment Advice on Retirement Saving, (Feb. 2015) http://
www.whitehouse.gov/sites/default/files/docs/cea_coi_report_final.pdf.
\58\Letter from David M. Abbey, Deputy Gen. Counsel, Retirement
Policy, Inv. Co. Inst. and Brian Reid, Chief Economist, Inv. Co. Inst.,
to the Hon. Howard Shelanski, Admin., Office of Info. and Reg. Aff.,
OMB (Apr. 7, 2015), http://www.ici.org/pdf/15_ici_omb_data.pdf.
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Despite this criticism, on April 20, 2015,\59\ DOL proposed
a regulation and a package of amendments (2015 NPRM) to the
prohibited transaction rules designed to expand the universe of
activities that trigger fiduciary liability. The proposal
effectively eliminated the ``regular basis,'' ``mutual
agreement,'' and ``primary basis'' prongs of the five-part test
for investment advice. An application of the existing
prohibited transaction rules using this new definition would
have functionally barred commission-based retirement accounts,
where the advisor receives payment when transactions are
executed (as opposed to an ``advisory account,'' where the
advisor receives a flat fee or percentage of assets annually to
manage the account). Because non-fiduciary commission-based
accounts are the most cost-effective way to engage low- and
middle-income savers, this proposal risked millions of
individuals with IRAs losing access to advice. Purportedly to
address this, DOL also proposed the BIC Exemption, an exemption
from the prohibited transaction rules if the IRA provider
fulfilled a number of conditions.
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\59\Definition of the Term ``Fiduciary''; Conflict of Interest
Rule-Retirement Investment Advice, 80 Fed. Reg. 21928 (Apr. 20, 2015)
[hereinafter 2015 Proposal].
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The BIC exemption was widely panned as so unworkable that
it provided little relief. It included a requirement the
advisor sign a contract prior to providing any recommendation
promising to provide advice only in the client's best
interest.\60\ Other requirements included projecting the cost
of each recommended asset purchase for one-, five-, and ten-
year periods after the transaction; maintaining a website with
all compensation information for the firm and each individual
advisor or affiliate for each potential investment offered; and
recommending only certain types of investment products.
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\60\Restricting Access to Financial Advice: Evaluating the Costs
and Consequences for Working Families and Retirees: Hearing Before the
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on
Educ. and the Workforce, 114th Cong. 8 (Jun. 17, 2015) (written
testimony of Jack Haley, Exec. Vice President, Fidelity Invs.).
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Under this proposed exemption and the proposed regulation,
advisors would be subject to class action litigation, and
previously-provided non-fiduciary ``education'' would now
trigger fiduciary liability. Finally, advisory firms would not
be able to market to small businesses without triggering
fiduciary liability, likely leading to a market exodus. In sum,
the proposal jeopardized Americans' access to affordable
advice.
The 2015 NPRM received thousands of comments, including
numerous letters from members of Congress.\61\ Notably, 46
House Democrats signed a letter led by HELP Subcommittee
Ranking Member Jared Polis (D-CO) calling for publication of
the revised rule prior to finalizing, as well as a supplemental
comment period.\62\ Another letter, signed by 96 House
Democrats, expressed concerns the proposal could reduce access
to investment advice for both small businesses and low- and
middle-income individuals.\63\ In all, over half of House
Democrats signed letters questioning the DOL's proposal.
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\61\Comments received through September 24, 2015, are published on
EBSA's website, http://www.dol.gov/ebsa/regs/cmt-1210-AB32-92.html.
\62\See, e.g., Letter from the Hon. Jared Polis, et al to the Hon.
Thomas E. Perez, Sec'y, Dep't of Labor (Oct. 30, 2015), http://
df2d4c59ccf47b6bc124-
2951e9520e07371e6076e0c8af900fc2.r54.cf5.rackcdn.com/wp-content/
uploads/Secretary-Perez-Fiduciary-Comment-Period-Letter-10-30-15.pdf.
\63\Letter from the Hon. Gwen Moore, et al to the Hon. Thomas E.
Perez, Sec'y, Dep't of Labor (Sept. 24, 2015) (on file with the
Committee).
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On July 21, 2015, every Republican member of the Committee
signed a comment letter calling for the proposal to be
withdrawn and highlighting testimony from a hearing held by the
HELP Subcommittee on June 17, 2015.\64\ This comment letter
also explained the Committee's longstanding interest in
pursuing a responsible best interest standard.
