On December 18, 2020, the Department of Labor (DOL) finalized a best interest standard for investment advice fiduciaries in a new class exemption that was designed to align with the Security and Exchange Commission (SEC) standard of conduct on broker-dealers called Regulation Best Interest. The regulatory alignment idea is that, regardless of whether retirement investors choose broker-dealers or investment advisors, investors will be entitled to advice that is in their best interest.
An account balance in an employee benefit plan can represent a lifetime of savings, and often, the largest sum of money a worker has at retirement. The decision to roll over ERISA-covered retirement plan assets to an Individual Retirement Account (IRA), which is not protected by ERISA, is a consequential financial decision for a plan participant. Both the DOL fiduciary exemption and the SEC final rule apply to rollover recommendations.