Recent federal court decisions vacating the Department of Labor’s (DOL) 2024 fiduciary rule have prompted a common and practical question from retirement plan service providers: Does this change affect whether we still need to rely on PTE 2020‑02 for non‑discretionary fiduciary advice? For providers acting as ERISA fiduciaries, the answer is no. The litigation does not change the operation or requirements of the existing prohibited transaction exemption.
In practice, service providers are focused on the exemption from the underlying prohibited transaction. Where a service provider is acting as an ERISA fiduciary and receives compensation from a plan in connection with investment recommendations, particularly compensation that varies based on the investment selected, the IRS and DOL treat that arrangement as inherently conflicted and prohibited. Because these arrangements are common, service providers rely on an exemption to continue receiving commissions, asset‑based fees, or revenue sharing in connection with fiduciary investment advice.
Since 2020, that prohibited transaction has been addressed primarily through reliance on Prohibited Transaction Exemption (PTE) 2020‑02. PTE 2020‑02 permits financial institutions and their representatives to receive otherwise prohibited compensation in connection with non‑discretionary fiduciary investment advice, provided that the exemption’s conditions are satisfied. Those conditions include, among other requirements, a written acknowledgment of fiduciary status, compliance with a best interest standard reflecting ERISA’s duties of prudence and loyalty, receipt of no more than reasonable compensation, disclosure of material conflicts of interest, adoption of written policies and procedures designed to mitigate conflicts, and completion of an annual retrospective compliance review certified by a senior executive officer. Failure to satisfy any of these conditions can cause the exemption to be unavailable.
Recent litigation and related DOL actions do not change this framework. In March 2026, federal district courts vacated the DOL’s 2024 “Retirement Security Rule,” which had attempted to expand the definition of fiduciary investment advice. The Department subsequently removed the 2024 rule from the Code of Federal Regulations, restored the prior fiduciary framework, and republished the operative text of PTE 2020‑02, which confirmed that the exemption itself was not vacated and remains in effect. Because PTE 2020‑02 was never dependent on the 2024 fiduciary rule, these developments do not affect its continued availability or requirements.
In short, while the recent court decisions reset the broader debate over the scope of fiduciary status, they do not alter the prohibited transaction analysis applicable to non‑discretionary fiduciary advice. Until the DOL says otherwise, PTE 2020‑02 remains the governing rule of the road, and service providers should continue to evaluate advisory relationships and compensation practices accordingly.