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\64\Letter from the Hon. John Kline, Chairman, H. Comm. on Educ.
and the Workforce, et al to the Hon. Thomas E. Perez, Sec'y, Dep't of
Labor (July 21, 2015), http://edworkforce.house.gov/uploadedfiles/7-21-
15-_dol_fiduciary_rule.pdf.
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CONCERNS WITH DOL'S FINAL REGULATION
On April 6, 2016, DOL finalized its regulation,
significantly altering the retirement services
marketplace.Based on overwhelming testimony from a diverse
group of stakeholders during two HELP Subcommittee hearings,
the final rule (even as revised from the 2015 NPRM) disrupts
advisory relationships, contains a multitude of technical
shortcomings, and brings about a number of unacceptable
consequences. The final rule restricts access to affordable
financial advice for lower- and middle-income Americans and
makes it harder for employers--especially small businesses--to
set up retirement plans. For these reasons, even if the final
rule represents a modest improvement from the 2015 NPRM, the
rule should still be rejected.
Restricted access to advice
The final regulation will have the net effect of locking
lower- and middle-income investors out of the advice market.
Advisors should have a legal duty to act in the ``best
interests'' of their clients; however, ``fiduciary'' status
under the regulation will result in the legal prohibition of
most transactions because of how the advisor is
compensated.\65\ DOL claims its goal is not to eliminate
commission-based accounts,\66\ but it failed to adequately
rectify this gaping inadequacy in the final rule. For example,
while the BIC exemption permits advisors to continue to receive
commissions, there are several onerous disclosure and
information-gathering requirements that will increase costs,
which will be passed on to investors. Alternatively, those
costs will make continued advice to small- and mid-size
accounts unaffordable and therefore unavailable. Mr. Dean
Harman, CFP, Harman Wealth Management, summarized these
concerns, saying:
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\65\Id. at 3, 4.
\66\Restricting Access to Financial Advice: Evaluating the Costs
and Consequences for Working Families and Retirees: Hearing Before the
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on
Educ. and the Workforce, 114th Cong. 5 (Jun. 17, 2015) (written
testimony of The Hon. Thomas E. Perez, U.S. Sec'y, Dept. of Labor).
Unfortunately, these and other flawed assumptions
cause the DOL to offer a proposal that is poorly
designed for investors and unduly burdensome for
financial advisors and financial institutions. The
result is that the proposal will drive up costs putting
retirement advice out of the reach of many
investors.\67\
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\67\Restricting Access to Financial Advice: Evaluating the Costs
and Consequences for Working Families and Retirees: Hearing Before the
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on
Educ. and the Workforce, 114th Cong. 10 (Jun. 17, 2015) (written
testimony of Dean Harman, CFP, Managing Dir., Harman Wealth
Management).
Moreover, the disclosure requirements could overwhelm investors
with the volume of fine print, resulting in confusion or
functional non-disclosure. This was a concern of many in the
industry, including Mr. Jules Gaudreau, Jr. ChFC, CIC,
President of The Gaudreau Group, Inc., who echoed this
sentiment at a December 2, 2015, HELP Subcommittee hearing,
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stating:
It is, therefore, important to make sure that the
U.S. retirement savings and tax policies encourage
individuals to take personal responsibility for the
need to save to protect their financial futures. It is
also important to be sure that the rules in place to
protect these savers and savings do not so burden the
mechanisms for saving that the rules themselves become
a barrier to achieving the goal of post-retirement
financial security. . . . Clear, understandable
disclosure of this relevant information is a must.
However, it is easy to overwhelm a retirement saver,
especially one who is in need of basic financial
education. Too much disclosure leads to overload and
possibly paralysis in the decision-making process. The
DOL proposal, as drafted this past April, fails this
important balancing test. It requires too much
information--and it requires it of financial advisors
who usually do not have access to the data the DOL
requires.\68\
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\68\Principles for Ensuring Retirement Advice Serves the Best
Interests of Working Families and Retirees: Hearing Before the Subcomm.
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and
the Workforce, 114th Cong. 3, 4 (Dec. 2, 2015) (written testimony of
Jules Gaudreau, Jr., ChFC, CIC, President, The Gaudreau Group, Inc.).
