Question: Did the vacatur of the U.S. Department of Labor’s 2024 fiduciary rule eliminate rollover compliance obligations for investment advisers?
Answer: Not exactly — the 2024 DOL fiduciary rule was vacated, but rollover obligations did not disappear.
The vacatur has created some confusion, particularly around whether a recommendation by an investment adviser to roll over assets from a retirement plan to an individual retirement account (IRA) is still subject to fiduciary standards. In reality, the vacatur did not eliminate the regulatory framework — it shifted it back to a more familiar, but still nuanced, structure.
For ERISA purposes, the analysis reverts to the longstanding 1975 five-part test for investment advice fiduciary status. As a result, some rollover recommendations may fall outside ERISA, while others — particularly those involving an existing investment advisory relationship — may still trigger fiduciary and related compliance obligations depending on the facts.
Here’s how this looks in practice:
1. What Changed?
Federal courts in Texas vacated the Department of Labor’s 2024 Retirement Security Rule, and the U.S. Court of Appeals for the Fifth Circuit subsequently dismissed the DOL’s appeal, allowing the vacatur to stand. On March 17, 2026, the DOL published a final rule formally removing the 2024 rule from the Code of Federal Regulations and officially restoring the 1975 five-part test for determining ERISA fiduciary status.
As a result, the attempted expansion that would have treated many one-time rollover recommendations as fiduciary advice is no longer in effect.
Importantly, in connection with the final rule, the DOL also declared the entire preamble to Prohibited Transaction Exemption 2020-02 (PTE 2020-02) “no longer reliable.” The DOL explained that the courts’ vacaturs left too much ambiguity regarding what portions of the preamble remained valid, making it necessary to withdraw the preamble in its entirety. The exemption itself, however, remains in effect.
2. What Did Not Change?
Rollover recommendations may still be subject to ERISA fiduciary standards — but only where the 1975 five-part test is satisfied.
This is a narrower, fact-specific framework. Many one-time rollover recommendations are unlikely to meet the test. However, the analysis is materially different where there is an existing investment advisory relationship.
For example, if an adviser is already providing investment advice to a retirement plan or its participants:
- The adviser is not acting as a “one-off” salesperson
- The rollover recommendation is significantly more likely to satisfy the five-part test
- The recommendation may be treated as ERISA fiduciary advice, particularly where there is an expectation that the advice will serve as a primary basis for investment decisions
In those cases, if the adviser receives compensation that would otherwise be prohibited (e.g., advisory fees on IRA assets), reliance on PTE 2020-02 may be required. Although the DOL has declared the PTE’s preamble no longer reliable, the exemption’s operative requirements remain in effect, including:
- Investor acknowledgment
- Best interest analysis
- Written documentation
- Annual retrospective review
In other words, the vacatur does not eliminate rollover-related compliance obligations where an ongoing advisory relationship exists. It does, however, create some uncertainty about the scope of PTE 2020-02’s application given the loss of the preamble guidance. Advisers should work with ERISA counsel to evaluate their specific facts.
3. SEC Expectations Still Apply Regardless
Separate and apart from the DOL framework, rollover recommendations remain subject to the fiduciary duty under the Investment Advisers Act (and, for broker-dealers, Regulation Best Interest).
The SEC’s Investment Adviser/Broker-Dealer Staff Bulletin specifically addresses rollover recommendations and emphasizes that advisers must have a reasonable basis to believe that both:
- The rollover itself, and
- The destination account
are in the retail investor’s best interest.
The Staff identifies factors that should generally be considered, including:
- Costs and fees
- Level of services
- Features of the existing plan (including costs)
- Available investment options
- Ability to take penalty-free withdrawals
- Required minimum distributions
- Creditor and legal protections
- Employer stock considerations
The SEC also makes clear that:
- It will be difficult in most cases to demonstrate compliance without documenting the basis for the recommendation, and
- Advisers must consider the alternative of leaving assets in the employer’s plan, where that option exists
You are encouraged to review the bulletin in full: SEC Staff Bulletin — Section 4: Retirement Account Rollover Recommendations
Bottom Line
- The 2024 DOL fiduciary rule is gone, but rollover obligations did not disappear
- The DOL’s March 17, 2026 final rule formally reinstated the narrower 1975 five-part test and declared the PTE 2020-02 preamble no longer reliable — but the exemption itself remains in effect
- The five-part test still captures certain rollover scenarios — especially where the adviser already serves the plan or participant
- Even where ERISA does not apply, SEC fiduciary obligations continue to govern rollover recommendations
- In practice, robust best interest analysis and documentation remain essential
Practical Takeaway
The vacatur narrows when ERISA applies — but it does not reduce regulatory risk around rollover recommendations. In most cases, the safest approach remains the same: perform and document a thorough, client-specific best interest analysis.
Important Disclosure
The information contained in this post is general in nature intended for educational purposes only and is not a comprehensive analysis of this topic. This is merely a summary and does not necessarily include all material facts from the proceeding. This post is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation. Please consult with legal counsel and refer to the U.S. Department of Labor and the applicable securities regulator’s published guidance for more details about the topics referenced above. For more information about the limitations of this blog post and information on our website, please see our Disclosures webpage.
Posted by Bryan Hill
Labels: DOL, IRA Rollover, SEC
