10.5 ERISA Fiduciary Status and Current DOL Rules

Separate the legal frameworks

Retirement advice can be governed by securities law, ERISA, the Internal Revenue Code, state insurance law, and professional standards. A person may satisfy one definition without satisfying another. Calling a professional a “financial adviser” or a “CRPC designee” does not by itself determine ERISA fiduciary status.

ERISA establishes standards for many private employer benefit plans. Governmental plans and certain church plans are outside important ERISA Title I provisions. IRAs generally are not ERISA Title I plans, but the Internal Revenue Code's prohibited-transaction rules can apply. Identify the account and relationship before applying a plan rule to an IRA.

Fiduciary functions

A person can be a fiduciary to the extent they exercise specified discretionary authority over plan management or administration, or authority or control over plan assets. Investment-advice fiduciary status follows its own definition. A person's job title is less important than the function performed.

For a plan fiduciary, central obligations include acting for participants and beneficiaries, using prudence, diversifying where appropriate, paying reasonable expenses, and following plan documents insofar as consistent with ERISA. A plan document cannot authorize violation of the statute. Delegating a function can require prudent selection and monitoring rather than eliminate every responsibility.

For example, a committee deciding which funds appear in a 401(k) menu should evaluate investment roles, risks, and costs. A payroll clerk performing routine ministerial processing does not become an investment fiduciary merely by entering contribution data. Discretion and control must be analyzed in context.

The 2024 rule is not the current operative rule

DOL's current official rule page reports that the 2024 Retirement Security Rule and associated exemption amendments were vacated, with a notice of court vacatur published March 20, 2026. Do not teach the 2024 rule's proposed broader rollover coverage or its original effective date as the current law.

The restored investment-advice framework uses the longstanding five-part test. In simplified form, it asks whether the person provides advice or recommendations concerning securities or other property values or investment decisions, for a fee or other compensation, on a regular basis, under a mutual agreement or understanding that the advice will serve as a primary basis for plan investment decisions and will be individualized to the plan.

All elements matter. Read the applicable regulation and controlling legal developments. A one-time recommendation does not automatically satisfy the regular-basis and mutual-understanding elements merely because it concerns retirement money. Conversely, a continuing advice relationship should not be relabeled “education” solely to avoid an obligation.

Education versus advice

General explanations of plan features, asset classes, risk, and distribution concepts can differ from individualized investment recommendations. A counselor presenting neutral information should avoid quietly steering a particular client toward a compensated transaction while asserting that no advice was given.

Consider two interactions. A seminar explaining what an IRA rollover is may be educational. A personalized recommendation to move a participant's specific balance into the professional's managed IRA raises securities-law duties and requires separate ERISA/Code fiduciary analysis. The second interaction is not automatically resolved by placing a disclaimer on a slide.

Prohibited transactions and exemptions

When a fiduciary uses its position to obtain conflicted compensation or engage in specified self-dealing, a prohibited-transaction issue can arise. An exemption can permit an otherwise prohibited transaction if its conditions are satisfied. The existence of an exemption does not mean the transaction is automatically lawful.

The original PTE 2020-02, where applicable, provides a route for certain fiduciary investment-advice compensation subject to impartial conduct and other conditions. Those include best-interest advice, reasonable compensation, no materially misleading statements, required disclosures and acknowledgment, policies, and review procedures. The vacatur of later amendments should not be confused with the proposition that every prior exemption disappeared.

A rollover file should document why the recommendation serves the client, with relevant comparisons of investments, fees, services, distribution access, and alternatives. The analysis cannot be replaced with “the IRA has more choices” if the client's plan already provides suitable low-cost investments and needed withdrawal access.

Integrating Reg BI and professional conduct

A covered retail broker recommendation remains subject to SEC Reg BI even if it does not meet the ERISA five-part test. An investment adviser also owes its applicable fiduciary duties within the engagement. A professional code can add obligations but cannot weaken a regulator's rule.

Suppose a broker recommends rolling a 56-year-old's employer plan into an IRA without considering the loss of the separation-from-service additional-tax exception. The client harm and Reg BI analysis do not disappear because the broker disputes ERISA fiduciary status. Identify each legal basis separately and document the actual facts.

Exam approach

First identify the account and employer type. Next identify the person's function, discretion, compensation, and advice relationship. Apply the current definition, then analyze conflicts and any exemption. Finally check the independent securities, insurance, and credential obligations. Avoid treating a stayed, proposed, or vacated rule as operative merely because an older official fact sheet remains online.

Checked October 19, 2026: DOL current rule status and vacatur notice.

Decision checkpoints