FINRA issued a notice this week reminding firms of theirresponsibilities when it comes to recommending a rollover ortransfer of assets from an employer-sponsored retirement plan to anIRA or marketing IRAs andassociated services.

The organization, which is the largest independent securitiesregulator in the U.S., warned that it will make reviewing firmpractices in this area a top priority in 2014.

It pointed out that a recommendation to a client to roll overplan assets into an IRA rather than keeping assets in a previousemployer's plan should be based on an investor's individual needsand circumstances. It should take into account investment options,fees and expenses, services, penalty-free withdrawals, requiredminimum distributions and employer stock.

FINRA said that if employees leave a job between the ages of 55and 59 ½, they may be able to take penalty-freewithdrawals from a plan. In contrast, penalty-free withdrawalsgenerally may not be made from an IRA until age 59 ½. Italso may be easier to borrow from a plan.

Once individuals reach age 70½, the rules for definedcontribution plans and IRAs change, with both requiring theperiodic withdrawal of certain minimum amounts of money, known asthe required minimum distribution.

If a person is still working at that age, he is not required tomake required minimum distributions from his current employer'splan, which could be advantageous to those who plan to work longer,FINRA said.

Firms also must take into account conflictsof interest and suitability and fair dealing whenhelping clients roll over assets. If an advisor or broker-dealerstands to gain monetarily from the advice they are giving, there isa conflict of interest, FINRA's notice stated. Conflicts also mayexist for firms that are responsible for educating planparticipants about their choices, but they have an incentive toencourage participants to open IRAs rather than maintain theirassets in their plan.

Broker-dealers should review their retirement servicesactivities to assess conflicts of interest.

Broker-dealers also must meet suitability standards and dealfairly with clients. FINRA's suitability rule requires that abroker-dealer and its associated persons have a reasonable basis tobelieve that a recommended transaction or investment strategyinvolving a security is suitable for the customer. They must takeinto account the investor's age, other investments, financialsituation and needs, tax status, investment objectives, investmentexperience, time horizon, liquidity needs and risk tolerance.