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Don Faller, CFP C(k)P

Don Faller, CFP C(k)P, has built a nationally recognized reputation as an expert in matters pertaining to the financial operation of ERISA plans and related retirement benefit programs.

With President Donald Trump’s Memo, DOL Rule on Hold

 

If you’re wondering what the status is for changes to the 401(k) fiduciary rule, you’re not alone. On Friday, February 3, President Donald Trump signed a memorandum that asked the Department of Labor (DOL) to review the fiduciary rule that was scheduled to go into effect on April 10. The memo doesn’t revise or repeal the rule, or require the DOL to delay its implementation. However, it’s likely the DOL will delay the rule’s implementation to give the department time to conduct its analysis.

President Trump’s stated goal is to, “empower Americans to make their own financial decisions,” and he feels the rule limits the number of investment options that financial advisors can offer to their clients. His instructions to the DOL require the department to determine whether or not the rule “may adversely affect the ability of Americans to gain access to retirement information and financial advice.”1

The DOL’s fiduciary rule was scheduled to expand the definition of investment advice fiduciaries, including 401(k) fiduciaries, which was originally set in the Employee Retirement Income Security Act of 1974 (ERISA). Fiduciaries must always act in the best interests of their clients and put their clients’ interests above their own.

Currently, many financial professionals, like insurance agents, brokers, and planners, are held to the “suitability” standard, which means that as long as an investment recommendation met a client’s needs, it was deemed appropriate. So, these types of advisors were free to recommend products that paid them higher commissions, as long as they are “suitable” for their clients, which can create potential conflicts of interest.

So what does President Trump’s memo mean for plan sponsors and their retirement plans? For now, the memo simply retains the existing status quo. Since compliance wasn’t required until April, many financial advisors haven’t begun following the new fiduciary standards.

As a 401(k) plan sponsor, though, you are a 401(k) fiduciary to your company’s retirement plan, and you’re required to act in the best interest of your plan’s participants. If you’re looking for comprehensive financial or retirement plan information, you should make sure your financial advisory is an investment fiduciary, and make sure you’ve documented this in writing. Working with a fiduciary provides both your company, and you, with the greatest amount of risk management from potential liability.

If you have questions about your company-sponsored retirement plan and the fiduciary responsibilities of your plan advisors, FiduciaryFirst can help. We can review your plan and identify the 401(k) fiduciaries and work with you to understand your fiduciary responsibility and help manage your corporate and personal investment liability. We’ll help you monitor the changing landscape created by President Trump’s review of the proposed fiduciary rule, and we’ll make sure you’re up to date and informed. For more information, contact us at 866-625-4611.

1 https://www.whitehouse.gov/the-press-office/2017/02/03/presidential-memorandum-fiduciary-duty-rule

Tracking Number:1-584565

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Maitland, FL 32751

Phone: 866-625-4611

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Email: info@fiduciaryfirst.com 

Disclaimer

Retirement Plan Consulting Program and other advisory services offered through LPL Financial, a registered investment advisor.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

 

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