The Department of Labor’s 2024 Final Rule on Investment Advice in Private Sector Pension Plans and Individual Retirement Accounts

June 18, 2024 R48108

The Department of Labor’s 2024 Final Rule on
June 18, 2024
Investment Advice in Private Sector Pension
Elizabeth A. Myers
Plans and Individual Retirement Accounts
Analyst in Income Security

On April 25, 2024, the Department of Labor (DOL) issued a final regulation to redefine
John J. Topoleski
investment advice within private sector pension and retirement plans, which replaced regulations
Specialist in Income
issued in 1975 (“the 1975 rule”). Following the enactment of the Employee Retirement Income
Security
Security Act of 1974 (ERISA; P.L. 93-406), the 1975 rule defined investment advice using a five-

part test. To be held to ERISA’s fiduciary standard with respect to providing advice, an
individual had to (1) make recommendations on investing in, purchasing, or selling securities or

other property or give advice as to the value (2) on a regular basis (3) pursuant to a mutual
understanding with the plan or the plan fiduciary (4) that the advice would serve as a primary basis for investment decisions
and (5) would be individualized to the particular needs of the plan regarding such matters as, among other things, investment
policies or strategy, overall portfolio composition, or diversification of plan investments.
Under ERISA, a person who provides investment advice is a fiduciary. Redefining the term investment advice could affect
who is subject to this fiduciary standard. For example, under the five-part test, an individual had to provide advice on a
regular basis to be a fiduciary, which generally would not have included one-time recommendations such as an employer
seeking recommendations as to which options to include in its 401(k) plan investment menu. The change in definition
replaces the requirement that advice be given on a regular basis with a requirement that makes fiduciaries of financial
professionals who, among other conditions, provide investment recommendations as a regular part of their business. The final
rule is accompanied by amendments to a number of prohibited transaction exemptions (PTEs). PTEs allow fiduciaries to
engage in transactions that might otherwise be deemed to injure plans or plan participants (such as charging commissions for
products fiduciaries recommend).
Under the 1975 rule, financial professionals who provided services to retirement investors and retirement plans and whose
actions did not meet the five-part test were not fiduciaries and, thus, did not have to meet a fiduciary standard. However, their
recommendations may have been subject to other standards. For example, securities brokers and dealers must meet a best
interest standard, as found in the Securities and Exchange Commission’s (SEC’s) Regulation Best Interest. Insurance agents
who sell annuities regulated by the states are subject to state standards of conduct. Most states have adopted the National
Association of Insurance Commissioners (NAIC) Model Regulation. Under DOL’s final rule, brokers, dealers, and insurance
agents are generally considered to be fiduciaries when they provide recommendations that meet the definition of investment
advice in certain specified contexts involving a relationship of trust and confidence between the financial professionals and
retirement investors.
DOL first proposed broadening the definition of investment advice in October 2010. The proposed regulation generated much
controversy and, in September 2011, DOL announced that it would withdraw the proposed rule. DOL issued a revised
proposal in April 2015 that also generated considerable controversy. DOL issued a final rule on April 8, 2016, with an
effective date of June 7, 2016, and an applicability date of April 10, 2017. With the 2016 rule, DOL broadened the term’s
definition to capture activities that currently occur within pension and retirement plans but did not meet the 1975 definition of
investment advice. In March 2018, the U.S. Court of Appeals for the Fifth Circuit vacated the 2016 rule. The vacatur had the
effect of reinstating the five-part test. In July 2020, DOL implemented the vacatur of the 2016 rule. According to DOL, the
final rule “is far narrower than the previous rulemaking” because it “specifically focuses on whether the investment
recommendation can be appropriately treated as trust and confidence advice.”
In October 2020, DOL issued PTE 2020-02 which, as with previous PTEs, allows fiduciaries to conduct transactions that
would otherwise be prohibited. Investment advice fiduciaries who rely on PTE 2020-02 must comply with Impartial Conduct
Standards, which require them to provide advice that is in the best interest of retirement investors, charge no more than
reasonable compensation, and make no misleading statements about investment transactions. In addition, PTE 2020-02 noted
that rollover recommendations from an employer plan to an IRA could be considered investment advice if specified
conditions are met—for example, if the investment recommendation were expected to be part of an ongoing relationship. On
February 13, 2023, a federal district court struck down the portion of PTE 2020-02 related to the rollover recommendations,
and on June 30, 2023, a different federal district court recommended that the guidance related to rollover advice be vacated.
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DOL Conflict of Interest Final Rule

On November 3, 2023, DOL issued a proposed regulation that would redefine the term investment advice within private
sector pension and retirement plans. Following the release of the 2023 proposal, DOL received more than 20,000 comments
in the 60-day comment period. DOL held two days of public hearings on December 12 and December 13, 2023. On April 25,
2024, DOL issued the final regulation and amended PTEs. On May 15, 2024, resolutions were introduced in the House of
Representatives and the Senate that, under the Congressional Review Act, would overturn the final rule and amended PTEs.
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Overview
On April 25, 2024, the Department of Labor (DOL) adopted a final rule (2024 final rule) that
updates the definition of investment advice within employer-sponsored private sector pension
plans and individual retirement accounts (IRAs).1 Individuals who provide recommendations that
meet the definition of investment advice to plans (and their participants) that are covered by
pensions law as found in Title 29 of the U.S. Code (often called the Labor Code) are held to a
fiduciary standard. The fiduciary standard is a higher standard of conduct than that for
individuals who provide recommendations that do not meet the definition. Individuals who are
held to the fiduciary standard are required to act solely in the interests of plan participants and
beneficiaries. Therefore, updating the definition of investment advice to include recommendations
that are not currently considered investment advice might increase the number of individuals held
to this higher standard.
Background on Pensions and IRAs
Although most workers can expect to become eligible to receive Social Security benefits after the
age of 62, a number of tax-advantaged methods of preparing for retirement might also be
available to them.2 For example, their employers might sponsor pension plans, or the workers
might establish and contribute to IRAs to use as sources of income in retirement.
Pension plans can be classified along several dimensions. In defined benefit (DB) plans
(sometimes referred to as traditional pension plans), participants typically receive monthly
payments in retirement based on a formula that uses either (1) a combination of length of service,
accrual rate, and average of final years’ salary or (2) a flat dollar amount times the number of
months or years in the plan. Some plans offer participants the option to receive their benefits as
lump-sum amounts.
In defined contribution (DC) plans, workers are provided individual accounts funded by their own
contributions, contributions from their employers, or both. The funds in the account may accrue
investment earnings, which can then be used as a source of income in retirement. The type of DC
plan that an employer may offer depends on the type of employer (for example, the types of plans
offered by public sector employers are typically different from those offered by private sector
employers), as well as the employer’s choices regarding plan features (for example, private sector
employers have a number of types of DC plans they can offer). Examples of DC plans include
profit-sharing plans, money purchase plans, 401(k) plans, 403(b) plans, and employee stock
ownership plans (ESOPs).
IRAs are tax-advantaged accounts that allow individuals to save for retirement outside of
employer-sponsored plans or to roll over savings from employer-sponsored plans.3 Often

1 See DOL, Employee Benefits Security Administration (EBSA), “Retirement Security Rule: Definition of an
Investment Advice Fiduciary,” 89 Federal Register 32122-32258, April 25, 2024, https://www.federalregister.gov/
documents/2023/11/03/2023-23779/retirement-security-rule-definition-of-an-investment-advice-fiduciary.
2 For more information on Social Security, see CRS Report R42035, Social Security Primer, and for more information
on the tax treatment of retirement savings, see U.S. Congress, Joint Committee on Taxation, Present Law and
Background Relating to the Tax Treatment of Retirement Savings, 112th Cong., 2nd sess., JCX-32-12, April 13, 2012.
3 For background on IRAs, see CRS Report R46635, Individual Retirement Account (IRA) Ownership: Data and Policy
Issues, and CRS Report RL34397, Traditional and Roth Individual Retirement Accounts (IRAs): A Primer.
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individuals with savings in DC plans, or with lump-sum payments from DB plans, roll over their
savings to IRAs at job change or retirement.4
Federal Law for Private Sector Pension Plans and IRAs
To protect the interests of private sector pension plan participants and beneficiaries, Congress
passed the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406). ERISA is
included in the U.S. Code in both Title 26 (the Internal Revenue Code, or IRC) and in Title 29
(often called the Labor Code). ERISA sets standards that pension plans must follow with regard
to plan participation (who must be covered), minimum vesting requirements (how long a person
must work for an employer to acquire a non-forfeitable right to the benefit earned), plan funding
(how much must be set aside to pay for future benefits), and fiduciary duties (standards of
conduct for certain individuals who have discretion over plan operations or who provide
investment advice to plans or plan participants). ERISA covers only private sector pension plans
and exempts pension plans established by federal, state, and local governments and by churches.
The fiduciary duty requires that individuals—such as plan sponsors, administrators, and others
who oversee pension plans—operate these plans prudently and in the sole interests of plan
participants.
The 2024 final rule on investment advice concerns two of ERISA’s four titles: Title I and Title II.
Title I covers most private sector pension plans and is administered by DOL’s Employee Benefits
Security Administration (EBSA). Title I imposes duties and restrictions on fiduciaries with
respect to Title I plans.5 Title II specifies the requirements for plan qualifications under the IRC.
While Title II is generally administered by the Department of the Treasury, the Reorganization
Plan No. 4 of 1978 transferred much of Treasury’s interpretive and exemptive authority over the
IRC’s prohibited transaction rules (including those relating to the provision of investment advice)
to DOL.6
IRAs were first authorized by ERISA. Provisions that affect IRAs are found only in Title II of
ERISA, which is codified in the IRC. Title 29 does not have any IRA provisions.7
Prohibited Transaction Exemptions (PTEs)
ERISA prohibits certain transactions between a plan and individuals who are fiduciaries.
Fiduciaries may not:
• deal with the assets of the plan in their own interests or for their own accounts;

