New Legislation Would Remove DOL Authority Over IRAs

A new piece of legislation has been introduced to eliminate the DOL's regulatory authority over IRAs. If passed, it would mean that IRAs would no longer be subject to the DOL's prohibited transaction rules. The law would, however, preserve a ban on self-dealing and eliminate tax benefits for IRA owners who improperly use IRA assets for personal benefits. The law would clarify that individual IRA owners would not need a specific exemption to access reduced cost or enhanced services and products that are already allowed through another type of savings account. The rationale is that the prohibited transaction rules were designed for large employer-sponsored retirement and pension plans, not individual IRAs. This has meant that IRAs have been subject to DOL fiduciary rulemaking (including the Obama-era fiduciary rule in 2016 and the Biden-era retirement security rule in 2024, arguably creating confusion for advisors and limiting advisory services for IRA owners. The Simplifying Modern Access to Retirement Tools for Savings (SMART Savings) Act was introduced by Republicans in both the House and Senate. For more information on the exemptions to the prohibited transaction rules, visit Tax Facts Online. Read More: Link to Q3983.