[Federal Register Volume 82, Number 66 (Friday, April 7, 2017)]
[Rules and Regulations]
[Pages 16902-16918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06914]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2510

RIN 1210-AB79


Definition of the Term ``Fiduciary''; Conflict of Interest Rule--
Retirement Investment Advice; Best Interest Contract Exemption 
(Prohibited Transaction Exemption 2016-01); Class Exemption for 
Principal Transactions in Certain Assets Between Investment Advice 
Fiduciaries and Employee Benefit Plans and IRAs (Prohibited Transaction 
Exemption 2016-02); Prohibited Transaction Exemptions 75-1, 77-4, 80-
83, 83-1, 84-24 and 86-128

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Final rule; extension of applicability date.

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SUMMARY: This document extends for 60 days the applicability date of 
the final regulation, published on April 8, 2016, defining who is a 
``fiduciary'' under the Employee Retirement Income Security Act of 1974 
and the Internal Revenue Code of 1986. It also extends for 60 days the 
applicability dates of the Best Interest Contract Exemption and the 
Class Exemption for Principal Transactions in Certain Assets Between 
Investment Advice Fiduciaries and Employee Benefit Plans and IRAs. It 
requires that fiduciaries relying on these exemptions for covered 
transactions adhere only to the Impartial Conduct Standards (including 
the ``best interest'' standard), as conditions of the exemptions during 
the transition period from June 9, 2017, through January 1, 2018. Thus, 
the fiduciary definition in the rule (Fiduciary Rule or Rule) published 
on April 8, 2016, and Impartial Conduct Standards in these exemptions, 
are applicable on June 9, 2017, while compliance with the remaining 
conditions in these exemptions, such as requirements to make specific 
written disclosures and representations of fiduciary compliance in 
communications with investors, is not required until January 1, 2018. 
This document also delays the applicability of amendments to Prohibited 
Transaction Exemption 84-24 until January 1, 2018, other than the 
Impartial Conduct Standards, which will become applicable on June 9, 
2017. Finally, this document extends for 60 days the applicability 
dates of amendments to other previously granted exemptions. The 
President, by Memorandum to the Secretary of Labor dated February 3, 
2017, directed the Department of Labor to examine whether the Fiduciary 
Rule may adversely affect the ability of Americans to gain access to 
retirement information and financial advice, and to prepare an updated 
economic and legal analysis concerning the likely impact of the 
Fiduciary Rule as part of that examination. The extensions announced in 
this document are necessary to enable the Department to perform this 
examination and to consider possible changes with respect to the 
Fiduciary Rule and PTEs based on new evidence or analysis developed 
pursuant to the examination.

DATES: Effective dates: This rule is effective April 10, 2017. The end 
of the effective period for 29 CFR 2510.3-21(j) is extended from April 
10, 2017, to June 9, 2017.
    Applicability dates: See Section E of the SUPPLEMENTARY INFORMATION 
section for dates for the prohibited transaction exemptions.

FOR FURTHER INFORMATION CONTACT:  For questions pertaining to 
the fiduciary regulation, contact Jeffrey Turner, Office of Regulations 
and Interpretations, Employee Benefits Security Administration (EBSA), 
(202) 693-8825.
     For questions pertaining to the prohibited transaction 
exemptions, contact Karen Lloyd, Office of Exemption Determinations, 
EBSA, (202) 693-8824.
     For questions pertaining to regulatory impact analysis, 
contact G. Christopher Cosby, Office of Policy and Research, EBSA, 
(202) 693-8425. (Not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

A. Background

    On April 8, 2016, the Department of Labor (Department) published a 
final regulation (Fiduciary Rule or Rule) defining who is a 
``fiduciary'' of an employee benefit plan under section 3(21)(A)(ii) of 
the Employee Retirement Income Security Act of 1974 (ERISA or the Act) 
as a result of giving investment advice to a plan or its participants 
or beneficiaries. 29 CFR 2510.3-21. The Fiduciary Rule also applies to 
the definition of a ``fiduciary'' of a plan (including an individual 
retirement account (IRA)) under section 4975(e)(3)(B) of the Internal 
Revenue Code of 1986 (Code). The Fiduciary Rule treats persons who 
provide investment advice or recommendations for a fee or other 
compensation with respect to assets of a plan or IRA as fiduciaries in 
a wider array of advice relationships than was true of the prior 
regulatory definition (1975 Regulation).\1\
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    \1\ The 1975 Regulation was published as a final rule at 40 FR 
50842 (Oct. 31, 1975).
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    On this same date, the Department published two new administrative 
class exemptions from the prohibited transaction provisions of ERISA 
(29 U.S.C. 1106) and the Code (26 U.S.C. 4975(c)(1)): The Best Interest 
Contract Exemption (BIC Exemption) and the Class Exemption for 
Principal Transactions in Certain Assets Between Investment Advice 
Fiduciaries and Employee Benefit Plans and IRAs (Principal Transactions 
Exemption), as well as amendments to previously granted exemptions. The 
new exemptions are designed to promote the provision of investment 
advice that is in the best interest of retirement investors.
    The new exemptions and certain previously granted exemptions that 
were amended on April 8, 2016 (collectively Prohibited Transaction 
Exemptions or PTEs) would allow, subject to appropriate safeguards, 
certain broker-dealers, insurance agents, and others that act as 
investment advice fiduciaries, as defined under the Fiduciary Rule, to 
continue to receive compensation that would otherwise violate 
prohibited transaction rules, triggering excise taxes and civil 
liability. Rather than flatly prohibit compensation structures that 
could be beneficial in the right circumstances, the exemptions are 
designed to permit investment advice fiduciaries to receive commissions 
and other common forms of compensation.
    Among other conditions, the new exemptions and amendments to 
previously granted exemptions are generally conditioned on adherence to 
certain Impartial Conduct Standards:

[[Page 16903]]

Providing advice in retirement investors' best interest; charging no 
more than reasonable compensation; and avoiding misleading statements 
(Impartial Conduct Standards).\2\ The Department determined that 
adherence to these fundamental fiduciary norms helps ensure that 
investment recommendations are not driven by adviser conflicts, but by 
the best interest of the retirement investor.
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    \2\ In the Principal Transactions Exemption, the Impartial 
Conduct Standards specifically refer to the fiduciary's obligation 
to seek to obtain the best execution reasonably available under the 
circumstances with respect to the transaction, rather than to 
receive no more than ``reasonable compensation.'' Accordingly, 
references in this document to ``reasonable compensation'' in the 
context of the Principal Transactions Exemption should be read to 
refer to this best execution requirement.
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    By Memorandum dated February 3, 2017, the President directed the 
Department to conduct an examination of the Fiduciary Rule to determine 
whether it may adversely affect the ability of Americans to gain access 
to retirement information and financial advice. As part of this 
examination, the Department was directed to prepare an updated economic 
and legal analysis concerning the likely impact of the Fiduciary Rule 
and PTEs, which shall consider, among other things:
     Whether the anticipated applicability of the Fiduciary 
Rule and PTEs has harmed or is likely to harm investors due to a 
reduction of Americans' access to certain retirement savings offerings, 
retirement product structures, retirement savings information, or 
related financial advice;
     Whether the anticipated applicability of the Fiduciary 
Rule and PTEs has resulted in dislocations or disruptions within the 
retirement services industry that may adversely affect investors or 
retirees; and
     Whether the Fiduciary Rule and PTEs is likely to cause an 
increase in litigation, and an increase in the prices that investors 
and retirees must pay to gain access to retirement services.

    The President directed that if the Department makes an affirmative 
determination as to any of the above three considerations, or the 
Department concludes for any other reason, after appropriate review, 
that the Fiduciary Rule, PTEs, or both are inconsistent with the 
priority of the Administration ``to empower Americans to make their own 
financial decisions, to facilitate their ability to save for retirement 
and build the individual wealth necessary to afford typical lifetime 
expenses, such as buying a home and paying for college, and to 
withstand unexpected financial emergencies,'' then the Department shall 
publish for notice and comment a proposed rule rescinding or revising 
the Fiduciary Rule, as appropriate and as consistent with law. The 
President's Memorandum was published in the Federal Register on 
February 7, 2017, at 82 FR 9675.
    In accordance with that memorandum, the Department published in the 
Federal Register on March 2, 2017, at 82 FR 12319, a document seeking 
comment on a proposed 60-day extension of the applicability dates of 
the Fiduciary Rule and PTEs until June 9, 2017 (NPRM). The comment 
period on the proposed extension ended on March 17, 2017. In that same 
document, the Department sought comments regarding the examination 
described in the President's Memorandum and on more general questions 
concerning the Fiduciary Rule and PTEs. This comment period ends on 
April 17, 2017.

B. Public Comments & Decision on Delay

    As of the close of the first comment period on March 17, 2017, the 
Department had received approximately 193,000 comment and petition 
letters expressing a wide range of views on whether the Department 
should grant a delay and the duration of any delay. Approximately 
15,000 commenters and petitioners support a delay of 60 days or longer, 
with some requesting at least 180 days and some up to 240 days or a 
year or longer (including an indefinite delay or repeal); and, by 
contrast, 178,000 commenters and petitioners oppose any delay 
whatsoever.\3\ The Department continues to receive a very high volume 
of comment and petition letters on a daily basis, both on the delay and 
on the more general questions that the Department set forth in its 
NPRM. EBSA intends to continue to post comment and petition letters for 
public inspection on EBSA's Web site as quickly as practicable after 
receipt.
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    \3\ The Department includes these counts only to provide a rough 
sense of the scope and diversity of public comments. For this 
purpose, the Department counted letters that do not expressly 
support or oppose the proposed delay, but that express concerns or 
general opposition to the Fiduciary Rule or PTEs, as supporting 
delay. Similarly, letters that do not expressly support or oppose 
the proposed delay, but that express general support for the Rule or 
PTEs, were treated as supporting the Rule and PTEs as originally 
drafted including support for the April 10, 2017 applicability date, 
and were therefore treated as opposing a delay.
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    One of the main reasons offered by commenters and petitioners in 
support of a delay of the applicability date of the Fiduciary Rule and 
PTEs is that the Department needs time to properly conduct the analysis 
required by the President's Memorandum. Although many commenters 
supported a 60-day delay for this purpose, others argued that a much 
longer period is needed (e.g., a 1-year delay or an indefinite 
extension terminating 60 or more days after completion of the 
examination required by the President's Memorandum). These commenters 
asserted that unless the Department took such an approach, it could be 
forced to grant a series of short extensions, which would produce 
serious frictional costs, protracted uncertainty (for advisers, 
financial institutions, and retirement investors), wasted expenses on 
interim and conditional compliance efforts, and unnecessary market 
disruption. Many commenters also requested that any delay of the 
applicability date, regardless of its length, be accompanied by a 
commensurate adjustment in the periods of transition relief available 
under the BIC Exemption and the Principal Transactions Exemption.
    Many supporters of delay also argued that the President's 
Memorandum has rendered the ultimate fate of the Fiduciary Rule and 
PTEs uncertain and that proceeding with the April 10, 2017 
applicability date in the face of this uncertainty would impose 
unnecessary costs and burdens on the financial services industry and 
result in unnecessary confusion to investors inasmuch as products, 
services, and advisory practices could change after completion of the 
examination. Some expressed particular concern about the risk of a 
chaotic transition process, as firms try to communicate with millions 
of clients to describe options that could become applicable in April, 
but subsequently change if parts of the Fiduciary Rule or PTEs are 
later reconsidered and changed after the examination required by the 
President.
    Another theme of commenters and petitioners supporting delay is 
that, even without regard to the President's Memorandum, the Department 
initially erred in adopting April 10, 2017, as the applicability date 
of the Fiduciary Rule and PTEs. These commenters assert that although 
financial institutions have worked to put in place the policies and 
procedures necessary to make the business structure and practice shifts 
required by the new rules,\4\ there is still considerable work left to 
be done to implement the new rules in a proper and responsible manner 
and without