Even worse, the final rule reduces the educational material
that can be provided to IRA holders. For example, if an IRA
provider notes a sample asset allocation, it cannot mention
examples of funds in those asset classes without triggering
fiduciary duties. Therefore, IRA owners will likely be deprived
of that educational information.
Furthermore, unlike the 2015 NPRM, under the final rule,
all variable and fixed-index annuities will need to comply with
the new requirements. Moreover, the BIC exemption continues to
envision class action litigation under state law. The costs
associated with this litigation will drive costs up for those
least able to bear it, namely low- and middle-income retirement
savers. More technically, DOL continues to require compliance
within an unreasonably short amount of time, with most
requirements being effective within one year.
The final rule adopts the proposal's narrowing of the five-
part test for determining whether the advisor rendered
``investment advice'' and the framework of the BIC exemption,
and amended a few of the most obviously unworkable
requirements. For example, a contract stating the advisor's
intent to provide advice in the best interest of the client is
no longer required prior to any recommendation; instead, a
contract is required at the time a transaction is executed. The
one-, five-, and ten-year cost projections are no longer
required, and other disclosure requirements were modified to be
more practical. Exemptive relief is not limited to
recommendations involving only certain products. Nevertheless,
the remaining burdensome requirements will serve to discourage
savings, to the detriment of small business owners and low- and
middle-income savers.
Fewer employer-provided retirement plans
Small business owners provide nearly half a trillion
dollars in retirement savings for 9 million households.\69\
Employers are very concerned the new rule will make it much
harder for small businesses to set up retirement plans and for
plan participants to receive advice.
---------------------------------------------------------------------------
\69\U.S. Chamber of Commerce, Locked Out of Retirement: The Threat
to Small Business Retirement Savings (Jun. 9, 2015), http://
www.centerforcapitalmarkets.com/wp-content/uploads/2013/08/US-Chamber-
Locked-Out-of-Retirement-White-Paper.pdf.
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Destructively, like the 2015 NPRM, DOL's final rulemaking
holds large and small businesses to different standards, with
greater restrictions and additional burdens placed on small
businesses. Under most circumstances, merely selling your
services is not fiduciary ``investment advice.''\70\ In one
counterproductive exception, however, retirement advisors would
automatically trigger fiduciary duties if they sell to a plan
managing under $50 million in assets, such as a small
business's plan.\71\ To continue to provide services to small
businesses, advisors will either need to increase fees or
qualify for an exemption. The Honorable Brad Campbell testified
at the December 2, 2015, HELP Subcommittee Hearing about a
similar discriminatory rule in the 2015 NPRM, saying:
---------------------------------------------------------------------------
\70\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20997-
998.
\71\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20999.
Small plans and small-account IRA owners may be most
in need of basic investment advice, but they would be
least likely to be served by the Proposal due to the
increased compliance costs and increased legal
liability risks it unnecessarily creates.\72\
---------------------------------------------------------------------------
\72\Principles for Ensuring Retirement Advice Serves the Best
Interests of Working Families and Retirees: Hearing Before the Subcomm.
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and
the Workforce, 114th Cong. 5 (Dec. 2, 2015) (written testimony of the
Hon. Bradford Campbell, Counsel, Drinker Biddle & Reath LLP).
Because of the complicated new requirements, institutions
providing retirement plans would be prohibited from offering
assistance to small business plan sponsors in selecting
investment options to offer their employees. However, larger
plans do not have this requirement. While public policy should
encourage employers to help workers save for retirement, it is
harmful for DOL to refuse to provide an exemption for
information provided to small businesses. Even worse, the final
DOL rule actually will drive up costs for these small firms,
while shielding larger businesses from the same costs. As Ms.
Rachel Doba, President of DB Engineering LLC, noted at the same
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HELP Subcommittee hearing:
DOL seems to believe that small business owners, such
as me, are not as sophisticated as large businesses
and, therefore, need additional protections. The
validity of this rationale is based on faulty
assumptions, and does not justify discriminatory
treatment.\73\
---------------------------------------------------------------------------
\73\Principles for Ensuring Retirement Advice Serves the Best
Interests of Working Families and Retirees: Hearing Before the Subcomm.
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and
the Workforce, 114th Cong. 5 (Dec. 2, 2015) (written testimony of Ms.
Rachel Doba, President, DB Engineering LLC).
