While Congress is battling over repeal of Obamacare, President Donald Trump is setting a course to repeal a regulation that the Obama administration pushed through last year and which has become known as “Obamacare for your IRA and 401(k).” Like Obamacare, the “fiduciary rule” dramatically limits choices and raises costs. This rule could devastate our financial well-being just as Obamacare has harmed our health.
Fortunately, the Trump administration can rescind and repeal the fiduciary rule. Unlike Obamacare, this regulation is not based on any new law, but on an expansive and probably illegal interpretation – currently subject to a legal challenge – of the 42-year-old Employee Retirement Income Security Act. This rule itself was issued by Obama’s Department of Labor in April 2016.
The President needs the help of freedom-loving Americans, though. Supporters of this big-government Obama rule are already out in public claiming that repeal or even delay of this rule only helps Wall Street.
This couldn’t be further from the truth. But the Trump Department of Labor needs to hear from Main Street savers that they don’t want this rule, which would limit their access to financial advice and investment choices, and possibly put their friends and neighbors in the brokerage and insurance industries out of work.
Knowing that a new president could potentially repeal the regulation, the Obama administration put “booby traps” in it to trap (401)k and IRA accounts under its authority before the rule can be repealed. That may be exactly why the Obama administration set things up so that businesses could be punished for violating this convoluted rule as early as April 10. Before the rule is repealed, it must be immediately delayed, or else Obama-allied trial lawyers could sue the folks who handle your IRA and 401(k) to force them to stop offering investments that the Obama administration deemed not in your “best interest.”
Savers who don’t want government bureaucrats and trial lawyers dictating what’s in their best interest can help President Trump by telling the Labor Department that they want the fiduciary rule immediately delayed and eventually repealed. Pro-regulation activists will likely flood the Labor Department with comments supporting this nannyist rule, so it’s crucial that supporters of the free market submit comments of their own.
The deadline to submit comments is March 17. Send yours to the Department of Labor at [email protected] and include “RIN 1210-AB79” in the subject line of the message. You can also go to the Federal eRulemaking Portal and follow the instructions there.
Here are some important points that commenters might want to stress about why this regulation is so horrific.
- The rule’s premise is that savers are too stupid to manage their own retirement or to seek help from financial professionals in doing so. In the proposed rule, Obama Labor Department bureaucrats actually wrote that “seldom” can Americans “prudently manage retirement assets on their own,” and that they “generally cannot distinguish … good investment results from bad.” This from the administration that blew $535 million on subsidizing the Solyndra “green energy” boondoggle! Savvy savers should let the Trump Labor Department know that they can indeed manage their own retirement accounts and choose professionals to help them do so, without any “help” from Big Government.
- The rule would restrict both choices and access to investment guidance for middle- and lower-income savers. Liberal economists Robet Litan and Hal Singer have estimated that this rule could cause American savers to lose $80 billion in savings over ten years. After Great Britain barred brokers from receiving third-party commissions in 2013, as the fiduciary rule effectively does, studies found a guidance gap in which savers with less than $240,000 in assets could not get their accounts serviced by a broker or adviser.
- The rule will cause many Americans to pay more in fees for their 401(k)s and IRAs. If brokers can’t get commissions from mutual funds, a practice that is fully disclosed to savers, they will have to make up that money by charging savers more.
- The rule could prevent American savers from putting different types of assets in their retirement accounts. Currently, many Americans are putting precious metals such as gold and silver, as well as real estate, in their IRAs. But this rule may curtail that option if government bureaucrats or self-appointed trial lawyers deem these choices to be not in savers’ “best interests.”
- The rule could put 92,000 Americans out of work or out of business. According to a recent report from the American Action Forum, rather than trying to comply with the rule, many companies are planning to leave the retirement savings space entirely.