[[Page 16904]]

causing further confusion and disruption to retirement investors. Some 
of these commenters and petitioners also asserted that individual 
retirement investors--those most impacted by the Fiduciary Rule and 
PTEs--have not themselves focused on how investment products, related 
services, and costs may change and need more time to understand, 
process, and make decisions regarding their accounts and services.
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    \4\ This includes drafting and implementing training for staff, 
drafting client correspondence and explanations of revised product 
and service offerings, negotiating changes to agreements with 
product manufacturers to facilitate compliance, and changing 
employee and agent compensation structures, among other things.
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    Many commenters also based support for delay on opposition to the 
substance of the Fiduciary Rule and PTEs, as written, and disagreement 
with the conclusions reached in the final rulemaking and associated 
Regulatory Impact Analysis. In general, these comments reiterated 
arguments made as part of the notice and comment process for the Rule 
and PTEs.\5\ For example, commenters asserted that the Fiduciary Rule 
and PTEs would unduly increase costs and adversely affect access to 
products, services, and advice. Industry commenters, in particular, 
asserted that unintended consequences of the rulemaking could include 
the reduced availability of advice to participants with small account 
balances, such as young savers; inappropriate increases in fee-based 
accounts and passive investments; reduced competition among investment 
products and providers; less innovation; and a harmful exit of advisers 
from the marketplace. Similarly, commenters expressed concern about the 
costs imposed by the Rule and PTEs on the financial services industry, 
the likelihood that those costs would be passed on to plan and IRA 
investors, and the risk of extensive class action litigation. 
Commenters asserted that the costs of the Fiduciary Rule and PTEs would 
further increase if they become applicable but are subsequently revised 
or rescinded due to the examination required by the President. 
Additionally, commenters argued that the complexities, ambiguities, and 
uncertainties associated with the Fiduciary Rule and PTEs require 
additional time for implementation. A number of commenters also 
asserted that the rulemaking exceeded the Department's authority or 
would be better left to other regulators, such as the Securities and 
Exchange Commission or state insurance commissioners. To these 
commenters and petitioners, delay is necessary in order to review and 
address these claims.
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    \5\ The 2016 Regulatory Impact Analysis can be accessed on 
EBSA's Web site at (https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/rules-and-regulations/completed-rulemaking/1210-AB32-2/conflict-of-interest-ria.pdf). Rather than repeat that 
analysis here, the Department refers readers to 81 FR 21002 (April 
8, 2016) (BIC Exemption) and 81 FR 21089 (April 8, 2016) (Principal 
Transactions Exemption) for discussion of the issues raised by 
comments expressing support or opposition to the Rule and PTEs. The 
Department has requested additional comments on these and related 
issues in connection with its work on the President's Memorandum. As 
indicated in the preamble to the March 2, 2017 NPRM, the Department 
seeks comments on the issues raised by the President's Memorandum 
and related questions by April 17, 2017, as detailed at 82 FR 12319, 
12324-25. The Department urges commenters to submit data, 
information, and analyses responsive to the requests in that 
document by that date, so that it can complete its work pursuant to 
the Memorandum as carefully, thoughtfully, and expeditiously as 
possible.
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    Other commenters and petitioners expressed broad support for the 
Rule and PTEs and opposition to any delay in their implementation. Many 
of these commenters stressed the Department's determination in the 
final rulemaking that, under the current regulatory structure, 
investors lose billions of dollars each year as a result of conflicts 
of interest, and argued that delay would compound these losses. 
Commenters argued that the Department already has studied this topic, 
as well as the issues presented in the President's Memorandum, at great 
length as part of an extensive regulatory process, its original 
analysis was not flawed, and nothing has changed since then that would 
warrant a reexamination. Commenters noted that the rulemaking had been 
upheld by three federal district courts to date, and that two of those 
courts had concluded that the previous regulatory definition of 
fiduciary investment advice may be difficult to reconcile with the 
statutory text of ERISA's definition of fiduciary.
    Opponents of a delay also argued that the Fiduciary Rule and PTEs 
have already contributed to positive changes in the marketplace, and 
that further delay could slow or reverse this progress. Commenters also 
challenged assertions that firms would be unable to comply with their 
obligations as of April 10, 2017, or that aspects of the Rule or PTEs 
were unworkable; noted that a number of firms have advertised that they 
already are prepared for full compliance with the Rule and PTEs; 
asserted that concerns about class actions were exaggerated and 
neglected the values served by such litigation; and argued that further 
delay would have the effect of penalizing firms that took regulatory 
deadlines seriously while rewarding those that failed to take 
appropriate actions to ensure compliance. Similarly, commenters 
opposing delay expressed support for the substance of the Fiduciary 
Rule and the PTEs, arguing that the Fiduciary Rule would protect 
retirement investors from abuse; appropriately strengthen the standards 
applicable to advisers; create a level playing field for all advisers 
by requiring adherence to a best interest standard regardless of title 
or product; align advisers' standards with investors' reasonable 
expectations that recommendations will be based on their best interests 
(also, thereby avoid investor confusion about the significance of 
different adviser designations); and ensure that investment 
recommendations and choices are based on the investor's interests 
rather than advisers' conflicts of interest. Finally, a commenter 
argued that the proposed delay is inconsistent with the Congressional 
Review Act, Executive Order 12866, Executive Order 13563 and Executive 
Order 13771, among other things.\6\
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    \6\ Some commenters said the 15-day comment period on whether to 
delay was too short to provide a meaningful opportunity for input, 
noting that Executive Order 12866 recommends 60 days or more. They 
also said the 45-day period for input on reconsideration of the Rule 
and PTEs was insufficient to address more complex issues surrounding 
the likely impact of the Rule and PTEs. The 15-day comment period 
was chosen in light of the public reaction and media reports 
following the Presidential Memorandum expressing concerns about 
investor confusion and other marketplace disruption based on 
uncertainty about whether a delay could be accomplished before April 
10. The Department concluded that prompt action was needed to 
protect against this investor confusion and uncertainty, and to 
ensure that the Rule and PTEs did not become temporarily applicable. 
In addition, the primary question to address in this 15-day period 
was whether or not to delay, an issue less complex than those 
reserved for the 45-day comment period. In any event, in this 15-day 
period the Department received approximately 193,000 comment and 
petition letters expressing a wide range of views on whether the 
Department should grant a delay and the duration of any delay. That 
level of public engagement itself belies the contention that the 
public did not have a meaningful opportunity to comment on the 
proposal. The Department likewise disagrees with the assertions 
regarding the 45-day comment period. In light of the need for prompt 
action to avoid continued uncertainty regarding the future of the 
Rule and PTEs, the Department concluded that a 45-day comment period 
would provide adequate time for the public to provide input, 
generally, and on the threshold questions raised in the Presidential 
Memorandum. Importantly, although a high volume of commentary 
continues to date, the Department always has the ability to re-open 
the comment period or otherwise solicit information to supplement 
the public comment, if necessary.
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    In response to the Department's request for comments as to whether 
it should delay only certain aspects of the Rule and PTEs, but not 
others, the commenters and petitioners had very different views.\7\ A 
substantial number of commenters that generally believe no delay is 
warranted nevertheless stated that, if the Department were to proceed 
with a delay, the delay should only partially apply: the Fiduciary Rule 
and

[[Page 16905]]

Impartial Conduct Standards of the PTEs should be immediately 
applicable even if other conditions and obligations are postponed. 
These commenters generally noted that many of the nation's largest 
financial institutions publicly state their current adherence to and 
support for a best interest standard, and stated the merits of this 
approach should be beyond dispute. Other commenters, however, caution 
the Department against permitting any part of the Rule or PTEs to 
become applicable before completion of the examination required by the 
President's Memorandum. These commenters essentially maintain that all 
issues identified by the Presidential Memorandum must be resolved 
before any aspect of the Rule or PTEs become applicable to avoid the 
possibility of investor confusion and needless or excessive expense as 
firms build systems and compliance structures that may ultimately be 
unnecessary or mismatched with the Department's final decisions on the 
issues raised by the Presidential Memorandum.
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    \7\ See 82 FR 12319, 12321 (Mar. 2, 2017).
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    Based on its review and evaluation of the public comments, the 
Department has concluded that some delay in full implementation of the 
Fiduciary Rule and PTEs is necessary to conduct a careful and 
thoughtful process pursuant to the Presidential Memorandum, and that 
any such review is likely to take more time to complete than a 60-day 
extension would afford, as many commenters suggested. The Department is 
also concerned that many firms may have reasonably assumed that the 
Department is likely to delay implementation as proposed and may, 
accordingly, have slowed their compliance efforts. As a result, rigid 
adherence to the April 10 applicability date could result in an unduly 
chaotic transition to the new standards as firms rush to prepare 
required disclosure documents and finalize compliance structures that 
are not yet ready, resulting in investor confusion, excessive costs, 
and needlessly restricted or reduced advisory services.
    At the same time, however, the Department has concluded that it 
would be inappropriate to broadly delay application of the fiduciary 
definition and Impartial Conduct Standards for an extended period in 
disregard of its previous findings of ongoing injury to retirement 
investors. The Fiduciary Rule and PTEs followed an extensive public 
rulemaking process in which the Department evaluated a large body of 
academic and empirical work on conflicts of interest, and determined 
that conflicted advice was causing harm to retirement investors.\8\ For 
all the reasons detailed in the preambles for the Fiduciary Rule and 
PTEs and in the associated Regulatory Impact Analysis, the Department 
concluded that much of this harm could be avoided through the 
imposition of fiduciary status and adherence to basic fiduciary norms, 
particularly including the Impartial Conduct Standards.
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    \8\ For example, the Department estimated that advisers' 
conflicts on average cost their IRA customers who invest in front-
end-load mutual funds between 0.5 percent and 1.0 percent annually 
in foregone risk-adjusted returns, due to poor fund selection.
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    The Department concludes that it can best protect the interests of 
retirement investors in receiving sound advice, provide greater 
certainty to the public and regulated parties, and minimize the risk of 
unnecessary disruption by taking a more balanced approach than simply 
granting a flat delay of fiduciary status and all associated 
obligations for a protracted period. Specifically, the Department 
extends the applicability date for the Fiduciary Rule and the BIC 
Exemption and Principal Transactions Exemption (including their 
transition relief) for 60 days, as proposed. The applicability date of 
the Impartial Conduct Standards in these exemptions is extended for the 
same 60 days, while compliance with other conditions for transactions 
covered by these exemptions, such as requirements to make specific 
disclosures and representations of fiduciary compliance in written 
communications with investors, is not required until January 1, 2018, 
by which time the Department intends to complete the examination and 
analysis directed by the Presidential Memorandum. In this way, the 
Fiduciary Rule (i.e., the new fiduciary definition itself) will become 
applicable after the 60-day delay, and the BIC Exemption and the 
Principal Transactions Exemption will be available as of that date but 
these exemptions will only require fiduciaries to adhere to the 
Impartial Conduct Standards for covered transactions until January 1, 
2018, when the remaining conditions will apply unless revised or 
withdrawn. The other requirements of these PTEs, including 
representations of fiduciary compliance, contracts, warranties about 
firm's policies and procedures, etc., will not become applicable during 
the period in which the Department performs the mandated examination of 
the Rule and PTEs. In addition, the Department has delayed the 
applicability of the amendments to PTE 84-24 until January 1, 2018, 
except that the Impartial Conduct Standards will become applicable on 
June 9, 2017, and the Department has extended for 60 days the 
applicability dates of the 2016 amendments to other previously granted 
exemptions.
    This approach has a number of significant advantages:
     Since there is fairly widespread, although not universal, 
agreement about the basic Impartial Conduct Standards, which require 
advisers to make recommendations that are in the customer's best 
interest (i.e., advice that is prudent and loyal), avoid misleading 
statements, and charge no more than reasonable compensation for 
services (which is already an obligation under ERISA and the Code, 
irrespective of this rulemaking), this approach provides retirement 
investors with the protection of basic fiduciary norms and standards of 
fair dealing, while at the same time honoring the President's directive 
to take a hard look at any potential undue burdens.\9\ After the 
passage of a year since the Rule and PTEs were published, and based on 
public comment, the Department finds little basis for concluding that 
advisers need more time to give advice that is in the retirement 
investor's best interest and free from misrepresentations in exchange 
for reasonable compensation. Indeed, financial institutions and 
advisers routinely hold themselves out as providing just such advice.
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    \9\ Advice is in the retirement investor's best interest when 
the advice is rendered ``with the care, skill, prudence, and 
diligence under the circumstances then prevailing that a prudent 
person 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, based on the investment objectives, risk tolerance, 
financial circumstances, and needs of the Retirement Investor, 
without regard to the financial or other interests of the Adviser, 
Financial Institution, or any Affiliate, Related Entity, or other 
party.'' See Section VIII(d) of the BIC Exemption As set forth in 
the preamble to the BIC Exemption, 81 FR at 21028 (April 8, 2016), 
this definition ``incorporates the objective standards of care and 
undivided loyalty that have been applied under ERISA for more than 
forty years.''
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     Because the provisions requiring written representations 
and commitments about fiduciary compliance, execution of a contract, 
warranties about policies and procedures, and the prohibition on 
imposing arbitration requirements on class claims, would not go into 
effect during this period, this approach eliminates or minimizes the 
risk of litigation, including class-action litigation, in the IRA 
marketplace, one of the chief concerns expressed by the financial 
services industry in connection with the Fiduciary Rule and PTEs.
     This approach is consistent with the Department's 
compliance-first