Echoing these concerns, the National Federation of
Independent Business sent a letter to DOL criticizing the 2015
NPRM because advisors will no longer provide advice to small
businesses that establish retirement plans. Instead, the
regulation will prohibit (or make cost-prohibitive) the
arrangements currently prevalent.\74\ Additionally, the Small
Business Administration's Office of Advocacy submitted a
comment letter to the Department warning, ``the proposed rule
would likely increase the [advisors'] costs and burdens
associated with serving smaller plans . . . [and] could limit
financial advisors' ability to offer savings and investment
advice to clients . . . ultimately lead[ing] advisors to stop
providing retirement services to small businesses.''\75\
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\74\Letter from Amanda Austin, Vice President, Public Policy, Nat'l
Fed'n of Indep. Bus. to the Emp. Benefits Sec. Admin. (May 5, 2015),
http://www.dol.gov/ebsa/pdf/1210-AB32-2-00039.pdf.
\75\Comment letter from the Small Bus. Admin's Office of Advocacy
5, 6 (Jul. 17, 2015),
http://www.dol.gov/ebsa/pdf/1210-AB32-2-00403.pdf.
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LEGISLATION ADDRESSING THE RULEMAKING
In an effort to provide an alternative to DOL's flawed
proposed rule, on December 18, 2015, Rep. Phil Roe, with five
bipartisan cosponsors, introduced H.R. 4293, the Affordable
Retirement Advice Protection Act (ARAPA).\76\ This bill was
introduced concurrently with the bipartisan H.R. 4294, the
Strengthening Access to Valuable Education and Retirement
Support Act of 2015 (SAVERS Act).\77\ H.R. 4293 amends ERISA,
while H.R. 4294 adds similar provisions to the Code. The bills
achieve the DOL's stated goal of ensuring retirement advisors
act in their clients' best interests. They do this by updating
current law to ensure all financial professionals providing
personalized advice about investments, distributions, or the
use of other fiduciaries would be legally required to act in
the best interest of their customers. However, unlike the DOL
rules, ARAPA and the SAVERS Act ensure low- and medium-asset
savers and small businesses have access to affordable
retirement advice. The bills also prohibit DOL from finalizing
its regulation unless Congress affirmatively approves the
regulation. The Committee ordered these bills favorably
reported on February 2, 2016.
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\76\H.R. 4293, 114th Cong. (2015).
\77\H.R. 4294, 114th Cong. (2015).
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Other legislation also attempted to mitigate the damage of
DOL's rulemaking. In October 2013, the House passed the Retail
Investor Protection Act, requiring DOL to postpone any
rulemaking relating to the definition of ``fiduciary'' until
after a potentially conflicting regulation from the SEC is
promulgated, pursuant to authority in Dodd-Frank.\78\ The House
passed the bill by a vote of 255-166 (with 30 Democrats in
support), but the Senate did not consider it. This Congress,
the bill was reintroduced by Rep. Ann Wagner\79\ and passed by
a vote of 245-186.
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\78\Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.
L. No. 111-203, Sec. 913 (2010).
\79\H.R. 1090, 114th Cong. (2015).
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Additionally, both the Fiscal Year 2016 Labor, Health and
Human Services appropriations bills passed by the House and
Senate Appropriations Committees included language prohibiting
funds from being used to finalize, implement, administer, or
enforce the proposed rule.\80\ However, this language was not
included in the omnibus appropriations bill enacted in December
2015.
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\80\The Departments of Labor, Health and Human Services, and
Education, and Related Agencies Appropriations Act, Fiscal Year 2016,
H.R. 3020, Sec. 113 (2015); The Departments of Labor, Health and Human
Services, and Education, and Related Agencies Appropriations Act,
Fiscal Year 2016, S. 1695, 110 (2015).
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Finally, on April 19, 2016, Rep. Phil Roe, joined by Reps.
Charles Boustany and Ann Wagner, introduced H.J. Res. 88, a
joint resolution of disapproval under the CRA, disapproving the
rule submitted by DOL relating to the definition of the term
``fiduciary.'' The Committee ordered the joint resolution
favorably reported on April 21, 2016, by a vote of 22-14.
CONCLUSION
The DOL rule will have a detrimental impact on low- and
middle-income Americans and small businesses. The joint
resolution of disapproval will ensure this regulatory change
will not impair retirement security.
