The Labor Department is "going all-in on the IRA rollovers" with its final fiduciary rule, according to Ed Slott of Ed Slott and Co.
"One of the big changes [under the rule] is that advisors used to be able to get around [fiduciary responsibility] because a rollover is a one-time transaction. Not anymore," Slott told ThinkAdvisor Wednesday in an interview.
In its final rule, released Tuesday, "it's pretty clear that one of the big changes is that ERISA rules — the fiduciary aspect of it — does apply to IRAs," Slott said.
Even one-time rollovers are covered.
"The DOL again wants to ensure that when making an IRA rollover recommendation, advisors are considering numerous factors, the pros and cons of each option, and can document a process to do that," Slott said.
"Advisors will have to get up to speed on all available options when retirement funds are leaving company plans," Slott continued. "They must be able to show that they have a process to explain all the options, the benefits and drawbacks when making any recommendation and to document that."
Rollover Process
As the 476-page rule states: "Financial Institutions must document the reasons for a rollover recommendation and provide that documentation to the Retirement Investor." There must be a "written explanation of the basis to recommend a rollover."