4 In addition, Congress has authorized several types of IRA-based retirement plans that employers can offer, such as
Savings Incentive Match Plan for Employees (SIMPLE) IRAs and Simplified Employee Pension (SEP) IRAs
(described below). In IRA-based plans, employers establish IRAs for employees at financial institutions. Employers
may also offer payroll deduction IRAs, which are available to employers who want to provide their employees a
retirement savings option while limiting employer involvement. In addition, some states have established state-
facilitated retirement savings programs, often IRA-based, for private sector employees.
5 Title III assigns responsibilities for administration and enforcement to DOL and the Department of the Treasury. Title
IV of ERISA established the Pension Benefit Guaranty Corporation, an independent federal agency that insures DB
pension plans covered by ERISA.
6 See DOL, Reorganization Plan No. 4 of 1978, https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/
executive-orders/4.
7 However, DOL does oversee employer-sponsored IRA plans such as SIMPLE and SEP IRAs. SIMPLE and SEP
retirement plans are designed for small businesses. More information is available at https://www.dol.gov/sites/dolgov/
files/ebsa/about-ebsa/our-activities/resource-center/publications/choosing-a-retirement-solution-for-your-small-
business.pdf.
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• act in any transaction involving the plan on behalf of a party (or representing a
party) whose interests are adverse to the interests of the plan or the interests of its
participants or beneficiaries; or
• receive any consideration for their own personal accounts from any party dealing
with such plan in connection with a transaction involving the assets of the plan.
ERISA allows DOL to issue exemptions to prohibited transactions that allow an individual, a
plan, or a group of individuals or plans (i.e., a class) to engage in transactions that would
otherwise violate ERISA. These exemptions are referred to as prohibited transaction exemptions
(PTEs).8
Role of DOL and the Department of the Treasury
Both DOL and Treasury oversee private sector pension plans and IRAs.9 In general, DOL
oversees the protection of pension plan participants, and the Internal Revenue Service (IRS),
under the Treasury, oversees contributions to pension plans and taxes. Because IRA provisions
are found only in the IRC, Treasury oversees most issues regarding IRAs. However, a 1978
executive order—subsequently ratified in P.L. 98-532—among other things, transferred
regulatory authority with respect to fiduciary duty in Title II plans from the Secretary of the
Treasury to the Secretary of Labor.10
Standards in Pension Plans
Retirement plans are complex, and employers and participants often rely on financial services
professionals to assist them with their decisionmaking. For example, an employer might seek out
assistance in determining what investments to offer in a 401(k) plan it has established,
participants in a 401(k) plan might seek assistance in choosing their investments from among the
options offered by the plan, or a worker who participates in an employer-sponsored 401(k) plan
might seek assistance on whether to leave his or her 401(k) account balance in the plan or roll it
over into an IRA or into another employer’s DC plan upon either job change or retirement.
The way in which some financial services professionals are compensated may give rise to
conflicts of interest if these professionals’ recommendations result in larger commissions or
otherwise benefit them. These potential conflicts could lead to the professionals making
recommendations that are not in the interests of their clients. By contrast, some financial services
professionals have compensation structures that do not vary based on which products clients
choose. This type of compensation structure could mitigate any conflicts of interest.

8 The procedures governing the filing and processing of PTEs are at Title 29, Sections 2570.30-2570.52, of the Code of
Federal Regulations.
9 The 2024 final regulation on investment advice applies to private sector pension plans. It would not apply to the
pension plans operated by state or local governments, the federal government, or churches.
10 See DOL, Reorganization Plan No. 4 of 1978. ERISA, as originally enacted, provided for both DOL and Treasury to
issue PTEs. Reorganization Plan No. 4 of 1978 transferred much of Treasury’s interpretive and exemptive authority
over the IRC’s prohibited transaction rules to DOL. Currently, DOL evaluates virtually all of the applications for
administrative exemptions. DOL’s FAQs regarding PTE 2020-02 explained how DOL enforces compliance with PTEs
with regard to Title II plans (such as IRAs). See FAQ 21 of DOL, New Fiduciary Advice Exemption: PTE 2020-02
Improving Investment Advice for Workers and Retirees Frequently Asked Questions, April 2021, https://www.dol.gov/
sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/new-fiduciary-advice-exemption.pdf. The FAQ
states, “For IRAs and other non-Title I plans, the Department has interpretive authority to determine whether the
exemption conditions have been satisfied and transmits information to the IRS for enforcement of the excise tax.”
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Individuals who transact with pension plans may be required to meet certain standards. The
standard that applies depends on the individuals’ roles and the actions they are taking. For
example, a financial professional providing investment advice is subject to the fiduciary standard,
whereas an individual who is only executing a transaction at the direction of a plan participant
would not be an investment advice fiduciary.
Fiduciary Duty
ERISA Section 3(21)(A)11 provides that a person is a fiduciary to the extent that the person:
• exercises any discretionary authority or control with respect to the management
of the plan or exercises any authority with respect to the management or
disposition of plan assets,
• renders investment advice for a fee or other compensation with respect to any
plan asset or has any authority or responsibility to do so, or
• has any discretionary responsibility in the administration of the plan.12
An individual who is a Title I fiduciary is required, among other duties, to “discharge his duties
with respect to a plan solely in the interest of the participants and beneficiaries.”13 ERISA
identifies four standards of conduct: (1) a duty of loyalty, (2) a duty of prudence, (3) a duty to
diversify investments, and (4) a duty to follow plan documents to the extent that they comply
with ERISA.14
Investment Advice
As noted above, ERISA Section 3(21)(a) established situations in which a person qualifies as a
fiduciary. One of these situations, in which an individual renders investment advice for a fee or
other compensation, is the subject of the final rule that DOL published in the Federal Register on
April 25, 2024.15 The rule is intended to replace a rule that was promulgated in 1975.
1975 Rule
In 1975, DOL addressed the second of the three actions that render an individual a fiduciary. DOL
issued regulations that created a five-part test to determine whether an individual provided
investment advice and thus was subject to the fiduciary standard.16
To be held to the 1975 fiduciary standard with respect to his or her investment advice, an
individual must (1) make recommendations on investing in, purchasing, or selling securities or
other property or give advice as to the value (2) on a regular basis, (3) pursuant to a mutual
understanding with the plan or plan fiduciary (4) that the advice serves as a primary basis for
investment decisions and (5) is individualized to the particular needs of the plan regarding such
matters as, among other things, investment policies or strategy, overall portfolio composition, or

11 See also IRC §4975(e)(3)(B).
12 See ERISA §3(21)(A).
13 See ERISA §404(a).
14 See ERISA §404(a)(1)(A)-404(a)(1)(D).
15 DOL, “Retirement Security Rule,” 75890.
16 DOL, “Definition of Fiduciary,” 40 Federal Register 50840-50850, October 31, 1975, https://www.govinfo.gov/
content/pkg/FR-1975-10-31/pdf/FR-1975-10-31.pdf#page=150.
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diversification of plan investments. An investment adviser is not treated as a fiduciary unless each
of the five elements of the test is satisfied for each instance of advice.
Individuals who provide investment services to retirement investors or plans may also be subject
to other regulatory structures. For example, broker-dealers are subject to the Financial Industry
Regulatory Authority (FINRA) regulations.17 Individuals such as broker-dealers, who provide
investment recommendations but whose actions do not meet ERISA’s five-part test, may be
subject to other regulatory standards, such as the Securities and Exchange Commission’s (SEC’s)
Regulation Best Interest (Reg BI) or state securities or insurance law.18 Investment advisers who
are compensated for advising about securities investments may have to register with the SEC and
conform to conduct standards in the Investment Advisers Act of 1940 (P.L. 76-768).19
Investment Education
Not all information that retirement investors receive meets the definition of investment advice.
For example, providing materials of a general nature designed to encourage participants to make
informed decisions in their 401(k) plans would not necessarily meet all parts of the five-part test.
To assist plan sponsors to develop education materials, DOL issued guidance—Interpretive
Bulletin 96-1—that provides examples of materials furnished to participants that would not, in
DOL’s view, be considered investment advice.20 Such materials include general information about
a plan; details of a plan’s investment options; general financial and investment information;
information that describes how investors might allocate their investments based on hypothetical
characteristics; and interactive investment materials such as questionnaires, worksheets, or
software that help participants understand future retirement income and needs.
Recent Regulatory Actions
In October 2010, DOL proposed (and subsequently in September 2011, announced that it would
withdraw) a rule that would have expanded the definition of fiduciary advice that would have
made more individuals and their actions subject to the fiduciary advice regulation.21 In April
2015, DOL issued a revised proposal to broaden the definition of investment advice22 and, in
April 2016, issued a final rule and new and amended PTEs.23

17 See FINRA, https://www.finra.org/#/.
18 For more information on Reg BI, see CRS Report R46115, Regulation Best Interest (Reg BI): The SEC’s Rule for
Broker-Dealers, and CRS Report R47431, Capital Markets: Overview and Selected Policy Issues in the 118th
Congress. Fixed annuities are insurance products, and individuals who sell them are subject to state insurance law.
Most states follow model regulations issued by the National Association of Insurance Commissioners (NAIC). See
NAIC, “Suitability in Annuity Transactions Model Regulation,” 2020, https://content.naic.org/sites/default/files/model-
law-275.pdf. Because variable annuities and some indexed annuities are securities, individuals who sell them may also
be subject to Reg BI.
19 See SEC, “Laws and Rules,” https://www.sec.gov/investment/laws-and-rules.
20 See DOL, “61,” 29586 Federal Register 29590, July 11, 1996, https://www.govinfo.gov/content/pkg/FR-1996-06-
11/pdf/96-14093.pdf.
21 See DOL, “Definition of the Term ‘Fiduciary,’” 75 Federal Register 65263, October 22, 2010,
https://www.federalregister.gov/documents/2010/10/22/2010-26236/definition-of-the-term-fiduciary.
22 See DOL, “Definition of the Term ‘Fiduciary;’ Conflict of Interest Rule-Retirement Investment Advice,” 80 Federal
Register 21928, April 20, 2015, https://www.federalregister.gov/documents/2015/04/20/2015-08831/definition-of-the-
term-fiduciary-conflict-of-interest-rule-retirement-investment-advice.
23 See DOL, “Definition of the Term ‘Fiduciary;’ Conflict of Interest Rule-Retirement Investment Advice,” 81 Federal
Register 20946, April 8, 2016, https://www.federalregister.gov/documents/2016/04/08/2016-07924/definition-of-the-
term-fiduciary-conflict-of-interest-rule-retirement-investment-advice/.
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Under the 2016 rule, the types of activities that would have constituted investment advice—if
they were done for a fee or other compensation—were recommendations pertaining to the
advisability of buying, selling, holding, or exchanging investments; how investments should have
been invested after being rolled over, transferred, or distributed from an IRA; the management of
investments; or IRAs, including whether, in what form, in what amount, and to what destination
rollovers, distributions from IRAs, and transfers from IRAs should have been made. The rule also
described certain activities that would not have constituted investment advice (e.g., marketing by
platform providers, providing general investment education, and executing securities
transactions).
Among the new and amended PTEs accompanying the final rule were the Best Interest Contract
Exemption, the Principal Transactions Exemption, and an amended PTE 84-24, which affects the
sale of annuity products. For more information on the 2016 proposed and final rule and PTEs, see
CRS Report R44884, Department of Labor’s 2016 Fiduciary Rule: Background and Issues.
Actions Under the Trump Administration
In March 2017, DOL issued a Temporary Enforcement Policy that indicated it would not initiate
enforcement actions against financial advisers or financial institutions that failed to satisfy the
conditions of the 2016 regulation or the PTE.24 In March 2018, the U.S. Court of Appeals for the
Fifth Circuit vacated the 2016 rule.25 The vacatur had the effect of reinstating the five-part test. In
July 2020, DOL implemented the vacatur of the 2016 rule.26
On December 18, 2020, DOL issued PTE 2020-02, which, as with previous PTEs, allows
fiduciaries to conduct transactions that are otherwise prohibited.27 Investment advice fiduciaries
who rely on PTE 2020-02 must comply with Impartial Conduct Standards, which require them to
provide advice that is in the best interest of retirement investors, charge no more than reasonable
compensation, and make no misleading statements about investment transactions.
In addition, PTE 2020-02 and a subsequent FAQ noted that rollover recommendations from an
employer plan to an IRA28 could be considered investment advice if specified conditions are
met—for example, as FAQ 7 noted, if the investment recommendation was given as “part of an
ongoing relationship or as the beginning of an intended future ongoing relationship.”29 On
February 13, 2023, a federal district court issued an opinion vacating the policy referenced in
FAQ 7 and remanded it to DOL for future proceedings.30 On June 30, 2023, a magistrate judge in
a different federal district court filed a report with the judge’s recommendations, including that