[[Page 16906]]

posture toward implementation as reflected in EBSA Field Assistance 
Bulletin 2017-01 (March 10, 2017) (announcing a temporary non-
enforcement safe harbor for DOL litigation for advisers and financial 
institutions) \10\ and its Conflict of Interest FAQs (Part I--
Exemptions) (Oct. 27, 2016) (``The Department's general approach to 
implementation will be marked by an emphasis on assisting (rather than 
citing violations and imposing penalties on) plans, plan fiduciaries, 
financial institutions and others who are working diligently and in 
good faith to understand and come into compliance with the new rule and 
exemptions.'').\11\ Although ERISA provides a cause of action for 
violations by fiduciary advisers to ERISA-covered plans and plan 
participants, including violations with respect to rollovers and 
distributions of plan assets, the Department's focus will be on 
compliance assistance, both in the period before January 1, 2018, and 
for some time after.
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    \10\ See also IRS Announcement 2017-04 (March 27, 2017), I.R.B. 
2017-16 (April 17, 2017), which provides relief from certain excise 
taxes under Code section 4975 and any related reporting requirements 
to conform to the Department's position in EBSA Field Assistance 
Bulletin 2017-01.
    \11\ Available at https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/coi-rules-and-exemptions-part-1.pdf
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     This approach addresses financial services industry 
concerns about uncertainty over whether they need to immediately comply 
with all of the requirements of the PTEs, particularly including the 
notice and disclosure provisions that would otherwise have become 
applicable on April 10, 2017, without giving short shrift to the 
competing interest of retirement investors in receiving advice that 
adheres to basic fiduciary norms. Because the Impartial Conduct 
Standards apply after 60 days, retirement investors will benefit from 
higher advice standards, while the Department takes the additional time 
necessary to perform the examination required by the President's 
Memorandum.
     If, after receiving comments on the issues raised by the 
President's Memorandum, the Department concludes that significant 
changes are necessary or that it needs more time to complete its 
review, it retains the ability to further extend the January 1, 2018 
applicability dates or to grant additional interim relief, such as more 
streamlined PTEs, as it finalizes its review and decides whether to 
make more general changes to the Rule or PTEs.
    In the Department's view, this approach gives the Department an 
appropriate amount of time to reconsider the regulatory burdens and 
costs of the Fiduciary Rule and PTEs, calls for advisers and financial 
institutions to comply with basic standards for fair conduct during 
that time, and does not foreclose the Department from considering and 
making changes with respect to the Rule and PTEs based on new evidence 
or analyses developed pursuant to the President's Memorandum.
    Accordingly, based on its review of the comments, the Department 
has decided to extend for 60 days the applicability date of all 
provisions of the Fiduciary Rule. In addition, the applicability dates 
of the BIC Exemption and the Principal Transactions Exemption are 
extended for 60 days, and these exemptions require fiduciaries engaging 
in transactions covered by the exemptions to comply only with the 
Impartial Conduct Standards, during the transition period from June 9, 
2017 through January 1, 2018. This document further delays the 
applicability of the amendments to PTE 84-24 until January 1, 2018, 
except that the Impartial Conduct Standards will become applicable on 
June 9, 2017, and extends for 60 days the applicability dates of 
amendments to other previously granted exemptions. The Impartial 
Conduct Standards generally require that advisers and financial 
institutions provide investment advice that is in the investors' best 
interest, receive no more than reasonable compensation, and avoid 
misleading statements to investors about recommended transactions. As 
detailed in the Regulatory Impact Analysis below, a longer delay of the 
Rule and Impartial Conduct Standards cannot be justified based on the 
public record to date. In the absence of the Impartial Conduct 
Standards, retirement investors are likely to continue incurring new 
losses from advisory conflicts. Losses arising from a delay of longer 
than 60 days would quickly overshadow any additional compliance cost 
savings.
    The predicted cost savings and investor losses associated with this 
extension may increase or decrease depending on the information and 
data received in response to the comment solicitation contained in the 
March 2017 NPRM. Between now and April 17, 2017, the Department will 
continue to receive and review these additional public comments, and 
between now and January 1, 2018, the Department will perform the 
examination required by the President. Following the completion of the 
examination, some or all of the Rule and PTEs may be revised or 
rescinded, including the provisions scheduled to become applicable on 
June 9, 2017. This document's delay of the applicability dates as 
described above should not be viewed as prejudging the outcome of the 
examination.
    The approach adopted in this document seeks to address the major 
concerns of the commenters and petitioners in an equitable and cost 
efficient manner. There was no consensus among commenters and 
petitioners regarding whether, and how long, to delay the applicability 
date of the Rule and PTEs, or even whether to retain or rescind the 
Rule and PTEs in whole or in part. Applying the Rule and the Impartial 
Conduct Standards after a 60-day delay, however, means that much of the 
potential investor gains predicted in the Rule's regulatory impact 
analysis published on April 8, 2016, will commence on June 9, 2017, and 
accrue prospectively while the Department performs the examination 
mandated by the President and considers potential changes to the Rule 
and PTEs.
    As compared to the contract, disclosure, and warranty requirements 
of the BIC Exemption and Principal Transactions Exemption, the 
Fiduciary Rule and the Impartial Conduct Standards are among the least 
controversial aspects of the rulemaking project (although not free from 
controversy or unchallenged in litigation). Indeed, even among many of 
the commenters and petitioners that support a delay of the 
applicability date, there are varying degrees of support for the Rule 
and the Impartial Conduct Standards. In the Department's judgment, Plan 
and IRA investors, firms, and advisers all will benefit from the 
balanced approach set forth above. Firms and advisers will be given 
additional time for an orderly transition and will not be required to 
immediately provide the notices, disclosures, and written commitments 
of fiduciary compliance that would otherwise be immediately required 
under the BIC Exemption and Principal Transactions Exemption. Also, 
more controversial provisions--such as requirements to execute 
enforceable written contracts under the Best Interest Contract and 
Principal Transactions Exemption, and changes to PTE 84-24 (other than 
the addition of the Impartial Conduct Standards)--are not applicable 
until January 1, 2018, while the Department is honoring the President's 
directive to take a hard look at any potential undue burdens and 
decides whether to make significant revisions. As indicated above, if, 
after receiving comments on

[[Page 16907]]

the issues raised by the President's Memorandum, the Department 
concludes that significant changes are necessary or that it needs more 
time to complete its review, it retains the ability to further extend 
the January 1, 2018 applicability dates or to grant additional interim 
relief, such as more streamlined PTEs, as it finalizes its review and 
decides whether to make more general changes to the Rule or PTEs.

C. Regulatory Impact Analysis

    On March 2, 2017, the Department published the NPRM seeking comment 
on a proposed 60-day delay of the applicability date of the Fiduciary 
Rule and PTEs until June 9, 2017.\12\ The comment period for the 
proposed extension closed on March 17, 2017. After careful review and 
consideration of the comments, the Department is issuing this final 
rule that will (1) extend the applicability date of the Fiduciary Rule, 
the BIC Exemption, and the Principal Transactions Exemption for 60 days 
until June 9, 2017, and (2) require that fiduciaries relying on these 
exemptions for covered transactions adhere only to the ``best 
interest'' standard and the other Impartial Conduct Standards of these 
PTEs during a transition period from June 9, 2017, through January 1, 
2018. As a result, the Fiduciary Rule and the Impartial Conduct 
Standards in these PTEs will become applicable beginning on June 9, 
2017, while other conditions in these PTEs, such as requirements to 
make specific written disclosures and representations of fiduciary 
compliance in investor communications, are not required until January 
1, 2018. In addition, the Department also delays the applicability of 
amendments to PTE 84-24 until January 1, 2018, except that the 
Impartial Conduct Standards will become applicable on June 9, 2017, and 
extends the applicability dates of the amendments to other previously 
granted PTEs for 60 days until June 9, 2017.
---------------------------------------------------------------------------

    \12\ The Department would also treat Interpretative Bulletin 96-
1 as continuing to apply during the 60-day extension of the 
applicability date of the Rule.
---------------------------------------------------------------------------

    As fully discussed above in Section B, the Department received many 
comments supporting and opposing the applicability date delay. In 
general, commenters opposing the delay expressed concern regarding the 
harm investors would suffer if their advisers continue providing 
conflicted advice to them while the applicability date for the 
Fiduciary Rule and PTEs is delayed. On the other hand, commenters 
supporting the proposed 60-day delay or a longer or indefinite delay 
argued that such delay would be appropriate, because it would provide 
sufficient time for the Department to complete its review of the Rule 
and PTEs in conformance with the President's Memorandum without issuing 
a series of extensions that could create market frictions due to 
uncertainty regarding whether the Department would ultimately leave the 
Rule in place, revise it, or rescind it.
    The Department's decision to delay the applicability date of the 
Fiduciary Rule for 60 days and make the Impartial Conduct Standards in 
the new PTEs and amendments to previously granted PTEs applicable on 
June 9, 2017, is expected to produce benefits that justify associated 
costs. On the benefits side, the 60-day delay of the April 10 
applicability date will avert the possibility of a costly and 
disorderly transition to the Impartial Conduct Standards on April 10. 
In the face of uncertainty and widespread questions about the Fiduciary 
Rule's future or possible repeal, many financial firms slowed or halted 
their efforts to prepare for full compliance on April 10. Consequently, 
failure to delay that applicability date could jeopardize such firms' 
near-term ability and/or propensity to serve classes of customers, and 
both such firms and their investor customers could suffer. Investors 
whose cost to select and change to a different firm are high would be 
more adversely affected by such disruption. Also on the benefits side, 
both the 60-day delay and the subsequent transition period will 
generate cost savings for firms. Today's final rule will produce more 
cost savings for firms than a 60-day delay of the PTEs' applicability 
date would alone, because many exemption conditions would not have to 
be met until January 1, 2018. The Department notes, however, that the 
benefits of avoiding disruption and compliance cost savings generally 
will be proportionately larger for those firms that currently are less 
prepared to comply with the Fiduciary Rule and PTEs.
    On the cost side, the NPRM RIA predicted that a 60-day delay alone 
would inflict some losses on investors, because advisory conflicts 
would continue to affect some advice rendered during those 60 days. 
However, the Department now believes that investor losses from the 60-
day extension provided here will be relatively small. Because many 
firms have already taken steps toward honoring fiduciary standards, 
some investor gains from the Fiduciary Rule are already being realized 
and are likely to continue. On the other hand, because many other firms 
are not immediately prepared to satisfy new requirements beginning 
April 10, and need additional time to comply, the 60-day delay is 
unlikely to deprive investors of additional gains.\13\
---------------------------------------------------------------------------

    \13\ Comments on the NPRM and various media reports together 
suggest that there is substantial variation in different firms' 
preparedness to comply with various provisions of the Fiduciary Rule 
and PTEs. Differences in firms' preparedness may reflect differences 
in the level of effort required to achieve compliance, differences 
in the availability of resources to undertake such efforts, 
differences in expectations about whether, how and when the 
Fiduciary Rule and PTEs might be revised, differences in perceptions 
of and appetite for compliance and/or market risk, or some 
combination of these factors.
---------------------------------------------------------------------------

    Finally, because the Impartial Conduct Standards will become 
applicable on June 9, 2017, the Department believes that firms will 
make efforts to adhere to those standards, motivated both by their 
applicability and by the prospect of their likely continuation, as well 
as by the impending applicability of complementary consumer protections 
and/or enforcement mechanisms beginning on January 1, 2018, depending 
on the results of the Department's review of the Fiduciary Rule 
pursuant to the President's Memorandum. Because of Firms' anticipated 
efforts to satisfy the Impartial Conduct Standards during that review, 
the Department believes that most, but not all, of the investor gains 
predicted in the 2016 RIA for the transition period will remain intact. 
The fraction of these gains that will be lost during the transition 
period (and future returns not realized because of those losses), 
however, will represent a cost of this final rule.
    Several recent media articles reported that industry and market 
observers anticipate multiple extensions because they believe 60 days 
would not be sufficient for the Department to conclude its re-
examination.\14\ Several commenters were also skeptical that the 
Department can complete its thorough re-evaluation within the 60 day 
period as proposed. Thus, those commenters supported much longer-term 
extensions such as a one-year or indefinite extension. Under this final 
rule extending the applicability dates, stakeholders can plan on and 
prepare for compliance with the Fiduciary Rule and the PTEs' Impartial 
Conduct Standards beginning June 9, 2017. At the same time, 
stakeholders will be assured that they will not be subject to the other 
exemption conditions in the BIC Exemption and the Principal 
Transactions Exemption until at least January 1, 2018. The Department 
will aim to complete its review pursuant to

[[Page 16908]]

the President's Memorandum as soon as possible before that date and 
announce its intention on whether to propose changes to the Rule or 
PTEs, provide additional transitional relief, or to allow all the 
conditions of the PTEs to become applicable as scheduled on January 1, 
2018.
---------------------------------------------------------------------------

    \14\ Mark Schoeff Jr. Investment News, March 1, 2017, ``Delay of 
DOL Fiduciary Rule likely to extend beyond 60 days.''
---------------------------------------------------------------------------

    The Department has concluded that the benefits of this final rule, 
which include the estimated cost savings, the potential reduction in 
transition costs, the reduction of uncertainties, and the avoidance of 
major and costly market disruptions, justify its costs.

