The effective dates of the Department of Labor’s new 2024 fiduciary advice rule (the “2024 Fiduciary Rule”) and the amendments to Prohibited Transaction Exemptions 84-24, 75-1, 77-4, 80-83, 83-1, 86-128, and 2020-02 (the “Amended Exemptions”), were recently stayed by the federal District Courts of the Fifth Circuit. The 2024 Fiduciary Rule and the Amended Exemptions were to be effective on September 23, 2024.

In the Eastern District Court of Texas, the plaintiffs, a group of licensed insurance agents, challenged the 2024 Fiduciary Rule and Amended Exemptions on the basis that (1) the Department of Labor (“DOL”) exceeded its authority under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Internal Revenue Code of 1986, as amended (“Code”), and the Administrative Procedure Act (“APA”), and (2) the 2024 Fiduciary Rule and PTE 84-24 are arbitrary, capricious, and irreconcilable with the text of ERISA and the Code. The Eastern District Court granted a stay of the effective date of the 2024 Fiduciary Rule and PTE 84-24, finding that the “Plaintiffs are likely to succeed on the merits of their claim because the 2024 Fiduciary Rule conflicts with ERISA in several ways, including by treating as fiduciaries those who engage in onetime recommendations to roll over assets from an ERISA plan to an IRA.”

The following day, the Northern District Court of Texas issued a stay of the remaining Amended Exemptions. The Northern District Court found that the plaintiffs in that case were “virtually certain to succeed on their claims that the Rule exceeds DOL’s statutory authority. . .”

Seward & Kissel actively monitors ERISA updates. If you have questions or concerns about the recent 2024 Fiduciary Rule or Amended Exemptions, please contact Bradley Fay at (212) 574-1429, S. John Ryan at (212) 574-1679, Michael O’Brien at (212) 574-1505, or Shayna Roth at (212) 574‑1309.