DOL Fiduciary Rollover Guidance Struck Down by Florida Court
February 22, 2023 by Melanie Waddell
A federal court in Tampa, Florida, on Monday struck down the Labor Department’s guidance that declared rollover advice fiduciary advice.
The Florida court ruled that Labor’s interpretation of the five-part test setting out who qualifies as a fiduciary under the Employee Retirement Income Security Act was “arbitrary and capricious.”
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Wink’s Note: Arbitrary and capricious!
That’s what a federal court in Florida said when they struck down the U.S. Department of Labor‘s guidance that declared rollover advice be fiduciary advice.
Did you hear this?!?
The American Securities Association challenged the DOL in court, and won. They did this because “Labor’s attempt to change existing retirement rules without going through a notice-and-comment rulemaking as is required under the Administrative Procedure Act.”
Christopher A. I. with the ASA said, “to protect investor choice and America’s retirement savers from administrative overreach and the Court agreed the DOL’s failure to seek public comment before changing its rules about retirement advice was a violation” of the APA.
The court agrees.
Interesting. So, what does this mean for the Fiduciary Rule?
Fred Reish with Faegre Drinker suggests that the DOL “will likely appeal the Florida court’s decision.”
He expects that the new fiduciary regulation will likely be proposed in the “next three or four months, if not sooner.”
If it is, “it could be finalized within the next 12 months, which would effectively moot” the Florida court’s decision, he said.
Ultimately, Reish suggests “we can expect to live with uncertainty for at least a few years.”
Thanks to Melanie Waddell with ThinkAdvisor for the insights! – sjm