The Department of Labor’s proposed update to its fiduciary rule “is all about the ERISA-fication of the IRA space,” Groom Law Group Chairman Steven Saxon told attendees at the Insured Retirement Institute’s Washington conference on Monday.
“It is the most controversial issue that anyone has seen in the past 40 years,” said Mr. Saxon.
Under the current standard, “most interactions with plan sponsors, plan participants and IRA accounts fell outside of the fiduciary standard. Under the proposed (standard), there is a flip of the presumption,” said Richard Turner, vice president and deputy general counsel of AIG Life and Retirement.
One of the biggest questions to be answered is how the Department of Labor will handle exemptions distinguishing non-fiduciary behavior from fiduciary behavior, known as carve-outs. “It seems like everything is in unless you meet one of the carve-outs,” said Abigail Pancoast, chief counsel for retirement plan services with Lincoln Financial Group.