1. Executive Order 12866 Statement

    This final rule is an economically significant regulatory action 
within the meaning of section 3(f)(1) of Executive Order 12866, because 
it would likely have an effect on the economy of $100 million in at 
least one year. Accordingly, the Department has considered the costs 
and benefits of the final rule, and it has been reviewed by the Office 
of Management and Budget (OMB).
a. Investor Gains
    Some commenters suggested that the Department underestimated the 
harms to investors from NPRM's proposed delay, because the illustrative 
losses of investor gains did not include all types of conflicts nor all 
types of investment in addition to excluding the harms associated with 
rollover recommendations and small plans. One commenter offered its own 
estimates of investor losses, significantly larger than the 
Department's, due to this delay. Other commenters argued that the 
Department's estimated investor losses from the proposed 60-day delay 
were overstated because they were derived from the 2016 RIA, which 
these commenters contend overestimated net investor gains.
    The Department's regulatory impact analysis of the Fiduciary Rule 
and related PTEs (2016 RIA) predicted that resultant gains for 
retirement investors would justify the compliance costs. The analysis 
estimated a portion of the potential gains for IRA investors at between 
$33 billion and $36 billion over the first 10 years for one segment of 
the market and category of conflicts of interest. It predicted, but did 
not quantify, additional gains for both IRA and ERISA plan investors.
    In considering the benefits and costs of this final rule, the 
Department considered both the effects of the 60-day delay (until June 
9) in the applicability of the Fiduciary Rule and PTEs and Impartial 
Conduct Standards conditions, and the longer delay (until January 1, 
2018) in the applicability of the other exemption conditions in the BIC 
Exemption and the Principal Transactions Exemption.
    The NPRM's RIA illustrated a possible effect of a 60-day delay in 
the commencement of the potential investor gains estimated in the 2016 
RIA. The illustration indicated that such a delay could result in a 
reduction in those estimated gains of $147 million in the first year 
and $890 million over 10 years using a three percent discount rate.\15\ 
The illustration used the same methodology that the 2016 RIA used to 
estimate potential investor gains from the Rule. Both made use of 
empirical evidence that front-end-load mutual funds that share more of 
the load with distributing brokers attract more flows but perform 
worse.\16\
---------------------------------------------------------------------------

    \15\ The ten-year estimate using a seven percent discount rate 
was $610 million. The equivalent annualized estimates were $104 
million using a three percent discount rate and $87 million using a 
seven percent discount rate.
    \16\ Other characteristics that are shared due to the common 
methodology include: (1) The estimates encompass both transfers and 
changes in society's real resources (the latter being benefits in 
the context of the 2016 RIA but costs in this RIA because gains are 
forgone); (2) the estimates have a tendency toward overestimation in 
that they reflect an assumption that the April 2016 Fiduciary Rule 
will eliminate (rather than just reduce) underperformance associated 
with the practice of incentivizing broker recommendations through 
variable front-end-load sharing; and (3) the estimates have a 
tendency toward underestimation in that they represented only one 
negative effect (poor mutual fund selection) of one source of 
conflict (load sharing), in one market segment (IRA investments in 
front-load mutual funds).
---------------------------------------------------------------------------

    To the extent that investment advisers comply with the Fiduciary 
Rule and PTEs only when the Fiduciary Rule and PTEs are applicable on 
their original terms and schedule, this estimate represents a 
reasonable adjustment of the 2016 estimate to reflect the impact of the 
60-day delay. On the other hand, if some advisers would comply with or 
without a delay or would fail to comply with or without a delay, then 
the estimate overstates the delay's impact. Public comments that have 
implications for these possibilities will be discussed below.
    A number of comments on the NPRM indicate that some firms are not 
prepared to comply with the Fiduciary Rule beginning on April 10, 2017. 
Based on these comments, it appears that, even before the President 
issued his Memorandum, at least some firms were not on course to 
achieve full compliance with the Impartial Conduct Standards by that 
date. In addition, over the nearly sixty days since the President's 
Memorandum, many firms have assumed that the Department is likely to 
grant a delay or even repeal the rulemaking, and stepped back their 
compliance efforts accordingly. As a result, the Department is 
concerned that a significant portion of the industry is not in a 
position to issue millions of notices, finalize and fully stand-up 
transition compliance structures, and perform all the other work 
necessary to comply with their obligations under the transition 
provisions of the BIC Exemption and Principal Transaction Exemption by 
the April 10, 2017 deadline.
    As a result, notwithstanding the Department's efforts to issue 
transitional enforcement relief, absent an additional sixty days' 
extension, there is a significant risk of a confused and disorderly 
transition process, rushed business decisions, excessive expenses 
because of deadlines that are now too tight, and poor or inaccurate 
communications to consumers. This could also lead to reduced services 
and increased costs for consumers in the short term. While the 
Department cannot readily quantify the impact of these considerations, 
there is substantial reason to believe that they could substantially 
offset the benefits portion of the investor gains originally posited by 
(but not quantified in) the 2016 RIA in the sixty days immediately 
following the original applicability date. The calculated investor 
gains above were based on the assumption that firms would be in a 
position to comply with their transitional obligations by April 10, 
2017. As noted previously, to the extent that assumption is incorrect, 
the calculations overstate the likely injury caused by delay.
    The 60-day extension permits an orderly transition to the Impartial 
Conduct Standards to once again occur, so that investors can gain from 
firms' adherence to these basic standards. Additionally, the approach 
taken by this document gives the Department the time necessary to 
implement the President's Memorandum, while avoiding the risk that 
firms will engage in costly compliance activities to meet requirements 
that the Department may ultimately decide to revise. It has been close 
to a year since the Department finalized the Fiduciary Rule and PTEs, 
and now with the additional extension of the applicability date 
contained in this final rule, there is little basis for concluding that 
advisers need still more time before they will be ready to give advice 
that is in the best interest of retirement investors and free from 
material misrepresentations in exchange for reasonable compensation. In 
addition, some comments indicate that some firms have already adopted 
and intend to maintain fiduciary standards

[[Page 16909]]

of conduct. For this reason too, investor losses from the 60-day delay 
are likely to be smaller than would otherwise be the case.
    At the same time, the Department notes that the NPRM RIA's 
illustration of potential investor losses was incomplete because it 
represented only one negative effect of one source of conflict in one 
market segment. Accordingly, some commenters suggested that the 
Department underestimated the harms to investors from NPRM's proposed 
delay, because the illustrative losses of investor gains did not 
include all types of conflicts nor all types of investment in addition 
to excluding the harms associated with rollover recommendations and 
small plans.\17\ One commenter offered its own estimates of investor 
losses, significantly larger than the Department's, due to this delay. 
For example, the comment letter submitted by Economic Policy Institute 
(EPI) estimates that retirement savers who received conflicted advice 
during the 60-day delay would receive $3.7 billion less when their 
savings are drawn down over 30 years compared to those savers that did 
not receive conflicted advice. EPI derived its estimate using the 
methodology the White House Council of Economic Advisors (CEA) used in 
its 2015 report, which estimated that the aggregate annual cost of 
conflicted advice is about $17 billion each year).\18\ The Department 
notes that the EPI estimate covers broad range of investments including 
variable annuities and other types of mutual funds, while the 
Department's estimates in the 2016 final RIA are based solely on front-
end load mutual funds.
---------------------------------------------------------------------------

    \17\ For example, the comment letter submitted by Consumer 
Federation of America on March 17, 2017 argued that regulatory 
impact analysis for the Fiduciary Rule is inadequate.
    \18\ The CEA report was most recently accessed at the following 
URL: https://permanent.access.gpo.gov/gpo55500/cea_coi_report_final.pdf.
---------------------------------------------------------------------------

    Other commenters argued that the Department's estimated investor 
losses from the proposed 60-day delay were overstated because they were 
derived from the 2016 RIA, which these commenters contend overestimated 
net investor gains. These commenters generally contend the 2016 RIA 
wrongly applied published research to estimate investor gains and/or 
failed to properly account for social costs such as potential loss of 
access to financial advice.\19\ These comments largely echo comments 
made in response to the Fiduciary Rule when it was proposed in 2015, 
and that were addressed in considerable detail in the 2016 RIA. In the 
2016 RIA, the Department concluded that published research supports its 
estimates of investor gains and that the Fiduciary Rule and PTEs were 
not likely to impose additional social costs as a result of the loss of 
access to financial advice.\20\ The Department notes that its 
conclusion that investor losses from this delay will be small has no 
immediate bearing on the conclusions of its 2016 RIA. However, the 
Department will review the 2016 RIA's conclusions as part of its review 
of the Fiduciary Rule and PTEs directed by the Presidential Memorandum.
---------------------------------------------------------------------------

    \19\ For example, see the ICI comment letter and the IRI comment 
letter.
    \20\ The 2016 RIA is available at https://www.dol.gov/sites/
default/files/ebsa/laws-and-regulations/Rules-and-regulations/
completed-Rulemaking/1210-AB32-2/conflict-of-interest-ria.pdf. See 
pp. 312-324.
---------------------------------------------------------------------------

    With respect to this final rule's delay in the applicability of 
exemption conditions other than the Impartial Conduct Standards in the 
BIC Exemption and the Principal Transactions Exemption until January 1, 
2018, the Department considered whether investor losses might result. 
Under this final rule, beginning on June 9, 2017, advisers will be 
subject to the prohibited transaction rules and will generally be 
required to (1) make recommendations that are in their client's best 
interest (i.e., IRA recommendations that are prudent and loyal), (2) 
avoid misleading statements, and (3) charge no more than reasonable 
compensation for their services. If advisers fully adhere to these 
requirements, affected investors will generally receive the full gains 
due to the fiduciary rulemaking. However, the temporary absence (until 
January 1, 2018) of exemption conditions intended to support and 
provide accountability mechanisms for such adherence (e.g., conditions 
requiring advisers to provide a written acknowledgement of their 
fiduciary status and adherence to the Impartial Conduct Standards) 
obliges the Department to consider the possibility that some lapses in 
compliance may result in associated investor losses.
    Advisers who presently are fiduciaries may be especially likely to 
fully satisfy the PTEs' Impartial Conduct Standards before January 1, 
2018, in the ERISA-plan context, because advisers who make 
recommendations to plans and plan participants regarding plan assets, 
including recommendations on rollovers or distributions of plan assets, 
are already subject to standards of prudence and loyalty under ERISA 
and a violation of the Impartial Conduct Standards would be subject to 
claims for civil liability under ERISA. Moreover, financial 
institutions and advisers who do not provide impartial advice as 
required by the Rule and PTEs would violate the prohibited transaction 
rules of the Code.
    In addition, the temporary absence of the transitional disclosure 
conditions in the BIC Exemption and Principal Transactions Exemption is 
likely to have a smaller impact than would be true if the Impartial 
Conduct Standards were removed. Advisers would be expected to exercise 
care to fairly and accurately describe recommended transactions and 
compensation practices pursuant to the Impartial Conduct Standards 
which require advisers to make recommendations that are prudent and 
loyal (i.e., in the customer's best interest), free from 
misrepresentations, and consistent with the reasonable compensation 
standard.\21\ In addition, even though advisers would not be 
specifically required by the terms of these PTEs to notify retirement 
investors of the Impartial Conduct Standards and to acknowledge their 
fiduciary status before January 1, 2018, many investors are likely to 
know they are entitled to advice that adheres to a fiduciary standard 
because this final rule will receive publicity from the Department and 
media, and many advisers will likely notify consumers voluntarily about 
the imposition of the standard and their adherence to that standard as 
a best practice.
---------------------------------------------------------------------------

    \21\ In addition to various disclosure and representation 
obligations, other delayed conditions in the BIC Exemption and 
Principal Transactions Exemption include requirements to designate 
persons responsible for addressing material conflicts of interest 
and monitoring compliance and to comply with recordkeeping 
obligations.
---------------------------------------------------------------------------

    Comments received by the Department and media reports also indicate 
that many financial institutions already had completed or largely 
completed work to establish policies and procedures necessary to make 
the business structure and practice shifts required by the Impartial 
Conduct Standards earlier this year (e.g., drafting and implementing 
training for staff, drafting client correspondence and explanations of 
revised product and service offerings, negotiating changes to 
agreements with product manufacturers as part of their approach to 
compliance with the PTEs, changing employee and agent compensation 
structures, and designing conflict-free product offerings), and the 
Department believes that financial institutions may use this compliance 
infrastructure to ensure that they meet the Impartial Conduct Standards 
after taking the additional

