How the DOLs Fiduciary Rule Affects Your Old 401(k) [Video]

Key Takeaways

• A new Department of Labor fiduciary rule is set to go into effect this September. The DOL is worried that financial advisors will put their own interests in front of their clients’ interests when it comes time to make a choice for how you want this money from the 401(k) distributed. There are basically three choices: Roll it over to an IRA, leave it in the company plan, or if you get a new job, roll it to a new company’s plan—but it’s essentially the same thing because it stays within a 401(k)—or take a lump-sum distribution and pay the tax. They want to make sure advisors don’t just knee-jerk default to the IRA rollover.
• The DOL wants advisors to get educated on each option for an old 401(k) and to have a process.
• Despite the potential downsides to taking a lump-sum distribution, there may a reason to do it. …