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Sunday, September 20, 2015

Department of Labor's Proposed Rule -- No Options in IRAs


The U.S. Department of Labor (DOL) has issued a proposed rule that would eliminate the current ability of self-directed individual investors to use listed-options in our IRAs.

Clearly this is a misguided proposed rule change.  Many conservative investors (including us Covered Calls investors) depend on options as part of our income-oriented, risk-reducing investing approach.

Below is the email I have sent to DOL in opposition to this rule.  You too can voice your concern directly to the DOL, but must do so BEFORE SEPT 24, 2015, when the comment period ends. 


Email To:
Subject: Objection to RIN1210-AB32

Department Of Labor:

I am an investor. My financial security, and that of my family, are very important to me – especially when I consider my retirement. Recently, I became aware of a proposed rule that would undermine my ability to plan for my retirement in a way I believe is best for me, and I want to share my concern with you.

My understanding is that the Department of Labor's (DOL's) proposed retirement rule would limit my ability to trade listed options in my IRA. It's a limitation that, to me, makes no sense and should not be pursued.

I am a conservative investor and invest in my IRAs using Covered Calls and 100% Cash-Secured Puts.  As you know, research has demonstrated that these strategies provide investment return results equal to or slightly better than for solely buying stocks (but with only two-thirds of the risk).  I am a self-directed investor.  Please do not restrict my freedom to continue investing in this manner – regardless of the type of brokerage account (retirement or non-retirement) that I hold.   

Please do not pursue this rule any further.  Its passage would likely have the following unintended consequences:  It would very likely drive me (and many investors) to trade options in non-retirement accounts, thereby decreasing the funding we have available for our retirement (from our IRAs). I'm sure that's not the DOL's intent, but it's a very real possibility.

So, I urge you to preserve the freedoms American investors currently enjoy to choose how we invest in our retirement accounts.

Jeff Partlow