More On Legal & Compliancefrom The Advisor's Professional Library
- Anti-Fraud Provisions of the Investment Advisers Act RIAs and IARs should view themselves as fiduciaries at all times, whether they meet the legal definition or not. Deviating from the fiduciary standard of full disclosure while courting clients may cause the advisor significant problems.
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
According to the bill, the Act (S. 3760) enables employees who work for a private business with more than 10 workers and whose employer does not already offer a retirement plan to contribute to retirement savings through payroll deductions. Worker contributions would be deposited into their own Individual Retirement Account, ultimately managed by the same banks, mutual funds, insurance carriers and other institutions that currently provide IRAs. The approach builds on the use of automatic features in 401(k) plans that encourage employees toward sensible decisions (while allowing them to make alternative choices), which has proven highly successful in raising 401(k) contribution rates.
Employers will receive a tax credit to cover the administrative costs of setting up the IRA account, but they will not be allowed to make a contribution to it.
"Last year, only half of all American workers had access to any type of retirement plan or account at work. As a result, millions of Americans enter their retirement years with inadequate savings," Bingaman (D-New Mexico) said in a statement. "Our bill will open the door to a secure retirement for nearly 42 million workers, including 250,000 New Mexicans. Giving workers a way to directly deposit some of their paycheck into a retirement account will help millions of Americans better prepare for their golden years."
"This legislation simply makes it easier for Americans to save for retirement without making businesses shoulder new burdens. More than 800,000 workers in
Massachusetts would be eligible to participate in a payroll deduction IRA and carve a path to a secure retirement," Kerry (D-Massachusetts) said.
The Obama administration has called on Congress to enact an automatic IRA measure, and included a proposal in its FY 2011 budget.
"I applaud Senator Bingaman for introducing his Auto IRA bill, and I urge the Congress to help increase the retirement security of working Americans by creating automatic IRAs," Vice President Joe Biden said. "Right now in America, nearly 80 million workers have no employer-based retirement plan, making it hard to save enough for the secure and dignified retirement they deserve. Automatic IRAs, which were proposed in the President's budget and supported by the Middle Class Task Force that I chair, would help improve the retirement security of tens of millions of Americans by making it easy for employees to save through payroll deposit.
"Contributions would be purely voluntary; employees would be free to opt out at any time," Biden added. "The legislation also provides exemptions, simplified procedures and a tax credit to make implementation easy for small employers. Creating automatic IRAs is a common-sense proposal that has received bipartisan support in the past, and I congratulate Senator Bingaman for his leadership in this matter."