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Jun 08, 2016

The DOL’s New Fiduciary Rule: Capturing the Apparent Conflict at the “Moment of Rollover”

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The US Department of Labor’s final fiduciary rule captures rollover, transfer and distribution recommendations to retirement investors. In essence, under the rule, a financial organization or adviser is acting as a fiduciary when advising a retail client to take a rollover or distribution from an ERISA plan or individual retirement account, even if the rollover or distribution recommendation is not accompanied by an investment recommendation as to the rollover or distribution proceeds. When an ERISA plan is the source of funds for the rollover, the DOL’s view is that ERISA’s normal fiduciary and prohibited transaction rules apply. When the source of funds is an IRA, the DOL’s position is that a prohibited transaction occurs due to the conflict that arises from the fee income that will be received by the financial organization if the rollover happens. In either case, reliance on an exemption will be necessary to avoid violating ERISA.

This publication focuses on the impact of the final rule on the business of accumulating assets through capturing rollovers and plan distributions.

View full memo, The DOL’s New Fiduciary Rule: Capturing the Apparent Conflict at the “Moment of Rollover”

Authors and Contributors

John J. Cannon III

Partner

Compensation, Governance & ERISA

+1 212 848 8159

+1 212 848 8159

New York

Nathan Greene

Partner

Investment Funds

+1 212 848 4668

+1 212 848 4668

New York

Adam Hakki

Partner

Litigation

+1 212 848 4924

+1 212 848 4924

New York

Kenneth J. Laverriere

Partner

Compensation, Governance & ERISA

+1 212 848 8172

+1 212 848 8172

New York

Doreen E. Lilienfeld

Partner

Compensation, Governance & ERISA

+1 212 848 7171

+1 212 848 7171

New York

Thomas Majewski

Counsel

Investment Funds

+1 212 848 7182

+1 212 848 7182

New York

Brian H. Polovoy

Partner

Litigation

+1 212 848 4703

+1 212 848 4703

New York

Linda Rappaport

Of Counsel

Compensation, Governance & ERISA

+1 212 848 7004

+1 212 848 7004

New York

Russell Sacks

Partner

Financial Institutions Advisory & Financial Regulatory

+1 212 848 7585

+1 212 848 7585

New York

Paul Schreiber

Of Counsel

Investment Funds

+1 212 848 8920

+1 212 848 8920

New York