DOL revives narrower definition of fiduciary investment advice 

May 7, 2026

For the second time this decade, the Department of Labor (DOL) has officially reinstated the agency’s longstanding regulatory definition of ERISA fiduciary investment advice from 1975. This action follows two court rulings vacating a Biden-era regulation that would have significantly expanded that definition, as well as accompanying changes to seven prohibited transaction exemptions (PTEs). DOL also revived its 2005 advisory opinion providing that one-time rollover recommendations generally aren’t investment advice under the 1975 definition. DOL took this step to resolve a separate lawsuit challenging the first Trump administration’s broader interpretation of rollover advice in the preamble to PTE 2020-02.

Under ERISA, anyone who provides investment advice for a fee or compensation is a fiduciary. A fiduciary must act prudently and solely in the interest of the plan and its participants — and can be held personally liable for failing to do so. ERISA also prohibits fiduciaries from using their authority to receive consideration on account of their fiduciary status, unless they comply with an applicable PTE. This article provides an overview of the current state of guidance on ERISA investment following DOL’s most recent actions.

While the expanded definition of fiduciary investment advice in the 2024 regulation never took effect due to court orders staying its implementation, DOL formally reinstated the agency’s longstanding regulatory definition from 1975. That regulation establishes a bright-line test to determine whether a person is an investment advice fiduciary. Under that test, individuals and companies act as investment advice fiduciaries only if they receive direct or indirect compensation for giving advice about the value of securities or other property of a plan or for making recommendations to the plan about investing in, purchasing, or selling securities or other property, and meet either of these conditions:

• Exercise discretionary authority or control over purchasing or selling securities or other property for a plan
• Render advice on a regular basis under a mutual agreement, arrangement, or understanding (whether written or otherwise) that the advice will serve as a primary basis for investment decisions regarding plan assets and be individualized for the plan

Sponsors can continue providing nonfiduciary investment education. Sponsors and their vendors can continue to provide nonfiduciary investment education to participants in accordance with Interpretive Bulletin (IB) 96-1. However, the preamble to the 2024 regulation indicated that DOL would also treat additional categories of investment education from the previously vacated 2016 fiduciary rule — including information about systemic withdrawal payments, annuitization, and guaranteed minimum withdrawal benefits — as investment education. DOL hasn’t specified whether it continues to maintain this view in the context of the 1975 regulation.

One court ruling that vacated the 2024 regulation also vacated the related amendments to seven PTEs. To implement that ruling, DOL reinstated the text of PTE 2020-02 as originally adopted during the first Trump administration. DOL also updated its website to reflect the pre-2024 text of the six other PTEs amended in connection with the Biden-era rule.

PTE 2020-02 remains available for financial institutions providing advice. PTE 2020-02 allows regulated financial institutions and their representatives to receive certain compensation for investment advice reflecting a retirement investor’s best interest. However, sponsors can’t rely on this PTE to receive compensation for giving investment advice to their participants: PTE 2020-02 excludes situations where the investment advice provider is an employer of employees covered by the plan.

• Entire preamble to PTE 2020-02 eliminated. Although DOL reinstated the original version of PTE 2020-02, the agency also eliminated the PTE’s entire preamble (which explained how those relying on the PTE could meet many of its conditions). This action implements a separate 2025 court ruling vacating a portion of the PTE’s preamble that said one-time rollover recommendations are fiduciary advice under the 1975 regulation. While the court’s order only vacated portions of the PTE’s preamble, DOL explained that it believes “those vacated portions interrelate with matters and guidance in other portions of the preamble to such an extent that the Department is no longer confident in the soundness of the remaining portions of the preamble.”
• Related FAQ guidance still online. FAQ guidance on the PTE that mirrors some of the original preamble’s discussion remains posted on DOL’s website. This includes one FAQ reflecting the same interpretation of the 1975 regulation’s application to one-time rollover recommendations. However, this FAQ was previously vacated by another federal court and is no longer operative (see Court overturns DOL guidance on rollover advice (February 28, 2023)).

More restrictive interpretation of rollover advice reinstated. DOL also reinstated a 2005 advisory opinion — previously withdrawn by the Obama administration in 2016 — that provides guidance on whether participant rollover recommendations are advice under the 1975 regulation. Under this guidance, as long as the person making the recommendation isn’t already a plan fiduciary, recommending that a participant take a distribution generally wouldn’t be fiduciary investment advice, even if that recommendation includes advice on investing the proceeds. Sponsors should be aware that plan vendors may decide to modify their participant service models in response to this change:

• Vendors who previously accepted fiduciary status in connection with participant rollover recommendations may decline to do so going forward (and cease relying on PTE 2020-02)
• Vendors who curtailed their support for rollover recommendations to avoid becoming fiduciaries may consider returning to pre-2016 participant service models

A news release accompanying DOL’s reinstatement of the 1975 regulation indicates that the agency “has no current plans to engage in notice and comment rulemaking” on the scope of fiduciary investment advice. However, the agency “will consider whether any additional guidance, including transitional or non-enforcement relief, is appropriate.”

• Definition of an investment advice fiduciary (Federal Register, March 20, 2026)
• News release, (DOL, March 18, 2026)
• American Council of Life Insurers v. DOL, 4:24-cv-00482-O (N.D. Tex. March 17, 2026)
• Federation of Americans for Consumer Choice v. DOL, 6:24-cv-00163-JDK (E.D. Tex. March 12, 2026)
• Federation of Americans for Consumer Choice v. DOL, 3:22-cv-00243-K-BT (N.D. Tex. July 9, 2025)
• Advisory opinion 2005-23A (December 7, 2005)

• DOL drops appeal of court rulings blocking 2024 fiduciary rule (January 23, 2026)
• What plan sponsors should know about DOL’s final fiduciary rule (June 20, 2024)
• Court overturns DOL guidance on rollover advice (February 28, 2023)
• Investment advice PTE takes effect as DOL hints at more changes (February 17, 2021)
• DOL finalizes more fiduciary investment guidance (December 22, 2020)