[[Page 16910]]

sixty days for an orderly transition between June 9, 2017, and January 
1, 2018.
    For these reasons, the Department expects that advisers' compliance 
with the Impartial Conduct Standards during the period between June 9, 
2017 and January 1, 2018, will be substantial, even if there is some 
reduction in compliance relative to the baseline. The Department is 
uncertain about the magnitude of this reduction and will consider this 
question as part of its review of the Fiduciary Rule and PTEs pursuant 
to the President's Memorandum.
b. Cost Savings
    In the 2016 RIA, the Department estimated that Financial 
Institutions would incur $16 billion in compliance costs over the first 
10 years, $5 billion of which are first-year costs. Delaying the 
applicability date of the Rule and PTEs would result in cost savings 
due to foregone costs of complying for 60 days with the new PTE 
conditions. Additionally, after June 9, 2017 until at least January 1, 
2018, financial institutions and advisers relying on the BIC Exemption 
and Principal Transactions Exemption to engage in covered transactions 
would have to satisfy only the Impartial Conduct Standards of those 
exemptions. They would not be specifically required to meet other 
transition period requirements of these PTEs, such as to make specific 
written disclosures and representations of fiduciary status and of 
compliance with fiduciary standards in investor communications, 
designate a person or persons responsible for addressing material 
conflicts of interest and monitoring advisers' adherence to the 
Impartial Conduct Standards, and comply with new recordkeeping 
obligations.
    Therefore, due to both the 60-day delay of the Fiduciary Rule and 
PTEs and the reduced transition period requirements, the Department 
estimates cost savings of $78 million until January 1, 2018. The 
Department estimates that the ten-year cost savings, which also include 
returns on the cost savings that occur in the April 10, 2017, to 
January 1, 2018 time period, are $123 million using a three percent 
discount rate, and $114 million using a seven percent discount rate. 
The equivalent annualized values are $14.4 million using a three 
percent discount rate and $16.2 million using a seven percent discount 
rate.\22\
---------------------------------------------------------------------------

    \22\ Estimates are derived from the ``Data Collection,'' 
``Record Keeping (Data Retention),'' and ``Supervisory, Compliance, 
and Legal Oversight'' categories discussed in section 5.3.1 of the 
2016 final RIA and reductions in the number of the transition 
notices that will be delivered.
---------------------------------------------------------------------------

    Figure 1 shows the sources of the cost-savings. Please note that 
numbers in the table do not equal the ten-year total costs-saving, 
because they are not discounted. The cost savings to firms due to the 
delay remain unchanged relative to what was estimated for the NPRM, 
while the cost-savings from the complete elimination of the transition 
notice has increased. Also note that even though the applicability date 
of the exemption conditions have been delayed during the transition 
period, it is nevertheless anticipated that firms that are fiduciaries 
will implement procedures to ensure that they are meeting their 
fiduciary obligations, such as changing their compensation structures 
and monitoring the sales practices of their advisers to ensure that 
conflicts in interest do not cause violations of the Impartial Conduct 
Standards, and maintaining sufficient records to corroborate that they 
are adhering to Impartial Conduct Standards. However, these firms have 
considerably more flexibility to choose precisely how they will comply 
during the transition period. Therefore, there could be additional cost 
savings not included in these estimates if, for example, firms develop 
more efficient methods to adhere to the Impartial Conduct Standards. 
The Department does not have sufficient data to estimate these cost 
savings, therefore, they are not quantified.

[[Page 16911]]

[GRAPHIC] [TIFF OMITTED] TR07AP17.000

    The delay of applicability dates described in this final rule could 
defer or reduce start-up compliance costs, particularly in 
circumstances where more gradual steps toward preparing for compliance 
are less expensive. However, due to lack of systematic evidence on the 
portion of compliance activities that have already been undertaken, 
thus rendering the associated costs sunk, the Department is unable to 
quantify the potential change in start-up costs that would result from 
a delay in the applicability date and elimination of the transition 
disclosure requirement.
    Commenters addressed the issue of start-up costs that have not yet 
been incurred suggesting that a delay could yield substantial savings, 
particularly if subsequent changes to the Fiduciary Rule and PTEs or 
subsequent market developments make it possible to avoid or reduce such 
costs. One commenter provided as an example of start-up costs that 
might be avoided the cost of developing ``T'' shares--a cost that has 
not yet been incurred by some affected firms. T shares, a class of 
mutual fund shares, generally would pay advisers a uniform commission, 
thereby mitigating advisory conflicts otherwise associated with 
variation in commission levels across different mutual funds. Some 
investment companies had been rushing to develop T shares in order to 
comply with the Fiduciary Rule and PTEs' originally scheduled 
applicability dates. However, some investment companies are now 
pursuing an alternative approach, sometimes referred to as ``clean'' 
shares, as a potentially better solution. Clean shares would have no 
commission attached. Instead, distributing brokers would set their own 
commission levels, and generally would set the levels uniformly across 
different funds they recommend, thereby mitigating potential conflicts 
from variation in commission levels. The clean share approach recently 
became more viable, owing to new SEC staff guidance clarifying its 
permissibility under applicable law. It now seems likely that the T-
share approach will yield to clean shares. Consequently, this final 
rule's delay in the applicability of the Fiduciary Rule and PTEs might 
make it possible to avoid some of the cost of continuing to develop and 
implement T-shares, in favor of moving more directly to what might be 
the preferred long-term solution, namely, clean shares.
    More generally, however, it is unclear what proportion of start-up 
costs might be avoided as a result of this final rule's delay of 
applicability dates. Absent additional changes to the Fiduciary Rule or 
PTEs, firms are likely to incur most of these costs eventually. The 
Department generally believes that start-up costs not yet incurred for 
requirements scheduled to become applicable January 1, 2018, should not 
be included as a cost savings associated with this final rule, because 
it remains to be determined whether those requirements will be revised 
or eliminated.
    Some comments generally argued that the compliance cost estimates 
presented in the 2016 RIA were understated, and that therefore the cost 
savings from a delay in the applicability of all or some of the 
requirements of the Fiduciary Rule and PTEs would be larger than 
estimated above.
    Some comments reported expected costs savings if the Fiduciary Rule 
is rescinded or modified; however, that information is not useful for 
calculating the cost savings associated with this final rule, because 
the appropriate base-line for this analysis assumes full implementation 
of the Fiduciary Rule

[[Page 16912]]

and PTEs by January 1, 2018. Those start-up costs that have not been 
incurred only would have an impact if the Department decides in the 
future to delay the January 1, 2018 implementation date or to revise or 
repeal the obligations of firms and advisers. The Department does not 
have any basis for predicting such changes at this time, before it has 
received substantial new data or evidence in response to the 
President's Memorandum.
    A commenter also asserted that the Department significantly 
understated the cost savings that would result from a 60-day delay. 
This assertion had three components: (1) The commenter estimated the 
cost over 60 days to be $250 million based on the on-going cost from 
the final 2016 RIA of $1.5 billion per year, (2) that cost savings over 
a 10-year period were not provided to allow comparison to the negative 
effects on investors that would occur over the ten year period, (3) 
that industry cost savings were not projected out over 10 years using 
returns on capital in a similar manner to investors' lost earnings. The 
Department stands behind its estimate, however, because the commenter 
misapplied the estimates from the 2016 final RIA when developing its 
cost-saving estimate. The $1.5 billion on-going costs are the costs of 
compliance for all components of the Fiduciary Rule and PTEs; however, 
the delay affects only the costs related to the transition period 
requirements which are a subset of the costs included in the $1.5 
billion estimate. Also, when estimating the costs for the Fiduciary 
Rule and PTEs a decision was made, for simplification of estimation, to 
over-estimate costs for the transition period by using the same costs 
for the transition period as was used for the period with full 
compliance during that time period.
    The comment's assertions in items (2) and (3) above also are 
incorrect. Instead of a ten-year total cost number, an annualized 
number for the ten-year period was provided in the NPRM for both the 
cost savings ($8 million using a three percent discount rate and $9 
million using a seven percent discount rate) and for the negative 
investor impacts ($104 million using a three percent discount rate and 
$87 million using a seven percent discount rate). Annualized numbers 
use the same inputs as those used to estimate a ten-year discounted 
total number, thereby allowing a comparison of expected impacts across 
the ten-year period. Also, the cost savings to firms from the delay 
were projected out for ten years and included in the annualized numbers 
to account for the fact that due to the delayed applicability date, 
financial institutions will have additional resources to reinvest in 
their firms. This parallels the methodology the Department used to 
estimate the ten-year reduction in investor gains that will result from 
the delay. Contrary to the concerns expressed by another commenter, the 
reported annualized number does not mean that costs are spread equally 
across the ten years.
    Another commenter agreed that a delay ``could delay or reduce 
start-up compliance costs, particularly in circumstances where more 
gradual steps towards preparing for compliance are less expensive.'' 
However, the commenter failed to provide any estimates or data that 
would help the Department quantify such cost savings.
c. Alternatives Considered
    In conformance with Executive Order 12866, the Department 
considered several alternatives in finalizing this final rule that were 
informed by public comments. As discussed below, the Department 
believes the approach adopted in this final rule likely yields the most 
desirable outcomes including avoidance of costly market disruptions, 
more compliance cost savings than other alternatives, and reduced 
investor losses. In weighing different options, the Department took 
numerous factors into account. The Department's objective was to avoid 
unnecessary confusion and uncertainty in the investment advice market, 
facilitate continued marketplace innovation, and minimize investor 
losses while maximizing compliance cost savings.
    Compared with the alternative offered in the NPRM, this final rule 
provides more benefits. It provides more certainty during the period 
between June 9, 2017 and January 1, 2018. The Department will aim to 
complete its review of the Fiduciary Rule and PTEs pursuant to the 
President's Memorandum in advance of January 1, 2018, and to thereby 
afford firms continued certainty and enough time to prepare for 
whatever action is prompted by the review. On the cost side, as noted 
above, the Department now believes that investor losses associated with 
either the NPRM approach (a 60-day delay alone) or this final rule 
delaying applicability dates would be relatively small. As opposed to a 
full delay of all conditions until January 1, 2018, this final rule's 
application of the Impartial Conduct Standards beginning on June 9, 
2017, helps ensure that retirement investors will experience gains from 
a higher conduct standard and minimizes the potential for an undue 
reduction in those gains as compared to the full protections of all the 
PTEs' conditions.
    The Department also considered the possible impact of a 90-day or 
longer delay in the application of the fiduciary standards and all 
conditions set forth in the Fiduciary Rule and PTEs. Such a longer 
delay likely would result in too little additional cost saving to 
justify the additional investor losses, which could be quite large. 
Under this final rule, the Department expects that over time investors 
will come to realize much of the gains due to the Impartial Conduct 
Standards. A longer delay in the application of the Fiduciary Rule and 
PTEs and those standards would deprive investors of important fiduciary 
protections for a longer time, resulting in larger investor losses.
    The Department also considered a scenario where the fiduciary 
definition in the Rule and Impartial Conduct Standards in the PTEs take 
effect on April 10, 2017 as originally planned, while the remaining 
conditions in the PTEs become applicable on January 1, 2018. This 
approach was suggested by several commenters claiming that the delay is 
not necessary to conduct the examination required by the Presidential 
Memorandum.\23\ This approach arguably might minimize any reduction to 
investor gains. The Department did not adopt this alternative, however, 
because it would not provide the regulated community with sufficient 
notice and time to comply, and the resultant disruptions attributable 
to the short time frame could overshadow any benefits.
---------------------------------------------------------------------------

    \23\ For example, see the commenter letter submitted by Consumer 
Federation of America on March 17, 2017.
---------------------------------------------------------------------------

2. Paperwork Reduction Act

    The Paperwork Reduction Act (PRA) (44 U.S.C. 3501, et seq.) 
prohibits federal agencies from conducting or sponsoring a collection 
of information from the public without first obtaining approval from 
the Office of Management and Budget (OMB). See 44 U.S.C. 3507. 
Additionally, members of the public are not required to respond to a 
collection of information, nor be subject to a penalty for failing to 
respond, unless such collection displays a valid OMB control number. 
See 44 U.S.C. 3512.
    The Department has sent a request to OMB to modify the information 
collections contained in the Fiduciary Rule and PTEs. The Department 
will notify the public regarding OMB's response to its request in a 
separate Federal Register Notice. The information collection 
requirements

