Bloomberg | Bloomberg | Getty ImagesWhy Labor Department wants to raise protectionsIn 2020, about 5.7 million Americans rolled a total $618 billion into IRAs, according to most recent IRS data.
IRAs held about $11.5 trillion in 2022, almost double the $6.6 trillion in 401(k) plans, according to the Investment Company Institute.
Here's the problem, in the eyes of the Labor Department: 401(k) investors have certain protections that don't generally extend to IRA investments or the advice to move money to IRAs.
"ERISA fiduciary duties are the highest fiduciary duties under U.S. law," said Josh Lichtenstein, partner at law firm Ropes & Gray.
That advice typically generates compensation like a commission for the broker or agent, and the Labor Department is concerned those incentives may bias recommendations for certain investments that pay them more but aren't in an investor's best interests.
Persons:
IRAs, Josh Lichtenstein, Pew, Julie A, Su, Tom Williams, David Levine
Organizations:
Bloomberg, Getty, Labor Department, Investment Company Institute, ICI, Gray, Investors, Pew, Trusts, Labor, Health, Education, Washington , D.C, CQ, Inc, The Labor Department, White House Council, Economic Advisers, Groom Law
Locations:
rollovers, IRAs, Washington ,