What Financial Advisers Need to Know About the Biden Administration’s Retirement Security Rule (As of April 2025) and the ERISA Nerd’s “two cents”
The Biden Administration’s push to strengthen retirement protections for American workers has been met with both praise and pushback. At the center of this effort is the Retirement Security Rule, a regulation was created that aims to ensure that all financial “professionals” act in the best interests of retirement investors.
While it was finalized in 2024, and supposed to go into effect on 9/23/2024, the rule's fate remains in limbo as we head into mid-2025—leaving financial professionals in a state of regulatory uncertainty.
Understanding the Retirement Security Rule: Where It Came From
This is not the first time the Department of Labor (DOL) has attempted to impose a stronger fiduciary standard on retirement advice. The Obama-era DOL issued a fiduciary rule in 2016, expanding the definition of who qualifies as a fiduciary under ERISA. That rule was struck down in 2018 by the Fifth Circuit Court of Appeals, which said the DOL overstepped its authority mainly because that rule would have allowed IRA holders to sue their adviser in court.
ERISA grants Title I participants (employer sponsored plans) direct access to courts. Also, Title I is regulated by the DOL. However, IRA holders fall under Title II of ERISA and do not have access to the court system. Also, the IRS, not the DOL, regulates Titles II accounts. So, the courts struck down the Obama rule for creating a new “right of action” (ability to go to court) for IRA holders.
Fast forward to the Biden Administration: In a renewed effort to curb conflicts of interest and protect everyday investors, the DOL released its revised Retirement Security Rule in late 2023 and finalized it in April 2024. The new version attempts to withstand legal scrutiny by refining how fiduciary status is applied to financial professionals who provide investment advice for retirement assets. The new rule would not dramatically affect most RIAs and their investment advisers as they already have to comply with the ERISA rules when working with 401(k) participants. However, it would dramatically effect insurance agents and brokers who would be brought under ERISA for the very first time.
The intent of the rule is clear: ensure that all advice regarding rollovers, IRA contributions, or any retirement-related transactions is in the best interest of the investor.
Key Provisions of the Rule
Here’s what the Retirement Security Rule proposes:
Expanded Fiduciary Definition: Financial professionals who provide "recommendations" for retirement accounts—even on a one-time basis—could be treated as fiduciaries.
Best Interest Standard: Advisers must prioritize the investor’s financial interests over their own compensation or incentives.
Disclosure Requirements: Advisers must clearly disclose conflicts of interest and compensation arrangements.
Recordkeeping & Compliance: Firms are expected to have internal policies and procedures that support adherence to the rule.
The DOL emphasized that the goal is not to limit product offerings but to ensure that recommendations are based on what's right for the investor—not what pays the adviser more.
Legal Challenges and Delays
Despite the revised approach, the new rule faced swift legal opposition. By the summer of 2024, multiple lawsuits had been filed by industry groups—arguing that the DOL was once again exceeding its statutory authority, just as it did in 2016.
Federal courts in Texas and Florida issued preliminary injunctions blocking enforcement of the rule, which was originally set to take effect on September 23, 2024.
In February 2025, the new “Trump DOL” requested a pause in ongoing appeals, stating that newly appointed officials wanted time to review the rule and its legal implications. The Fifth Circuit Court of Appeals granted this request, placing the case in abeyance (suspension) until June 16, 2025.
Where Things Stand Now (April 2025)
The Rule Is Finalized—but Not Enforced.
Technically, the rule was finalized in 2024. However, due to legal stays (pauses) and the DOL’s request for review, no enforcement action is currently underway.The Litigation Pause Runs Until June 16, 2025.
At that point, the DOL will either proceed with the rule, modify it, or potentially withdraw it depending on internal review and legal strategy.Advisers Remain Under Existing Regulations.
For now, the existing fiduciary obligations under ERISA and the Prohibited Transaction Exemption (PTE) 2020-02 remain the baseline standard—particularly for rollover advice if you are deemed an “ERISA Fiduciary”. (Reread the 11/5/24 blog titled “Am I an ERISA Fiduciary” https://www.erisanerd.com/blogs/am-i-an-erisa-fiduciary).
What Financial Advisers Should Do Now
Even though the Retirement Security Rule isn’t being enforced today, advisers should not ignore its implications. In fact, the industry trend is clearly moving toward higher standards, more transparency, and greater scrutiny.
Here’s how to stay ahead:
1. Audit Your Advice Process
Even if you're not currently a fiduciary under ERISA for certain accounts, ask yourself:
Are you making recommendations that could later be interpreted as fiduciary advice?
Are your compensation structures clearly disclosed?
2. Stay Educated and Proactive
Regulatory shifts can come quickly once litigation is resolved. Make sure your compliance team and back office are ready for potential changes in documentation and client communications. Be sure to subscribe to our blog for more information on this topic as it becomes available.
3. Lean Into Best Interest Practices
Clients appreciate transparency. Use this moment to emphasize your commitment to acting in their best interest—even if you’re not currently required to under law. It builds trust and futureproofs your business. Look into our ERISA Best Practices (CE) Course at https://www.erisanerd.com/erisa-best-practices-ce-course
Looking Ahead: Uncertainty
Most “experts” believe that the Trump Administration will not take any action and let the “Biden Rule” die on the vine. This is what happened with the Obama era rules that were challenged in court when the Trump administration took over the DOL the first time.
However, I would like to play “devils advocate” for a second. I think that Trump, if he is fully informed on what the rule is, may choose to fight for it. He may want the courts to approve the Biden Administration’s changes.
Why?
Ego!
Most everyone has focused on the fact that the Biden Rule would expand ERISA Fiduciary status to EVERYONE who works with 401k participant or an IRA. Currently only RIA/IARs are held to “ERISA Fiduciary” status if they don’t choose a “loophole” to avoid the status.
But one thing that has been overlooked is the fact that the Biden Administration is trying to get rid of many Prohibited Transaction Exemptions (PTEs). They are looking to make PTE 2020-02, formally known as “Improving Investment Advice for Workers & Retirees” or informally as “The Rollover Rule”, the law of the land.
The Biden Administration is literally trying to make PTE 2020-02 the only exemption available for conflicted advice (unless you are an insurance broker, then you could use the new PTE 84-24).
It was the Trump Administration’s DOL who wrote PTE 2020-02. So, I am not yet ruling out that just due to ego alone, the Trump administration may fight to preserve the “Biden Rule”.
Only time will tell.
So for now, we speculate for another couple months.
All eyes are on June 16, 2025.
Well maybe not “all eyes”, but for sure this ERISA nerd’s eyes are!