The back and forth of the fiduciary rule over the years has caused confusion for advisors and plan sponsors in fiduciary roles. Since the term “investment advice fiduciary” was defined in 1975 under the Employee Retirement Income Security Act of 1974 (ERISA), there have been various proposed and final regulations released to update the language after legal challenges due to mixed support from recent presidential administrations. The regulations have attempted to account for the evolving changes in investment environments and pressures on the retirement industry about fiduciary compensation and efforts to protect retirement plan participants.
On March 18, 2026, a Department of Labor (DOL) Employee Benefits Security Administration (EBSA) news release advised that the department was removing the 2024 final rule, “Retirement Security Rule: Definition of an Investment Advice Fiduciary.” The March 20, 2026 release of the Notice of Court Vacatur is the DOL’s final rule that removes the 2024 retirement security rule for fiduciaries. Effective April 20, 2026, the final rule confirms the DOL is restoring the 1975 definition of investment advice fiduciary and the five-part test.
What Is the Five-Part Test?
The framework of the five-part test was created in 1975 by ERISA to clarify if a professional giving advice and earning compensation, commission or other fees is an advisor who makes recommendations and is therefore a fiduciary. Each part of the test is required to be satisfied to be considered a fiduciary.
- Specific investment recommendations must be made.
- The person making the recommendation must receive direct or indirect compensation.
- The recommendations must be based on the specific needs of the plan.
- The advice must be a primary basis for plan investment decisions.
- The advice must be provided on a regular basis.
Questions around the fiduciary status of advisers tend to occur based on whether a professional provides ongoing investment advice or if the advice is a one-time recommendation. Consider the situation when a departing employee wants to complete a 401(k) rollover to an individual retirement account (IRA) and obtains advice, either from an individual advisor or through a call center (with a 401(k) service provider, for example). In this situation, the advisor may not be acting as a fiduciary if they aren’t providing the employee with continuous advice.
In addition to the five-part test, the amended Prohibited Transaction Class Exemption (PTE) 2020-02 continues to exempt investment professionals from certain types of compensation arrangements if various conditions are met. The DOL has updated its website, “Understanding the Retirement Security Rule: For Investment Advice Providers,” with the latest information in a Q&A format.
Next Steps
The DOL news release states that there are “no current plans to engage in notice and comment rulemaking” but that they would “consider whether any additional guidance, including transitional or non-enforcement relief, is appropriate.” Daniel Aronowitz, Assistant Secretary of Labor for Employee Benefits Security, said, “The challenged regulation wrongly sought to impose ERISA fiduciary status on securities brokers and insurance agents when there was not a relationship of trust and confidence.”
Other sources have indicated the possibility of further discussions. Proskauer indicates that “we do not believe this is the end of the saga: we expect additional proposals at some point in the future”.
In a 401(k) Specialist article, Lisa Gomez, former head of the EBSA during the Biden Administration, says that the five-part test “is a decades-old framework designed for a very different marketplace than the one retirement savers experience today—before the rise of rollovers in a retirement saver’s decision making process, before the increase in complicated advice models and complex investment products, and before millions of Americans were asked to navigate retirement largely on their own.” She considers the DOL statement “appropriate as an invitation to continue the discussion.”
As a result, plan sponsors may want to clarify their contracts and arrangements with their service providers to understand who is operating as a fiduciary and who is not.
The International Foundation will be monitoring the DOL for additional information released on this topic. For more background about the fiduciary rule and how we arrived here in 2026, please view our blog, “How the DOL’s Proposed Fiduciary Rule Would Affect Retirement Plans.” In addition, find more information on this topic in our Fiduciary/Investment Advice Regulations InfoQuick, available to members.
Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.
