DOL plans fiduciary guidance on consolidating multiple IRAs

A Government Accountability Office (GAO) report concerning Department of Labor (DOL) regulations is due out soon addressing the consolidation of multiple IRAs for employees who have changed jobs several times. The report is intended to complement a 2013 GAO report (GAO-13-30) that focused on aggressive marketing of certain IRA rollover products that created participant confusion over plan-to-plan rollovers.

According to the Groom Law Group, which held a seminar on October 15, 2014 on the latest regulatory and legislative developments for employee benefits, the current rule (ERISA Advisory Opinion 2005-23A), advising that when a plan participant rolls over to an IRA managed by the advisor’s firm, it is permissible if the advisor has no relationship with the plan; it is not permissible if the advisor is already a plan fiduciary.

The GAO has recommended that the Labor Department develop a concise written summary explaining a participant’s distribution options and listing key factors that a participant should consider. Moreover, the GAO said the DOL should seek additional statutory authority if needed. The DOL plans to address rollover advice in future guidance and will require disclosures of the advisor’s financial interest. In addition, the IRS plans to standardize distribution processes to better facilitate plan-to-plan rollovers.

Source: Groom Law Group seminar, October 15, 2014.

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