Fred Reish Comments on Shift in 401(k) Advice Rule Compliance for Bloomberg Law

Benefits and executive compensation partner Fred Reish spoke to Bloomberg Law on how many firms are changing course in complying with the Department of Labor’s (DOL) new fiduciary rule after it was stayed by two federal courts. 

According to the publication, the halting of the rule leaves 401(k) service providers relying on a set of older standards, including a five-part test for fiduciary advice dating back to1975 and older iterations of prohibited transaction exemptions.

“All of my clients stopped their work on complying with the new regulation and exemptions when the courts stayed the effective dates,” Reish said. “In some ways, the SEC rules for broker-dealers and investment advisers are similar to the DOL’s rules, so there are compliance issues there as well.”

Many firms and sales agents are shifting compliance plans to focus on the National Association of Insurance Commissioners Model Rule 275, which has been adopted by 47 states. 

Reish noted that Model Rule 275 is less demanding than the DOL’s making insurance professionals the “primary beneficiary.”