Washington Pulse: DOL issues FAQ addressing key concerns over fiduciary rule

DRESHER, PA (August 9, 2017) — On August 3, 2017, the Department of Labor (DOL) issued additional guidance regarding its final fiduciary regulations and related prohibited transaction exemptions (PTEs)—together referred to as the “fiduciary rules.” This latest guidance is in a frequently-asked question (FAQ) format and provides help with two areas of concern—the interaction of the fiduciary regulations and service provider fee disclosure requirements under ERISA Sec. 408(b)(2), and the confusion over whether recommendations designed to increase participation in retirement plans constitute investment advice.


After years in the making, the investment advice fiduciary rules generally became effective on June 9, 2017. Some of the PTE requirements, however, are delayed to January 1, 2018. The period from June 9, 2017, to January 1, 2018, is the “transition period”, after which all fiduciary rule requirements are scheduled to become effective.

Separate from the fiduciary rules, the DOL requires service providers who provide “covered services” to ERISA retirement plans to disclose to those plans the services they provide and the fees they expect to receive in return. The purpose of the disclosure is to make sure that plan fiduciaries have the information needed to carefully select and monitor service providers.

The effect of the fiduciary rules on service provider disclosures raised questions and may have resulted in the failure of some service providers to timely amend their disclosures without additional DOL guidance.

In two previous FAQs, the DOL sought to clarify many items involving the fiduciary rules, including the circumstances under which communications intended to increase plan participation would or would not rise to the level of recommendations and result in investment advice fiduciary status. Because of lingering confusion, and without additional DOL clarification, participation rates and contribution levels may have suffered.

This latest set of FAQs provides much needed relief for those issues described above, especially in light of the DOL’s recent request for comments on the fiduciary rules and the potential for further changes.

Service Provider Disclosures and the Fiduciary Rules

The DOL requires service providers to disclose whether they intend to provide fiduciary services to plans. To help service providers comply with the disclosure requirements in light of the investment advice fiduciary rules, the DOL has provided the following guidelines.

  • Service providers that are not investment advice fiduciaries and do not reasonably and in good faith expect to become investment advice fiduciaries need not update their service provider disclosures, assuming they otherwise comply with the service provider disclosure rules. This guideline applies even if an agent, representative, or employee of the service provider individually provides “unauthorized and irregular” services that would otherwise result in investment advice under the fiduciary rules.
  • Service providers that will, or expect to, become investment advice fiduciaries may provide service provider disclosures to plans without using the word “fiduciary” in their disclosures during the transition period as long as their services are accurately and completely described. If the services are not accurately and completely described, the disclosures must be amended.
  • Service providers that are, or expect to become, investment advice fiduciaries, but whose service provider disclosures currently state that they are not fiduciaries, must amend their disclosures to accurately and completely describe the services they provide.

The DOL generally requires service providers to disclose a change in their fiduciary status as soon as is practical and no more than 60 days after the service provider is “informed” of such change. An exception exists for circumstances beyond the service provider’s control. The exception requires service providers to provide updated disclosures as soon as it is practicable, without imposing the 60-day rule.

To assist service providers who must update their disclosures to satisfy the fiduciary requirement, the DOL has clarified that it does not consider service providers to have been informed of a change in fiduciary status on June 9, 2017, the date the fiduciary rules became applicable. In addition, the DOL recognizes the uncertainty caused by its past decisions to delay the fiduciary rules and considers the current circumstances to be beyond the control of service providers. Therefore, service providers who must update their disclosures for the fiduciary element of the service provider disclosure must simply do so as soon as it is practicable. In addition, the DOL FAQ reminds service providers that such amendments may be provided to plans electronicall

A chart summarizing these disclosure rules is provided below:

Recommendations to Contribute to a Plan or IRA

Previous DOL FAQs attempted to clarify whether recommendations to contribute to a plan or IRA would result in fiduciary investment advice. The previous FAQs were unclear, however, and resulted in confusion. In its latest FAQ, the DOL has clearly stated that communications about the benefits of participating in or increasing contributions to, a plan or IRA do not result in fiduciary investment advice, provided they do not include investment recommendations.

In addition, the DOL has clarified that it would not be fiduciary investment advice to provide plan administrators or plan fiduciaries with suggestions of ways to increase employees’ participation in or contributions to ERISA plans. This may be helpful, for example, with plan design considerations.

Stay Tuned

The outcome of the ongoing fiduciary rule debate is far from over but the latest DOL FAQs provide meaningful clarification to retirement plan product and service providers.  As always, Ascensus will keep you informed of further developments.

About Ascensus

Ascensus is the largest independent retirement and college savings services provider in the United States, helping over 7 million Americans save for the future. With more than 35 years of experience, the firm partners with financial institutions to offer tailored solutions that meet the needs of financial professionals, employers, and individuals. Ascensus specializes in recordkeeping, administrative, and program management services, supporting over 47,000 retirement plans and over 3.8 million 529 college savings accounts. It also administers more than 1.5 million IRAs and health savings accounts and is home to one of the largest ERISA consulting teams in the country. For more information about Ascensus, visit View career opportunities at or on LinkedIn at For the latest company news, follow @AscensusInc on Twitter.


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