SECTION-BY-SECTION
Congress expresses its disapproval of the rule submitted by
DOL relating to the definition of the term ``fiduciary'' and
prohibits it from going into effect.
EXPLANATION OF AMENDMENTS
The amendments, including the amendment in the nature of a
substitute, are explained in the body of this report.
APPLICATION OF LAW TO THE LEGISLATIVE BRANCH
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch. House Joint Resolution 88 expresses congressional
disapproval of the U.S. Department of Labor (DOL or Department)
rule amending the regulatory definition of ``fiduciary'' under
the Employee Retirement Income Security Act of 1974 (ERISA) and
the Internal Revenue Code of 1986 (Code).
UNFUNDED MANDATE STATEMENT
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement of
whether the provisions of the reported bill include unfunded
mandates. This issue is addressed in the CBO letter.
EARMARK STATEMENT
H.J. Res. 88 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of House Rule XXI.
ROLL CALL VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
CORRESPONDENCE
Exchange of letters with the Committee on Ways and Means.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
In accordance with clause (3)(c) of House Rule XIII, the
goal of House Joint Resolution 88 is to disapprove of the U.S.
Department of Labor (DOL or Department) rule amending the
regulatory definition of ``fiduciary'' under the Employee
Retirement Income Security Act of 1974 (ERISA) and the Internal
Revenue Code of 1986 (Code).
DUPLICATION OF FEDERAL PROGRAMS
No provision of H.J. Res 88 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
DISCLOSURE OF DIRECTED RULE MAKINGS
The committee estimates that enacting H.J. Res. 88 does not
specifically direct the completion of any specific rule makings
within the meaning of 5 U.S.C. 551.
STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the committee's oversight findings and recommendations are
reflected in the body of this report.
NEW BUDGET AUTHORITY AND CBO COST ESTIMATE
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the committee has received
the following estimate for H.J. Res. 88 from the Director of
the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 25, 2016.
Hon. John Kline,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.J. Res. 88, a joint
resolution providing for congressional disapproval under
chapter 8 of title 5, United States Code, of a rule submitted
by the Department of Labor relating to the definition of the
term ``Fiduciary''.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Noah
Meyerson.
Sincerely,
Keith Hall.
Enclosure.
H.J. Res. 88--A joint resolution providing for congressional
disapproval under chapter 8 of title 5, United States Code, of
a rule submitted by the Department of Labor relating to the
definition of the term ``Fiduciary''
H.J. Res. 88 would disapprove the final rule submitted by
the Department of Labor (DOL) and published in the Federal
Register on April 8, 2016, relating to investment advice within
pension and retirement plans; those regulations are sometimes
referred to as the ``fiduciary rule.'' H.J. Res. 88 would
invoke a legislative process established by the Congressional
Review Act (Public Law 104-121) to disapprove the new rule. If
H.J. Res. 88 is enacted, the rule would have no force or
effect.
CBO expects that, if this legislation were enacted, DOL
would likely not propose a new rule related to the definition
of fiduciary because the Congressional Review Act prohibits
agencies from issuing any new rule in substantially the same
form as a disapproved rule, unless specifically authorized by
subsequent legislation.
Under the Employee Retirement Income Security Act of 1974
(ERISA) and the Internal Revenue Code, a person who is paid to
provide investment advice is considered a fiduciary and is
obligated to work in the best sole interest of their clients.
The rule published on April 8 broadens the definition of
investment advice within pension and retirement plans and
therefore applies the fiduciary standard to more advisors.
CBO and the staff of the Joint Committee on Taxation (JCT)
estimate that the bill would have a negligible effect on
revenues over the 2016-2026 period. Enacting the bill would not
affect direct spending. Because enacting H.J. Res. 88 would
affect revenues, pay-as-you-go procedures apply.
CBO and JCT estimate that enacting H.J. Res. 88 would not
increase net direct spending or on-budget deficits in any of
the four consecutive 10-year periods beginning in 2027.
CBO and JCT have determined that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act and would impose no costs on
state, local, or tribal governments.
On February 10, 2016, CBO transmitted a cost estimate of
H.R. 4294, the Strengthening Access to Valuable Education and
Retirement Support Act of 2015, as ordered reported by the
House Committee on Ways and Means on February 3, 2016.
On April 20, 2016, CBO transmitted a cost estimate of H.R.