24 See DOL, Temporary Enforcement Policy on Fiduciary Duty Rule, Field Assistance Bulletin 2017-01, March 10,
2017, https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2017-
01.pdf.
25 See Chamber of Commerce v. United State Department of Labor, 885 F.3d.360 (5th Cir. 2018).
26 See 85 Federal Register 40589, July 7, 2020.
27 See DOL, “Prohibited Transaction Exemption 2020-02, Improving Investment Advice for Workers and Retirees,” 85
Federal Register 82798-82866, December 18, 2020, https://www.federalregister.gov/documents/2020/12/18/2020-
27825/prohibited-transaction-exemption-2020-02-improving-investment-advice-for-workers-and-retirees.
28 PTE 2020-02 also provided relief for an investment advice fiduciary to receive compensation for advice to roll plan
assets to another plan, to roll IRA assets to another IRA or to a plan, and to transfer assets from one type of account to
another.
29 See FAQ 7 of DOL, New Fiduciary Advice Exemption: PTE 2020-02 Improving Investment Advice for Workers and
Retirees Frequently Asked Questions.
30 See Noah Zuss, “Federal Judge Strikes Down DOL Rollover Advice Guidance,” Plan Sponsor, February 14, 2023,
https://www.plansponsor.com/federal-judge-strikes-down-dol-rollover-advice-guidance/.
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the court should vacate portions of PTE 2020-02 related to investment advice relationships in
IRAs.31
Actions Under the Biden Administration
On November 3, 2023, DOL published in the Federal Register its “Retirement Security Rule:
Definition of an Investment Advice Fiduciary,” which contained proposed amendments to the
definition of investment advice and related PTEs (PTE 2020-02; PTE 84-24; and PTEs 75-1, 77-
4, 80-83, 83-1, and 86-128).32 A 60-day period for public comments followed the release of the
rule (which closed on January 2, 2024). In addition, DOL held two days of public hearings on the
proposals on December 12 and 13, 2023.33 On April 25, 2024, DOL adopted the final version of
the rule and amendments to PTEs.34
Overview of the Final Rule
The final rule consists of a revision to the definition of investment advice found in regulations and
amendments to PTE 2020-02; PTE 84-24; and PTEs 75-1, 77-4, 80-83, 83-1, and 86-128.
2024 Final Rule
ERISA 3(21)(A)(ii) states that a person is a fiduciary if the person “renders investment advice for
a fee or other compensation.” The final rule replaces the current five-part test with an updated
definition of when recommendations would be considered investment advice. Under the updated
definition, a broader range of recipients receive advice that would be required to meet fiduciary
standards under ERISA.
The final rule says that a person renders investment advice if he or she makes a recommendation
of any securities or investment transaction to a retirement investor. Retirement investor is defined
in the final rule as a plan, plan fiduciary, plan participant or beneficiary, or IRA owner or
beneficiary.35
The person making the recommendation additionally has to do either of the following:
• Make professional investment recommendations as a regular part of his or her
business.36 In addition, the recommendation has to be based on the needs or

31 See Findings, Conclusions, and Recommendations of the United States Magistrate Judge, Fed’n of Ams. for
Consumer Choice v. U.S. Dep’t of Labor, No. 3:22–CV–00243–K–BT, 2023 WL 5682411, at *27–29 (N.D. Tex. June
30, 2023). The 2024 final rule included a footnote that “[a]s of the date of this final rule, the district court judge has not
yet taken action regarding the magistrate judge’s report and recommendations” (see 89 Federal Register 32127).
32 EBSA, “Retirement Security Rule: Definition of an Investment Advice Fiduciary,” 88 Federal Register 75890-
75979, November 3, 2023, https://www.federalregister.gov/documents/2023/11/03/2023-23779/retirement-security-
rule-definition-of-an-investment-advice-fiduciary.
33 See EBSA, “Retirement Security Rule: Definition of an Investment Advice Fiduciary and Related Exemptions Public
Hearing,” https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-
AC02-hearing.
34 See 89 Federal Register 32122-32258.
35 In the final rule preamble, DOL noted that “communications to plan or IRA fiduciaries acting as investment advice
fiduciaries will not result in the person making the communication also being considered an investment advice
fiduciary.” See 89 Federal Register 32149.
36 The final rule added the word professional before investment recommendations. DOL noted that it added the word to
“provide additional certainty that the provision would not be satisfied by the ordinary communications of a human
(continued...)
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circumstances of the retirement investor and is to be relied upon by the
retirement investor as a basis for investment decisions that are in the retirement
investor’s best interest.
• Acknowledge or represent that he or she is a fiduciary.37
In addition, a written statement that a person is not a fiduciary does not have an effect on
determining fiduciary status if the statement is inconsistent with the person’s actions, according to
the final rule.
A person is not a fiduciary (1) with respect to assets or investments over which the person does
not have discretionary authority or provide investment advice or (2) solely because the person
executes securities transactions on the instructions of the retirement investor.
A recommendation, according to the final rule, is one regarding the:
• advisability of acquiring, holding, disposing, or exchanging securities or other
investment property as an investment strategy or how it should be invested after a
rollover;
• management of investments such as recommendations on investment strategies,
portfolio composition, selection of persons to provide investment advice or
management services, account arrangements (i.e., brokerage versus advisory), or
the voting of proxies; or
• rolling over, transferring, or distributing assets from a plan or an IRA.
The final rule makes clear that one-time instances of advice regarding the rolling over of assets
from a workplace retirement plan to an IRA, “as well as recommendations to roll over, transfer, or
distribute assets from a plan or IRA,” are considered fiduciary investment advice.
DOL added a paragraph to the final rule that explains that a salesperson’s recommendations that
do not meet the other conditions of investment advice or investment education are not investment
advice within the meaning of the final rule.
PTE 2020-02
ERISA prohibits fiduciaries from engaging in improper transactions. These prohibited
transactions include, for example, (1) “engaging in self-dealing and receiving compensation from
third parties in connection with transactions” involving retirement plans and IRAs and (2) acting
on behalf of their own accounts (i.e., principal transactions).38 Fiduciaries who engage in
prohibited transactions are subject to excise taxes on the amounts involved in the transactions.39
PTE 2020-02, which was published in the Federal Register on December 18, 2020 (under the
Trump Administration), provides an exemption to these prohibited transactions so that investment

resources employee, who is not an investment professional, in communications with plan participants.” See 89 Federal
Register 32151.
37 The proposed rule made a person an investment advice fiduciary if the person exercised control over a retirement
investor’s assets. DOL did not include this in the final rule. For a discussion of the proposed rule, see CRS Report
R48045, The Department of Labor’s Proposed Rule on Investment Advice in Private Sector Pension Plans and
Individual Retirement Accounts.
38 Principal transactions occur when investment advice fiduciaries sell or purchase certain investments out of their own
inventories to or from plans or IRAs.
39 See IRS, “Retirement Topics—Tax on Prohibited Transactions,” https://www.irs.gov/retirement-plans/plan-
participant-employee/retirement-topics-tax-on-prohibited-transactions.
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advice fiduciaries can receive compensation40 and engage in principal transactions provided they
follow the conditions outlined in the PTE. Without this exemption, many common transactions in
retirement plans would be prohibited under ERISA, and this would disrupt the retirement
marketplace.
Under the exemption, financial institutions and investment professionals41 who provide fiduciary
investment advice, as defined in the regulation, to retirement investors42 can receive a wide
variety of payments that would otherwise be prohibited. PTE 2020-02 covers investment advice
(1) to hold, dispose of, or exchange securities and other investments; (2) to take a distribution
from a plan or to roll over the assets to an IRA; or (3) to engage (or not engage) in other
transactions such as plan-to-plan rollovers, IRA-to-IRA rollovers, or rollovers from one type of
account to another type of account (e.g., commission-based accounts, fee-based accounts). The
April 25, 2024, final amendment to PTE 2020-02 made changes to some, but not all, of the
conditions of the exemption. Prior to the final amendment, to comply with the exemption, an
investment advice fiduciary had to:
• provide advice meeting the Impartial Conduct Standards, which included a best
interest standard,43 a reasonable compensation standard, and a requirement to
make no misleading statements about investment transactions;
• acknowledge in writing their fiduciary status when providing investment advice,
the services to be provided, and any material conflicts of interest;
• document the reasons that a rollover recommendation is in the best interest of the
retirement investor;
• adopt policies and procedures designed to ensure compliance with the Impartial
Conduct Standards; and
• conduct a retrospective review of compliance.
The exemption also allowed a financial institution to engage in transactions in which the
institution purchases or sells certain investments from its own account and receives a mark-up or
mark-down or similar payment on the transaction, referred to as a principal transaction.44
The exemption specified that financial institutions and investment professionals were ineligible to
rely on the PTE if, within the previous 10 years, they were convicted of certain crimes related to
their provision of investment advice, or they engaged in systemic or intentional violation of the
exemption’s conditions or provided materially misleading information to DOL.

