The DOL Reverts to 1975: What the Retirement Security Rule Vacatur Means for Rollover Recommendations, PTE 2020-02, and Your Compliance Program

TL;DR

• March 18, 2026: The DOL published Federal Register notice 2026-05492 acknowledging a court vacatur of the 2024 Retirement Security Rule — investment advice fiduciary status under ERISA now reverts to the 1975 five-part test
• Under the 1975 test, all five prongs must be met — including “regular basis” — which means a one-time rollover recommendation from a broker generally does not create ERISA fiduciary status
• PTE 2020-02 was not vacated and remains in effect; firms that already built PTE 2020-02 compliance programs should not dismantle them
• SEC fiduciary duty for RIAs and Regulation Best Interest for broker-dealers are unaffected — both remain in force under the SEC’s parallel authority
• The DOL is expected to begin new rulemaking; compliance programs should document the reversion and avoid dismantling controls before successor rules are finalized

The DOL’s attempt to expand the definition of “investment advice fiduciary” under ERISA had a run of about a year before the courts ended it. The 2024 Retirement Security Rule — the latest iteration of a DOL project that has been through multiple rounds of proposal, finalization, litigation, and withdrawal — was vacated. On March 18, 2026, the DOL published a formal notice in the Federal Register acknowledging the court’s ruling. The 1975 five-part test is back.

For compliance professionals who spent the past two years building disclosure frameworks, documentation workflows, and rollover recommendation review processes around the 2024 rule, this creates an immediate problem: you now have a compliance program calibrated to a legal standard that no longer exists.

The instinct to strip it out and revert to pre-2024 practices is understandable. It’s also the wrong move. Here’s why — and what to actually do.

What the 2024 Rule Was, and Why It Was Vacated

The 2024 Retirement Security Rule attempted to resolve a tension that regulators and advocates have been arguing about for decades: whether broker-dealers, insurance agents, and other financial professionals who give retirement account advice — particularly rollover recommendations — should be treated as ERISA fiduciaries subject to the Employee Retirement Income Security Act’s prohibited transaction rules.

Under ERISA, fiduciaries cannot receive compensation that creates a conflict of interest unless a prohibited transaction exemption (PTE) applies. The problem the DOL was trying to address: the 1975 five-part test — the existing standard — was so narrow that it excluded most one-time rollover recommendations from fiduciary treatment, even though those recommendations involved moving potentially hundreds of thousands of dollars and often generated significant compensation for the recommending advisor.

The 2024 rule broadly expanded the definition to capture a wider range of advice relationships, including one-time rollover recommendations. Federal courts, applying the reasoning of Loper Bright (the Supreme Court’s 2024 decision limiting Chevron deference to agency interpretations of ambiguous statutes) and reading the 1975 regulatory history, found the expansion exceeded the DOL’s interpretive authority. The courts vacated the rule.

The DOL acknowledged the vacatur in its March 18, 2026 Federal Register notice and declined to contest the ruling.

The 1975 Five-Part Test Is Back — All of It

The reversion to the 1975 test is not a minor technical adjustment. It materially changes who qualifies as an ERISA investment advice fiduciary and which transactions are subject to the prohibited transaction framework.

Under the 1975 regulation, a person is an investment advice fiduciary only when they satisfy all five prongs:

Prong 1 — Value or recommendation: The person renders advice regarding the value of securities or other property, or makes recommendations on investing in, purchasing, or selling securities.

Prong 2 — Regular basis: The advice is rendered on a regular basis. Not occasionally. Not for a single transaction. Regular.

Prong 3 — Mutual agreement: There is a mutual agreement, arrangement, or understanding — express or implied — between the advisor and the plan or plan fiduciary that the advice will be given.

Prong 4 — Primary basis: The parties mutually understand that the advice will serve as a primary basis for investment decisions. Background input, market color, or general guidance that isn’t the primary driver of the decision doesn’t satisfy this prong.

Prong 5 — Individualized: The advice is individualized to the particular needs of the plan — not generic market commentary or educational information.

The critical prong for most rollover-related compliance programs is Prong 2. A broker-dealer representative who meets with a departing employee to discuss a 401(k) rollover — and never interacts with that person again in a professional capacity — typically does not meet the “regular basis” requirement. Under the 2024 rule, that rollover recommendation would have triggered fiduciary status. Under the 1975 test, it typically does not.

