On February 15, 2023, Senator Tommy Tuberville (R-Ala.) reintroduced the Financial Freedom Act (S. 427), which he first introduced last year. If enacted, the bill would prohibit the Department of Labor (DOL) from issuing any formal regulations or guidance that would limit the types of investments that retirees may consider in a self-directed brokerage account (SDBA).
Cosponsors of the bill include Sens. Cynthia Lummis (R-Wyo.), Mike Braun (R-Ind.), Rick Scott (R-Fla.), and Katie Britt (R-Ala.).
Americans for Tax Reform supported the Financial Freedom Act when it was introduced last year, and it strongly urges lawmakers to pass it this year.
This bill was originally introduced in response to guidance issued by the Biden Administration that put pressure on plan managers to stop offering certain crypto assets in a menu of options for 401(k) plans.
Plan managers of SDBAs should be allowed to offer a menu of diversified investments without the federal government making unilateral decisions that prohibit choices for retirees. SDBAs “allow investors access to a broader range of retirement investment options and more control over how and where they invest.”
DOL’s behavior is nearly identical to the Securities and Exchange Commission’s (SEC) paternalistic behavior toward crypto assets and other investment products. For example, the SEC issued a proposed rulemaking that could undermine how mutual funds operate today. According to one report by the Advisory Council on Employee Welfare and Pension Benefit Plans, the second largest holding for Schwab SDBA participants is “mutual funds, at 30.4 percent.” Combating the SEC’s proposed rule is especially important considering the vast amount of SDBA assets invested in mutual funds.
Sen. Tuberville’s bill will ensure that DOL cannot implement the same discriminatory rules being pursued by the SEC.
“I am proud to support Sen. Tuberville’s Financial Freedom Act, which would prevent the Department of Labor from mandating how Americans can maximize their nest eggs,” said Grover Norquist, President, Americans for Tax Reform.
Americans for Tax Reform strongly supports S. 427.