In an article titled “New Bill Would Bar DOL From Constraining 401(k) Investments,” ThinkAdvisor turned to benefits and executive compensation partner Fred Reish for his commentary on the Financial Freedom Act of 2022.
The bill would prohibit the Department of Labor (DOL) secretary from constraining the range or type of investments that may be offered to participants and beneficiaries of retirement accounts. “Some legislators, attorneys and private sector businesses are upset that the DOL is expressing opinions on investments and the prudence of particular investments,” Reish said.
Reish expressed that the bill, which targets individual accounts in retirement plans that are regulated under the Employee Retirement Income Security Act (ERISA), is “a political or policy statement and not with any expectation that it will become law.”
The bill does not affect IRAs, Reish explained, “since they are regulated only by the Internal Revenue Code and this [bill] doesn’t amend the Code.”
While lawmakers’ “concerns are real,” Reish continued, “there is also a bit of conflict since some of the same people didn’t object to the Trump era ESG regulation, which disfavored ESG factor investments. I suspect that it [the bill] was primarily motivated by the DOL guidance on investing in cryptocurrencies. The supplemental guidance on private equity investments could also be part of the motivation.”