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New DOL Fiduciary Rule Takes Aim at Loopholes in Retirement Savings

Posted on November 16th, 2023 at 11:52 AM
New DOL Fiduciary Rule Takes Aim at Loopholes in Retirement Savings

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï 

The Department of Labor (DOL) unveiled its latest retirement security rule, which involves altering the definition of an investment advice fiduciary under the Employee Retirement Income Security Act (ERISA). In addition to this, the Department also introduced proposed amendments to prohibited transaction exemptions (PTEs).

According to DI Wire, those proposed changes address what the Biden White House characterizes as "junk fees," which allegedly erode a significant portion of the savings of middle-class retirement investors.

The DOL's new proposals have the primary objective of reducing junk fees, as follows:

  1. Closing “loopholes” to ensure that investment product recommendations serve the best interests of savers. Presently, specific commodities and insurance products, such as fixed index annuities, are subject to state laws, varying from state to state.
  2. Expanding the scope to include advice related to rolling assets out of a 401(k) or other employer-sponsored plan. Currently, one-time advice, such as guidance on rolling over assets from a 401(k) to an IRA, is not mandated to be in the best interest of savers.
  3. Extending coverage to advice given to plan sponsors regarding selecting investments for 401(k)s and other employer-sponsored plans. Presently, this advice is not subject to the SEC's Regulation Best Interest, and there is no requirement for it to be in the customer's best interest.

The revised definition of an investment advice fiduciary would be applicable when financial services providers offer investment advice for a fee to retirement plan participants, individual retirement account owners, and others.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

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