Beginning this year, most investors can now convert traditional IRAs to Roth IRAs. The conversion could make sense for affluent investors, who anticipate their tax rates will only go up from where they are now. But the factors aren't that simple for many investors, or for fiduciaries who are advising on the decision. In his Other Voices column for InvestmentNews, AIF designee Andy Rice takes a look at many of the factors that a fiduciary needs to consider before making a recommendation for their client.
Also related to Roth retirement plans, there has been recent lobbying for Roth conversions to be allowed for 401(k) plans and the Obama administration last week endorsed Roth IRAs as the default option for automatic enrollment plans.
With the decision of whether to tax now or tax later on retirement assets having such a big impact on what investors will be able to withdraw, fiduciaries should be familiarizing with the benefits and risk of Roth plans and a process for determining what works best for each of their clients.
Note: Andy's article is an entrant in the fi360 member article competition. You can leave feedback on entered articles from our website. And, if you are an AIF/AIFA designee who has written an article in the past year and would like more information on entering it into the competition, log in to the designee portal for more information or email resources@fi360.com.
Now on to the rest of the best links from the last week.
In the news/commentary:
- Survey shows that brokers think a fiduciary standard will not be implemented for advice [Registered Rep]
- Another look at the same study though, finds that advisors believe the fiduciary standard would be beneficial for their profession [Financial Planning]
- Expect the new 401(k) investment advice rules related to the Pension Protection Act to come out soon. [InvestmentNews]
- Scapiro says the SEC will examine 12b-1 fees this year [InvestmentNews]
From the organizations/associations/government/academia:
- A study shows that many plan sponsors are facing challenges in compliance with new 403(b) regulations [TIAA-CREF]
- Regulators are seeking comment on the use of annuities in retirement plans [DOL]
- Consumer group worries that the brokerage and insurance lobbies will be successful in weakening currently proposed fiduciary standard from regulatory reform. You can also listen to their news conference. [NASAA]
From the blogs:
- A look at the potential fiduciary issues associated with using ETFs in retirement plans [Fiduciary News]
- A look at how arms-length contracts can become fiduciary relationships via the Mark Cuban insider trading case [Business Law Prof Blog]
Comments