Kaplan: Fiduciary Rule ‘Completely in Flux’

By John Iekel • May 24, 2018 • 0 Comments

Robert Kaplan, the American Retirement Association’s Director of Technical Education, provided a look at recent regulatory and legislative developments in a May 22 ASPPA webcast.

Kaplan began the Second Quarter 2018 Washington Update webcast with a discussion of fiduciary rules. He noted that the U.S. Court of Appeals for the 5th Circuit had vacated the rule, and that while the Trump administration can appeal that ruling to the U.S. Supreme Court, “it does not appear at this point that they are going to do that.”

Nonetheless, Kaplan suggested, the matter is far from settled. “Where are we right now? Completely in flux,” he said, noting that the Department of Labor (DOL) can revisit the rule, as well as issue guidance. But the DOL also could “call it quits,” he said, and revert to the way fiduciary governance had been conducted before the rule. In addition, he said, forms are confronting whether they will abide by the rule despite its being moribund, or apply part of it, or none of it.

Meanwhile, Kaplan observed that the Securities and Exchange Commission (SEC) has proposed its own fiduciary rule. However, he cautioned, one should not expect it to be issued in final form any time soon. “This is a proposal,” he said, adding, “this is going to be another long, long process.”

Turning to Capitol Hill, Kaplan outlined the provisions of the Retirement Enhancement and Savings Act of 2018 (RESA), a bill introduced by Sens. Orrin Hatch (R-UT) and Ron Wyden (D-OR) that is a new iteration of a version first introduced by Hatch in 2016.

Kaplan said that some of RESA’s provisions suggest that members of the House and Senate are aware of recent developments and changing circumstances and that they affect retirement plans. For instance, he said, the provision that would create an auto-enrollment credit shows that Capitol Hill recognizes that auto enrollment is generally increasing participation in plans. In addition, he said, the provision that would repeal the age 70½ prohibition from IRA contributions suggests that members of the Hose and Senate “recognize that people are living longer and that longevity is increasing” and noted that they rule had been put in place before those trends. “It’s good to see that Capitol Hill recognizes this,” Kaplan observed.

“This bill is something that would be very positive for our industry,” Kaplan noted. And he was positive about its prospects, remarking, “Anytime you see a bipartisan bill, there’s always a better chance it might pass.” He added that it is possible that some regard its passage as a “going away present” for long-serving Hatch, who has announced that he does not plan to seek another term in the Senate.

Kaplan also discussed the Senate’s Health, Education, Labor and Pensions (HELP) Committee’s May 16 hearing, at which it addressed four measures:

  • Retirement Security for American Workers Act

  • Increasing Access to a Secure Retirement Act

  • Receiving Electronic Statements to Improve Retiree Earnings Act

  • Retirement Plan Modernization Act

Kaplan remarked that the Receiving Electronic Statements to Improve Retiree Earnings Act “shifts some of the conversation to administration and expanding coverage” and that the Retirement Plan Modernization Act, which would increase automatic cash out amounts, would accomplish a cost-of-living update, which had not been done “for years and years.”





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