The DOL has officially withdrawn its defense of the Biden administration’s 2024 fiduciary rule, which sought to place retirement investment advice including rollovers from 401(k) and similar accounts, under a fiduciary obligation. This move concludes a prolonged legal battle that began after the rule was finalized in 2024 and faced immediate legal challenges from industry groups.
After three delays earlier in the year, the DOL’s Employee Benefits Security Administration filed an unopposed motion to dismiss its appeal in the U.S. 5th Circuit Court of Appeals, effectively abandoning its efforts to implement the rule. The appeal had originally challenged stays issued by the U.S. District Courts for the Northern and Eastern Districts of Texas, both of which had blocked enforcement of the rule in July 2024.
The 2024 fiduciary rule aimed to expand the definition of a fiduciary for retirement investors, covering not only investment advice but also one-time guidance on account rollovers and advice to small employer plans. However, opponents argued that the DOL exceeded its authority under the ERISA and that the rule suffered from similar flaws as the Obama-era version overturned by the 5th Circuit in 2018.
In defending the rule, the Biden DOL maintained that it had corrected previous shortcomings by focusing on trust and confidence in retirement advice. Nevertheless, federal courts in Texas ruled that the revised rule was not sufficiently distinct from its predecessor, siding with industry challengers.
A more activist DOL has its sights on two other initiatives: rewriting the current ESG rules and focusing on initiatives to expand retirement plan access to alternative assets such as private equity and cryptocurrencies.
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