The DOL Just Hit Reset on the Fiduciary Rule — Here’s What That Means

March 2026

If you work in financial advising, retirement planning, or employee benefits, last week’s move by the Department of Labor probably caught your attention. On March 18, the DOL officially restored the longstanding five-part test that determines when someone qualifies as an investment-advice fiduciary under ERISA — the Employee Retirement Income Security Act of 1974.

This didn’t come out of nowhere, but it does mark a significant turning point after years of regulatory back-and-forth.

A Quick Recap: How We Got Here

The DOL had been pushing to modernize its definition of who counts as a fiduciary when giving investment advice. The effort, known as the Retirement Security Rule (and informally called the “amended fiduciary rule”), aimed to broaden the circumstances under which financial professionals would owe fiduciary duties to retirement plan participants.

Two federal district courts in Texas struck down key parts of that rule. The DOL initially appealed to the Fifth Circuit Court of Appeals but ultimately withdrew its appeal, effectively conceding the fight. With the appeal dropped, both district courts formally entered their orders — and the amended rule was dead.

What the DOL Did on March 18

Rather than leaving things in regulatory limbo, the DOL issued guidance that does three notable things.

First, it republished Prohibited Transaction Exemption 2020–02 in its original, unamended form. This exemption allows certain financial professionals to receive compensation that would otherwise be prohibited under ERISA, provided they meet specific conditions. The version now in effect is the one that existed before the Retirement Security Rule attempted to modify it.

Second, the DOL formally restored the traditional five-part test for determining fiduciary status. This test has been the standard for decades and requires that all five conditions be met before someone is considered a fiduciary for purposes of investment advice. In broad strokes, the advice must be rendered on a regular basis, pursuant to a mutual understanding that it will serve as a primary basis for investment decisions, and be individualized to the plan or participant.

Third — and this surprised some observers — the DOL withdrew the entire 2020 preamble to the amended rule. The courts had only invalidated portions of the preamble, but the DOL chose to pull the whole thing. That preamble had included aggressive interpretations of the five-part test that many in the industry considered controversial. By scrapping it entirely, the DOL appears to be clearing the deck for whatever comes next.

The DOL treated all of these actions as ministerial, meaning they didn’t go through the usual notice-and-comment process required by the Administrative Procedure Act.

Why This Matters

For financial advisors and firms, the immediate practical effect is clarity. The rules governing fiduciary status are back to a familiar framework that the industry has operated under for years. If you were already complying with the traditional five-part test and the original version of PTE 2020–02, you’re on solid ground.

But this probably isn’t the end of the story. The DOL’s own regulatory agenda signals that it plans to revisit the fiduciary definition later this year. The withdrawal of the entire 2020 preamble — not just the portions the courts struck down — suggests the current administration may want a clean starting point for crafting its own version of the rule.

What to Watch For

The big question now is what the DOL does next. Will the Trump Administration propose a narrower update? A wholesale rethinking of fiduciary obligations for investment advisors? Or will it leave the traditional five-part test in place indefinitely?

For now, retirement plan sponsors, financial advisors, and compliance teams should ensure their practices align with the restored regulatory framework. And anyone in this space would be wise to keep a close eye on DOL announcements in the coming months — the next chapter of the fiduciary rule saga is likely already being written.