Proposed Regulations Protect Retirement Accounts

On Tuesday, Federal regulators proposed rules to provide expanded customer protection for retirement savings.  The rules, which were proposed by the Labor Department, are part of the Obama administration’s effort to help the middle class. 

If enacted, the rules would eliminate some of the loopholes allowing brokers to avoid acting as fiduciaries when providing advice on retirement money held inside accounts such as 401(k)s and IRAs, which hold approximately $7 trillion.  The new rules would update ERISA, which was enacted in 1974. 

It is expected that the effort will save investors $40 billion over ten years.  “We want to make sure people get put into products that work best for them,” says the secretary of labor Thomas Perez.  “We have met too many people who have worked their tails off for retirement, they had barely enough saved to begin with, and then they were steered into a product that was unduly complex.”

See Tara Siegel Bernard, U.S. Plans Stiffer Rules Protecting Retiree Cash, The New York Times, Apr. 14, 2015.

Special thanks to Lewis Saret for bringing this article to my attention.