The Department of Labor today delayed implementation of a rule that would have allowed most investment advisers to give specific advice to 401(k) participants.
The Department of Labor today delayed implementation of a rule that would have allowed most investment advisers to give specific advice to 401(k) participants.
The action by the Obama administration is likely to result in killing the provisions of the rule that would have allowed advisers affiliated with brokerage firms or mutual funds to provide advice to 401(k) plan participants
House Education and Labor Committee Chairman George Miller, D-Calif., has been critical of the rule, which was issued by the Labor Department shortly before President Obama was sworn into office Jan. 20.
On Inauguration Day, the president’s chief of staff, Rahm Emanuel, issued a memo to executive departments and agencies delaying or stopping implementation of last-minute regulations issued by the Bush administration.
Mr. Miller and other Democrats believe the Bush regulation would result in advisers with conflicts of interest providing advice to 401(k) participants.
The proposal issued today by the Labor Department extends the effective date of the new rule by 60 days to May 22. It was originally scheduled to take effect March 23.
“Extending the effective date would allow the Department of Labor to evaluate comments on questions of law and policy concerning the rules,” the notice issued today said.
The notice also allows a new comment period on the rule through Feb. 18.
While the mutual fund and brokerage industries supported the rule issued by the Bush administration, financial planners have been more skeptical of it, arguing that advisers to 401(k) participants should act as fiduciaries, putting clients’ interests first.
