For all the good intentions, however, what will happen when the rubber finally meets the road? Will the new DOL Fiduciary Rule really level the playing field?
Tag "Jason Grantz"
Here’s where the greatest controversy of the new Rule, as with its predecessors, comes to a head.
For all the rose-colored eyes that have a created a legend flawless certitude concerning memories of a time that never existed, pension plans simply can’t measure up to 401k plans.
Plan sponsors need to think about it in these terms: Does it make sense to have a pork-belly ETF on a 401k investment menu? How about orange futures?
Of course, to really answer the question of post-retirement middle class stability, we have to understand what “middle class” means. Luckily, there are folks who collect data, which helps with this definition.
The challenge is plan sponsors often can’t determine if an account is forgotten until some triggering event. And by that time, it’s too late.
There is an out, of course, but that might eliminate the so-called “institutional pricing” advantage former employees have for staying in the plan in the first place.
There might be a there, there. It could be that TDFs have an Achilles’ Heel that leaves them vulnerable.
Nobody’s perfect. It’s unfair to expect recordkeepers to be. Everyone makes mistakes—even recordkeepers. The problem is what happens when a mistake occurs.
The Irony Of Taxing 401k Plans To Save Social Security
Worse, if the “alternatives” alluded to by the paper entail government backed programs like Social Security, this could have a debilitating impact on encouraging people to be responsible for funding their own retirement.