Employee Benefits Security Administration restores the 1975 five-part test for investment advice fiduciaries after courts vacated its 2024 rule
As of our last check on November 2, 2026, this is in effect, since April 20, 2026.
We check the Federal Register daily for later actions. We check federal court opinions for rulings on published rules weekly, on Mondays. A ruling can take time to reach us, so not finding one here does not mean there is none.
In short
- What changed
- The Employee Benefits Security Administration (EBSA) is removing its 2024 investment advice fiduciary rule, which courts vacated, and putting the 1975 five-part test back in the Code of Federal Regulations (CFR), effective April 20, 2026. It also republishes Prohibited Transaction Exemption (PTE) 2020-02 without its 2024 amendments and says the exemption's entire preamble is effectively vacated.
- Who's affected
- Employers that sponsor retirement or other plans covered by the Employee Retirement Income Security Act (ERISA), plan fiduciaries, and the financial firms and advisers that give investment advice to plans and individual retirement accounts (IRAs). The document sets no size threshold.
- What to do
- This rule creates no new duties for employers: EBSA says it affects no legal rights or obligations, because the 2024 rule never took effect. Benefits teams may want to stop relying on the PTE 2020-02 preamble, including its rollover advice guidance, which EBSA now treats as vacated.
What changed
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From the sourceSUMMARY
This document implements the judicial vacatur of the Department's 2024 final rule defining who is a ``fiduciary'' under the Employee Retirement Income Security Act of 1974.
The rule carries out the court vacatur of the Department of Labor's 2024 rule defining who is an investment advice fiduciary under ERISA.
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From the sourceSupplementary Information, Part I.4
this final rule merely conforms the text in the CFR to reflect the mandate of the courts' decisions by removing the 2024 Fiduciary Rule from the CFR and replacing it with the Five-part Test Regulation.
The rule removes the 2024 Fiduciary Rule from the CFR and replaces it with the earlier five-part test regulation.
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From the sourceSupplementary Information, Part I.3
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 2024 Fiduciary Rule never took effect, because courts stayed its effective date, so the five-part test was never replaced in practice.
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From the source29 CFR 2510.3-21(c)(1)(ii)(B)
on a regular basis to the plan pursuant to a mutual agreement, arrangement or understanding, written or otherwise ... that such services will serve as a primary basis for investment decisions with respect to plan assets
Under the restored test, an adviser without discretionary authority is an investment advice fiduciary only if it gives advice on a regular basis under a mutual agreement that the advice will be a primary basis for plan investment decisions, among other conditions.
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From the sourceSupplementary Information, Part I.3
Part II of this document is republishing in full the text of PTE 2020-02, without the amendments adopted on April 25, 2024.
The document republishes the full text of PTE 2020-02 without the amendments adopted on April 25, 2024.
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From the sourceSupplementary Information, Part I.3
the Department, in this document, clarifies its view that the entire preamble of PTE 2020-02 is effectively vacated.
The Department of Labor states its view that the entire preamble of PTE 2020-02 is effectively vacated, not just the portions the courts struck.
Who is affected
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Our analysis29 CFR 2510.3-21(c)(1)
A person shall be deemed to be rendering ``investment advice'' to an employee benefit plan
Employers that sponsor ERISA plans are affected indirectly, because the restored definition decides which of their plan's advisers count as fiduciaries.
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From the sourcePart II, PTE 2020-02 Section I(a)
This exemption permits Financial Institutions and Investment Professionals who provide fiduciary investment advice to Retirement Investors to receive otherwise prohibited compensation
PTE 2020-02 lets financial institutions and investment professionals who give fiduciary investment advice receive compensation that would otherwise be prohibited, if they meet its conditions.
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From the sourcePart II, PTE 2020-02 Section V(k)
A participant or beneficiary of a Plan with authority to direct the investment of assets in his or her account or to take a distribution;
The investors protected by PTE 2020-02 include plan participants who direct their own investments or take distributions, and plan fiduciaries.
What it means in practice
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From the sourceSupplementary Information, Part I.3
This ministerial action reflects the judicial actions discussed above and affects no legal rights or obligations and imposes no costs.
The Department of Labor says this action affects no legal rights or obligations and imposes no costs.
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Our analysisSupplementary Information, Part I.3
stayed the effective date of the 2024 Fiduciary Rule, which left in place the prior regulatory text
Because the court stays left the five-part test in place, plan adviser relationships have been governed by the same test all along, so most plans should see little practical change.
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From the sourceSupplementary Information, Part I.3
Even though PTE 2020-02 has remained operative, its preamble is no longer reliable due to the courts' vacaturs in the 2022 litigation.
The Department of Labor says the PTE 2020-02 preamble is no longer reliable guidance.
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Our analysisSupplementary Information, Part I.2
Among other matters, the preamble provided guidance on when advice to roll over plan assets to an IRA would be considered fiduciary investment advice under the Five-part Test Regulation.
Guidance on when advice to roll plan assets into an IRA is fiduciary advice came from that preamble, so plan sponsors and fiduciaries can no longer point to it when evaluating rollover recommendations made to participants.
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Our analysisPart II, PTE 2020-02 Section I(c)(1)
The Plan is covered by Title I of ERISA and the Investment Professional, Financial Institution or any Affiliate is (A) the employer of employees covered by the Plan
An employer that is itself a financial institution, or an affiliate of one, cannot use PTE 2020-02 for advice to the ERISA plan covering its own employees.
What to do
Required
This final rule creates no new requirements for employers. EBSA says it only conforms the CFR to court orders and affects no legal rights or obligations. The conditions in the republished PTE 2020-02 apply to financial institutions and advisers that choose to rely on that exemption, not to employers as plan sponsors.
Worth considering
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Our suggestionPart II, PTE 2020-02 Section II(b)(1)
A written acknowledgment that the Financial Institution and its Investment Professionals are fiduciaries under Title I and the Code
Consider reviewing agreements with plan advisers and recordkeepers to confirm which providers acknowledge fiduciary status in writing for the advice they give your plan and participants.
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Our suggestionSupplementary Information, Part I.3
the Department, in this document, clarifies its view that the entire preamble of PTE 2020-02 is effectively vacated.
Consider updating plan committee materials or internal procedures that cite the 2024 Fiduciary Rule or the PTE 2020-02 preamble, since EBSA now treats that preamble as vacated.
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Our suggestionPart II, PTE 2020-02 Section I(c)(1)
The Plan is covered by Title I of ERISA and the Investment Professional, Financial Institution or any Affiliate is (A) the employer of employees covered by the Plan
If your company is a financial institution that advises its own employees' plan, consider confirming with counsel how the PTE 2020-02 employer exclusion affects that arrangement.
Open questions
The source leaves these open. We'll update this record if a later document answers them.
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Will the Department of Labor issue new guidance on when rollover advice counts as fiduciary investment advice under the five-part test?
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Where can plan sponsors find the pre-amendment versions of the other affected exemptions, such as PTE 84-24?
History
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Retirement Security Rule: Definition of an Investment Advice Fiduciary: Notice of Court Vacatur Source (opens in a new tab)