[[Page 16913]]

contained in the Rule and PTEs are as follows.
    Final Rule: The information collections in the Rule are approved 
under OMB Control Number 1210-0155. Paragraph (b)(2)(i) requires that 
certain ``platform providers'' provide disclosure to a plan fiduciary. 
Paragraphs (b)(2)(iv)(C) and (D) require asset allocation models to 
contain specific information if they furnish and provide certain 
specified investment educational information. Paragraph (c)(1) requires 
a disclosure to be provided by a person to an independent plan 
fiduciary in certain circumstances for them to be deemed not to be an 
investment advice fiduciary. Finally, paragraph (c)(2) requires certain 
counterparties, clearing members and clearing organizations to make a 
representation to certain parties so they will not be deemed to be 
investment advice fiduciaries regarding certain swap transactions 
required to be cleared under provisions of the Dodd-Frank Act.
    For a more detailed discussion of the information collections and 
associated burden, see the Department's PRA analysis at 81 FR 20946, 
20994.
    PTE 2016-01, the Best Interest Contract Exemption: The information 
collections in PTE 2016-01, the BIC Exemption, are approved under OMB 
Control Number 1210-0156. The exemption requires disclosure of material 
conflicts of interest and basic information relating to those conflicts 
and the advisory relationship (Sections II and III), contract 
disclosures, contracts and written policies and procedures (Section 
II), pre-transaction (or point of sale) disclosures (Section III(a)), 
web-based disclosures (Section III(b)), documentation regarding 
recommendations restricted to proprietary products or products that 
generate third party payments (Section (IV), notice to the Department 
of a Financial Institution's intent to rely on the PTE, and maintenance 
of records necessary to prove that the conditions of the PTE have been 
met (Section V).
    Section IX provides a transition period under which relief from 
these prohibitions is available for Financial Institutions and advisers 
during the period between the applicability date and January 1, 2018 
(the ``Transition Period''). As a condition of relief during the 
Transition Period, Financial Institutions were required to provide a 
disclosure with a written statement of fiduciary status and certain 
other information to all retirement investors (in ERISA plans, IRAs, 
and non-ERISA plans) prior to or at the same time as the execution of 
recommended transactions (the ``Transition Disclosure''). The final 
rule eliminates and removes the burden from the ICR for the Transition 
Disclosure requirement for which the Department estimated that 31 
million Transition Disclosures would be sent at a cost of $42.8 million 
during the transition period. This final rule therefore removes this 
burden.
    For a more detailed discussion of the information collections and 
associated burden, see the Department's PRA analysis at 81 FR 21002, 
21071.
    PTE 2016-02, the Prohibited Transaction Exemption for Principal 
Transactions in Certain Assets Between Investment Advice Fiduciaries 
and Employee Benefit Plans and IRAs (Principal Transactions Exemption): 
The information collections in PTE 2016-02, the Principal Transactions 
Exemption, are approved under OMB Control Number 1210-0157. The 
exemption requires Financial Institutions to provide contract 
disclosures and contracts to Retirement Investors (Section II), adopt 
written policies and procedures (Section IV), make disclosures to 
Retirement Investors and on a publicly available Web site (Section IV), 
maintain records necessary to prove they have met the PTE conditions 
(Section V).).
    Section VII provides a transition period under which relief from 
these prohibitions is available for Financial Institutions and advisers 
during the period between the applicability date and January 1, 2018 
(the ``Transition Period''). As a condition of relief during the 
Transition Period, Financial Institutions were required to provide a 
disclosure with a written statement of fiduciary status and certain 
other information to all retirement investors (in ERISA plans, IRAs, 
and non-ERISA plans) prior to or at the same time as the execution of 
recommended transactions (the ``Transition Disclosure''). This final 
rule eliminates and removes the burden from the ICR for the Transition 
Disclosure requirement for which the Department estimated that 2.5 
million Transition Disclosures would be sent at a cost of $2.9 million 
during the Transition Period. This final rule therefore removes this 
burden.
    For a more detailed discussion of the information collections and 
associated burden, see the Department's PRA analysis at 81 FR 21089, 
21129.
    Amended PTE 75-1: The information collections in Amended PTE 75-1 
are approved under OMB Control Number 1210-0092. Part V, as amended, 
requires that prior to an extension of credit, the plan must receive 
from the fiduciary written disclosure of (i) the rate of interest (or 
other fees) that will apply and (ii) the method of determining the 
balance upon which interest will be charged in the event that the 
fiduciary extends credit to avoid a failed purchase or sale of 
securities, as well as prior written disclosure of any changes to these 
terms. It also requires broker-dealers engaging in the transactions to 
maintain records demonstrating compliance with the conditions of the 
PTE.
    For a more detailed discussion of the information collections and 
associated burden, see the Department's PRA analysis at 81 FR 21139, 
21145. The Department concluded that the ICRs contained in the 
amendments to Part V impose no additional burden on respondents.
    Amended PTE 86-128: The information collections in Amended PTE 86-
128 are approved under OMB Control Number 1210-0059. As amended, 
Section III of the PTE requires Financial Institutions to make certain 
disclosures to plan fiduciaries and owners of managed IRAs in order to 
receive relief from ERISA's and the Code's prohibited transaction rules 
for the receipt of commissions and to engage in transactions involving 
mutual fund shares. Financial Institutions relying on either PTE 86-128 
or PTE 75-1, as amended, are required to maintain records necessary to 
demonstrate that the conditions of these PTEs have been met.
    For a more detailed discussion of the information collections and 
associated burden, see the Department's PRA analysis at 81 FR 21181, 
21199.
    Amended PTE 84-24: The information collections in Amended PTE 84-24 
are approved under OMB Control Number 1210-0158. As amended, Section 
IV(b) of PTE 84-24 requires Financial Institutions to obtain advance 
written authorization from an independent plan fiduciary or IRA holder 
and furnish the independent fiduciary or IRA holder with a written 
disclosure in order to receive commissions in conjunction with the 
purchase of insurance and annuity contracts. Section IV(c) of PTE 84-24 
requires investment company Principal Underwriters to obtain approval 
from an independent fiduciary and furnish the independent fiduciary 
with a written disclosure in order to receive commissions in 
conjunction with the purchase by a plan of securities issued by an 
investment company Principal Underwriter. Section V of PTE 84-24, as 
amended, requires Financial Institutions to maintain records necessary 
to demonstrate that the conditions of the PTE have been met.
    The final rule delays the applicability of amendments to PTE 84-24 
until

[[Page 16914]]

January 1, 2018, except that the Impartial Conduct Standards will 
become applicable on June 9, 2017. The Department does not have 
sufficient data to estimate that number of respondents that will use 
PTE-84-24 with the inclusion of Impartial Conduct Standards but delayed 
applicability date of amendments. Therefore, the Department has not 
revised its estimate from the proposed rule.
    For a more detailed discussion of the information collections and 
associated burden, see the Department's PRA analysis at 81 FR 21147, 
21171.
    These paperwork burden estimates, which are substantially derived 
from compliance with conditions that will apply after January 1, 2018, 
over the three-year ICR approval period, are summarized as follows:
    Agency: Employee Benefits Security Administration, Department of 
Labor.
    Titles: (1) Best Interest Contract Exemption and (2) Final 
Investment Advice Regulation.
    OMB Control Number: 1210-0156.
    Affected Public: Businesses or other for-profits; not for profit 
institutions.
    Estimated Number of Respondents: 19,890.
    Estimated Number of Annual Responses: 34,095,501 during the first 
year and 72,282,441 during subsequent years.
    Frequency of Response: When engaging in exempted transaction.
    Estimated Total Annual Burden Hours: 2,701,270 during the first 
year and 2,832,369 in subsequent years.
    Estimated Total Annual Burden Cost: $2,436,741,143 during the first 
year and $574,302,408 during subsequent years.
    Agency: Employee Benefits Security Administration, Department of 
Labor.
    Titles: (1) Prohibited Transaction Exemption for Principal 
Transactions in Certain Assets between Investment Advice Fiduciaries 
and Employee Benefit Plans and IRAs and (2) Final Investment Advice 
Regulation.
    OMB Control Number: 1210-0157.
    Affected Public: Businesses or other for-profits; not for profit 
institutions.
    Estimated Number of Respondents: 6,075.
    Estimated Number of Annual Responses: 2,463,803 during the first 
year and 3,018,574 during subsequent years.
    Frequency of Response: When engaging in exempted transaction; 
Annually.
    Estimated Total Annual Burden Hours: 85,457 hours during the first 
year and 56,197 hours in subsequent years.
    Estimated Total Annual Burden Cost: $1,953,184,167 during the first 
year and $431,468,619 in subsequent years.

3. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal Rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) or any other laws. 
Unless the head of an agency certifies that a proposed Rule is not 
likely to have a significant economic impact on a substantial number of 
small entities, section 604 of the RFA requires that the agency present 
a final regulatory flexibility analysis (FRFA) describing the Rule's 
impact on small entities and explaining how the agency made its 
decisions with respect to the application of the Rule to small 
entities. Small entities include small businesses, organizations and 
governmental jurisdictions.
    The Department has determined that this final rule will have a 
significant economic impact on a substantial number of small entities, 
and hereby provides this FRFA. As noted above, the Department is taking 
regulatory action to delay the applicability date of the fiduciary 
definition in the Rule and Impartial Conduct Standards in the PTEs 
until June 9, 2017, and remaining conditions for covered transactions 
in the BIC Exemption and Principal Transactions Exemption until January 
1, 2018. In addition, the Department is delaying the applicability of 
amendments to Prohibited Transaction Exemption 84-24 until January 1, 
2018, other than the Impartial Conduct Standards, which will become 
applicable on June 9, 2017. This final rule is intended to reduce any 
unnecessary disruption that could occur in the marketplace if the 
applicability date of the Rule and PTEs occurs while the Department 
examines the Rule and PTEs as directed in the Presidential Memorandum. 
In the face of uncertainty and widespread questions about the Fiduciary 
Rule's future or possible repeal, many financial firms slowed or halted 
their efforts to prepare for full compliance on April 10. Consequently, 
failure to delay that applicability date could jeopardize firms' near-
term ability and/or propensity to serve classes of customers, and both 
firms and investors could suffer.
    The Small Business Administration (SBA) defines a small business in 
the Financial Investments and Related Activities Sector as a business 
with up to $38.5 million in annual receipts. The Department examined 
the dataset obtained from SBA which contains data on the number of 
firms by NAICS codes, including the number of firms in given revenue 
categories. This dataset allowed the Department to estimate the number 
of firms with a given NAICS code that falls below the $38.5 million 
threshold to be considered a small entity by the SBA. However, this 
dataset alone does not provide a sufficient basis for the Department to 
estimate the number of small entities affected by the rule. Not all 
firms within a given NAICS code would be affected by this rule, because 
being an ERISA fiduciary relies on a functional test and is not based 
on industry status as defined by a NAICS code. Further, not all firms 
within a given NAICS code work with ERISA-covered plans and IRAs.
    Over 90 percent of broker-dealers (BDs), registered investment 
advisers, insurance companies, agents, and consultants are small 
businesses according to the SBA size standards (13 CFR 121.201). 
Applying the ratio of entities that meet the SBA size standards to the 
number of affected entities, based on the methodology described at 
greater length in the RIA of the Fiduciary Rule, the Department 
estimates that the number of small entities affected by this final rule 
is 2,438 BDs, 16,521 Registered Investment Advisors, 496 insurers, and 
3,358 other ERISA service providers. For purposes of the RFA, the 
Department continues to consider an employee benefit plan with fewer 
than 100 participants to be a small entity. The 2013 Form 5500 filings 
show nearly 595,000 ERISA covered retirement plans with less than 100 
participants.
    Based on the foregoing, the Department estimates that small 
entities would save approximately $74.1 million in compliance costs due 
to the delays of the applicability dates described in this 
document.\24\ This estimate is a subset of the cost savings discussed 
in the RIA, but is an estimate of cost savings only for small entities. 
As highlighted in the Final Regulatory Flexibility Act Analysis for the 
Fiduciary Rule, 96.2, 97.3, and 99.3 percent of BDs, Registered 
Investment Advisors, and Insurers respectively are estimated to meet 
the SBAs definition of small business. These cost savings are 
substantially derived from foregone on-going compliance requirements 
related to the transition notice requirements for the BIC Exemption and 
the Principal Transactions Exemption, data collection to demonstrate 
satisfaction of fiduciary requirements, and retention of data to 
demonstrate the satisfaction of

[[Page 16915]]

conditions of the exemption during the Transition Period.
---------------------------------------------------------------------------

    \24\ This estimate includes savings from notice requirements. 
Savings from notice requirements include savings from all firms 
because it is difficult to break out cost savings only from small 
entities as defined by SBA.
---------------------------------------------------------------------------

    As discussed above, most firms affected by this final rule meet the 
SBA's definition of a small business. Therefore, the discussion of the 
comments received on the proposed rule in Section B. and alternatives 
in Section C.1.c, is relevant and cross-referred to for purpose of this 
Regulatory Flexibility Act analysis.

