Key Takeaways
- Shortly after the DOL’s new regulation defining fiduciary advice and amended Prohibited Transaction Exemptions 2020-02 and 84-24 were finalized, two lawsuits were filed in Federal District Courts in Texas.
- The lawsuits sought to “vacate”, or overturn, the regulation and exemptions as being beyond the authority of the DOL. In addition, the plaintiffs requested that the courts “stay” the effective dates of the regulation and exemptions pending the outcome of the lawsuits.
- In the past two weeks, both courts have agreed to stay the effective dates, pending resolution of the cases.
- The next step will be for those courts to determine if the regulation and exemptions are valid or should be vacated.
- However, there are still compliance issues.
The DOL’s fiduciary regulation was scheduled to become effective this September 23. The exemptions were scheduled to become partially effective this September 23 and fully effective September 23, 2025.
Two Federal district courts—one in the Eastern District of Texas and the other in the Northern District—have stayed the effective dates. That means that the new rules will not be effective until the courts have decided the validity of the regulation and exemptions and, most likely, until the appeals are exhausted one way or the other.
As a result, the current fiduciary regulation, with its 5-part test, will continue in effect pending the final resolution of the lawsuits. In the same vein, the current PTEs 84-24 and 2020-02 will continue in effect until a final decision is reached on the validity of the amended PTEs.
