New Proposed Definition of "Fiduciary" for Retirement Plans

New Proposed Definition of "Fiduciary" for Retirement Plans

A new proposed rule would expand the number of persons who are subject to fiduciary standards when providing retirement investment advice. Among other responsibilities, fiduciaries are required by law to act impartially, provide advice that is in plan sponsors’ and plan participants’ best interests, and are not permitted to receive payments creating conflicts of interest without a specific exemption.
 

New Standards for Fiduciary Status

Under the proposed definition, any individual receiving compensation for providing advice that is individualized or specifically directed to a particular plan sponsor (e.g., an employer with a retirement plan), plan participant, or IRA owner for consideration in making a retirement investment decision is a fiduciary.
The proposed rule carves out several activities from fiduciary status, including general education on retirement saving and sales pitches to plan fiduciaries with financial expertise (provided that certain conditions are satisfied).
 

Additional Information

Another proposed rule provides new exemptions that give fiduciary advisers flexibility to continue common fee and compensation practices, so long as protections are in place to ensure that their advice is in their clients’ best interest. More information on both of these proposals, including a fact sheet and FAQs, is available from the U.S. Department of Labor.
To learn more about retirement planning and fiduciary duties, visit our section on Retirement Plans.