Today, the Department of Labor (DOL) is set to launch an updated version of its fiduciary rule during a ceremony at the White House. Included in the alterations are amendments to the department's five-part test, incorporating recommendations for rollovers into fiduciary protections.

The aim of these adjustments is to eliminate existing lacunas and inconsistencies in the law and align the regulations with the way most people currently prepare for their retirement in today's economy, stated Acting DOL Director Julie Su.

Even though Reg BI was recognized as a robust regulation by administration officials, it did not apply in situations where investors might anticipate a best-interest criterion, such as guidance on picking suitable options for a 401(k).



The forthcoming proposal will ensure that recommendations given to plan sponsors about 401(k)s are regarded as fiduciary-related suggestions. It will also apply to one-off retirement advice, for instance, advice on rolling over 401(k) assets into an Individual Retirement Account (IRA) or an annuity.

Administration representatives indicated that the DOL's existing rule on prohibited transaction exceptions would see slight modifications, and changes would be made to Rule 84-24, which is frequently employed by independent insurance brokers.

Earlier in September, the suggested rule was sent to the White House Office of Management and Budget, which has held consultations with industry lobbyists and advocates of investor protection over the course of October.

Past versions of the rule have existed, such as a rule from the 2000s that was repealed by the DOL, as well as an effort by the Obama administration that was subsequently rejected by the Fifth Circuit of Appeals a few years later. The Trump administration launched its iteration of the rule in 2020, which came into effect in 2021 (but was later faced with its legal obstacles).

The new proposal displays a number of considerably distinct differences when compared to the version nullified by the Fifth Circuit, according to administration representatives. Although the 2016 edition included a somewhat broad definition of the rule covering anyone providing investment advice for a fee, the new proposal is specially tailored to apply only to advisors possessing client relationships of trust and confidence. The administration says this phraseology was inspired by the language of the Fifth Circuit.