Douglas Pelley Talks 401(k) Fiduciary Rules with Investopedia
Arnold & Porter Tax counsel Douglas Pelley was recently quoted in the Investopedia article, “What the Death of the Biden-Era Fiduciary Rule Means for Your 401(k) Rollover,” discussing how a Texas federal court’s vacating the “Retirement Security Rule” impacts consumers rolling over 401(k)s, as well as those advising them.
Doug explained that rules proposed by prior administrations generally aimed to expand the definition of fiduciary and broaden obligations for advisors during one-time 401(k) rollover transactions.
“Historically, a one-off rollover discussion between a financial institution and a participant was not treated as fiduciary,” he said. “The Department of Labor tried to move the definition under their various proposals, but they were unsuccessful in doing so, and the courts struck down those regulations multiple times.”
Following the Court’s decision, fiduciary standards will revert to the original Employee Retirement Income Security Act (ERISA) guidelines.
Doug also highlighted that even if advisors are subject to other regulations, such as the Securities and Exchange Commission’s Regulation Best Interest, those regulations “may not be as stringent” as fiduciary standards.
