For most Americans, it’s been a rough year for retirement savers. Many have lost their jobs or been unable to save due to the COVID pandemic.
In addition, it’s been challenging for those looking for reliable advice on how to fund their retirement. Do you set up an annuity? Cash out of your 401(k)?
One important step in closing the retirement knowledge gap is getting unconflicted advice. You’re unlikely to get it from brokers, advisors and agents who are not designated as “fiduciaries.” This is a legal term meaning that they must work in your best interest — not their own — or they could be sued. Most brokers and agents are not fiduciaries.
Under a new Department of Labor rule, you now can pay for the advice of a fiduciary advisor when making a decision on what to do with your 401(k). This exemption can help you make better decisions, especially when it comes to 401(k) rollovers into separate accounts.
“This exemption allows for important investor protections, including a stringent ‘best interest’ standard of care for fiduciary recommendations of rollovers from ERISA-protected retirement accounts,” stated Deputy Assistant Secretary of Labor for the Employee Benefits Security Administration Ali Khawar.
“We recognize that investment advice providers have been preparing for the exemption, and this step will allow them to implement important system changes.”
While this rule doesn’t completely protect retirement investors, it’s a step ahead. As a general recommendation, always work with a fiduciary advisor such as a fee-only certified financial planner when making investment decisions.
(Drew Angerer/Getty Images)
