DOL Fiduciary Rule

The DOL fiduciary rule is the common name for a series of Labor Department rulemakings that would have expanded who is treated as an investment advice fiduciary under the Employee Retirement Income Security Act and the parallel provision of the tax code. The name is informal and slightly misleading, because it refers to more than one rule and because the one currently in force is the oldest of them. Fiduciary status for retirement investment advice is determined today by a regulation adopted in 1975, which the Department itself calls the Five-part Test Regulation, and which survived because both attempts to replace it were struck down in court.

For a person choosing what to do with a 401(k) or an IRA, the practical question this history decides is narrow and important: whether the person recommending the move owes a fiduciary duty under retirement law. Under the surviving test, a one-time recommendation from someone who does not advise the plan or the account on a regular basis, under a mutual understanding that the advice is a primary basis for decisions, generally does not create that status. Other legal duties may still apply, from the securities laws and from state law, but they are different duties with different standards.

What the surviving 1975 regulation actually requires. Under 29 CFR 2510.3-21(c)(1), a person renders "investment advice" to a plan only if two things are both true. First, the person renders advice as to the value of securities or other property, or makes a recommendation as to the advisability of investing in, purchasing or selling them. Second, the person either has discretionary authority or control over purchasing or selling securities or other property for the plan, or renders that advice "on a regular basis to the plan pursuant to a mutual agreement, arrangement or understanding" that the services "will serve as a primary basis for investment decisions with respect to plan assets", and that the person "will render individualized investment advice to the plan based on the particular needs of the plan". Counting the elements of the second route gives the familiar five parts: advice about investments, on a regular basis, under a mutual understanding, as a primary basis for decisions, individualized to the plan. Each is a separate hurdle, and failing any one of them means no fiduciary status under this route.

Why the Department kept trying to replace it. A test built around a regular, ongoing, mutually understood advisory relationship fits a plan that retains an adviser. It fits far less comfortably a single conversation in which someone recommends moving an entire retirement balance out of a workplace plan and into a product that pays them, which for many households is the largest financial decision they will ever make and is by its nature a one-time event. Both the 2016 rule and the 2024 rule were attempts to bring that conversation inside the definition. Neither survived.

The 2024 rule, in the Department's own account. The Retirement Security Rule was published on April 25, 2024. Two lawsuits followed, one in the Eastern District of Texas and one in the Northern District of Texas, and on July 25 and 26, 2024 those courts stayed the rule's effective date, with the second also staying amendments to a group of prohibited transaction exemptions. The consolidated appeal was dismissed by the Fifth Circuit on November 28, 2025 on the appellant's own motion, and final judgments followed in the district courts on March 12 and March 17, 2026. The Department then published a notice of court vacatur, effective April 20, 2026, whose reasoning is the cleanest statement available of where the law stands: "Because the 2024 Fiduciary Rule never became effective, and the Five-part Test Regulation was never replaced, this document takes the administrative steps necessary to conform the regulatory text in the CFR." The 2016 rule met a similar end, and the Department implemented that vacatur in the same administrative way in 2020.

The exemption survived; its explanation did not, and that distinction is the most consequential thing on this page. Prohibited Transaction Exemption 2020-02 permits an investment advice fiduciary to receive compensation that ERISA's prohibited transaction rules would otherwise forbid, subject to conditions, and it expressly covers rollover advice. It remains operative exactly as originally granted in December 2020, and the Department republished its operative text in full to make that clear. What did not survive is the preamble. Separate litigation vacated a 2021 guidance policy on rollover advice and then vacated portions of the exemption's preamble, and in the 2026 notice the Department went further, clarifying "its view that the entire preamble of PTE 2020-02 is effectively vacated" because the vacated portions are too entangled with the rest to leave the remainder reliable. So a reader who was told at some point that rollover advice is automatically fiduciary advice was probably reading, at one remove, guidance the Department no longer stands behind.

What this leaves, stated as fact rather than as advice. Retirement investment advice can be given by someone who is a fiduciary under ERISA, by someone who is a fiduciary under the Investment Advisers Act, by a broker-dealer subject to the SEC's best-interest standard for retail recommendations, or by an insurance agent subject to state suitability rules, and the same conversation can sit under more than one of those regimes or under none of the retirement-specific ones. The compensation attached to the recommendation does not change whether a duty applies, but it is the thing the duties are there to manage: a recommendation that moves money into a product paying the recommender is the fact pattern all three rulemaking attempts were aimed at. Because the regimes differ, the useful question is not "is my advisor a fiduciary?" but "under which rule, for this recommendation, and how is the person paid for it?" Both halves of that are answerable in writing before any money moves.

Applying the surviving test to a specific recommendation runs in order, and the second step is where most one-time recommendations stop:

1. Is it advice about investments? A recommendation as to the value of securities or other property, or as to the advisability of buying, selling or investing in them.

2. Is there discretion? If the person has discretionary authority or control over buying and selling for the plan, that alone makes them a fiduciary and the remaining elements do not need to be reached.

3. If not, is the advice on a regular basis? A single conversation is not a regular basis.

4. Is there a mutual agreement, arrangement or understanding that the advice will serve as a primary basis for investment decisions?

5. Is the advice individualized to the particular needs of the plan?

If steps 3, 4 and 5 are all satisfied along with step 1, the person is an investment advice fiduciary under ERISA. If any one fails, they are not, under this route.

There is no worked dollar example on this page, and the reason is worth stating: fiduciary status turns on the shape of the relationship rather than on any amount of money. The same recommendation about a $30,000 account and a $3,000,000 account is tested identically.

Pros

• The surviving test is old, litigated and reasonably predictable, which is worth something after a decade in which the governing standard changed twice and then changed back.
• The exemption that permits conflicted compensation for genuine investment advice fiduciaries is intact, with its conditions unchanged from 2020.
• The Department stated plainly that its own preamble guidance is no longer reliable, which is more useful to a reader than leaving superseded guidance in circulation.
• Nothing in this history removed any other duty. The securities-law standards for advisers and brokers, and state insurance rules, operate independently of it.

Cons

• The gap the two rulemakings were aimed at is still open: a one-time recommendation to move a retirement balance often fails the regular-basis and primary-basis elements, so ERISA fiduciary status does not attach to the single largest decision many households make.
• A reader researching this subject will find a great deal of confidently written material describing the 2016 or 2024 rules as current. Both are gone.
• Because the preamble to the exemption is treated as vacated, guidance people relied on for rollover advice has been withdrawn without being replaced.
• Which standard applies now depends on who is speaking and in what capacity, which is a poor design from the point of view of the person receiving the recommendation.