Don't expect a fiduciary proposal for retirement advisers until next spring, expert says

Other proposals include states requiring small businesses to establish deferred-comp plans

Nov 11, 2013 @ 1:19 pm

By Liz Skinner

The earliest that the Labor Department is likely to propose a rule that would raise investment advice standards for retirement plan advisers is April or May 2014, according to a policy expert.

The rule proposal apparently is just reaching DOL Secretary Thomas Perez' desk and will likely take the rest of this year to get to the Office of Management and Budget, Brian Graff, chief executive of the American Society of Pension Professionals and Actuaries, said at the Schwab Impact conference in Washington D.C. on Monday.

The rule would expand the definition of "fiduciary" as it applies to anyone advising a customer about a retirement plan. The agency proposed such a regulation in 2010 but withdrew it after the financial industry complained it would curb compensation for brokers selling individual retirement accounts and potentially drive them out of the market.

Mr. Graff said advisers also need to be closely watching states because more than a dozen — including California and Illinois — are working on measures that would mandate that companies with five or more employees make a retirement savings vehicle available.

"We have not succeeded in getting millions of workers covered by a plan," he said. "The idea of a mandate is going to take hold in a state, and then eventually the federal government will get on this."

The state proposals will allow any payroll deduction IRA, but some also call for the states to get into the retirement plan business by providing a plan if an employer hasn't found applicable products to make available to its employees.

Mr. Graff said ASPPA is trying to make sure state lawmakers approach the issue in a way that involves the industry.

"We can't run away from this reality," he said.

On a separate issue, Mr. Graff said he doesn't anticipate that lawmakers will change the tax rules for Roth IRAs, though he could see down the road some type of excise tax being assessed on large amounts saved in Roths, such as those with $3 million or more.

"We believe it's wrong, but that's how they would try to do it," he said.


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