WASHINGTON — A new report contends that the fiduciary standard proposed by the Department of Labor (DOL) would disproportionately impact retirement plans set up by small businesses as well as the “Main Street” advisors who helped set up the plans small businesses use.
Moreover, the report, commissioned by the U.S. Chamber of Commerce, argues that the proposal “stretches” the DOL’s current regulatory authority over employer-provided retirement plans. It was written by Bradford P. Campbell, counsel at Drinker Biddle & Reath in Washington. Campbell headed the Employee Benefits Security Administration (EBSA), which was charge of enforcing the Employee Retirement Income Security Act (ERISA) during the Bush administration.
In the report, Campbell contended that small businesses use SEP IRAs and SIMPLE IRAs because they are easy and inexpensive to set up. Those plans also do not impose ongoing administrative or reporting requirements on employers. But those same small businesses who use such plans “are likely to disproportionately bear the costs of excessive regulation” imposed through the new rule, the report said.
That is because the proposed rule would impose “more complex regulations,” which “mean more hurdles and compliance costs, and a greater likelihood of lawsuits,” Campbell said in the Chamber report.
As a result, Campbell said, “Main Street advisors will have to review how they do business, and likely will decrease services, increase costs, or both” because the small scale of small businesses “means they are more expensive to serve.”
“The U.S. Chamber believes that DOL’s proposed regulations risk hurting the very small businesses and workers they are intended to protect,” Campbell continued.
InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at [email protected].
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