40 Compensation can include commissions, 12b-1 fees, trailing commissions, sales loads, mark-ups and mark-downs,
and revenue sharing payments from investment providers or third parties. Fees known as 12b-1 fees are annual
marketing or distribution fees. See SEC, “Distribution [and/or Service] 12b-1 Fees,” https://www.investor.gov/
introduction-investing/investing-basics/glossary/distribution-andor-service-12b-1-fees.
41 Financial institutions refers to SEC- and state-registered investment advisers, broker-dealers, banks, and insurance
companies. Investment professionals refers to the individual employees, agents, and representatives who work for these
financial institutions.
42 Retirement investors includes retirement plan participants and beneficiaries, IRA owners, and plan and IRA
fiduciaries.
43 In PTE 2020-02, DOL notes that the best interest standard is broadly aligned with the SEC’s Reg BI and the standard
included in NAIC’s Suitability in Annuity Transactions Model Regulation.
44 A principal transaction may be a riskless principal transaction (in which a financial institution purchases or sells the
same investment product for the financial institution’s own account to offset the transaction with a retirement investor)
or a covered principal transaction (which is non-riskless and limited to specific investment products).
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Final Amendment to PTE 2020-02
The 2024 final rule was accompanied by amendments to several PTEs, including PTE 2020-02.45
The amendment is effective September 23, 2024.
DOL stated that the amendment would cover more transactions and revise “some of the
exemption’s conditions to emphasize the core standards underlying the exemption.”46 The
amendment makes several changes, including those described below.
Changes to the Exemption’s Scope
The amendment expands the exemption to cover investment advice provided by:
• pooled plan providers (PPP), which DOL says would allow pooled employer
plans (PEPs, which were authorized in the Setting Every Community Up for
Retirement Enhancement Act of 2019 [SECURE Act; enacted as Division O of
P.L. 116-94]) to receive investment advice in the same manner as other
retirement plans;47 and
• financial institutions that provide advice through computer models (“robo
advice”).
Compared to the proposed amendment, the final amendment further expands the exemption’s
scope to include recommendations of any investment products, regardless of whether the product
is sold on a principal or agency basis. As part of this expansion, financial institutions, investment
professionals, and their affiliates and related entities can receive reasonable compensation
(including commissions, fees, mark-ups, mark-downs, and other payments) that would otherwise
be prohibited. The original PTE 2020-02 and proposed amendment granted limited relief for
“covered principal transactions” and “riskless principal transactions.” DOL noted that the
expansion in scope responds to concerns that the proposed amendment “did not sufficiently
clarify whether recommendations involving insurance and annuity products were covered
transactions.”48
In addition, the final amendment adds non-bank health savings account (HSA) trustees and
custodians to the definition of financial institutions with respect to HSAs.49
Changes to Impartial Conduct Standards
In the final amendment, DOL retains the substance of PTE 2020-02’s requirement to act in the
retirement investor’s “Best Interest,” but replaces the term Best Interest with its two separate

45 See EBSA, “Amendment to Prohibited Transaction Exemption 2020-02,” 89 Federal Register 32260-32299, April
25, 2024, https://www.federalregister.gov/documents/2024/04/25/2024-08066/amendment-to-prohibited-transaction-
exemption-2020-02. The proposed amendment stated that DOL “notes that more parties may need to rely on an
amended PTE 2020-02, because of the Department’s proposed amendment to the definition of ‘fiduciary investment
advice.’ If the new rule is adopted, parties that have not been fiduciaries under the five-part test may become fiduciaries
in the future.” See EBSA, “Proposed Amendment to Prohibited Transaction Exemption 2020-02,” 88 Federal Register
75979-76003, November 3, 2023, https://www.federalregister.gov/documents/2023/11/03/2023-23780/proposed-
amendment-to-prohibited-transaction-exemption-2020-02.
46 See 89 Federal Register 32261.
47 While the proposed amendment would have created a separate category for PPPs, the final amendment clarifies that
they can rely on PTE 2020-02 when the PPP is selected by an independent fiduciary.
48 See 89 Federal Register 32263.
49 For more information on HSAs, see CRS Report R45277, Health Savings Accounts (HSAs)
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components: the Care Obligation50 and the Loyalty Obligation.51 DOL states that the final
amendment refers to each obligation separately but that they are unchanged in substance from the
previous version of PTE 2020-02 and the proposed amendment.
Changes to Disclosures
In the pre-transaction disclosure to retirement investors, the amendment:
• clarifies the fiduciary acknowledgment requirement;
• requires a financial institution to include a written statement of the Care
Obligation and Loyalty Obligation owed by the investment professional and
financial institution to the retirement investor;
• requires the financial institution to disclose in writing all material facts relating to
the scope and terms of the relationship with the retirement investor, including (1)
material costs and fees that apply to the retirement investor’s transactions,
holdings, and accounts; (2) the type and scope of services provided to the
retirement investor, including any material limitations on the recommendations
that may be made to them; and (3) all material facts related to conflicts of interest
that are associated with the recommendation; and
• revises the language to clarify that the disclosure must be provided at or before
the time a covered transaction occurs.52
DOL stated that it based the final amendment’s disclosure obligation on the SEC’s Reg BI
disclosure obligations to ensure that retirement investors receive critical information while
reducing compliance burdens for financial institutions.
In the rollover disclosure, the amendment requires financial institutions and investment
professionals to consider and document the bases for recommending that a retirement investor
engage in a rollover from a Title I plan or how a plan participant or beneficiary should invest
post-rollover assets currently held in a Title I plan. Factors to be considered include, but are not
limited to, alternatives to a rollover, associated fees and expenses, whether an employer or other
party pays for some of all of a plan’s administrative expenses, and the different levels of services
available under the plan and the recommended investment or account. This documentation must
be provided to the retirement investor.
The final amendment’s disclosure requirement applies only to rollover recommendations from
Title I plans and would no longer require disclosures regarding advice for IRA-to-IRA rollovers
or rollovers from one type of account to another. In the final amendment, DOL clarified the
language that the disclosure applies only to advice to engage in a rollover recommendation to a

50 To meet the Care Obligation, “advice must reflect the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims, based on the investment objectives, risk tolerance, financial
circumstances, and needs of the Retirement Investor.” See 89 Federal Register 32266.
51 To meet the Loyalty Obligation, “the Financial Institution and Investment Professional must not place the financial
or other interests of the Investment Professional, Financial Institution or any Affiliate, Related Entity, or other part
ahead of the interests of the Retirement Investor or subordinate the Retirement Investor’s interests to those of the
Investment Professional, Financial Institution or any Affiliate, Related Entity.” See 89 Federal Register 32266.
52 The proposed amendment would have required financial institutions to inform retirement investors of their right to
obtain specific information regarding costs, fees, and compensation and how they can receive this information free of
charge.
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plan participant or beneficiary as to the post-rollover investment of assets currently held in a Title
I plan.53
In the final amendment, DOL revised the disclosure requirements to more closely track other
regulators’ disclosure requirements with respect to investment advice.54
Changes to Policies and Procedures
The amendment provides more guidance for financial institutions and investment professionals
when implementing policies and procedures to comply with the Impartial Conduct Standards. It
also requires that the policies and procedures mitigate conflicts of interest. Financial institutions
“may not use quotas, appraisals, performance or personnel actions, bonuses, contests, special
awards, differential compensation, or other similar actions or incentives that are intended, or that
a reasonable person would conclude are likely, to encourage Investment Professionals to make
recommendations that are not in Retirement Investors’ Best Interest.”55 In addition, the
amendment states that financial institutions must not “offer incentive vacations, or even paid trips
to educational conferences, if the desirability of the destination is based on sales volume and
satisfaction of sales quotas.”56
The amendment requires financial institutions to provide their policies and procedures to DOL
within 30 business days of request.57
Changes to Retrospective Review
The amendment requires financial institutions, as part of their retrospective reviews, to report
non-exempt prohibited transactions associated with fiduciary investment advice and pay any
resulting excise taxes.58
Changes to Circumstances Under Which a Financial Institution or Investment
Professional Becomes Ineligible to Rely on the Exemption
The amendment sets forth a list of specific crimes (including foreign crimes) that could cause
ineligibility to rely on the exemption for 10 years. The final amendment excludes foreign
convictions that occur within foreign jurisdictions that are included on the Department of
Commerce’s list of “foreign adversaries.”59 In addition, financial institutions and investment
professionals become ineligible to rely on the exemption if there is a final judgment or court-

53 The proposed amendment’s disclosure requirement would have extended to plan-to-plan, plan-to-IRA, IRA-to-plan,
and IRA-to-IRA rollovers, as well as rollovers from one type of account to another (e.g., commission-based account to
a fee-based account).
54 In the proposed amendment, DOL sought comment on whether it should require financial institutions to maintain
public websites containing various disclosures. In the final amendment, DOL did not include a website disclosure
requirement.
55 See 88 Federal Register 75987.
56 See 88 Federal Register 75987.
57 The proposed amendment’s time requirement was 10 business days.
58 The final rule adds failure to do so to the list of behaviors that could make a financial institution ineligible to rely on
the PTE for 10 years.
59 The list is available at 15 C.F.R. §7.4. The proposed amendment did not include an exception for certain foreign
jurisdictions.
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approved settlement in a federal or state criminal or civil court proceeding brought by specified
agencies, regulators, or state attorneys general.60
A financial institution or investment professional convicted of a felony crime by a U.S. federal or
state court of competent jurisdiction would not have an opportunity to be heard by DOL. The
final amendment stated that a financial institution or investment professional will become
ineligible after it has been determined in a final judgment or court-approved settlement that
improper conduct (as defined in the regulation) has occurred.61 The final amendment limits the
provision to the “controlled group.”62
The regulation changes the “winding down” time period before ineligibility from a variety of time
periods to a one-year transition period after the date of the conviction, DOL’s written
determination regarding a foreign conviction, or DOL’s written ineligibility notice regarding other
misconduct.63
Additional Changes from the Proposed Amendment to PTE 2020-02
Compared to the proposed amendment, DOL provides new streamlined exemption provisions for
financial institutions that give fiduciary advice in connection with a Request for Proposal (RFP)
to provide investment management services as a particular type of investment manager as defined
in Section 3(38) of ERISA.64
Unlike the proposed amendment, which would have expanded recordkeeping requirements for
financial institutions following covered transactions, the final amendment keeps the existing
recordkeeping requirements in PTE 2020-02 in place.
In addition, in response to comments that the proposal lacked sufficient time for financial
institutions to comply with the amended PTE, DOL added a section that provides for a one-year
phase-in period beginning September 23, 2024.
PTE 84-24
Prior to the final amended version, PTE 84-24 covered transactions in connection with the
purchase of insurance and annuity products and other investment securities that would otherwise
be prohibited by ERISA.65 Insurance companies offer three common types of annuities: fixed
annuities, indexed annuities, and variable annuities. A fixed annuity provides the investor with
specified payouts in the decumulation phase. An indexed annuity provides the investor with
payouts that are based on the performance of a market index, such as the S&P 500. A variable

