Empower: New DOL regulation may hurt retirement plan formation

Empower: New DOL regulation may hurt retirement plan formation

In letter to Labor Department, company seeks withdrawal of proposed rule

GREENWOOD VILLAGE, COLO. Dec. 21, 2023 – The Department of Labor’s (DOL) recent proposal redefining who is an investment advice fiduciary would impose significant new hurdles to employers sponsoring retirement plans and is in conflict with the efforts of Congress to expand access to workplace retirement plans, writes Empower in a comment letter to the federal agency.

In addition, Empower is concerned that the new proposal is not materially different from a prior rulemaking effort that was vacated by the Fifth Circuit Court of Appeals in 2018. A new final rule could face similar court challenges and ultimately meet the same fate. Meanwhile, across the financial services industry, firms will invest heavily to implement the rule that faces a strong possibility of being struck down, notes Empower.

 “The proposed rule should be withdrawn immediately because it will make it more difficult for providers to share information with employers who need to make prudent decisions about their retirement plan,” said Empower CEO Edmund F. Murphy III. “This proposed rule is adding hurdles to plan formation, not removing them.

“The workplace savings system has been an effective public-private partnership for decades and it has had the effect of driving better financial security for millions of Americans,” said Murphy. “This new proposal and the aggressive nature by which the DOL is advancing it runs counter to that great partnership, and that’s setting a terrible precedent.”

Recognized as the second-largest retirement services provider in the U.S.1 by total participants, Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans; Taft-Hartley plans; small, mid-size, and large corporate 401(k) clients; nonprofit 403(b) entities; private-label recordkeeping clients as well as wealth management, brokerage and IRA customers. Empower administers approximately $1.4 trillion in assets for more than 18 million investors.2

Empower filed the letter on Dec. 21 with the DOL in response to the proposed “Retirement Security Proposed Rule and Proposed Amendments to Class Prohibited Transaction Exemptions for Investment Advice Fiduciaries” for which the Department of Labor is seeking public commentary. The DOL made the proposed rule public in November and has set an aggressive public commentary period, which concludes on Jan. 2, 2024.

Empower notes that the “breadth of the Proposed Rule could prohibit activities — like sales conversations and plan sponsor investment conversations — that have traditionally not been considered fiduciary activities. By assigning fiduciary status to plan sales, the Proposed Rule could reduce the flow of information to employers looking to sponsor retirement plans. This may reduce plan formation and appears to run contrary to Congressional intent, specifically the SECURE Act and SECURE 2.0, which incentivized plan formation.”

“This would potentially include request-for-proposal responses to requests for fund line up suggestions, fund discussions with third party advisors serving as a fiduciary to a plan and discussions with existing clients regarding changes to their fund lineup,” writes Empower in the letter, which is signed by Murphy.

If enacted, the new rule could significantly alter conversations between investment providers, employers sponsoring retirement plans and their advisors because, as written, definitions of such conversations are so broad that they could create liability for the parties involved.

In addition, Empower notes that the new rule may alter some disclosure requirements in ways that are not productive to either providers or individuals and are written in a way that they are too vague to be useful. In amendments to existing prohibited transaction exemptions, the rule significantly expands the disclosure requirements, requiring information that is not adequately defined, not publicly available, and duplicative. There is also the question of whether the information is actually useful to the recipient.


Recognized as the second-largest retirement services provider in the U.S.1 by total participants, Empower administers approximately $1.4 trillion in assets for more than 18 million investors2 through the provision of retirement plans, advice, wealth management and investments. Connect with us on empower.com, Facebook, Twitter, LinkedIn, Tik Tok and Instagram.


Media contacts:

Stephen Gawlik - Stephen.Gawlik@empower.com

Mandy Cassano - Mandy.Cassano@empower.com

Securities, when presented, are offered and/or distributed by Empower Financial Services, Inc., Member FINRA/SIPC. EFSI is an affiliate of Empower Retirement, LLC; Empower Funds, Inc.; and registered investment adviser Empower Advisory Group, LLC. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice. 

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