This is the gap the DOL was trying to close. The gap is back.

What Didn’t Change

Before compliance programs start unwinding, it’s worth cataloguing what the vacatur didn’t touch — because the practical answer is: quite a lot.

PTE 2020-02 Remains in Effect

Prohibited Transaction Exemption 2020-02 — “Improving Investment Advice for Workers & Retirees” — allows broker-dealers, RIAs, and insurance companies to receive otherwise-prohibited compensation when they do satisfy ERISA fiduciary status, provided they comply with specified conduct standards: acting in the best interest of the retirement investor, charging no more than reasonable compensation, not making materially misleading statements, and maintaining a written policies and procedures program.

PTE 2020-02 was not vacated by the ruling that ended the 2024 Retirement Security Rule. The exemption remains available. Firms that built PTE 2020-02 compliance programs — disclosure forms, conflict-of-interest documentation, written policies, best-interest review processes — should continue operating under them when they are working with retirement accounts and do qualify as ERISA fiduciaries under the 1975 test.

The narrower question is whether the scope of transactions requiring PTE 2020-02 compliance has shrunk — because fewer recommendations now trigger ERISA fiduciary status in the first place. For most one-time rollover transactions handled by broker-dealers, the answer is: possibly yes.

SEC Fiduciary Standard and Reg BI Are Unchanged

RIAs registered with the SEC remain subject to the Investment Advisers Act’s fiduciary duty regardless of what the DOL does. The SEC’s fiduciary standard requires that an investment adviser act in the best interest of its clients — placing client interests first, disclosing and avoiding conflicts of interest where possible, and fully disclosing conflicts that cannot be avoided.

Broker-dealers remain subject to Regulation Best Interest, which requires that a recommendation be in the best interest of the customer at the time it is made, considering the customer’s investment profile. Reg BI has its own disclosure requirements (Form CRS), conflicts documentation, and compliance program requirements.

Neither of these regulatory frameworks is affected by the DOL rule vacatur. For the typical retail retirement investor interaction — an advisor recommending a fund, a rollover option, or a reallocation — the SEC’s framework continues to apply regardless of whether ERISA fiduciary status is separately triggered.

State Insurance Regulations

The DOL’s rule was partially motivated by a concern that insurance agents recommending fixed indexed annuities and other insurance products in rollover contexts were operating without any federal fiduciary standard. The vacatur does not affect state insurance regulations, which vary considerably but include best-interest standards in many states following the NAIC model. Those state obligations remain unchanged.

The Rollover Recommendation Landscape Now

The practical consequence of the reversion plays out most acutely in the rollover recommendation context — the exact scenario the 2024 rule was designed to capture.

Under the 1975 test, a broker-dealer representative advising a plan participant on a 401(k) rollover to an IRA typically does not satisfy the “regular basis” prong. That means:

• The recommendation is not a prohibited transaction under ERISA
• PTE 2020-02 compliance is not required to receive compensation for the recommendation
• The broker-dealer’s obligations flow from Reg BI (for securities) or state insurance law (for annuity products), not from ERISA’s prohibited transaction framework

For firms that built rollover-specific PTE 2020-02 documentation workflows — rollover recommendation forms, compensation disclosure processes, best-interest determination records — the legal compulsion for those workflows has narrowed. For pure broker-dealer representatives who were only making one-time rollover recommendations, ERISA fiduciary obligations may no longer apply to those transactions.

That said: the Reg BI obligation to act in the customer’s best interest at the time of the recommendation is still there. For rollover recommendations, FINRA and SEC examiners continue to scrutinize whether broker-dealer representatives adequately analyzed whether an IRA rollover was in a specific customer’s best interest compared to leaving funds in the plan, taking a lump sum, or other alternatives. That analysis obligation comes from Reg BI and SEC examination priorities, not ERISA — and it is unaffected by the vacatur.

