At the end of last week, Secretary of Labor Andrew Acosta resigned. The resignation related not to retirement, nor matters at the Labor Department. The resignation related to pushback in conjunction with sexual misconduct charges against Jeffrey Epstein during which Acosta was a top prosecutor in Florida in the late 2000s. However, Acosta’s resignation may have implications for the regulatory agenda at the Labor Department.
The Labor Department has had a difficult time under the Trump Administration. Rewind to the beginning of 2017 when the first nomination for the post was Andrew Puzder, who ultimately withdrew his resignation. After getting off to a slow start, Acosta was confirmed on April 27, 2017. A substantial part of Acosta’s time in the position was consumed by the fiduciary rule, but recently, other priorities have made their way to the forefront, leaving in question: with a lack of leadership, will progress continue in the Labor Department?
Each year, the Labor Department announces its regulatory agenda. This past spring was no different. The Department announced an aggressive agenda including several initiatives at the Employee Benefits Security Administration (an agency of the Department of Labor lead by Preston Rutledge), including:
- Electronic Disclosure rules: as part of the Executive Order last year, the Trump Administration required that the Labor Secretary examine the required notices to make them “more understandable and useful for participants and beneficiaries, while also reducing the costs and burdens they impose on employers and other plan fiduciaries responsible for their production and distribution.”[1] The review was to include evaluation of electronic delivery for notices and was to be completed by August 31, 2019. Accordingly, part of the Spring 2019 regulatory agenda for the Department included this initiative.[2]
- Voluntary Fiduciary Correction Program (VFCP): The Labor Department planned to make updates to the VFCP to expand the scope of some transactions currently eligible for correction and to streamline correction procedures.[3]
- Fiduciary Rule and associated exemptions: the re-proposal of the rule was expected by the end of 2019. Remember, this rule, which was vacated by the Fifth Circuit last year, seeks to protect investors by issuing new standards for providing investment advice including advice on rollovers when money leaves the retirement plan.[4]
It is possible that these initiatives will progress under the interim leadership of current Deputy Secretary of Labor Patrick Pizzella, who will become the acting Labor Security on July 19, 2019, but it is also likely that the progress of these initiatives may be slowed with the change in leadership. Stay tuned to see if the third appointment under the Trump Administration will be the charm the Labor Department needs to continue progress on key initiatives for retirement plans, including electronic disclosure regulations.
Notes:
[1] https://www.whitehouse.gov/presidential-actions/executive-order-strengthening-retirement-security-america/.
[2] See https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RIN=1210-AB90.
[3] See https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RIN=1210-AB64.
[4] See https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RIN=1210-AB82.
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