IRA fiduciary rollover risk can be managed

Tip for October 2017


401(k) and 403(b)-like retirement plans face the possibility of serious trouble when plan participants rollover their account balances to individual retirement accounts (“IRA”). Your fiduciary management system needs to embrace IRA transactions.

The Department of Labor’s new investment advice fiduciary rule, which we’ll call the DOL Rule, bears down on the transfer or rollover of retirement plan participants’ assets to IRAs. The impact is not yet widely appreciated by fiduciary committees, but knowledge is spreading.

In summary, here’s what you should know. The DOL Rule defines two classes of “Retirement Investors:”

  • Individuals who hold IRAs; and
  • ERISA qualified retirement plans.

Investment advice delivered to a Retirement Investor must be provided by an individual or institution that complies with the Impartial Conduct Standards. Advice given by a non-compliant advisor would trigger a violation called a prohibited transaction, which can have severe consequences for a plan participant and the related retirement plan.


In order to protect against a prohibited transaction in your plan when a participant requests a transfer of his or her assets for a rollover distribution, a risk management procedure should intervene.

If the individual plans to hire an investment advisor to help with decisions about the rollover or how to invest the proceeds of the rollover, be sure the advisor complies with the Impartial Conduct Standards.

‘Sounds simple but you may need some help. Few advisors currently possess independent proof of their compliance with those standards, which makes it challenging for plan fiduciaries to validate an advice provider. Don’t be content with an investment advisor’s verbal representation of compliance. Get it in writing.


We’ve developed an answer for plan sponsors. It’s called Rollover Chek. Learn how Rollover Chek can help you and your organization manage its IRA fiduciary rollover risk.

Rollover Chekā„¢ is a trademark of Roland|Criss Fiduciary Services.

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