DOL Abandons 2024 Fiduciary Rule Appeal
The U.S. Department of Labor (DOL) will not be fighting a pair of challenges that sought to overturn the Biden Administration’s fiduciary rule.
In a court filing, the Labor Department’s Employee Benefit Security Administration (EBSA) confirmed it would not challenge two federal district court decisions that had stayed the Biden-era Retirement Security Rule in 2024.
UPDATE – Fifth Circuit Acts Quickly in Granting EBSA Request to Dismiss Fiduciary Rule Appeals
The announcement ends a prolonged debate over whether entities outside of the retirement plan industry, including insurance agents and organizations, should act in accordance with the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (IRC). The rule, initially scheduled for September 2024, would have updated the definition of an investment advice fiduciary under ERISA and the IRC.
News of the final rule in April 2024 prompted backlash from insurance organizations, who argued that the DOL had expedited the reviewal process in order to advance the final rule prior to the November 2024 presidential election.
The two federal court stays then came in July 2024. The first stay, granted by U.S. District Judge Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas, was filed by the Federation of Americans for Consumer Choice along with several independent insurance agents.
The second, issued just one day later, was granted by the Federal District Court for the Northern District of Texas, who blocked the fiduciary rule from moving forward until it ruled on a past lawsuit filed by the American Council of Life Insurers and eight other insurance organizations.
The DOL under the Biden Administration appealed the two stays following the setback. The agency would go on to further delay the appeal at three separate points in 2025, until it announced its withdrawal on Monday.
News of the dismissal prompted comments from Lisa Gomez, the former Assistant Secretary of Labor for EBSA under the Biden Administration, who said she was “disappointed though not at all surprised” about the abandonment.
“I would have liked to see the Court of Appeals and possibly the Supreme Court take a deeper dive into the rule,” Gomez wrote on LinkedIn Tuesday before adding that she remains “concerned, as we said in the rule, that while individual retirement investors who are being provided with more and more control and responsibility over how to invest their retirement savings (which should be a good thing), and as products become more complicated, we are not doing our collective best to make sure that we are supporting, empowering and educating those investors.”
She also voiced concerns over whether lawmakers are prioritizing the state of duty and prudence among industry professionals. “We are not doing our collective best to ensure that the professionals who retirement investors have trust and confidence in, whether the individual investors are making decisions about long-term investment strategy or what to do in a one-time rollover, are acting in their best interests,” Gomez wrote.
Gomez touched on the DOL’s indication in a September regulatory bulletin that it would remove and rewrite the fiduciary rule in May 2026.
“The Department says it is going to take another swing at it. I am interested to see what they will do, but rule or no rule, we need to work together to find a solution that everyone can accept and move on with,” Gomez concluded. “Retirement investors and the people who serve them deserve no less. Let’s put our heads together and figure out next steps.”
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
