07.11.25

Court Rejects Part of Frozen DOL Rollover Rule

by: Allison Bell

A federal judge has rejected part of the U.S. Labor Department's (DOL) fiduciary rule regulations on retirement transactions. U.S. District Judge Ed Kinkeade ruled against sections in Prohibited Transaction Exemption 2020-02 stating that an advisor could start an "ongoing advice relationship" with a retirement saver under the Employee Retirement Income Security Act (ERISA) if the advisor helped the retirement saver with even one retirement savings rollover transaction. Traditionally, the Labor Department has used a "five-part test" to determine whether the people or companies giving retirement savers financial advice were fiduciaries. The provisions "exceed the DOL's authority under ERISA and constitute arbitrary and capricious interpretations of the five-part test to determine whether financial professionals are acting as 'investment advice fiduciaries,'" Kinkeade ruled.

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