Tags: employee retirement income security act | erisa | regulation | trump

Trump Regulation Freeze to Impact ERISA?

Trump Regulation Freeze to Impact ERISA?

President Donald Trump on January 31, 2017, in Washington, D.C. (Alex Wong/Getty Images)

Wednesday, 01 February 2017 10:52 AM Current | Bio | Archive

On January 19 I wrote about the Department of Labor’s new rule concerning the extension of the Employee Retirement Income Security Act (ERISA). Speaker of the House Paul Ryan called the rule "Obamacare for Financial Planning," stating that it was a "one-size-fits-all regulation that’s bad for Americans." On January 20, White House Chief of Staff Reince Priebus issued a memorandum communicating President Trump’s plan for managing the Federal regulatory process including the immediate freeze of all rules and regulations that are not yet in effect. That said, the new DOL rule went into effect last June but the provisions of the rule will not apply until April 10, 2017. So does the memorandum effect the new DOL rule or not?

Yes, but it will likely be up to the new Director of the Office of Management and Budget (OMB) who will determine how this memorandum will affect the new DOL rule. The initial freeze is only for 60 days, not long enough to meet the April 10 deadline, so it doesn’t seem to cover the rule. Yet, paragraph 3 of the memorandum states that where permitted by law, it can be proposed to the new OMB Director to "delay the effective date for regulations beyond that 60-day period."

The following are the suggested courses of action that seem to have the highest likelihood of success:

1. Formally file a delay of the rule and have a very short comment period, after which the DOL or OMB would immediately delay the rule. There has to be a reason for the delay. The most likely reason would be that it is much more expensive and cumbersome to implement than the DOL expected, thereby necessitating a delay.

2. Tell the acting head of the DOL to tell the agency that the rule does apply. There is an argument that if the administration thinks it applies, it does.

3. The rule comes with a Best Interest Contract Exemption. As an exemption to the rule, the exemption is not really part of the rule. Therefore, they could pull that exemption and write a new, more liberal exemption. In theory, this could redefine the actual rule.

I would assume any course of action will lead to legal challenges. The best strategy is to find a way to delay the rule, use that delay to argue withdrawal of the rule due to the DOL better understanding the rule’s implications, and then start over.

Richard S. Bernstein, CEO of Richard S. Bernstein & Associates, Inc., West Palm Beach, is an insurance advisor for high net worth business leaders, families, businesses, municipalities, and charitable organizations. An insurance advisor to many of America’s wealthiest families, he is a writer, trusted local and national media resource and expert speaker on estate planning and health insurance. Visit his website at www.rbernstein.com. To read more of his reports — Click Here Now.

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Speaker of the House Paul Ryan called the Department of Labor's Employee Retirement Income Security Act (ERISA) rule "Obamacare for Financial Planning."
employee retirement income security act, erisa, regulation, trump
Wednesday, 01 February 2017 10:52 AM
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