Regarding the DOL's most recent proposed changes, there are three main points to focus on.

Expanded definition of "fiduciary. The rule broadens the category of those deemed "fiduciary" under the Employee Retirement Income Security Act (ERISA). This means more financial professionals advising on 401(k) plans, including rollovers, are legally obligated to put their clients' interests ahead of their own.
Rollovers. There is added scrutiny on rollovers, the process of moving funds from a 401(k) to an Individual Retirement Account (IRA), because rollovers are often seen as points of vulnerability for investors. The new rule places stricter scrutiny on recommendations to rollover, aiming to prevent advisors from pushing rollovers that are not in the investor's best interest.
Prohibited transaction exemptions. The DOL is also reworking certain exemptions that allow advisors to receive otherwise prohibited compensation (like commissions) under specific conditions. These reworked exemptions include more rigorous requirements companies and advisors must meet.

Companies will need to make necessary adjustments to comply with the new regulations. It is expected that there will be an increase in scrutiny when choosing plan advisors. It will become essential for companies to perform a thorough background check on the financial advisors and firms they hire to manage their 401(k) plans. To avoid potential legal issues, fiduciary standards must be met.

Instant Insights /

The new DOL fiduciary rule: How it could change your company's 401(k) plan

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