WASHINGTON— House Democrats are asking the Department of Labor to substantially narrow the scope of the term “fiduciary” for purposes of selling retirement products in any new rule proposed by the agency.
More than 30 Democrats, members of both the House Financial Services and Ways and Means Committee joined in sending the letter Monday to DOL secretary Hilda Solis.
The letter “applauded” the agency’s decision to withdraw and re-propose the rule.
“Again, thank you for withdrawing the proposed rule defining the term ‘fiduciary’, thereby opening the door to a more robust public policy dialogue,” the letter said. “We look forward to working with you on these critical issues.”
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It deals with the agency’s decision in September to withdraw and re-propose a regulation that would have imposed a fiduciary standard on sale of IRAs and similar products covered under the Employee Retirement Income Security Act.
The rule was withdrawn by Phyllis Borzi, director of the DOL’s Employee Benefits Security Administration under intense pressure from members of Congress, both Democratic and Republican, as well as investment advisors and others who sell retirement products.
She promised that it would be re-proposed in January and would keep in mind the concerns of interested parties.
But, Borzi has made clear that IRAs would still be subject to the fiduciary standard in any revised rule.
Borzi has repeatedly said that federal retirement laws must be updated to protect workers and retirees who are now responsible for their own nest eggs through defined-contribution plans such as 401(k)s and IRAs.