The U.S. Department of Labor announced new rules Wednesday that redefine the definition of “retirement advice” for pension and retirement plans. They’re expected to have a big impact on how Americans save for retirement.
According to the House Education and the Workforce Committee, which has federal oversight of retirement security, the proposed rule would:
- Severely restrict the ability of individuals to receive some of the most basic financial advice, such as assistance in rolling over funds from a 401(k) to an IRA;
- Deny many small business owners the help they need to offer their employees a retirement plan;
- Impose more than $2 billion in additional costs each year on retirement advice – costs that will ultimately be passed on to working families; and
- Make it harder, if not impossible, for low- and middle-income families to access affordable retirement advice.
The agency first proposed a new rule in 2010 but withdrew it in 2011 after widespread criticism from financial industry officials and lawmakers. In 2015, a modified version was reintroduced and also met with criticism.
Alabama U.S. Reb. Bradley Byrne (AL-01), a member of the House Education and the Workforce Committee, is one of those lawmakers who oppose the rule, saying it “greatly expands government influence and regulation.”
“Members of Congress from both sides of the aisle reached out to the Department of Labor for months to express our concerns with the proposed rule,” Byrne said. “Sadly, this rule ignores many of those concerns and risks limiting access to retirement advice.
“This rule and its expensive requirements are especially damaging to low- and middle-income families and small businesses. I hope we can work together, in a bipartisan fashion, to actually put reforms in place that help every American save for retirement – not make things harder.”
The new rules, is slated to be phased in 2017, with full compliance required by January 2018.