Retirement Rollover or Transfer Comparison FAQs

What is new regarding DOL PTE 2020-02 as it relates to rollovers?

There are two major changes to rollovers with the new rule:

1)       Any new rollover recommendations will require that the client MUST acknowledge receipt of a comprehensive comparison and/or analysis of the recommendation being made. 

2)      Rollovers now include ANY rollover or transfer recommendations between retirement accounts which include IRA to IRA transfers, not just retirement plan rollovers.

When do the requirements go into effect?

The new rollover requirements went into effect on July 1, 2022.

What is changing at Mutual Advisors because of the new requirements?

Clients must now sign the Rollover Comparison Form, which was not previously a requirement.  There is a separate IRA Transfer Comparison Form that will apply to IRA transfers including transferring from commission-based to fee-based platforms.  

What is the difference between the Rollover Comparison Form and the IRA Transfer Comparison Form?

The Rollover Comparison Form is for any rollovers from a qualified retirement plan, whereas the IRA Transfer Comparison Form is for any IRA-to-IRA transfers. 

The Rollover Comparison Form is a much more in-depth comparison of fees and services offered in the previous plan and the recommended account. The IRA Transfer Comparison Form is a more simplified version that allows various categories of services to be selected and a place to provide overall rationale. Best practice is to provide a comparison of services in both accounts. However, the information is only required for the proposed account.

Rollovers from a qualified retirement plan can be much more impactful on a client’s retirement assets, which is why there is more detail required. Additionally, there is at least basic plan level information filed on a form 5500 for retirement plans, so there is a basis for some level of comparison with the previous plan versus what is being recommended to the client.  

Where can I obtain information on the client’s current qualified plan?

You can find a plan’s Form 5500 filing by going to https://www.efast.dol.gov/5500Search/.  Keep in mind that the exact information you are looking for may not be on the Form 5500, but there should be information that would be helpful in making assumptions.  The key is documenting the source of the information that you use to help make the comparison to the client.

What happens when a rollover comparison form is not submitted with a new IRA?

Advisory Services will put the account in a “Not In Good Order” (NIGO) status. This means the account will not be set up for billing until the proper form is provided. If no recommendation is made, then this just needs to be indicated to Advisory Services and the account will be considered “In Good Order” (IGO).

What defines whether a recommendation is made on a rollover and when would these forms be required?

If you guide the client as to whether they should make a rollover or IRA transfer (or tell them what you thought was in their best interest), then this is considered a recommendation and the form(s) would be required.  However, if you simply provided education on the client’s options but did not guide them in a particular direction, this would not be considered a recommendation and the forms would not be required.  Either way, this should be documented in the client’s file and or your CRM.