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Large IRAs and High-Income Retirement Savers Targeted by Amendment to Budget Reconciliation Bill

Last week, Richard Neal (D-Mass), chairman of the House Committee on Ways and Means, unveiled an amendment to help fund the $3.5 trillion budget reconciliation legislation that is currently under consideration in Congress. The Neal amendment would make dramatic changes to the rules governing retirement plans for certain high-income taxpayers by imposing new asset limitations and prohibitions. It would also require distributions and IRA contribution limitations for certain individuals with retirement savings over $10 million, require distributions of Roth balances in excess of $20 million and end the practice of so-called “back-door” Roth conversions. These changes aim to effectively prohibit mega IRAs, which were the subject of extensive press reports earlier this year following ProPublica’s revelation of multiple large IRAs, including Peter Thiel’s $5 billion mega-Roth IRA.

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Department of Labor Adopts Temporary Non-Enforcement Policy for Fiduciary Rule


Time to Read: 1 minutes Practices: ERISA

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On March 10, 2017, the U.S. Department of Labor (the “DOL”) issued Field Assistance Bulletin No. 2017-01, announcing a temporary non-enforcement policy for non-compliance with its fiduciary rule. The non-enforcement policy would apply in two circumstances:

  1. If the DOL’s proposed delay is not finalized until after April 10, the current applicability date for the fiduciary rule, then the DOL will not initiate enforcement actions based on any failure to comply with the rule between April 10 and the date the delay is implemented.
  2. If the DOL does not implement a final delay, then it will not initiate enforcement actions based on noncompliance with the rule and the prohibited transaction exemptions issued alongside the rule, if steps are taken to satisfy the requirements within a reasonable time period after the DOL announces that there will not be a delay.

The non-enforcement policy should provide some comfort to financial institutions that are having difficulty completing preparations for the April 10 compliance date. However, it does not protect institutions from private lawsuits for failure to comply with the rule. In addition, the policy does not eliminate the need to continue working on compliance programs, since the potential relief if the rule is not delayed requires an institution to come into compliance within a “reasonable time period.”

For details on the fiduciary rule, see our Alert; for details on the DOL FAQs, see our Alert on the First FAQ and Alert on the Second FAQ; and for information on the current status of the rule see our Alert on the Presidential Memorandum and Alert on the DOL’s Proposed 60-day Delay

If you would like further information, any member of Ropes & Gray’s ERISA practice group would be happy to discuss the current status of the DOL’s fiduciary rule with you.


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