Regardless of how you may have voted, you can’t ignore the fact that, in January, we will have a new President. With the election of Donald Trump, our office, our clients and partners are all wondering what effect the new President will have on the employee benefits and the associated plans and trusts industry. President-elect Trump did say he plans to postpone or eliminate recent Department of Labor (DOL) fiduciary regulations. (Of course, he did say he was going to put Hillary in jail, but has since said “they are good people.”)
What did The Donald mean when he declared that he would be postponing or eliminating the recently issued DOL fiduciary regulations? Of course, no one knows for sure, but we have spent some time thinking about what it may mean and how this may affect our clients, partners and trusts.
In the simplest explanation, President-elect Trump has said for every new federal regulation, there must be the elimination of two current regulations. The new administration can immediately choose not to finalize proposed regulations, suspend start dates on new regulations or even eliminate current regulations. Additionally, regulations on the table in the 8 months prior to the inauguration (June 2016) can be overturned by use of the Congressional Review Act (CRA). A majority vote would be all that is needed and filibustering would not be allowed.
To eliminate older regulations, there would need to be amendments on the statutes to which they were based on, and withdrawal on lawsuits that question the validity of specific regulations. Even if the older regulations can be eliminated, implementing new regulations will take time.
One recent regulation that may be identified for elimination is a regulation for the Department of Labor on April 8, 2016, in regards to fiduciary regulations. This rule addressed the conflicts of interest between investment advisors, employee benefit plans, and participants in these plans. The effective date was June 7, 2016, but the applicability date was April 7, 2017. This makes it unclear if it is within the 8-month window allowed by the CRA to be overturned. Investment advisors in those months can comply with the regulations if they elect to, but are not obligated to comply.
If the Feds back off on regulations, then the states will likely become more involved. This would allow them to provide more protection for special groups, such as LGBT employees, if ERISA preemption doesn’t limit them.
In any case, the next 4 years of the Trump Presidency is going to be like nothing we have ever witnessed before in our lifetime! There will be something controversial, exciting, different, and even upsetting for all of us.
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