The American Society of Pension Professionals and Actuaries (ASPPA) says the U.S. Labor Department should keep individual retirement accounts (IRAs) out of a proposed update of the retirement plan fiduciary definition.
The Employee Benefits Security Administration (EBSA) an arm of the Labor Department, has been trying to come up with a new version because of concerns that the current version, which was written in the 1970s, is too narrow.
EBSA has suggested that the definition should apply to IRAs as well as to 401(k) plans and other employer-sponsored retirement plans.
ASPPA, Arlington, Va., believes IRAs should be removed from the proposed definition revision, according to ASPPA Executive Director Brian Graff.
The Labor Department has no effective means to enforce IRA rules, Graff says in a statement.
“If these rules continue to apply to IRAs, what will happen is that the heavily regulated firms like mutual fund and insurance companies will comply with the rules and less regulated companies won’t because they know there is no enforcement,” Graff says. “As a consequence, applying these rules to IRAs could actually put investors at greater risk by giving unscrupulous providers a competitive advantage.”
- Allison Bell