Featured: Negotiating ERISA Service Provider Contracts During DOL Review Of Fiduciary Rule | Practical Law

Featured: Negotiating ERISA Service Provider Contracts During DOL Review Of Fiduciary Rule | Practical Law

Practical Law has substantially revised its Fiduciary Definition Savings Clause to assist plan fiduciaries negotiating contracts that may be impacted by the fiduciary rule during the OMB review period. It provides that the parties will meet and renegotiate certain provisions of the contract that would conflict with the rule if and when the rule becomes applicable.

Featured: Negotiating ERISA Service Provider Contracts During DOL Review Of Fiduciary Rule

by Practical Law Employee Benefits & Executive Compensation
Published on 01 Mar 2017 • USA (National/Federal)
Practical Law has substantially revised its Fiduciary Definition Savings Clause to assist plan fiduciaries negotiating contracts that may be impacted by the fiduciary rule during the OMB review period. It provides that the parties will meet and renegotiate certain provisions of the contract that would conflict with the rule if and when the rule becomes applicable.
ERISA plan fiduciaries currently negotiating contracts with service providers are in a difficult position due to the unclear status of the final fiduciary regulation that was issued by the DOL on April 6, 2016 and scheduled to become effective on April 10, 2017 (fiduciary rule). The fiduciary rule replaces the existing regulatory interpretation of fiduciary investment advice under ERISA Section 3(21)(A)(ii) and may impact the fiduciary, compensation and other provisions in certain service provider contracts.
However, several recent changes have been made to the timing of the rule, including:
  • On February 3, 2017, President Trump issued a memorandum indicating that the fiduciary rule may not be "consistent" with the priorities of his administration and directing the DOL to review the fiduciary rule.
  • On February 9, 2017, the DOL filed paperwork with the Office of Management and Budget (OMB) to delay the applicability of the rule.
  • On March 1, 2017, the DOL issued an unpublished version of a proposed rule that would extend the applicability date by 60 days while it considers the impact of the memorandum on the rule. In that proposed rule, the DOL invites comments on the proposal to extend the applicability date of the final rule (including comments on the length of the delay period, which was originally anticipated to be 180 days).
Practical Law has substantially revised its Fiduciary Definition Savings Clause to assist plan fiduciaries negotiating contracts that may be impacted by the fiduciary rule during the OMB review period.