On March 20, the U.S. Department of Labor (DOL) officially closed the book on its 2024 “Retirement Security Rule,” a regulation that would have expanded the definition of a retirement investment “fiduciary” (that is, someone legally required to act in a client’s best interest) under the Employee Retirement Income Security Act of 1974 (“ERISA”). The DOL published a notice in the Federal Register formally implementing the courts’ earlier orders striking down the rule. The biggest takeaway is that those making infrequent, often one-off, recommendations to retirement investors will not be subjected to the fiduciary standard under ERISA. Whether a financial institution and its representatives are acting as ERISA fiduciaries is a critical compliance and risk management question. Fiduciary status triggers both the prohibited transaction rules (and their related exemptions) and, for interactions with ERISA-covered plans, strict statutory fiduciary duties. However, registered investment advisors, broker-dealers, and state licensed insurance agents will still be subject to the fiduciary (or fiduciary-like) standards governing their regular businesses.

Under Section 3(21) of ERISA and Section 4975(e) of the U.S. Internal Revenue Code, a person is considered a “fiduciary” with respect to an ERISA plan or an IRA if the person renders “investment advice” for a fee or other compensation, direct or indirect, or has any authority or responsibility to do so. Under the 1975 Five-Part Fiduciary Test, a person is considered to be providing “investment advice” for these purposes only if the person: (1) renders advice to the ERISA plan or IRA as to the value of securities or other property, or makes recommendations as to investing in, purchasing or selling securities or other property, (2) on a regular basis, (3) pursuant to a mutual agreement, arrangement, or understanding with the ERISA plan, the ERISA plan fiduciary or the IRA owner that, (4) the advice will serve as a primary basis for investment decisions with respect to the ERISA plan’s or IRA’s assets, and (5) the advice will be individualized based on the particular needs of the ERISA plan or IRA.  All five narrow prongs of the test must be met in order for advice to be considered “investment advice.”

The DOL’s Retirement Security Rule, finalized in April 2024 under the Biden administration, sought to broaden ERISA’s fiduciary standards by replacing the longstanding Five-Part Fiduciary Test with a wider definition—one that captured even one-time recommendations (such as 401(k) rollover advice) rather than requiring ongoing advice relationships. The rule faced immediate legal challenges from industry groups, who argued it exceeded DOL’s authority and mirrored a 2016 rule the Fifth Circuit had already struck down. Two Texas federal courts issued nationwide stays in mid-2024, and the Supreme Court’s Loper Bright decision—which eliminated judicial deference to agencies’ statutory interpretations—further weakened the rule’s footing. After the new administration took office in January 2025, the DOL dropped its defense, and the appeal was dismissed in November 2025.

Both district courts subsequently vacated the rule in March 2026, and the DOL published notice in the Federal Register on March 20, 2026, to update the Code of Federal Regulations accordingly. As a result of the vacatur, the DOL’s original 1975 Five-Part Fiduciary Test for determining investment advice fiduciary status is now fully restored as the operative standard. The DOL stated it has no current plans to issue new regulations on this topic through the standard public rulemaking process but noted it may still issue additional guidance or relief to ease the transition. The Trump administration’s Spring 2025 regulatory agenda had previously indicated the DOL planned to issue a new final rule on this topic by May 2026, one that “will ensure that the regulation is based on the best reading of the statute” and is responsive to executive orders calling for deregulation, though it remains to be seen whether that timeline will hold.

But professional advisors should still be mindful of other regulations that might govern their recommendations. Registered investment advisors will still be subject to the fiduciary standards imposed by the SEC under the Investment Advisors Act of 1940, while broker-dealers are subject to Regulation Best Interest (Reg BI) and will face scrutiny from both the SEC and the Financial Industry Regulatory Authority (FINRA). And several state statutes impose similar obligations on various financial advisors, such as insurance agents.