Department of Labor Issues Guidance on 401k Fiduciary Rule

fiduciary investment advice
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In what seems like déjà vu all over again, the U.S. Department of Labor’s Employee Benefits Security Administration issued guidance Tuesday on fiduciary investment advice for retirement investors, employee benefit plans, and investment advice providers.

The guidance relates to the department’s “Improving Investment Advice for Workers & Retirees” exemption, developed by President Trump’s DOL and allowed to move forward in the new administration, surprising many. It follows a Feb. 12, 2021 announcement that the exemption would go into effect as scheduled on Feb. 16, 2021.

The department issued two documents:

Both guidance documents are limited to the application of federal retirement laws to advice concerning investments in plans covered by the Employee Retirement Income Security Act of 1974, such as 401k plans and the Internal Revenue Code, such as IRAs, the announcement noted.

“The retirement investor guidance provides helpful information regarding the importance of selecting an investment advice provider who is a fiduciary and the protections that are provided to retirement investors under the ‘Improving Investment Advice for Workers & Retirees’ exemption,” Acting Assistant Secretary of Labor for Employee Benefits Security Ali Khawar, said in a statement. “The compliance-focused frequently asked questions provide assistance to financial institutions and investment professionals as they ramp up compliance with the exemption.”

The department said it is continuing to review issues of fact, law, and policy related to the exemption, and more generally, its regulation of fiduciary investment advice.

John Sullivan
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.

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