The United States Department of Labor has
indicated that a large percentage of assets in Individual Retirement Accounts in the United States
are derived from rollovers of assets and monies from 401(k) and other employer-sponsored retirement
plans. In addition to the 5.7 trillion dollars in IRA accounts, the United States Labor
Department statistics indicate that another 3.8 trillion dollars was held in 401(k) at the end of
What most investors don’t realize is that once
they rollover assets from an employer-sponsored ERISA-qualified plan into a separate IRA/IRA Rollover
account is that there may well be a lesser standard of fiduciary diligence and fiduciary responsibility,
which might serve to expose individual investors to considerable, enhanced risk.
Current regulatory provisions afford
financial advisors a one-time basis grace period to avoid the fiduciary requirement at the time of
the rollover of monies from a 401(k) plan into an IRA Rollover account. The currently-pending
Retail Investor Protection Act, which has passed the House but not the Senate, might make even make
it easier for financial advisors, their firms and mutual fund companies to steer investors into
investments which would afford these firms and their advisors revenue-sharing opportunities for
Further, firms might incentify their
financial advisors to steer customers into the purchase of the firm’s own sponsored products, which
likewise carry higher sales commission and ongoing annual fees. The fiduciary-related laws and
provisions of the securities industry are generally more flexible in the definition of a fiduciary
under ERISA, the federal statute which more strictly governs certain 401(k) plans, as opposed to
Rollover IRA accounts. In many aspects, the fiduciary standard expected of investment advisors
is less stringent when dealing with IRA accounts as opposed to ERISA-sponsored plans, including
We offer a free initial consultation to
investors who feel they have been victimized in their IRA and 401(k) plans.
The Law Offices of Timothy J. O’Connor practices securities law in the Tri-City Capital District of
Albany, Schenectady and Troy. We also represent victimized investors throughout the rest of
New York State, including Buffalo, Binghamton, Rochester, Syracuse, Watertown, Utica, Kingston,
Poughkeepsie, New York City/Manhattan, Long Island, and everywhere in between, as well as in the
surrounding states of Massachusetts, Vermont, New Hampshire, Connecticut, and New Jersey.
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