4. Congressional Review Act

    The final rule extending the applicability date is subject to the 
Congressional Review Act (CRA) provisions of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and 
will be transmitted to Congress and the Comptroller General for review. 
The final rule is a ``major rule'' as that term is defined in 5 U.S.C. 
804, because it is likely to result in an annual effect on the economy 
of $100 million or more. Although the CRA generally requires that major 
rules become effective no sooner than 60 days after Congress receives 
the required report, the CRA allows the issuing agency to make a rule 
effective sooner, if the agency makes a good cause finding that such 
public procedure is impracticable, unnecessary, or contrary to the 
public interest. The Department has made such a good cause finding for 
this rule (as discussed in further detail below in Section C.6 of this 
document), including the basis for that finding. The Presidential 
Memorandum, directing the Department to conduct an updated legal and 
economic analysis, was issued on February 3, 2017, only 67 days before 
the Rule and PTEs were scheduled to become applicable. The Department 
has determined it would be impracticable for it to conclude any delay 
of this rulemaking more than 60 days before the April 10, 2017 
applicability date.

5. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written statement 
assessing the effects of any Federal mandate in a proposed or final 
agency rule that may result in an expenditure of $100 million or more 
(adjusted annually for inflation with the base year 1995) in any one 
year by State, local, and tribal governments, in the aggregate, or by 
the private sector. For purposes of the Unfunded Mandates Reform Act, 
as well as Executive Order 12875, the final rule extending the 
applicability date does not include any federal mandate that we expect 
would result in such expenditures by State, local, or tribal 
governments, or the private sector. The Department also does not expect 
that the delay will have any material economic impacts on State, local 
or tribal governments, or on health, safety, or the natural 
environment.

6. Effective Date and Good Cause Under 553(d)(1), (3)

    The extension of the applicability date of the Rule and PTEs is 
effective immediately upon publication of the final rule in the Federal 
Register. Under 5 U.S.C. 553(d) (Administrative Procedure Act), an 
agency may determine that its rulemaking should become effective more 
quickly than the 30 days after publication that is otherwise required. 
This is appropriate if the rule relieves a restriction, or if the 
agency finds, and publishes, good cause to accelerate the effective 
date. The Department has determined that a delay of the applicability 
date of the Rule and PTEs relieves a restriction and therefore may 
appropriately become effective immediately. Additionally, for all of 
the reasons set forth in Sections B and C, the Department has 
determined that there is good cause for making the rule effective 
immediately. The APA provision is intended to ensure that affected 
parties have a reasonable amount of time to adjust their behavior to 
comply with new regulatory requirements. This final rule, which delays 
for 60 days regulatory requirements that would otherwise apply as of 
April 10, 2017, fulfills that purpose. Moreover, if the final rule's 
60-day delay were not immediately effective, significant provisions of 
the Rule and PTEs could become applicable on April 10 before the delay 
takes effect, resulting in a period in which the Rule, fiduciary 
obligations, and notice and disclosure requirements would become 
applicable before becoming inapplicable again. Such a gap period would 
result in a chaotic transition to fiduciary standards that would create 
additional confusion, uncertainty, and expense, thereby defeating the 
purposes of the delay. The resulting disorder would be contrary to 
principles of fundamental fairness and could increase costs, not only 
for firms and advisers, but for the retirement investors that they 
serve. The Department also believes that making the rule immediately 
effective will provide plans, plan fiduciaries, plan participants and 
beneficiaries, IRAs, IRA owners, financial services providers and other 
affected service providers the level of certainty that the rule is 
final and not subject to further modification without additional public 
notice and comment that will allow them to immediately resume and/or 
complete preparations for the provisions of the Rule and PTEs that will 
become applicable on June 9, 2017. Accordingly, the Department has 
concluded that providing certainty, by making the delay effective 
immediately, would be a more reasonable and fair path forward. In 
addition, the Presidential Memorandum ordering the Department to 
reconsider its legal and economic analysis was issued only 67 days 
before the applicability date and generated a high volume of comments; 
it would have been impracticable for the Department to finish any 
public rulemaking process quickly enough to provide an effective date 
30 days after publication.

7. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of 
Executive Order 13771 requires an agency, unless prohibited by law, to 
identify at least two existing regulations to be repealed when the 
agency publicly proposes for notice and comment, or otherwise 
promulgates, a new regulation. In furtherance of this requirement, 
section 2(c) of Executive Order 13771 requires that the new incremental 
costs associated with new regulations shall, to the extent permitted by 
law, be offset by the elimination of existing costs associated with at 
least two prior regulations. OMB's interim guidance, issued on February 
2, 2017, explains that for Fiscal Year 2017 the above requirements only 
apply to each new ``significant regulatory action that imposes costs,'' 
and that ``costs should be measured as the opportunity cost to 
society.'' The impacts of today's final rule are categorized 
consistently with the analysis of the original Fiduciary Rule, and the 
Department has also concluded that the impacts identified in the 
Regulatory Impact Analysis accompanying the 2016 final rule may still 
be used as a basis for estimating the potential impacts of that final 
rule, were it not being modified today. It has been determined that, 
for purposes of E.O. 13771, the impacts of the Fiduciary Rule that were 
identified in the 2016 analysis as costs, and are reduced by today's 
final rule, are presently categorized as cost savings (or negative 
costs), and impacts of the Fiduciary Rule that were identified in the 
2016 analysis as a combination of transfers and positive benefits, and 
that are reduced by today's final rule, are categorized as a 
combination of (opposite-direction) transfers and negative benefits. 
Accordingly, OMB has determined that this final rule extending the

[[Page 16916]]

applicability date does not impose costs that would trigger the above 
requirements of Executive Order 13771.

D. Supplemental Description of PTEs Available to Investment Advisers

    When it adopted the Fiduciary Rule in 2016, the Department also 
granted the new BIC Exemption \25\ and Principal Transactions 
Exemption,\26\ to facilitate the provision of investment advice in 
retirement investors' best interest. In the absence of an exemption, 
investment advice fiduciaries would be statutorily prohibited under 
ERISA and the Code from receiving compensation as a result of their 
investment advice, and from engaging in certain other transactions, 
involving plan and IRA customers. These new exemptions provided broad 
relief from the prohibited transaction provisions for investment advice 
fiduciaries operating in the retail marketplace. The Department also 
expanded an existing exemption to permit investment advice fiduciaries 
to receive compensation for extending credit to avoid failed securities 
transactions. See PTE 75-1, Part V.\27\
---------------------------------------------------------------------------

    \25\ 81 FR 21002 (April 8, 2016), as corrected at 81 FR 44773 
(July 11, 2016).
    \26\ 81 FR 21089 (April 8, 2016), as corrected at 81 FR 44784 
(July 11, 2016).
    \27\ Exemptions from Prohibitions Respecting Certain Classes of 
Transactions Involving Employee Benefit Plans and Certain Broker-
Dealers, Reporting Dealers and Banks, 81 FR 21139 (April 8, 2016).
---------------------------------------------------------------------------

    At the same time that it granted the new exemptions, the Department 
amended a number of previously granted exemptions to incorporate the 
Impartial Conduct Standards as conditions. In some cases, previously 
granted exemptions were revoked or were narrowed in scope, with the aim 
that investment advice fiduciaries would rely primarily on the BIC 
Exemption and Principal Transactions Exemption when they provided 
advice to retirement investors in the retail marketplace. These 
amendments were, as a whole, intended to ensure that retirement 
investors would consistently be protected by Impartial Conduct 
Standards, regardless of the particular exemption upon which an 
investment advice fiduciary relies.
    As discussed in Sections B and C above, the Department has 
determined that the Impartial Conduct Standards in the new exemptions 
and amendments to previously granted exemptions should become 
applicable on June 9, 2017, so that retirement investors will be 
protected during the period in which the Department conducts its 
examination of the Fiduciary Rule. Accordingly, this document extends 
for 60 days the applicability dates of the BIC Exemption and the 
Principal Transactions Exemption and requires adherence to the 
Impartial Conduct Standards (including the ``best interest'' standard) 
only, as conditions of the transition period through January 1, 2018. 
Thus, the fiduciary definition in the Rule published on April 8, 2016, 
and Impartial Conduct Standards in these exemptions, are applicable on 
June 9, 2017, while compliance with other conditions for covered 
transactions, such as the contract requirement, in these exemptions is 
not required until January 1, 2018. This document also delays the 
applicability of amendments to Prohibited Transaction Exemption 84-24 
until January 1, 2018, other than the Impartial Conduct Standards, 
which will become applicable on June 9, 2017. Finally, this document 
extends the applicability dates of amendments to other previously 
granted exemptions to June 9, 2017. Taken together, these exemptions 
provide broad relief to fiduciary advisers, all of whom will be subject 
to the Impartial Conduct Standards under the exemptions' terms. A brief 
description of the exemptions, and their applicability dates, follows.

BIC Exemption and Principal Transactions Exemption

    Both the BIC Exemption and the Principal Transactions Exemption 
will become applicable on June 9, 2017. The periods of transition 
relief (Section IX of the BIC Exemption and Section VII of the 
Principal Transactions Exemption) are amended to extend from June 9, 
2017, through January 1, 2018. The Impartial Conduct Standards set 
forth in the transition relief are applicable June 9, 2017. In 
addition, Section II(h) of the BIC Exemption is amended to delay 
conditions for robo-advice providers that are Level Fee Fiduciaries 
other than the Impartial Conduct Standards, which are applicable on 
June 9, 2017; these entities are excluded from relief in Section IX but 
the Department determined that the transition relief should apply to 
them as well. The preambles to the BIC Exemption (81 FR 21026-32) and 
the Principal Transactions Exemption (81 FR 21105-09) provide an 
extensive discussion of the Impartial Conduct Standards of each 
exemption.
    The remaining conditions of Section IX of the BIC Exemption and 
Section VII of the Principal Transactions Exemption, other than the 
Impartial Conduct Standards, will not be applicable during the 
Transition Period.\28\ These conditions would have required a written 
statement of fiduciary status, specified disclosures, and a written 
commitment to adhere to the Impartial Conduct Standards; designation of 
a person or persons responsible for addressing material conflicts of 
interest and monitoring advisers' adherence to the Impartial Conduct 
Standards; and compliance with the recordkeeping requirements of the 
exemptions. Absent additional changes to the Exemptions, these 
conditions (and others) will first become applicable on January 1, 
2018, after the Transition Period closed. See BIC Exemption Sections 
II(b), II(c), II(d)(2), II(e) and V; Principal Transactions Exemption 
Sections II(b), II(c), II(d)(2), II(e) and V.
---------------------------------------------------------------------------

    \28\ See Sections IX(d)(2)-(4) of the BIC Exemption and Sections 
VII(d)(2)-(4) of the Principal Transactions Exemption.
---------------------------------------------------------------------------

PTE 84-24

    PTE 84-24 \29\ is a previously granted exemption for transactions 
involving insurance and annuity contracts, which was amended in April 
2016 to include the Impartial Conduct Standards as conditions and to 
revoke relief for annuity contracts other than ``fixed rate annuity 
contracts.'' \30\ By the amendment's terms, the exemption would no 
longer apply to transactions involving fixed indexed annuity contracts 
and variable annuity contracts as of April 10, 2017.
---------------------------------------------------------------------------

    \29\ Prohibited Transaction Exemption 84-24 for Certain 
Transactions Involving Insurance Agents and Brokers, Pension 
Consultants, Insurance Companies and Investment Company Principal 
Underwriters, 49 FR 13208 (April 3, 1984), as corrected 49 FR 24819 
(June 15, 1984), as amended 71 FR 5887 (Feb. 3, 2006), and as 
amended 81 FR 21147 (April 8, 2016).
    \30\ The term ``Fixed Rate Annuity Contract'' is defined in 
Section VI(k) of the amended exemption.
---------------------------------------------------------------------------

    The Department is now delaying the applicability date of the April 
2016 Amendments to PTE 84-24 until January 1, 2018, except for the 
Section II. Impartial Conduct Standards and the related definitions of 
``Best Interest'' and ``Material Conflict of Interest,'' which will 
become applicable on June 9, 2017.\31\ Therefore, from June 9, 2017, 
until January 1, 2018, insurance agents, insurance brokers, pension 
consultants and insurance companies will be able to continue to rely on 
PTE 84-24, as previously written,\32\ for the recommendation and sale 
of fixed indexed, variable, and other annuity contracts to plans and 
IRAs,\33\ subject to

