Three days after saying it would delay the effective date to permit 401(k) plan administrators to offer investment advice, the Department of Labor decided to scrap the rule altogether. The third extension for the effective date would have been May 17, 2010.
The rule had been widely criticized as giving too much influence to fund companies that could push their own funds. The Department said it “decided to withdraw the rule based on public comments that raised sufficient doubts as to whether the conditions of the final rule and the class exemption associated with the rule could adequately protect the interests of plan participants and beneficiaries.”
Instead, the Department said it will soon issue another rule that adheres more closely to the tenets of the Pension Protection Act.
As Jason C. Roberts, a partner with Reish & Reicher, told Investment News, “It seems like someone in Congress gave the order to stand down. They may want to put all of this as one big form of legislation instead of sorting it out in piecemeal, which makes sense.”