4293, the Affordable Retirement Advice Protection Act, as
ordered reported by the House Committee on Education and the
Workforce on February 2, 2016.
On April 20, 2016, CBO transmitted a cost estimate of H.R.
4294, the Strengthening Access to Valuable Education and
Retirement Support Act of 2015, as ordered reported by the
House Committee on Education and the Workforce on February 2,
2016.
All three bills contained a provision that would prevent
the fiduciary rule or any similar regulations from becoming
effective unless a bill or joint resolution approving them was
passed within 60 days of enactment of the proposed legislation.
Like H.J. Res. 88, those bills would have a negligible effect
on revenues and would not affect direct spending.
The CBO staff contact for this estimate is Noah Meyerson.
The estimate was approved by Theresa Gullo, Assistant Director
for Budget Analysis.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
COMMITTEE COST ESTIMATE
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.J. Res. 88.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when the committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
The requirements of clause 3(e) of rule XIII of the Rules
of the House of Representatives do not apply to H.J. Res. 88.
MINORITY VIEWS
Committee Democrats strongly oppose H.J. Res. 88, which
would block the Department of Labor's (DOL's) final rule
protecting workers' hard-earned retirement savings and ensuring
financial advisors act in the best interest of their retirement
clients.
For far too long, some financial advisors have exploited
loopholes in a decades-old DOL regulation that governs
investment advice for retirement savers. As a result of these
loopholes, these unscrupulous advisors were able to steer their
retirement clients toward financial products that yielded the
advisor a big commission but were not in their clients' best
interest.
This practice is referred to as providing ``conflicted
advice.'' Conflicted advice costs retirement plan participants
$17 billion in losses every year and could result in a loss of
almost a quarter of an individual's savings over a 35-year
period.\1\
---------------------------------------------------------------------------
\1\Council of Economic Advisors, The Effects of Conflicted
Investment Advice on Retirement Savings 17-18 (Feb. 2015); available
at: https://www.whitehouse.gov/sites/default/files/docs/
cea_coi_report_final.pdf.
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The most common point at which conflicted advice occurs is
when workers are about to retire and roll over their employer-
based retirement account, such as a 401(k), into an Individual
Retirement Account (IRA) or other financial product. According
to the White House, ``a typical worker who receives conflicted
advice when rolling over a 401(k) balance to an IRA at age 45
will lose an estimated 17 percent from her account by age 65.
In other words, if a worker has $100,000 in retirement savings
at age 45, without conflicted advice it would grow to an
estimated $216,000 by age 65 adjusted for inflation, but if she
receives conflicted advice it would grow to $179,000--a loss of
$37,000 or 17 percent.''\2\
---------------------------------------------------------------------------
\2\White House, ``Fact Sheet: Middle Class Economics: Strengthening
Retirement Security by Cracking Down on Conflicts of Interest in
Retirement Savings,'' (April 2016); available at: https://
www.whitehouse.gov/the-press-office/2016/04/06/fact-sheet-middle-class-
economics-strengthening-retirement-security.
---------------------------------------------------------------------------
Committee Democrats believe that, after a lifetime of hard-
work and sacrifice, these workers should be guaranteed that the
financial advice they receive about their retirement savings
will be in their best interest. Retirement savers expect that
the advice they receive is in their best interest, and they
rely on it accordingly. Unfortunately, under the existing
loophole-ridden regulation, that is not always the case. The
DOL's final rule provides a responsible solution by expanding
the circumstances under which advisers must abide by a
fiduciary standard and requiring them to disclose conflicts of
interest. The final rule will help hardworking Americans enjoy
a more secure and dignified retirement.
H.J. Res. 88 nullifies this rule and leaves in place the
unacceptable status quo that enables certain financial advisors
to put their interests ahead of their clients'.
COMMITTEE REPUBLICANS MOVED WITH RECORD-BREAKING HASTE TO BLOCK THE
DOL'S FINAL RULE
DOL's final rule was the product of a thorough and
transparent process. The DOL conducted hundreds of meetings on
the rule and provided the American public nearly six months to
provide feedback. On April 8, 2016, DOL published its final
conflict of interest rule in the Federal Register, which
included significant changes in response to the feedback DOL
had received.\3\ Nonetheless, eleven days later on April 19,
2016, three House Republicans introduced H.J. Res. 88, a joint
resolution of disapproval of the rule under the Congressional
Review Act (CRA). On Thursday, April 21, the Committee on
Education and the Workforce held a mark-up of H.J. Res. 88.