60 See 89 Federal Register 32297 for the list of specified agencies, regulators, and state attorneys general.
61 The proposed amendment had stated that following receipt of the petition, DOL would provide the financial
institution or investment professional with an opportunity for a hearing and then issue a written determination regarding
the financial institution or investment professional’s ability to rely on the PTE.
62 The proposed amendment would have expanded ineligibility to include financial institutions that are affiliates, rather
than the more limited definition of controlled group, which refers to two or more corporations connected through stock
ownership by related persons. See CCH Answer Connect, “Definition of Controlled Group,”
https://answerconnect.cch.com/topic/b233b6867d5a1000b7950050568869390a/definition-of-controlled-group.
63 The proposed amendment included a six-month time period.
64 For more on ERISA section 3(38) investment managers, see Morgan Stanley, “Understanding Your Fiduciary
Liability: 3(21) vs. 3(38) Services,” https://advisor.morganstanley.com/compass-point-wealth-management/documents/
field/c/co/compass-point-wealth-management/understanding-fiduciary-liability-3-21-v-3-38.pdf.
65 PTE 84-24 was originally granted in 1977 (as PTE 77-9) and has since been amended several times. See 42 Federal
Register 32395 (June 24, 1977) and 49 Federal Register 13208 (April 3, 1984).
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annuity is invested in options chosen by the investor (typically mutual funds), and payouts are
based on the performance of the underlying investments.66
Insurance companies that sell fixed annuities likely did not have to make use of PTEs for
fiduciary investment advice, because their activities typically did not meet the definitions in the
previous five-part test.67 When DOL finalized PTE 2020-02 on December 18, 2020, it indicated
that insurance companies could rely on either the finalized PTE 2020-02 or PTE 84-24 as it
existed at the time. Generally, insurance agents are one of two types: (1) A captive agent works
for and sells the products of a single insurance company, and (2) an independent agent does not
work for a particular insurance company and sells the products of more than one insurance
company. Under the 2024 definition of investment advice, many actions by insurance agents—
whether captive or independent—to retirement plans or investors are likely considered investment
advice.
One of the compliance challenges regarding the selling of insurance products to retirement plans
and retirement investors is that an insurance company may not have much authority or control
over independent agents. This could be problematic if insurance companies were fiduciaries
regarding their products sold by independent agents.
Amendment to PTE 84-24
DOL’s amendment to PTE 84-24 limits the exemption to independent agents, who are required to
make fiduciary acknowledgements.68 Insurance companies are generally not fiduciaries when
independent agents sell their products. However, insurance companies would be required to
supervise the selling of their products by independent agents.
PTE 84-24, as modified by the amendment, is available to independent agents who sell annuities
from two or more insurers to retirement plans and retirement investors. It is not available to
agents who also sell annuities regulated by the SEC (such as variable annuities) or other non-
insurance products. These agents have to rely on PTE 2020-02.
Insurance agents who rely on PTE 84-24, as modified by the amendment, are required to meet
certain conditions similar to those in PTE 2020-02, including adhering to Impartial Conduct
Standards, limiting the types of compensation agents can receive, maintaining proper records, and
providing disclosures to IRA owners. Insurance companies are required to establish, maintain,
enforce, and retrospectively review policies and procedures to ensure agents’ compliance with the
Impartial Conduct Standards and other conditions of the amendment to PTE 84-24, though the
amendment specifically notes that an insurer is not required to supervise an agent’s
recommendations of products other than the annuities offered by the insurer. Similar to the
amendment to PTE 2020-02, independent agents and insurers could lose their eligibility to rely on

66 For more discussion of the different types of annuity products, see 88 Federal Register 75928.
67 They may have to rely on other PTEs based on their interactions with retirement plans and retirement investors.
68 See EBSA, “Amendment to Prohibited Transaction Exemption 84-24,” 89 Federal Register 32302-32344, April 25,
2024, https://www.federalregister.gov/documents/2024/04/25/2024-08067/amendment-to-prohibited-transaction-
exemption-84-24. The final amendment allows an employee of an insurance company that has no financial interest in
the transaction to rely on the PTE. The proposal would have completely excluded employees of an insurance company,
whether or not the company had a financial interest in the transaction. See EBSA, “Proposed Amendment to Prohibited
Transaction Exemption 84-24,” 88 Federal Register 76004-76032, November 3, 2023, https://www.federalregister.gov/
documents/2023/11/03/2023-23781/proposed-amendment-to-prohibited-transaction-exemption-84-24.
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PTE 84-24 for convictions of felony financial crimes by U.S. federal or state courts or by foreign
courts.69
Changes from the Proposed Amendment to the Final Amendment to PTE 84-24
The changes to PTE 84-24 from the proposed amendment to the final amendment include the
following:
• Providing a less restrictive definition of compensation that could be the basis of
using the PTE.70
• Allowing statutory employees of insurance companies to use the exemption,
provided the insurance company has no financial interest in the transaction.
• Making changes to the best interest standard and Impartial Conduct Standards
similar to the changes made in PTE 2020-02 (such as separating the Care
Obligation and the Loyalty Obligation).
• Requiring disclosures involving only rollovers from Title 1 plans into insurance
products.
• Allowing insurance companies to rely on sampling to conduct their retrospective
reviews.
• Making changes to the eligibility provisions similar to the changes made in PTE
2020-02 (such as using the term controlled group rather than affiliates, removing
DOL’s discretion to determine ineligibility, and exempting conviction by “foreign
adversaries” as a cause to lose eligibility to rely upon the exemption).
• Providing narrower recording requirements.
• Adding in a one-year phase in period.
PTEs 75-1, 77-4, 80-83, 83-1, and 86-128
The 2024 final rule was accompanied by amendments to PTEs 75-1, 77-4, 80-83, 83-1, and 86-
128 (collectively referred to as the Mass Amendment).71 These PTEs provided relief to investment
advice fiduciaries for the following investment advice transactions:
• PTE 75-1 provided an exemption for broker-dealers, reporting dealers, and banks
to engage in certain classes of transactions with plans and IRAs.72

69 The crimes include, for example, those that involve employee benefit plans, financial fraud, or securities violations.
See 88 Federal Register 76029.
70 The proposed amendment limited covered compensation to mutual fund commission or an insurance sales
commission, whereas the final rule adopted the phrase sales commissions.
71 See EBSA, “Amendment to Prohibited Transaction Exemptions 75-1, 77-4, 80-83, 83-1, and 86-128,” 89 Federal
Register 32347, April 25, 2024, https://www.federalregister.gov/documents/2024/04/25/2024-08068/amendment-to-
prohibited-transaction-exemptions-75-1-77-4-80-83-83-1-and-86-128, For the proposed amendment, see EBSA,
“Proposed Amendment to Prohibited Transaction Exemption 75-1, 77-4, 80-83, 83-1, and 86-128,” 88 Federal Register
76032-76045, November 3, 2023, https://www.federalregister.gov/documents/2023/11/03/2023-23782/proposed-
amendment-to-prohibited-transaction-exemptions-75-1-77-4-80-83-83-1-and-86-128.
72 “Exemptions from Prohibitions Respecting Certain Classes of Transactions Involving Employee Benefit Plans and
Certain Broker-Dealers, Reporting Dealers and Banks,” 40 Federal Register 50845, October 31, 1975, as amended at
71 Federal Register 5883, February 3, 2006.
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• PTE 77-4 provided relief for a plan or IRA’s purchase or sale of open-end
investment company shares73 (i.e., mutual fund shares) where the investment
adviser for the investment company is also a fiduciary to the plan or IRA.74
• PTE 80-83 provided relief for a fiduciary causing a plan or IRA to purchase a
security when the proceeds of the securities issuance may be used by the issuer to
retire or reduce indebtedness to the fiduciary or an affiliate.75
• PTE 83-1 provided relief for the sale of certificates in an initial issuance of
certificates by the sponsor of a mortgage pool to a plan or IRA when the sponsor,
trustee, or insurer of the mortgage pool is a fiduciary with respect to the plan or
IRA assets investment in such certificates.76
• PTE 86-128 provided an exemption for certain types of fiduciaries to use their
authority to cause a plan or IRA to pay a fee to the fiduciary, or its affiliate, for
effecting or executing securities transactions as an agent for the plan.77
Amendments to PTEs 75-1, 77-4, 80-83, 83-1, and 86-128
The amendments to PTEs 75-1, 77-4, 80-83, 83-1, and 86-128 remove the relief in the
exemptions for the receipt of compensation as a result of the provision of investment advice and
require that these investment advice fiduciaries instead rely on the relief provided in the amended
PTE 2020-02 or PTE 84-24.78 DOL’s stated goal for this change is to provide for a single standard
of care that would apply to all fiduciary investment advice.
The amendments also include administrative amendments, such as revoking certain parts of some
of the PTEs and adding disclosure requirements for some transactions. The amendment is
effective September 23, 2024.
Changes from the Proposed Amendments to the Final Amendments to PTEs 75-1,
77-4, 80-83, 83-1, and 86-128
In response to concerns that certain parties would no longer be able to rely on the PTEs affected
by the Mass Amendment or the relief provided in PTE 2020-02, DOL said that it broadened the
scope of PTE 2020-02 instead of making changes to the Mass Amendment. DOL also revised the
final Mass Amendment to clarify that only “the receipt of compensation as a result of the
provision of investment advice within the meaning of ERISA section 3(21)(A)(ii) or Code section
4975(e)(3)(B) and regulations thereunder” is excluded from the amended PTEs. In addition, DOL
did not finalize revocations of certain parts of some of the PTEs.

