On March 15, 2018, the U.S. Department of Labor’s (“DOL”) Fiduciary Rule, redefining the term “fiduciary” under the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code of 1986, (the “Code”) was invalidated by the U.S. Court of Appeals for the Fifth Circuit and the Court’s order to vacate the rule became effective on June 21, 2018. As a result, the DOL Fiduciary Rule, along with the related Best Interest Contract Exemption and Principal Transaction Exemption have been effectively repealed and the DOL’s prior rule defining who is an investment advice fiduciary is restored.
If your Retirement Account is enrolled in one of Morgan Stanley’s Consulting Group advisory programs, where you receive investment advice from your Financial Advisor, Morgan Stanley will continue to act as a fiduciary under ERISA and/or the Code with respect to your Retirement Account. Please refer to your program ADV for more information on the services offered under the program and our role and responsibilities to you.
For those Retirement Accounts that are not enrolled in an advisory program, but rather maintain a brokerage account at Morgan Stanley and/or are enrolled in a Corporate Retirement Plan or Business Retirement Plan program, effective June 21, 2018, Morgan Stanley will continue to service your account and will continue to act in your best interests but will not necessarily be considered a fiduciary under ERISA and/or the Code unless, of course, we provide investment advice for a fee pursuant to the restored DOL rules and agree to do so in writing.
Please note that the Securities and Exchange Commission’s Regulation Best Interest, which requires broker-dealers to act in the best interest of their retail customers when recommending securities transactions or investment strategies to retail clients, is effective as of June 30, 2020. Morgan Stanley has long supported the idea of a uniform best interest standard that would apply to all clients regardless of account type as we believe it reduces client confusion and corresponds with our Core Value of Putting Clients First.
Should you have any questions about how these regulatory changes will affect your retirement services, please contact us.
*Retirement Account means any Individual Retirement Account (“IRA”), Roth IRA, Health Savings Account, Coverdell Education Savings Account, Archer Medical Savings Account, a Plan covered by ERISA, or a plan described in section 4975(e)(1)(A) of the Code.