Compliance

ASPPA Clarifies Stance of Definition of Fiduciary Proposal

By Rebecca Moore editors@plansponsor.com | July 28, 2011

July 28, 2011 (PLANSPONSOR.com) - In light of recent statements regarding its position on the proposed definition of fiduciary regulation, the American Society of Pension Professionals & Actuaries (ASPPA) again reiterated its support of the proposed regulation provided IRAs are removed from the pending rule.

In a statement, Brian Graff, Executive Director/CEO of ASPPA said: “We commend the [Department of Labor] DOL for attempting to address the issue—however we believe Individual Retirement Accounts (IRAs) should not be regulated by the Department without an effective means to enforce them.  

“If these rules continue to apply to IRAs, what will happen is that the heavily regulated firms like mutual fund and insurance companies will comply with the rules and less regulated companies won’t because they know there is no enforcement. As a consequence, applying these rules to IRAs could actually put investors at greater risk by giving unscrupulous providers a competitive advantage.”  

According to the statement, ASPPA’s testimony and comment letter to the DoL noted: “ASPPA, the Council of Independent Recordkeepers (CIkR), and the National Association of Independent Retirement Plan Advisors (NAIRPA) believe that these rules should not apply to Individual Retirement Accounts (IRAs). We recommend guidance for retail IRAs be considered in a comprehensive manner given the fundamental differences between IRAs and qualified retirement plans, and be supported by an active enforcement regime to ensure consistent application. Unlike retirement plans such as 401(k) plans, retail IRAs are not maintained by employers or employee organizations. Although this provides IRA owners with greater flexibility, it leaves them without many of the protections available to qualified retirement plans under ERISA and the Internal Revenue Code.”  

Graff said: “Again, we strongly caution that the impact of the proposed regulation would create an unfair competitive advantage and leave unscrupulous providers to practice without an effective enforcement regime.”  

In March, declaring that prior reports of its position on the DoL proposed regulation redefining “fiduciary” were unclear, ASPPA insisted it and its affiliated organizations “strongly support” the changing of the standard (see ASPPA Reiterates Support for DoL Fiduciary Definition Deliberations).  

Text of ASPPA’s testimony before the DoL is here    

ASPPA’s comment letter on the proposal is here