73 See SEC, “Mutual Funds,” https://www.investor.gov/introduction-investing/investing-basics/glossary/mutual-funds.
74 “Class Exemption for Certain Transactions Between Investment Companies and Employee Benefit Plans,” 42
Federal Register 18732, April 8, 1977.
75 “Class Exemption for Certain Transactions Involving Purchase of Securities Where Issuer May Use Proceeds to
Reduce or Retire Indebtedness to Parties in Interest,” 45 Federal Register 73189, November 4, 1980, as amended at 67
Federal Register 9483, March 1, 2002.
76 “Class Exemption for Certain Transactions Involving Mortgage Pool Investment Trusts,” 48 Federal Register 895,
January 7, 1984, as amended at 67 Federal Register 9483, March 1, 2002.
77 “Class Exemption for Securities Transactions Involving Employee Benefit Plans and Broker-Dealers,” 51 Federal
Register 41686, November 18, 1986, as amended at 67 Federal Register 64137, October 17, 2002.
78 For PTE 75-1, the proposed amendment would remove the exemptive relief for Parts III and IV.
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DOL’s Rationale for the Rule
DOL’s rationale for updating the current definition of investment advice includes the following:
inadequacy of the current five-part test, gaps in the current rule, a desire for a uniform standard of
advice, and expectations held by retirement investors.
DOL stated that it “drafted this rule to be responsive to the Fifth Circuit’s decision in Chamber,
which emphasized relationships of trust and confidence,” noting that “fiduciary status attaches
only if compensated recommendations are made in certain specified contexts, each of which
describes circumstances in which the retirement investor can reasonably place their trust and
confidence in the advice provider.”79
For evidence of the harm under the 1975 rule, the proposal pointed to discussions in the 2016
final rule’s Regulatory Impact Analysis (RIA), which it said provided evidence that retirement
investors, who may have inadequate financial literacy, are harmed by financial professionals’
conflicts of interest. DOL said that a review of the data “suggests that IRA holders receiving
conflicted investment advice can expect their investments to underperform by an average of 50 to
100 basis points per year over the next 20 years … [which] could cost IRA investors between $95
billion and $189 billion over the next 10 years.”80
Some of the rationale is based on the changes to the private sector pension system since the 1975
rule was issued. In 1975, most workers who had retirement plans at work were in DB plans
(70.8% of the 38.4 million active private sector plan participants). While DC plans existed,
Congress had not yet authorized 401(k) plans, which have since become the predominant type of
retirement plan.81 By 1984, a majority of active private sector plan participants were in DC plans,
and in 2021 (the most recent year for which data is available), 88.3% of participants were in DC
plans.82
DOL’s Concerns Regarding the Adequacy of the Five-Part Test
DOL noted in the preamble to the final regulation that “the 1975 regulation’s five-part test is
underinclusive in assigning fiduciary status as it fails to capture many circumstances in which an
investor would reasonably expect that they can place their trust and confidence in the advice
provider.”83 Examples of situations in which not all recommendations met each part of the five-
part test included:
• Regular basis prong. One of DOL’s concerns is that under the 1975 rule, one-
time recommendations generally did not meet the regular basis prong of the five-

79 See 89 Federal Register 32176.
80 For example, see DOL, Regulating Advice Markets: Definition of the Term “Fiduciary” Conflicts of Interest—
Retirement Investment Advice Regulatory Impact Analysis for Final Rule and Exemptions, April 2016, p. 9,
https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-regulations/completed-rulemaking/1210-
AB32-2/ria.pdf.
81 The Revenue Act of 1978 (P.L. 95-600) authorized 401(k) plans, which started to become more widespread after the
IRS issued regulations in 1981. See IRS, “Cash or Deferred Arrangements Under Employee Plans,” 46 Federal
Register 55544-55549, November 10, 1981, https://www.govinfo.gov/content/pkg/FR-1981-11-10/pdf/FR-1981-11-
10.pdf#page=50.
82 See CRS In Focus IF12007, A Visual Depiction of the Shift from Defined Benefit (DB) to Defined Contribution (DC)
Pension Plans in the Private Sector, and EBSA, Private Pension Plan Bulletin Historical Tables and Graphs 1975-
2021, September 2023, Table E7, https://www.dol.gov/sites/dolgov/files/ebsa/researchers/statistics/retirement-bulletins/
private-pension-plan-bulletin-historical-tables-and-graphs.pdf.
83 See 89 Federal Register 32136.
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part test. For example, an individual considering rolling over DC plan assets or
an IRA might contact a financial professional. The financial professional’s
recommendation might not have been considered investment advice if it was
provided once but not on a regular basis. The final rule addresses this scenario by
making fiduciaries of financial professionals who provide professional
investment recommendations as a regular part of their business, among other
conditions, regardless of whether the retirement investor receives the
recommendations one time or as part of an ongoing relationship.
• Mutual understanding prong. DOL said that firms may have lines in their
contracts that disclaim that they are fiduciaries (and therefore the mutual
understanding prong does not apply) or that tell investors to get other opinions
(thereby avoiding the primary basis prong). The final rule relies on the
circumstances surrounding the recommendation—including how investment
professionals hold themselves out to retirement investors and describe the
services offered—and replaces “primary basis” with “may be relied upon by the
retirement investor as a basis for investment decisions that are in the retirement
investor’s best interest.’’ A written statement that a person is not a fiduciary does
not have an effect on determining fiduciary status if the statement is inconsistent
with the person’s actions.
• Primary basis prong. DOL noted that some financial professionals skirted this
prong by telling clients to not rely solely on their recommendations and to seek
other opinions. By doing so, the recommendations would not have met this prong
of the five-part test.
Rollover Recommendations
The updated definition of investment advice includes recommendations on rollovers. DOL stated
that the decisions to take a benefit distribution or engage in a rollover are among the most
important financial decisions that a plan participant or IRA owner can make. DOL noted that
when retirement assets are held within ERISA plans, plan sponsors have the fiduciary duty to
facilitate sound investment options, whereas retirement assets held in IRAs “often operate under
conflicts of interest” by investment advice providers. Furthermore, an investment advice provider
may have incentives to recommend rollovers from a workplace plan to an IRA held by his or her
financial institution. PTE 2020-02 noted that when recommending a rollover, a firm “can
generally expect to earn transaction-based compensation such as commissions or an ongoing
advisory fee, from the IRA, but may or may not earn compensation if the assets remain in the
Title I plan.”84
Current Regulatory Gaps
The rule addresses what DOL calls gaps in the current regulatory structure. For example, Reg BI
covers recommendations of securities to retail investors. Reg BI does not apply to (1)
recommendations of non-securities (such as commodities, fixed indexed annuities, and real
estate) to retail investors85 and (2) recommendations to plan sponsors (because they are not retail
investors). By updating the definition of investment advice, the rule covers these two situations.

84 See 85 Federal Register 82802.
85 Other types of annuities, such as variable annuities, are considered securities and subject to Reg BI.
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DOL “expects that participants, in general, will benefit from the stronger, uniform standards
imposed by the amendments to the rule and PTEs.”86 For example, under the previous rule,
recommendations from broker-dealers might have been subject to Reg BI, whereas
recommendations from insurance agents might have been subject to state regulations. These are
generally covered recommendations under the final rule.
The sales of insurance products are generally regulated at the state level.87 Most states have
adopted the Suitability in Annuity Transactions Model Regulation #275, developed by the
National Association of Insurance Commissioners (NAIC), which sets standards for the
recommendation of annuity products. In the final rule, DOL noted what it considered to be
potential issues with the NAIC model regulation—for instance, that the term material conflict of
interest does not include cash compensation or non-cash compensation and that it does not cover
transactions involving ERISA plans.88
Congressional Responses to the Proposed and Final
Rule
The following sections describe the congressional responses to the proposed and the final rule, as
of the date of this report.
As of the date of this report, congressional responses to the final rule include the introduction of
resolutions of disapproval under the Congressional Review Act and press releases and statements
from several Members of Congress.
Legislation
In the 118th Congress, H.J.Res. 140, H.J.Res. 141, H.J.Res. 142, and H.J.Res. 143 (introduced on
May 15, 2024, by Representative Rick Allen) and S.J.Res. 79 (introduced on May 15, 2024, by
Senator Ted Budd) would overturn the final rule and associated PTEs under the Congressional
Review Act.89
Press Releases and Statements
Some Members of Congress objected to the proposed and final rule, indicating that they felt it
would limit retirement savers’ investment options and access to investment advice.90 Some

86 See 89 Federal Register 32198.
87 The final rule states that “while all annuity products are subject to State regulation, variable annuities and some
indexed annuities are considered securities, and therefore are also subject to SEC and FINRA regulations.” See 89
Federal Register 32188.
88 See NAIC, “Suitability in Annuity Transactions Model Regulation.” See also NAIC, “Additional Proposed Conflict
of Interest FAQ Question and Answer,” https://content.naic.org/sites/default/files/call_materials/
Conflict%20of%20Interest%20FAQ%20Proposed%20Q%26A%20clean.pdf. See 89 Federal Register 32192.
89 For more information on the Congressional Review Act, see CRS Report R43992, The Congressional Review Act
(CRA): Frequently Asked Questions.
90 See, for example, the following opposing the final rule: House Committee on Education and the Workforce, “Chair
Foxx Statement on Final Fiduciary Rule,” press release, April 23, 2024, https://edworkforce.house.gov/news/
documentsingle.aspx?DocumentID=410481; Office of Rep. Ann Wagner, “Wagner Slams Department of Labor
Fiduciary Rule, Vows to Protect Retail Investors,” press release, April 23, 2024, https://wagner.house.gov/media-
center/press-releases/wagner-slams-department-labor-fiduciary-rule-vows-protect-retail; Office of Rep. Rick W. Allen,
“Allen Statement on Biden’s Overreaching Fiduciary Rule,” press release, April 23, 2024, https://allen.house.gov/news/
(continued...)
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Members of Congress supported the final rule, saying that conflicted investment advice harms
retirement savers because they either pay unnecessary fees or are directed to inappropriate
investments.91
Hearings on the Proposed Rule
Congressional hearings held included:
• a hearing from the House Financial Services committee on January 10, 2024,
entitled Examining the DOL Fiduciary Rule: Implications for Retirement Savings
and Access;92
• a hearing from the Health, Employment, Labor, and Pensions subcommittee of
the House Education and Workforce Committee on February 15, 2024, entitled
Protecting American Savers and Retirees from DOL’s Regulatory Overreach.93

