2023 DOL Fiduciary Rule Developments: Recent Cases, Five-Part Test, Rollover Advice, Next Steps for Advisers

The DOL's fiduciary rule has undergone many revisions and challenges over the last few years. The DOL’s rule changes in 2016 expanded the definition of "investment advice," resulting in additional entities being deemed fiduciaries. Under that rule, essentially any recommendation made to a plan or its participants to take a particular course of action was considered fiduciary advice subject to few exclusions. Although those rule changes were overturned by the courts, the DOL has continued to try and expand the scope of the fiduciary rule.

Recent DOL guidance provided that recommendations to take a rollover from a plan and guidance on how to invest rollover assets as well as the selection of investment managers and investment account arrangements would often be considered fiduciary advice under the DOL fiduciary rule. However, recent cases applying the five-part test cast doubt on the application of the DOL fiduciary rule.

In American Securities Association v. U.S. Department of Labor, et al., the court decided that the "regular basis" element of the five-part test should be applied on a plan-by-plan basis as such relates to rollover investment advice. The court stated that assets cease to be assets of an ERISA plan after the rollover is complete and any future provision of advice is no longer to that ERISA plan. This case marks another vacatur that a federal court has issued in connection with the DOL's interpretation of the investment advice fiduciary rule.

Benefits counsel must understand the impact of the rule on retirement plan sponsors, advisers, and service providers to advise their clients on compliance and implementation best practices.

Listen as our panel discusses recent court decisions that significantly impact the application of the DOL fiduciary rule, courts' application of the five-part test to determine fiduciary status, and key considerations for financial advisers and plan sponsors.