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DOL proposed in April a new regulatory package that would put the department in charge of financial advice provided to Individual Retirement Accounts (IRAs) in addition to all private-sector, employer-provided retirement plans they already oversee. The proposal expands the definition of fiduciary investment advice under a federal law known as the Employee Retirement Income Security Act (ERISA) – a change that would impact rules governing how financial advice is provided to roughly $15 trillion in retirement savings.
The result would be that many traditional forms of compensation for financial advisors, such as commissions that vary from one investment to another, would become illegal under special provisions in that law called “prohibited transactions.” A number of aspects of the proposal appear unworkable in actual practice, and would negatively impact how advisors assist small businesses in providing retirement benefits for their employees. In particular, the change would impact two of the most popular retirement savings vehicles for small businesses: Simplified Employee Pension IRAs (SEP IRAs) and Savings Incentive Match Plan for Employees IRAs (SIMPLE IRAs).
To compete with larger companies and attract employees, small businesses need affordable retirement savings plans. Many use SEP and SIMPLE IRA plans because they provide a simple, cost-effective way for small businesses to contribute to their employees' retirement.
“Strengthening transparency and accountability for Americans' retirement savings is a noble goal that the U.S. Chamber supports,” says Chamber President and CEO Tom Donohue. “But the proposed DOL rule is the wrong way to achieve it. The proposal would make it harder for financial advisors to offer good counsel, and it would discourage small businesses from doing right by their employees and helping put them on the path to a secure future.”
If you are a small business, add your name to our letter challenging these new rules today.
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And tell us more about the importance of retirement benefits for you and your employees. We will share your story with lawmakers and regulators.
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