---------------------------------------------------------------------------
\3\81 Fed. Reg. 20945 (April 2016); available at: https://
www.federalregister.gov/articles/2016/04/08/2016-07924/definition-of-
the-term-fiduciary-conflict-of-interest-rule-retirement-investment-
advice.
---------------------------------------------------------------------------
In contrast to the DOL's deliberative process, Committee
Republicans rushed ahead with a mark-up of H.J. Res. 88 only 48
hours after it was introduced. On top of this, Committee
Republicans convened a mark-up of H.J. Res. 88 only thirteen
days after the publication of DOL's final conflict of interest
rule in the Federal Register. Based on a Congressional Research
Service (CRS) historical review of mark-ups of joint
resolutions of disapproval under the CRA that have been
convened by House and Senate Committees, thirteen days appears
to be the shortest timespan ever between issuance or
publication of a final rule and a Committee's CRA mark-up. On
average, there have been 55 days between issuance or
publication of a final rule and a scheduled mark-up of a CRA
resolution of disapproval.
THE DOL MADE SIGNIFICANT CHANGES TO THE RULE IN RESPONSE TO COMMENTS
FROM STAKEHOLDERS
Committee Democrats believe the DOL struck an appropriate
balance between accommodating congressional, industry, and
other stakeholder concerns without compromising core retirement
investor protections. Throughout the process, Secretary Perez
repeatedly stated that the final rule would reflect the
feedback provided by stakeholders. Secretary Perez lived up to
his word, as the final rule was changed in meaningful ways in
response to stakeholder input. For instance, the majority of
the comments focused on the best interest contract exemption
(BICE). The DOL made important modifications to the BICE's
disclosure and notice requirements as well as the timing and
execution of the contract to make the final rule more workable
overall.
The ill-advised haste with which Committee Republicans have
rushed to judgment on this rule is all the more curious when
considering these and other modifications, as well as the
initial positive reactions to the rule from industry and
others.
A VARIETY OF STAKEHOLDERS, INCLUDING INDUSTRY, EXPRESSED SUPPORT FOR
THE DOL'S FINAL RULE AND ACKNOWLEDGED THE FINAL RULE'S RESPONSIVENESS
TO THEIR FEEDBACK
A wide range of stakeholders--including industry
representatives--have expressed their initial support for the
final rule. For instance, John Thiel, who is the head of
Merrill Lynch's Wealth Management, said they were ``pleased
that Secretary Perez and the Department of Labor staff have
worked to address many of the practical concerns raised during
the comment period.''\4\ Roger Ferguson, the president and CEO
of TIAA, said ``based on our preliminary analysis, it appears
the Department has gone a long way toward making the best
interest standard the industry standard.''\5\
---------------------------------------------------------------------------
\4\Reuters, ``Merrill Lynch Sees Many Industry Concerns Addressed
In Retirement Advice Rule,'' (April 2016); available at: http://
in.reuters.com/article/bank-of-america-fiduciary-idINL2N1790TQ.
\5\Reuters, ``TIAA Statement on Department of Labor Fiduciary
Rule,'' (April 2016); available at: http://www.reuters.com/article/dc-
tiaa-idUSnBw065764a+100+BSW20160406.
---------------------------------------------------------------------------
Morgan Stanley said the Labor Department's final version of
fiduciary rules were ``meaningfully softened in several
aspects'' from the original proposal.\6\
---------------------------------------------------------------------------
\6\Wall Street Journal, ``Reactions to the Labor Department's
Fiduciary Rule,'' (April 2016); available at: http://www.wsj.com/
articles/reactions-to-the-labor-departments-fiduciary-rule-1459954904.
---------------------------------------------------------------------------
The Financial Industry Regulatory Authority (FINRA), which
was one of the most vigorous critics of the DOL's proposed
rule, and which ``filed one of the most pointed comment letters
last summer about the proposed rule,'' appears to have changed
its view after seeing the final rule.\7\ FINRA's chairman and
chief executive, Richard Ketchum, ``praised DOL for `making
some very significant changes' to the measure that will make it
operate better.''\8\ Mr. Ketchum reportedly said that he thinks
the ``final rule is much better.''\9\
---------------------------------------------------------------------------
\7\Investment News, ``An Original Critic, FINRA's Ketchum Praises
Improvements in Final DOL Fiduciary Rule,'' (April 2016); available at:
http://www.investmentnews.com/article/20160415/FREE/160419932/an-
original-critic-finras-ketchum-praises-improvements-in-final-dol.
