In “DOL’s fiduciary proposal will focus on rollovers, face legal hurdles, attorney says,” Pensions & Investments turned to benefits and executive compensation partner Fred Reish for insight on the Department of Labor (DOL) preparing its latest rule proposal on fiduciary investment advice, likely concerning rollovers.
According to Reish, the DOL has signaled that workers should maintain their fiduciary protections when rolling over assets from a 401(k) plan to an individual retirement account. He also expects the DOL to propose that “a single rollover recommendation, if the adviser receives compensation directly or indirectly related to that, then it will be a fiduciary recommendation, and it will be a prohibited transaction because you used your fiduciary authority to cause yourself to make more money. Then you’d need an exemption.”
Reish further noted that the DOL would have to keep prior legal rulings in mind and said its new proposal would have to deal with the “trust and confidence” issue, possibly by defining what a relationship of trust and confidence looks like or establishing some sort of test. He concluded, “I can’t imagine that it won’t be (challenged). I don’t even see that as one of the options on the table.”
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