DOL Drops Rollover Appeal

The Department of Labor on Monday dismissed its appeal of a ruling in favor of the American Securities Association against Labor’s guidance that declared rollover advice fiduciary advice.

A federal court in Tampa, Florida, struck down in mid-February the Labor Department’s guidance. The court ruled that Labor’s interpretation of the five-part test setting out who qualifies as a fiduciary under the Employee Retirement Income Security Act was “arbitrary and capricious.”

The case was brought in February 2022 by the American Securities Association in the Middle District of Florida challenging what ASA said was “Labor’s attempt to change existing retirement rules without going through a notice-and-comment rulemaking as is required under the Administrative Procedure Act.”

Labor’s guidance stated that a financial advisor’s one-time recommendation to roll over retirement assets may be subject to ERISA fiduciary duties. The District Court declared this action “arbitrary and capricious” and vacated it, ASA said.

“We are pleased the DOL dropped its appeal of the district court’s decision to strike down its attempt to change existing rules about retirement advice without a formal rulemaking,” said Chris Iacovella, president & CEO of ASA on Monday in a statement.