Matrix Tackles Changes to ERISA Fiduciary Rules

“IRAs & the ERISA Fiduciary Rules: Updates and Best Practices for a Changing Regulatory Environment” addresses the changes that individual retirement accounts (IRAs) could face if the anticipated regulations come to pass. The guide, co-authored by Cindy Dash, chief operating officer at Matrix Financial Solutions Inc., and Pamela O’Rourke, an Employee Retirement Income Security Act (ERISA) attorney for Integrated Retirement, outlines the current rules, the proposed changes, their predicted impact and steps for advisers to take.

“The proposed regulations may result in more broker/dealers and RIAs [registered investment advisers] being classified as an ERISA fiduciary when they provide services to IRAs,” said Dash. “It’s important that advisers and brokers understand this evolving issue and take the necessary steps to re-evaluate their business models and compensation structures in anticipation of any regulatory changes.”

The guide offers a three-step framework for advisers:

1. Evaluate the rollover business model. Advisers should know if their business model raises regulatory concerns under ERISA and investigate how it could affect their growth objectives. 
2. Assess the rollover IRA opportunity. Advisers must review the differences between traditional and Roth IRAs. “Contributions to IRAs can be made as pre-tax traditional IRA contributions, Dash said. “Roth contributions are taxed at the time of contribution, grow over time and then are not taxed at the time of distribution.” She added that nondeductible contributions may also be made to traditional IRAs, and both types of IRAs offer investors flexible tax-planning opportunities.
3. Monitor new developments. “Matrix suggests that advisers evaluate their existing business model and consider how a reproposal could impact their current book of business,” Dash said. To stay current, Dash suggested advisers review Broadridge/Matrix webinars and roadshows, as well as the Department of Labor (DOL)’s newsletter, which advisers can subscribe to here.

“While we don’t know what the proposed fiduciary definition regulations will look like, it’s important that advisers and brokers take into consideration the potential impact on their future business strategies and relationships with IRAs when the rules are released,” added Dash.

The full white paper can be found here.