Changing the Rules of Retirement

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 Susan Conrad By: Susan Conrad

I bought an airline ticket last night for an upcoming trip, thinking I’d found a deal. But after taxes, facility charges and carrier-imposed fees (what are those?), I was not feeling as confident in my purchase. Unfortunately, some employers feel the same way about their 401(k) plan—unsure if they’re really getting what they paid for.

The Department of Labor (DOL) responded to these concerns with the long-awaited New Fiduciary Rule released earlier this year. As the effective date, April 17, 2017, approaches, the industry continues to digest this new legislation … and deal with the resulting heartburn.

What It Says

The New Fiduciary Rule requires all advisors providing investment advice for retirement accounts to serve as fiduciaries—meaning their advice must be in clients’ best interest.

The regulation significantly enlarges the definition of fiduciary advice and increases the reach to include IRA assets. It also expands the list of activities that make one a fiduciary and the entities that will be treated as fiduciaries under the Employee Retirement Income Security Act (ERISA).

What’s Changing?

Advisors that are not currently fiduciaries will be required to convert when the new rule takes effect. This transition could bring about significant changes in the products available and how advisors interact with employers and employees. The relationship should be thoroughly reviewed.

What This Means for You

If you are an employer sponsoring a retirement plan, you’ll need to ensure your retirement plan committee has a firm understanding of the Fiduciary Rule. Increased responsibility comes with increased liability, so make sure they understand the proper processes and procedures required under the New Rule.

If you would like to learn more about the Fiduciary Rule and possible implications for your retirement plan, please email me at susan@plancorp.com.

 

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Susan has more than 25 years’ experience in the pension and retirement space, including 20 years at First Mercantile Trust (now a member of the MassMutual Financial Group). Her tenure at the firm armed her with a thorough understanding of the dollars and cents side of corporate retirement planning and importance of plan design. More »