What to Do With Your Existing Compliance Program

Three actions your compliance and legal teams should complete within the next 60 days:

1. Document the regulatory reversion. Write a memo — or a formal compliance issue — noting that the 2024 Retirement Security Rule has been vacated, the effective date of the reversion, the impact on the firm’s fiduciary status analysis, and which transactions are now assessed under which standard. This documentation matters because: (a) you will need to explain your compliance program decisions to examiners; (b) the DOL is expected to initiate successor rulemaking, and you’ll need a baseline to work from; and (c) any audit of your compliance program needs to show deliberate decision-making, not passive drift.

The Issues Management Tracker Template is a practical tool for logging this type of regulatory change as a tracked item — with the original finding, assigned owner, response decision, and closure date — rather than letting it sit in an email thread.

2. Assess controls against their actual legal basis. For each element of your 2024 Retirement Security Rule compliance program, identify whether it is still required by: (a) PTE 2020-02, (b) Reg BI, (c) SEC fiduciary duty, (d) state law, or (e) firm policy. Controls that remain required under any of those authorities should be maintained. Controls that were solely required by the 2024 rule — and have no other legal or policy basis — can be assessed for reduction, but the decision should be documented and approved, not simply abandoned.

3. Don’t dismantle PTE 2020-02 programs prematurely. Even under the 1975 test, there are situations where ERISA fiduciary status is established — RIAs with ongoing advisory relationships with plan fiduciaries, advisors who provide recurring investment advice to plan clients on a regular basis, and others. For those relationships, PTE 2020-02 compliance is still required to receive conflicted compensation. If your firm’s compliance program addresses a genuinely ongoing advisory relationship, not just one-time rollover recommendations, the fiduciary analysis under the 1975 test may still come out the same way it did under the 2024 rule.

Expect a Successor Rule

The DOL has not abandoned the underlying policy objective. The vacatur was a legal defeat, not a change in direction. DOL will initiate new rulemaking — the question is when and in what form, which will depend in part on the regulatory posture of the administration in place when rulemaking begins.

The pattern here follows the trajectory of DOL’s previous fiduciary rule attempts: the 2016 fiduciary rule was also vacated, the DOL regrouped and produced PTE 2020-02, and then the 2024 Retirement Security Rule. Each cycle produced a new regulatory instrument that compliance programs then had to absorb.

Compliance programs that dismantle controls during this gap period face a compounding problem: when a successor rule arrives, they will need to rebuild. And if an examination occurs during the gap — under Reg BI, which is very much still in force — examiners reviewing rollover recommendation practices will look at whether the firm maintained documented best-interest processes regardless of the DOL standard’s current status.

The SEC’s 2026 conflicts of interest risk alert made clear that examiners are focused on compensation-driven conflicts in investment advice — exactly the scenario that DOL fiduciary regulation was designed to address. The SEC’s examination priorities don’t pause because the DOL rule was vacated. If anything, the gap in ERISA coverage is likely to attract more SEC attention to rollover recommendation practices under Reg BI, not less.

So What?

The vacatur of the 2024 Retirement Security Rule is real, and its scope is real: rollover recommendations from broker-dealers that don’t involve an ongoing advisory relationship generally no longer trigger ERISA fiduciary status. That changes the legal analysis. It doesn’t change what a sound compliance program looks like for firms that are serious about retirement investor protection — and it doesn’t change what SEC examiners will look for when they evaluate rollover recommendation practices under Reg BI.

The firms that come through the next examination cycle in the best position are the ones that treated the 2024 rule as an opportunity to build durable retirement advice infrastructure — documentation, conflict disclosure, best-interest analysis — rather than a compliance cost to minimize. That infrastructure doesn’t become less useful because the specific DOL authority behind it was vacated.

Document the change. Maintain the controls that have independent authority. Track the rulemaking cycle. Don’t dismantle your rollover program in the gap between a vacated rule and whatever succeeds it.

External references:

• Federal Register Notice 2026-05492: Retirement Security Rule — Notice of Court Vacatur (DOL, March 18, 2026)
• DOL Fiduciary Rule Vacated by Court: Callan Analysis (Callan, 2026)
• DOL Vacates Fiduciary Investment Advice Rule (International Foundation of Employee Benefit Plans, 2026)
• New DOL Fiduciary Rule Stayed: What Advisors Recommending Rollovers Should Do Now (Faegre Drinker)
• DOL Retirement Security Rule Fact Sheet (U.S. Department of Labor, EBSA)