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DOL Fiduciary News: April 7, 2017

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DOL Hints at Regulatory ‘Relief’ for Indexed Annuities

Retirement Income Journal; Thu, Apr 06, 2017

When the Obama Department of Labor’s fiduciary rule, with little warning, decided last year that agents who sold indexed annuities couldn’t take commissions from insurers without signing the legally-binding “Best Interest” pledge to their clients, the $60 billion a year indexed industry went into fibrillation.

But the Trump DOL’s April 3 letter on the rule not only delayed its effect until at least the end of 2017, but also hinted that the DOL will reverse itself and allow complex indexed annuities and variable annuities to be sold on commission under so-called Prohibited Transaction Exemption 84-24, or PTE 84-24, which is the same light oversight applied to plain-vanilla fixed deferred annuities and single-premium immediate annuities.

“While it is not yet clear if the shift in allowing all annuity products to be covered by PTE 84-24 is more than a transitional tactic that will revert to the original plan next year,” wrote industry consultant Steven Saltzman in a client letter this week, “it could be a signal in terms of where a revision to the rule could be heading.  At minimum, firms should consider outcomes related to the prospect of eventual use of PTE 84-24 for all annuities.”

How the 60-day delay of the fiduciary rule affects employers

Employee Benefit News; April 05 2017, 3:08pm EDT

The Department of Labor this week delayed its fiduciary rule by 60 days, while it attempts to fulfill President Donald Trump’s February memorandum directing the DOL to examine the rule to make sure it doesn’t adversely affect the ability of Americans to gain access to retirement information and financial advice. The initial implementation date is now extended from April 10 to June 9.

Although more debate is expected and some predict the delay to become a permanent halt to the rule, most industry experts believe the rule will exist in some form or other. The majority of employers are embracing best interest standards in an attempt to avoid legal action.

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