\8\Id.
\9\Id.
---------------------------------------------------------------------------
At the same time, DOL has maintained the support of a wide
and diverse coalition of stakeholders that have championed the
conflict of interest rule since the promulgation of the
proposed rule. Such organizations comprise the ``Save Our
Retirement Coalition'' and include: AARP, AFL-CIO, Alliance for
Retired Americans, American Association for Justice, American
Association of University Women, American Federation of
Government Employees (AFGE), American Federation of State,
County and Municipal Employees (AFSCME), Americans for
Financial Reform, Association of University Centers on
Disabilities, Better Markets, B'nai B'rith International,
Center for Economic Justice, Center for Responsible Lending,
Committee for the Fiduciary Standard, Consumer Action, Consumer
Federation of America, Consumers Union, Demos, International
Association of Machinists and Aerospace Workers, International
Brotherhood of Boilermakers, International Brotherhood of
Electrical Workers (IBEW), International Union, United
Automobile, Aerospace, & Agricultural Implement Workers of
America (UAW), Justice in Aging, Leadership Conference on Civil
and Human Rights, Main Street Alliance, Metal Trades
Department, AFL-CIO, National Active and Retired Federal
Employees Association (NARFE), National Consumers League,
National Council of La Raza, National Women's Law Center,
NAACP, National Education Association, Public Citizen, Public
Investors Arbitration Bar Association, Rebalance IRA, United
Food and Commercial Workers (UFCW), United Steel, Paper and
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and
Service Workers International Union (USW), U.S. PIRG, and Young
Invincibles.
The Save Our Retirement Coalition issued a letter in
opposition to H.J. Res. 88 that voiced thoughtful support for
the rule. The Coalition's letter said ``the rule will at long
last require all financial professionals who provide retirement
investment advice to put their clients' best interests ahead of
their own financial interests. By taking this essential step,
the rule will help all Americans--many of whom are responsible
for making their own decisions about how best to invest their
retirement savings--keep more of their hard-earned savings so
they can enjoy a more financially secure and independent
retirement.''\10\
---------------------------------------------------------------------------
\10\Save our Retirement Coalition, ``Oppose the Resolution to block
DOL's final conflict of interest rule,'' (April 2016); available at:
http://saveourretirement.com/2016/04/re-oppose-the-resolution-to-block-
dols-final-conflict-of-interest-rule/.
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ROLL CALL VOTES ON FINAL PASSAGE
H.J. Res. 88 was reported by straight party-line votes of
22 ayes and 14 nays. No Democratic Committee Members voted in
favor of the bill.
Congresswoman Frederica Wilson (D-FL) issued a statement
following the Committee mark-up, saying she ``was unavoidably
detained and missed the vote.'' According to Congresswoman
Wilson's statement, she would have voted ``nay'' had she been
present.
CONCLUSION
In its record-setting rush to nullify the DOL's final rule
through a CRA joint resolution of disapproval, Committee
Republicans are jeopardizing workers' ability to receive
retirement investment advice that is in their best interest.
Committee Democrats reject this misguided and unnecessarily
partisan approach.
Instead of wasting precious time and resources on this
joint resolution, the Education and Workforce Committee should
be helping working families make ends meet so that they can
provide a better future for their children and grandchildren.
For instance, in the scarce time that remains this year, the
Committee should be taking up legislation that would boost
workers' wages, help workers achieve a better balance between
work and family life, end workplace discrimination, and
strengthen our retirement system.
For the reasons stated above, among others, we stood
together in opposing H.J. Res. 88 when it was hastily
considered by the Education and Workforce Committee. We
respectfully recommend that the full House of Representatives
do the same.
Robert C. ``Bobby'' Scott.
Susan A. Davis.
Joe Courtney.
Jared Polis.
Suzanne Bonamici.
Mark Takano.
Katherine M. Clark.
Mark DeSaulnier.
Ruben Hinojosa.
Raul M. Grijalva.
Marcia L. Fudge.
Frederica S. Wilson.
Mark Pocan.
Hakeem S. Jeffries.
Alma S. Adams.