THE HORIZON
On February 14, 2025, the Fifth Circuit Court of Appeals granted the Department of Labor a sixty-day pause in litigation over the 2024 Retirement Security Rule. That is a brick.
It is a small, procedural one, the kind that never makes a headline scroll past a financial news app. It belongs in the wall a builder is putting up around retirement money anyway.
The rule in question would have required brokers and insurance agents to act as fiduciaries when recommending a 401(k) rollover into an IRA or an annuity. With the case paused rather than decided, that standard is not in force, and will not be for at least two more months.
THE EVENT
The Fifth Circuit's order came in response to a joint request from the Department of Labor and the plaintiffs challenging the rule. Both sides asked for time while a new Labor Secretary nomination moved through the Senate.
The order removed the government's obligation to file a response brief that had been due February 14, 2025. It followed a pattern of delay that had already slowed the rule since its April 2024 finalization under the prior administration.
The Retirement Security Rule, first finalized in April 2024, aimed to close a long-standing gap in advice on IRA rollovers, an area where advisors historically operated under a lighter suitability standard rather than a fiduciary one.
The rule had also required disclosure of conflicts of interest tied to proprietary products, a provision insurers had specifically challenged in court. Its pause leaves that disclosure requirement unenforced as well, for the duration of the abeyance.
THE PATH
With enforcement paused, a builder rolling a 401(k) into an IRA this spring is getting advice under the same rules that applied in 2023, not the tighter standard the 2024 rule would have imposed. That gap matters most at the moment of a rollover, when a lump sum moves from a low-cost plan into an account that may carry higher advisory fees.
On a $400,000 rollover, a 1 percent annual advisory fee instead of a 0.3 percent expense ratio inside a former employer's plan costs roughly $2,800 a year in fee drag. Held for fifteen years and compounded, that gap alone can exceed six figures in lost growth.
The mechanism a builder controls regardless of the rule's status is the fee comparison itself, requested in writing before any rollover, since no regulation currently requires the advisor to volunteer it.
For a builder still five to ten years from any rollover decision, the exposure is procedural rather than urgent. A written fee and share-class comparison, obtainable at the time any advisor proposes moving retirement assets, exists independent of what a federal rule currently requires.
A less visible consequence touches business owners with a solo 401(k) or SEP IRA. Advisors marketing rollover services to owners selling a business or winding down a plan face the same reduced fiduciary pressure, at exactly the moment when the dollar amounts involved are largest.
An owner rolling $600,000 from a terminated solo 401(k) into an IRA-based annuity product, for instance, is relying entirely on the advisor's individual standards, not a federal backstop, while that pause remains in effect.
The brokerage-account angle is subtler still. Advisors who might have shifted client assets toward lower-cost index funds under a fiduciary standard have less regulatory pressure to do so, which keeps some rollover money in higher-cost active products longer than it might otherwise sit there.
Annuity products sold as part of a rollover deserve particular scrutiny while this pause holds, since surrender charges and commission structures inside annuities are exactly what a fiduciary standard was designed to police. The commission an advisor earns on that specific product is a figure a builder can request directly, independent of any rule's current status.
That is one more reason a builder benefits from naming his own target expense ratio, in writing, before any account transfer rather than after.
THE WATCH
Watch the docket in Employer Resources Coalition, and similar cases, as the sixty-day pause approaches its April 2025 expiration. Watch also for any nomination update on the Labor Secretary position, since that confirmation is what the pause was explicitly waiting on.
A builder now knows that a fiduciary standard he assumed was already active is, for the moment, still optional at the moment it matters most.
Sources
5th Circuit Grants DOL 60 More Days on Fiduciary Rule Lawsuit (PLANSPONSOR): https://www.plansponsor.com/5th-circuit-grants-dol-60-more-days-on-fiduciary-rule-lawsuit/
DOL Pauses Retirement Security Rule Litigation Defense (PSCA): https://www.psca.org/news/psca-news/2025/1/dol-pauses-retirement-security-rule-litigation-defense/