More On Legal & Compliancefrom The Advisor's Professional Library
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
Senior congressional staffers gathered at the second day of the annual Department of Labor (DOL) Speaks conference in National Harbor, Md., on Tuesday to discuss the legislative activities most pertinent to the retirement plan industry: addressing the small business tax bill, lifetime income options, fee disclosure, and auto-IRAs.
Brian Graff, executive director and CEO of the American Society of Pension Professionals and Actuaries (ASPPA) in Arlington, Va., moderated the panel of senior congressional staffers from the Senate Health, Education, Labor & Pensions (HELP) Committee, and the House Education and Workforce Committee. Graff noted that on Wednesday the House planned to take up, and likely pass, the small business tax bill that just passed the Senate. The bill includes a provision allowing rollovers from 457, 403(b) and 401(k) plans into Roth IRAs as long as the assets remain as plan assets. Graff noted that this rollover option is currently only available to workers aged 59 1/2 . "We'll have to see if [this age restriction] gets expanded," he says.
On the heels of the recent Departments of Labor and Treasury's hearing on lifetime income options in retirement plans, the panel also discussed the viability of lifetime income options. Graff asked panelists whether lifetime income options within retirement plans would be a focus for the next Congress. Gregory Dean, chief counsel on the Senate HELP Committee, responded that the while the discussion on lifetime income options was good, "where we go from here is a big question mark." Indeed, Michael Kreps, counsel on the Senate HELP Committee, agreed that "there aren't a whole lot of clear answers" on the viability of lifetime income options in retirement plans. However, he said, the "discussion is important and we're watching the discussion closely" on the Hill.
While decumulation strategies have taken center stage, accumulation tools like the auto-IRA are still trying to gain some traction. Two bills that were introduced before Congress broke for its summer recess--H.R. 6099, the Automatic IRA Act of 2010, introduced by Rep. Richard Neal, D-Mass., and S. 3760, the Automatic IRA Act of 2010, introduced by Sen. Jeff Bingaman, D-N.M., and co-sponsored by Sen. John Kerry, D-Mass.--both require that companies with more than 10 workers automatically enroll their employees in a payroll-deduction IRA (known as auto-IRAs) if they are not already covered by an employer-sponsored retirement plan.
However, similar proposals have been kicked around Capitol Hill since 1995, Kreps added, and Congress "has not pushed the ball all the way." Michelle Varnhagen, Labor Policy Director for the House Education and Workforce Committee, said that she doesn't envision the auto-IRA option to be addressed until Congress takes up "a large tax bill or revisits Social Security reform," which Congress must ultimately do.