documentsingle.aspx?DocumentID=6241; and Senate Committee on Health, Education, Labor and Pensions, “Ranking
Member Cassidy, Budd Slam DOL’s New Fiduciary Rule Threatening Americans’ Access to Retirement Savings,”
press release, April 23, 2024, https://www.help.senate.gov/ranking/newsroom/press/ranking-member-cassidy-budd-
slam-dols-new-fiduciary-rule-threatening-americans-access-to-retirement-savings. See, for example, the following
opposing the proposed rule: letter from Reps. Foxx, Good, Walberg, Grothman, Stefanik, Allen, Banks, Smucker,
McClain, Bean, and Houchin to Acting Secretary Su, December 21, 2023, https://edworkforce.house.gov/uploadedfiles/
12.21.23_final_comment_ltr_house_committee_on_education_and_the_workforce.pdf; letter from multiple Members
of Congress to Acting Secretary Su and Assistant Secretary Gomez, January 8, 2024, https://si-
interactive.s3.amazonaws.com/prod/planadviser-com/wp-content/uploads/2024/01/08165414/
2024.1.8_Bipartisan_Hill_DScott_DOL_Retirement_Security_Proposed_Rule_Comment_Letter-FINAL-SIGNED.pdf;
letter from Reps. Williams, Meuser, Alford, and Bean to Acting Secretary Su, December 7, 2023,
https://smallbusiness.house.gov/uploadedfiles/12.07.2023_-_letter_to_dol_re_rfa_fiduciary_rule.pdf; letter from Sens.
Marshall, Barrasso, Braun, Collins, Cornyn, Ernst, Grassley, Hagerty, Hyde-Smith, Rounds, and Thune to Acting
Secretary Su, December 18, 2023, https://www.marshall.senate.gov/wp-content/uploads/Letter-to-DOL-Fiduciary-
Rule-12.18.23.pdf; and Office of Rep. Ann Wagner, “Wagner Blasts Misguided, Irresponsible Fiduciary Rule,” press
release, October 31, 2023, https://wagner.house.gov/media-center/press-releases/wagner-blasts-misguided-
irresponsible-fiduciary-rule.
91 See, for example, the following supporting the final rule: Office of Sen. Elizabeth Warren, “Warren Reveals
Insurer’s Use of Hidden Kickbacks, Slams 15 Largest Annuity Companies for Opposition to New Retirement Security
Rule,” press release, April 30, 2024, https://www.warren.senate.gov/newsroom/press-releases/warren-reveals-insurers-
use-of-hidden-kickbacks-slams-15-largest-annuity-companies-for-opposition-to-new-retirement-security-rule; and
statement, Joint Economic Committee Democrats, “ICYMI: The Biden Administration Just Took Massive Steps to
Protect Workers and the Climate,” May 8, 2024, https://www.jec.senate.gov/public/index.cfm/democrats/2024/5/icymi-
the-biden-administration-just-took-massive-steps-to-protect-workers-and-the-climate. See, for example, the following
supporting the proposed rule: letter from Sen. Sanders and Rep. Scott to Acting Secretary Su, January 2, 2024,
https://democrats-edworkforce.house.gov/imo/media/doc/
scott_sanders_comment_letter_to_dol_re_retirement_security_rule.pdf; Office of Rep. Bobby Scott, “Scott Applauds
Proposed Rule to Strengthen America’s Retirement Security,” press release, October 31, 2023,
https://bobbyscott.house.gov/media-center/press-releases/scott-applauds-proposed-rule-strengthen-americas-retirement-
security; and Office of Rep. Maxine Waters, “Ranking Member Maxine Waters Applauds Biden Administration’s
‘Retirement Security’ Rule Proposal,” press release, October 31, 2023, https://democrats-financialservices.house.gov/
news/documentsingle.aspx?DocumentID=410916.
92 See Financial Services, Subcommittee on Capital Markets, Examining the DOL Fiduciary Rule: Implications for
Retirement Savings and Access, https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=409088.
93 See U.S. Congress, House Committee on Education and the Workforce, Subcommittee on Health, Employment,
Labor, and Pensions, Protecting American Savers and Retirees from DOL’s Regulatory Overreach,
https://edworkforce.house.gov/calendar/eventsingle.aspx?EventID=410108.
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Stakeholder Comments on the Proposed Rule
The 2023 proposed rule received over 20,000 comments.94 Stakeholders had varying opinions,
ranging from requests to withdraw the proposal to suggesting changes to endorsing the proposal.
This section includes a discussion of some stakeholder viewpoints regarding aspects of the
proposal and the extent to which DOL addressed them in the final rule.95
Updated Definition of Investment Advice
Some stakeholders believe that the proposal’s definition of investment advice is “overly broad.”96
The proposal’s updated definition would capture interactions between financial professionals and
retirement investors that some stakeholders think are not fiduciary investment advice. For
example, some stakeholders stated that a fiduciary advice relationship is one built on trust and
confidence, which would not be expected to be present for many of the interactions that would be
captured by the proposal, such as a one-time instance of a recommendation (for example, whether
a retirement investor should roll over 401(k) assets into an IRA).97 Some stakeholders referenced
the Fifth Circuit’s reasoning that vacated the 2016 rule, indicating they think it applies to parts of
the current proposal. For example, one comment letter noted that “the Proposed Rule’s
interpretation of investment advice fiduciary again lacks any requirement of a special relationship
of ‘trust and confidence.’”98
Other stakeholders support the updated definition of investment advice, noting that they believe
that financial professionals hold themselves out as acting in positions of trust by, as one comment
letter noted, “the use by advisers of titles used to engender a sense of trust and confidence among
clients.”99 Another comment letter noted that “any reasonable investor would view these
relationships as trusted advice relationships and expect to receive retirement investment advice
that is in their best interest.”100
Other stakeholders supported the updated definition of investment advice because
recommendations to plan sponsors are not covered by Reg BI and the NAIC model regulation.101
One comment letter noted that this could be of particular concern for small employers who might

94 This report provides a brief overview of selected comment letters, not a comprehensive summary of each letter.
Many of the letters address a variety of aspects of the proposed rule, and summarizing all of them is beyond the scope
of this report.
95 CRS identified topics that were discussed across many different letters and/or mentioned during DOL’s two days of
public hearings on the proposed rule. CRS incorporated a range of viewpoints from different stakeholders regarding
each topic. More thorough discussions of DOL’s responses to the comments are in the discussions of the final rule and
each of the amended PTEs.
96 See, for example, comment letter from the American Investment Council at https://www.dol.gov/sites/dolgov/files/
ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AC02/00362.pdf.
97 See, for example, comment letter from T. Rowe Price at https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-
regulations/rules-and-regulations/public-comments/1210-AC02/00363.pdf.
98 See, for example, comment letter from the National Association of Insurance and Financial Advisors at
https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-ZA33/
00018.pdf.
99 See comment letter from Better Markets at https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-
and-regulations/public-comments/1210-AC02/00374.pdf.
100 See, for example, comment letter from the Consumer Federation of America at https://www.dol.gov/sites/dolgov/
files/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AC02/00336.pdf.
101 Reg BI applies only to retail customers, which plan sponsor are not. See SEC, “Frequently Asked Questions on
Regulation Best Interest,” https://www.sec.gov/tm/faq-regulation-best-interest. The NAIC model regulation does not
apply to contracts used to fund ERISA plans. See NAIC, “Suitability in Annuity Transactions Model Regulation.”
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not have the same level of financial sophistication or knowledge as large employers have. The
comment letter noted that “under the current federal and state regulatory framework, small
business owners establishing a retirement plan for their employees are often provided zero
regulatory protection with respect to the advice given to them regarding plan investment
options.”102 Other stakeholders noted the benefits to retirement investors as a result of the rule.
For example, Morningstar analysis indicated that retirement investors would save $55 billion in
fees over the next 10 years and, when rolling over into fixed annuity products, would realize
significant savings.103
Some stakeholders argue that the existing regulatory framework for brokers/dealers and insurance
professionals adequately protect retirement investors. For example, NAIC indicated that it
“fundamentally disagree[d]” with “the Administration’s characterization of state consumer
protections around annuity sales as ‘inadequate’ and providing ‘misaligned incentives.’”104
In the final rule, DOL said that the final rule is not overly broad and “is far narrower than the
previous rulemaking,” because it “specifically focuses on whether the investment
recommendation can be appropriately treated as trust and confidence advice.”105 In addition, DOL
indicated that it drafted the rule “to be responsive to the Fifth Circuit’s decision in Chamber,
which emphasized relationships of trust and confidence.”106 Additionally, DOL noted that the
focus of the final rule is on “defining those circumstances in which the retirement investor has a
reasonable expectation that the recommendation reflects a professional or expert judgment
offered on their behalf and in their interest.”107
DOL noted that it had concerns that the NAIC model regulation “is not as protective as either the
Department’s approach under ERISA or the SEC’s approach under Regulation Best Interest.”108
DOL noted that the definition of material conflicts of interest in the NAIC model regulation
“excludes all ‘cash compensation’ and ‘non-cash compensation’” and that “NAIC also expressly
disclaimed that its standard creates fiduciary obligations.”109
Investment Advice Relationships for IRAs
The proposed rule made clear that recommendations of any securities or investment transactions
to IRA owners or beneficiaries would be fiduciary investment advice. Some stakeholders disagree
with DOL’s position that ERISA’s fiduciary standards should apply to advice to IRA owners
through the PTEs. One comment letter stated, “The fact that the prohibited transaction rules in
Sec. 4975 of the Code apply to IRAs do not confer on the Department the authority to regulate
the conduct of financial professionals making recommendations to IRAs.”110

