Last week, two district courts—the Northern District of Texas and the Eastern District of Texas—issued stays on the Department of Labor's (DOL) proposed Retirement Security Rule.

The rule, which was scheduled to take effect on Sept. 23, would expand the meaning of “fiduciary" under the Employee Retirement Income Security Act (ERISA) and extend a standard of care to most annuity transactions.

The judge in the Eastern District of Texas wrote that “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 one-time recommendations to roll over assets from an ERISA plan to an IRA." He went on to state that “DOL's related amendments to Prohibited Transaction Exemption 84-24 are also unreasonable and arbitrary and capricious."

These rulings give relief to retirement plan sponsors and their advisors, who had been working to comprehend and implement the changes required by the rule. The DOL is likely to appeal these rulings but many observers agree that those efforts will fail.

Earlier this year, the Big “I" submitted comments opposing what was then the DOL's proposed rule. The Big “I" argued that the rule would reduce access to trusted financial advisors by placing unnecessary burdens upon that community.

Additionally, the Big “I" pointed out that consumer protections have already been put in place by federal and state regulators through the Securities and Exchange Commission's Regulation Best Interest and the National Association of Insurance Commissioner's Suitability in Annuity Transactions Model Regulation, which has been adopted by more than 40 states.

Nathan Riedel is Big “I" senior vice president, federal government affairs.