Good news.
New rules will govern trillions in IRAs where your interests are put first. Americans will get new protections for money moved out of their 401(k)s and into IRAs, under Labor Department regulations released yesterday.
What does this mean to you? 401(k)s are governed by strict rules requiring any financial advice to be in the interest of individual savers under a 1974 law called Erisa.
Erisa rules have not historically applied once that 401(k) is rolled over into an IRA. Now a fiduciary rule will apply to IRAs. The change goes into effect September 23, with a year for firms to become compliant.
Action Line: Avoid the confusion and simply work with an investment advisor that, by law, is required from day one to work as your fiduciary. This industry is littered with products like annuities that are sold to unsuspecting investors. As expected, insurers are up in arms about this new rule. Why? Because it’s putting at risk products loaded with fees, including annuities with high-cost surrender charges. Stay tuned.