102 See comment from the American Retirement Association at https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-
regulations/rules-and-regulations/public-comments/1210-ZA32/00068.pdf.
103 See comment letter from Morningstar at https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-
regulations/public-comments/1210-AC02/00290.pdf.
104 See comment letter from NAIC at https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-
regulations/public-comments/1210-AC02/00165.pdf.
105 See 89 Federal Register 23141.
106 See 89 Federal Register 32176.
107 See 89 Federal Register 32137.
108 See 89 Federal Register 32136.
109 See 89 Federal Register 32137.
110 See comment letter from Allianz Life Insurance Company of North America at https://www.regulations.gov/
comment/EBSA-2023-0014-0428.
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In the final rule, DOL stated it “has clear authority to promulgate the regulatory definition of a
fiduciary under both Title I and Title II of ERISA, and the Department has taken care in this final
rule to honor the text and purposes of Title I and Title II of ERISA.”111
“Hire Me” Conversations
Some stakeholders have expressed concerns that interactions where financial professionals bid for
client services (what are referred to as “hire me” conversations) could be considered fiduciary
advice. While DOL said it “does not intend to suggest, however, that a person could become a
fiduciary merely by engaging in the normal activity of marketing themselves as a potential
fiduciary to be selected by a plan fiduciary or IRA owner,” one comment letter noted that, “like
other market participants, banks found the ‘hire me’ exception difficult to employ when the 2016
Rule was in effect, due to uncertainty regarding its parameters.”112
In the final rule, DOL did not provide any additional provisions related to “hire me”
conversations. However, it did note that people can tout their own services and provide
information about their services that would not be investment advice. DOL also noted that to the
extent that “‘hire me’ communications include covered investment recommendations, those
recommendations are evaluated separately under the provisions of the final rule.”113
Call Centers
Some stakeholders have expressed concerns that resources that investors regularly engage with,
such as call centers, could be considered sources of fiduciary advice. One comment letter noted
that call center representatives “would need to follow tightly controlled scripts…. The true impact
of the Proposal would be reducing these interactions to an exercise of sharing factual, bare
minimum and one-dimensional information resulting in the retirement investor being left to either
fend for themselves or take on additional cost to hire an investment advice provider for further
assistance.”114
In the final rule, DOL did not specifically address call center activities, though it noted that the
activities of call center personnel as described by some commentators are covered by a DOL
interpretive bulletin on investment education (IB 96-1) as discussed in the preamble to the final
rule. DOL also noted that “unless call center personnel provide an acknowledgment of ERISA
Title I or Title II fiduciary status with respect to the recommendation, they can provide
investment-related information that is not based on the particular needs or individual
circumstances of the retirement investor without ERISA fiduciary status attaching.”115
Lifetime Income
Some policymakers have a long-standing interest in ensuring that individuals receive regular
income throughout their retirement—what is referred to as lifetime income. The decline in the

111 See 89 Federal Register 32136.
112 See page 75906 of the proposed rule and comment from American Bankers Association, p. 15, at
https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AC02/
00296.pdf.
113 See 89 Federal Register 32164.
114 See comment letter from John L. Carter, president and chief operating officer of Nationwide Financial Services, at
https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AC02/
00292.pdf.
115 See 89 Federal Register 32168.
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number of private sector employers offering DB plans has raised concerns about participants
possibly outliving their DC retirement assets. Purchasing annuities, either within participants’ DB
plans or in IRAs after rolling over DC assets, is the primary means by which individuals can
ensure regular income throughout retirement. Some insurance companies have noted that as a
result of changes they foresee to the annuity marketplace, the proposal would make “it more
difficult and expensive for plans to offer lifetime income” and that “efforts that would restrict or
nearly eliminate the use of such products in defined contribution plans are contrary to
Congressional intent.”116
In the final rule, DOL noted that it is “especially concerned about the proper regulation of fixed
annuities” and that “uniquely among regulators, [DOL] can impose uniform standards for the
provision of investment advice to Retirement Investors.”117 DOL also indicated that while many
retirement investors will benefit from the final rule, DOL “expects Retirement Investors investing
in annuities to see the greatest benefits.”118
Changes to Ineligibility to Rely on PTE 2020-02
Some stakeholders disagree with DOL’s proposed changes to the ineligibility provisions, which
would be expanded to include conviction of an affiliate rather than a “controlled group” and set
forth a list of specific crimes (including foreign crimes) that could make the financial institution
or investment professional ineligible to rely on the exemption for 10 years. One comment letter
noted that “a conviction of an affiliate does not reflect in any way on the policies, procedures, or
compliance of the affiliated investment advisory firm.”119 Another noted that the proposed
expansion of the definition of controlled group to include affiliates “can lead to the anomalous
result of a fiduciary’s ineligibility resulting from the criminal conduct of a foreign affiliate that
has no contact or relationship with the fiduciary and which may be engaged in activities that are
wholly unrelated to the investment management of retirement assets (e.g., foreign real estate
brokerage, human resources support).”120
In the final amendment, after consideration of comments, DOL returned to the use of the term
controlled group for purposes of determining ineligibility under PTE 2020-02.121 In addition, the
final amendment excludes foreign convictions that occur within foreign jurisdictions that are
included on the Department of Commerce’s list of “foreign adversaries.”122
Compliance Concerns
The proposed amendment to PTE 2020-02 included additional disclosures and modifications to
existing disclosures. Some stakeholders expressed concern with the compliance costs that would
be associated with these changes to disclosures. The proposed amendment to PTE 2020-02

116 See comment letter from Mindset at https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-
regulations/public-comments/1210-AC02/00366.pdf.
117 See 89 Federal Register 32193-32194.
118 See 89 Federal Register 32196.
119 See, for example, comment letter from the Securities Industry and Financial Markets Association (SIFMA) and
SIFMA Asset Management Group at https://www.regulations.gov/comment/EBSA-2023-0014-0377.
120 See, for example, comment letter from the American Bankers Association at https://www.regulations.gov/comment/
EBSA-2023-0014-0345.
121 See 89 Federal Register 32281. PTE 84-24 has similar ineligibility provisions for independent agents and insurers.
122 The list is available at 15 C.F.R. §7.4. The proposed amendment did not include an exception for certain foreign
jurisdictions.
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included time and cost estimations for the changes included in the proposal, but one comment
letter noted that “these exemption changes would impose significant costs on the retirement
industry that far exceed the Department’s estimates, with no clear evaluation of the need for
changes and no demonstrable benefit to investors,”123 and that “many small entities are likely to
face significant compliance costs associated with the proposed rule.”124 Some stated that the
proposed changes to amended PTE 2020-02 would make it harder for service providers to comply
and that “their natural reaction will be to either cease providing information, advice, and
investment products to retirement investors or redouble their efforts to avoid classification as
investment advice fiduciaries.”125
In the final amendment, DOL modified some of the disclosure requirements from those included
in the proposed amendment. For example, DOL stated that it based the final amendment’s
disclosure obligations on the SEC’s Reg BI disclosure obligations, and the final amendment is
intended to keep retirement investors informed while reducing compliance burdens.126 In
addition, DOL narrowed the rollover disclosure requirement so that it applies only to
recommendations to rollovers from Title I plans.127
Changes to Incentives
Some stakeholders do not agree with DOL’s proposed prohibition of certain types of
compensation, such as paid trips to educational conferences, noting that DOL’s “restrictive
approach to the types of compensation that Investment Professionals are entitled to is at direct
odds with Regulation BI and FINRA.”128 Others describe the prohibition of the various types of
compensation as “completely arbitrary” and “speculative, subjective and capable of being
violated in every single employee’s compensation setting.”129
Other stakeholders support the proposed changes, noting that “these types of incentives would
encourage investment professionals to violate their best interest obligation.”130
In the final amendment, DOL stated that it “neither bans differential compensation, nor prohibits
educational meetings.” It also stated that financial institutions must “take special care to ensure”
that their compensation systems are not likely to result in recommendations that do not meet the
Care Obligation or Loyalty Obligation.131 With regard to educational conferences, DOL stated
that “the conferences must be structured in a manner that ensures they are not likely to lead

123 See comment letter from the Investment Company Institute at https://www.regulations.gov/comment/EBSA-2023-
0014-0444.
124 See comment letter from the U.S. Small Business Administration Office of Advocacy at
https://www.regulations.gov/comment/EBSA-2023-0014-0355.
125 See comment letter from Cetera Financial Group at https://www.regulations.gov/comment/EBSA-2023-0014-0422.
126 See 29 Federal Register 32272.
127 See 29 Federal Register 32273.
128 See comment letter from the Financial Services Institute at https://www.regulations.gov/comment/EBSA-2023-
0014-0391.
129 See, for example, comment letters from SIFMA at https://www.regulations.gov/comment/EBSA-2023-0014-0377
and Davis and Harman LLP at https://www.regulations.gov/comment/EBSA-2023-0014-0138.
130 See comment letter from the Consumer Federation of America at https://www.regulations.gov/comment/EBSA-
2023-0014-0385.
131 See 89 Federal Register 32274.
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Investment Professionals to make recommendations that do not meet the exemption’s Care
Obligation or Loyalty Obligation.”132
Efficiency Changes Resulting from Proposed Amendments to PTEs
75-1, 77-4, 80-83, 83-1, and 86-128
Some stakeholders disagree with the proposed change to remove existing exemptive relief for
certain transactions covered by PTEs 75-1, 77-4, 80-83, 83-1, and 86-128 (so that amended PTE
2020-02 would be used instead). One comment letter noted that “the efficiencies associated with
the current more tailored exemptions the Department proposes to amend would be lost, resulting
in higher costs and fewer benefits to investors.”133
In the final amendments, DOL stated that it believed that a common set of protective standards
for a wide range of advice transactions as provided in PTE 2020-02 and PTE 84-24 promotes
efficiency and clarity.134
Investment Education
Some interactions with retirement plan participants and plan sponsors, such as communications of
a general nature, do not meet the definition of investment advice. For example, communications
that describe the features of a participant’s 401(k) plan are considered investment education.
DOL’s Interpretive Bulletin 96-1 (IB 96-1) describes the circumstances under which
communications are considered investment education and therefore would not constitute
investment advice.135 While DOL stated that it “believes that the IB 96-1 would continue to
provide accurate guidance under the proposed regulation,” some stakeholders have expressed
concerns that about whether “routine interactions and investment education would newly trigger
fiduciary status” and that “further clarity is needed.”136
In the final rule, DOL added a paragraph that it says “provides confirmation that sales pitches and
investment education can occur without ERISA fiduciary status attaching.”137

132 See 89 Federal Register 32275.
133 See comment letter from the Investment Company Institute at https://www.regulations.gov/comment/EBSA-2023-
0014-0444.
134 See 89 Federal Register 32349.
135 See DOL, “Interpretive Bulletin 96-1; Participant Investment Education,” 61 Federal Register 29586-29590, June
11, 1996, https://www.govinfo.gov/content/pkg/FR-1996-06-11/pdf/96-14093.pdf. The categories in IB 96-1 are plan
information, general financial and investment information, asset allocation models, and interactive investment
materials.
136 See 88 Federal Register 75911 and comment letter from the ERISA Industry Committee.
137 See 89 Federal Register 32154.
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Author Information

Elizabeth A. Myers
John J. Topoleski
Analyst in Income Security
Specialist in Income Security

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Congressional Research Service
R48108 · VERSION 1 · NEW
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Jun. 18, 2024

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Topic areas

Domestic Social Policy

Report Type: CRS Report

Source: CRSReports.Congress.gov

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