[[Page 16917]]

the addition of the Impartial Conduct Standards.\34\
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    \31\ See 81 FR 21176 (Apr. 8, 2016), PTE 84-24 Section VI(b) 
(defining Best Interest) and Section VI(h) (defining Material 
Conflict of Interest).
    \32\ See 71 FR 5887 (Feb. 3, 2006).
    \33\ See PTE 2002-13, 67 FR 9483 (March 1, 2002) (preamble 
discussion of certain exemptions, including PTE 84-24, that apply to 
plans described in Code section 4975).
    \34\ The Impartial Conduct Standards are re-designated as 
Section VII of the 2006 exemption. PTE 84-24 also historically 
provided relief for certain transactions involving mutual fund 
principal underwriters that was revoked for transactions involving 
IRAs. The applicability date of that revocation is also delayed 
until January 1, 2018; accordingly, such transactions can continue 
until that time subject to the applicability of the Impartial 
Conduct Standards.
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    The purpose of this partial delay of the amendment's applicability 
date is to minimize any concerns about potential disruptions in the 
insurance industry during the transition period and consideration of 
the Presidential Memorandum. While the Department believes that most 
parties receiving compensation in connection with annuity 
recommendations can readily rely on the broad transition exemption in 
the BIC Exemption, discussed above, some parties have expressed a 
preference to continue to rely on PTE 84-24, as amended in 2006, which 
has historically been available to the insurance industry for all types 
of annuity products. The Department notes that it is considering, but 
has not yet finalized, additional exemptive relief that is relevant to 
the insurance industry in determining its approach to complying with 
the Fiduciary Rule. See Proposed BIC Exemption for Insurance 
Intermediaries.\35\
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    \35\ 82 FR 7336 (January 19, 2017).
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PTE 86-128 and PTE 75-1, Parts I and II

    In April 2016, the Department also amended PTE 86-128, which 
permits fiduciaries to receive compensation in connection with certain 
securities transactions, to require fiduciaries relying on the 
exemption to comply with the Impartial Conduct Standards, and revoked 
relief for investment advice fiduciaries to IRAs who would now rely on 
the BIC Exemption, rather than PTE 86-128. In addition, the Department 
revoked PTE 75-1, Part II(2), which had granted relief for certain 
mutual fund purchases between fiduciaries and plans, and amended PTE 
86-128 to provide similar relief, subject to the additional conditions 
of PTE 86-128, including the Impartial Conduct Standards. Rather than 
becoming applicable on April 10, 2017, as provided by the April 2016 
rulemaking, these amendments will now become applicable on June 9, 
2017, reflecting a sixty day extension. In addition, the transition 
exemption in the BIC Exemption will be broadly available to investment 
advice fiduciaries engaging in the transactions permitted by PTE 86-
128.
    The April 2016 amendments also provided for the revocation of PTE 
75-1, Part I, which provides an exemption for non-fiduciaries to 
perform certain services in connection with securities transactions. As 
discussed in the preamble to the amendments, the relief provided by PTE 
75-1, Part I was duplicative of the statutory exemptions for service 
providers set forth in ERISA section 408(b)(2) and Code section 
4975(d)(2).\36\ Rather than becoming applicable on April 10, 2017, as 
provided in the April 2016 rulemaking, these amendments will now become 
applicable in their entirety on June 9, 2017, reflecting a sixty day 
extension. For a full discussion of the 2016 amendments to PTE 86-128 
and 75-1, Parts I and II, see 81 FR 21181.
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    \36\ 81 FR 21181, 21198-99 (April 8, 2016).
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PTEs 75-1, Parts III and IV, 77-4, 80-83 and 83-1

    The Department amended the following previously granted exemptions 
to require fiduciaries relying on the exemptions to comply with the 
Impartial Conduct Standards.\37\ Because consistent application of the 
Impartial Conduct Standards is the Department's objective, these 
amendments will be delayed 60 days and become applicable June 9, 2017.
---------------------------------------------------------------------------

    \37\ 81 FR 21208 (April 8, 2016).
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     PTE 75-1, Part III and IV, Exemptions from Prohibitions 
Respecting Certain Classes of Transactions Involving Employee Benefit 
Plans and Certain Broker-Dealers, Reporting Dealers and Banks.
     PTE 77-4, Class Exemption for Certain Transactions Between 
Investment Companies and Employee Benefit Plans.
     PTE 80-83, Class Exemption for Certain Transactions 
Involving Purchase of Securities Where Issuer May Use Proceeds to 
Reduce or Retire Indebtedness to Parties in Interest.
     PTE 83-1 Class Exemption for Certain Transactions 
Involving Mortgage Pool Investment Trusts.

    For a full discussion of these amendments, see 81 FR 21208.

PTE 75-1, Part V

    In April 2016, the Department amended PTE 75-1, Part V, to permit 
investment advice fiduciaries to receive compensation for extending 
credit to a plan or IRA to avoid a failed securities transaction. Thus, 
the amendment expanded the scope of the existing exemption and allowed 
investment advice fiduciaries to receive compensation for such 
transactions, provided they make certain disclosures in advance 
regarding the interest that will be charged. The amendment will be 
useful to fiduciaries that are newly-covered under the Rule, which will 
become applicable on June 9, 2017, after a sixty day extension. 
Accordingly, this amendment too will become applicable on June 9, 2017. 
For a full discussion of the amendment, see 81 FR 21139.

E. List of Amendments to the Applicability Dates of the Prohibited 
Transaction Exemptions

    Following are amendments to the applicability dates of the BIC 
Exemption and other PTEs adopted and amended in connection with the 
Fiduciary Rule defining who is a fiduciary for purposes of ERISA and 
the Code. The amendments are effective as of April 10, 2017. For the 
convenience of users, the text of the BIC Exemption, the Principal 
Transactions Exemption, and PTE84-24, as amended on this date, appear 
restated in full on EBSA's Web site. The Department finds that the 
exemptions with the amended applicability dates are administratively 
feasible, in the interests of plans, their participants and 
beneficiaries and IRA owners, and protective of the rights of plan 
participants and beneficiaries and IRA owners.
    1. The BIC Exemption (PTE 2016-01) is amended as follows:
    A. The date ``April 10, 2017'' is deleted and ``June 9, 2017'' is 
inserted in its place as the Applicability date in the introductory 
DATES section of the exemption.
    B. Section II(h)--Level Fee Fiduciaries provides streamlined 
conditions for ``Level Fee Fiduciaries.'' In accordance with the 
exemption's Applicability Date, these conditions--including the 
Impartial Conduct Standards set forth in Section II(h)(2)--are 
applicable on June 9, 2017, but they are not required for parties that 
can comply with Section IX. For Level Fee Fiduciaries that are robo-
advice providers, and therefore not eligible for Section IX, the 
Impartial Conduct Standards in Section II(h)(2) are applicable June 9, 
2017 but the remaining conditions of Section II(h) are applicable 
January 1, 2018. The amended applicability dates are reflected in new 
Section II(h)(4).
    C. Section IX--Transition Period for Exemption provides an 
exemption for the Transition Period, subject to conditions set forth in 
Section IX(d). The Transition Period identified in Section IX(a) is 
amended to extend from June 9, 2017, to January 1, 2018, rather than 
April 10, 2017, to January 1, 2018. Section IX(d)(1), which sets forth

[[Page 16918]]

Impartial Conduct Standards, is applicable June 9, 2017. The remaining 
conditions of Section IX(d) are not applicable in the Transition 
Period. These conditions are also required in Sections II and V of the 
exemption, which will apply after the Transition Period.
    2. The Class Exemption for Principal Transactions in Certain Assets 
Between Investment Advice Fiduciaries and Employee Benefit Plans and 
IRAs (PTE 2016-02), is amended as follows:
    A. The date ``April 10, 2017'' is deleted and ``June 9, 2017'' is 
inserted in its place as the Applicability date in the introductory 
DATES section,
    B. Section VII--Transition Period for Exemption sets forth an 
exemption for the Transition Period subject to conditions set forth in 
Section VII(d). The Transition Period identified in Section VII(a) is 
amended to extend from June 9, 2017, to January 1, 2018, rather than 
April 10, 2017, to January 1, 2018. Section VII(d)(1), which sets forth 
Impartial Conduct Standards, is applicable June 9, 2017. The remaining 
conditions of Section VII(d) are not applicable in the Transition 
Period. These conditions are also required in Sections II and V of the 
exemption, which will apply after the Transition Period.
    3. Prohibited Transaction Exemption 84-24 for Certain Transactions 
Involving Insurance Agents and Brokers, Pension Consultants, Insurance 
Companies, and Investment Company Principal Underwriters, is amended as 
follows:
    A. The date ``April 10, 2017'' is replaced with ``January 1, 2018'' 
as the Applicability date in the introductory DATES section of the 
amendment, except as it applies to Section II. Impartial Conduct 
Standards, and Sections VI(b) and (h), which define ``Best Interest,'' 
and ``Material Conflicts of Interest,'' all of which are applicable 
June 9, 2017.
    B. Section II--Impartial Conduct Standards, is redesignated as 
Section VII. The introductory clause is amended to reflect the June 9, 
2017 applicability date of that section, as follows: ``On or after June 
9, 2017, if the insurance agent or broker, pension consultant, 
insurance company or investment company Principal Underwriter is a 
fiduciary within the meaning of ERISA section 3(21)(A)(ii) or Code 
section 4975(e)(3)(B) with respect to the assets involved in the 
transaction, the following conditions must be satisfied, with respect 
to the transaction to the extent they are applicable to the fiduciary's 
actions[.]''
    C. The definition of ``Best Interest,'' is redesignated as Section 
VI(h) and the definition of ``Material Conflict of Interest'' is 
redesignated as Section VI(i).
    4. The following exemptions are amended by deleting the date 
``April 10, 2017'' and replacing it with ``June 9, 2017,'' as the 
Applicability date in the introductory DATES section:
    A. Prohibited Transaction Exemption 86-128 for Securities 
Transactions Involving Employee Benefit Plans and Broker-Dealers and 
Prohibited Transaction Exemption 75-1, Exemptions from Prohibitions 
Respecting Certain Classes of Transactions Involving Employee Benefit 
Plans and Certain Broker-Dealers, Reporting Dealers and Banks, Parts I 
and II;
    B. Prohibited Transaction Exemption 75-1, Exemptions from 
Prohibitions Respecting Certain Classes of Transactions Involving 
Employee Benefit Plans and Certain Broker-Dealers, Reporting Dealers 
and Banks, Parts III and IV;
    C. Prohibited Transaction Exemption 77-4, Class Exemption for 
Certain Transactions Between Investment Companies and Employee Benefit 
Plans;
    D. Prohibited Transaction Exemption 80-83, Class Exemption for 
Certain Transactions Involving Purchase of Securities Where Issuer May 
Use Proceeds to Reduce or Retire Indebtedness to Parties in Interest; 
and
    E. Prohibited Transaction Exemption 83-1 Class Exemption for 
Certain Transactions Involving Mortgage Pool Investment Trusts.
    F. Prohibited Transaction Exemption 75-1, Exemptions from 
Prohibitions Respecting Certain Classes of Transactions Involving 
Employee Benefit Plans and Certain Broker-Dealers, Reporting Dealers 
and Banks, Part V.

List of Subjects in 29 CFR Parts 2510

    Employee benefit plans, Exemptions, Fiduciaries, Investments, 
Pensions, Prohibited transactions, Reporting and recordkeeping 
requirements, Securities.

    For the reasons set forth above, the Department amends part 2510 of 
subchapter B of chapter XXV of title 29 of the Code of Federal 
Regulations as follows:

SUBCHAPTER B--DEFINITIONS AND COVERAGE UNDER THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974

PART 2510--DEFINITIONS OF TERMS USED IN SUBCHAPTERS C, D, E, F, G, 
AND L OF THIS CHAPTER

0
1. The authority citation for part 2510 is revised to read as follows:

    Authority: 29 U.S.C. 1002(2), 1002(21), 1002(37), 1002(38), 
1002(40), 1031, and 1135; Secretary of Labor's Order No. 1-2011, 77 
FR 1088 (Jan. 9, 2012); Secs. 2510.3-21, 2510.3-101 and 2510.3-102 
also issued under sec. 102 of Reorganization Plan No. 4 of 1978, 5 
U.S.C. App. at 237 (2012), E.O. 12108, 44 FR 1065 (Jan. 3, 1979) and 
29 U.S.C. 1135 note. Sec. 2510.3-38 is also issued under sec. 1, 
Pub. L. 105-72, 111 Stat. 1457 (1997).


Sec.  2510.3-21  [Amended]

0
2. Section 2510.3-21 is amended in paragraphs (h)(2), (j)(1) 
introductory text, and (j)(3) by removing the date ``April 10, 2017'' 
and adding in its place ``June 9, 2017''.

    Signed at Washington, DC, this 3rd day of April, 2017.
Timothy D. Hauser,
Deputy Assistant Secretary for Program Operations, Employee Benefits 
Security Administration, Department of Labor.
[FR Doc. 2017-06914 Filed 4-4-17; 4:15 pm]
BILLING CODE 4510-29-P