Legislation introduced by a pair of congressmen would transfer regulatory oversight of IRAs to the Department of Revenue.
The Retirement Choice Protection Act, introduced by Reps. Mike Kelly, R-Pa, and Sam Johnson, R-Texas, would effectively derail the Department of Labor’s fiduciary rule. Last month, the pair co-authored a letter, co-signed by 103 House members, to Labor Secretary Thomas Perez expressing concerns that the rule would limit access to retirement advice.
The DOL is finalizing the fiduciary rule and is expected to publish it in the spring. The rule would hold anyone working with retirement funds, including IRAs, to a much tougher fiduciary standard.
The Kelly/Johnson bill resurrects the framework of Sen. Orrin Hatch’s Secure Annuities for Employee Retirement (SAFE) Act, which held that the DOL has no business writing fiduciary rules. Hatch introduced the bill in 2013, but it failed to gain traction.
A House source said the bill makes sense and gives DOL opponents a pro-fiduciary alternative.
“The Labor Department’s fiduciary rule will have a devastating impact on the ability of everyday Americans to save for their retirement,” Kelly said in a news release. “By adding a workable best interest standard to this ill-conceived rule, we will ensure that American families can continue to receive affordable investment guidance for a secure retirement.”
The Kelly/Johnson staffs consulted with several industry groups on the legislation, including the Insured Retirement Institute.
"We believe these efforts help make clear how the rule will harm American savers, and will serve as the impetus to ensure that unintended consequences are addressed," said Cathy Weatherford, president and CEO of IRI, in an email.
Another bill, by Rep. Ann Wagner, would prohibit the DOL from acting until the Securities and Exchange Commission passes its fiduciary standard. But the bill takes no stance on the tougher fiduciary standard.
Wagner’s Retail Investor Protection Act passed the full House, but faces a tough road in the Senate. President Barack Obama vowed to veto the bill if it reached his desk.
The 40-page Kelly/Johnson bill would transfer oversight of IRAs, annuities, Simplified Employee Pensions (SEPs), and Simple IRA accounts to the Secretary of Treasury. It defines an alternative best interest standard to the one defined by the DOL, and requires disclosure of compensation, commission-based and indirect compensation from a product provider.
However, those compensation methods would not constitute a prohibited transaction, as they do in the DOL’s proposal. Recommendations of proprietary products would be allowed.
The bill has been referred to two House committees: The Committee on Education and the Workforce and the Committee on Ways and Means.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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