The U.S. District Court for the Eastern District of Texas Tyler Division has granted the request of the Federation of Americans for Consumer Choice and several independent insurance agents to delay the implementation of the Labor Department's new fiduciary rule.
FACC and the agents filed for a preliminary injunction in late May in the federal court, seeking to force Labor to delay implementation the rule.
The filing — the group's second — argues that Labor's rule will cause too much damage if it goes into effect, so the court needs to delay its implementation until FACC's existing case against Labor's Prohibited Transaction Exemption 2020-02 on rollover advice is resolved.
The decision, released Thursday, grants the plaintiffs' motion, staying the rule's Sept. 23 effective date and that of the amended PTE 84-24 until a further court order.
The 2024 fiduciary rule "suffers from many of the same problems" as the rule Labor enacted in 2016, the decision states. (That rule was ultimately vacated.)
"Plaintiffs are insurance agents who sell annuities and other products to clients rolling over their retirement investments from employer-provided plans (such as 401(k)s) into IRAs," the descision states. "They argue that the 2024 Rule conflicts with [the Employee Retirement Income Securiy Act] by imposing ERISA-fiduciary status on 'any insurance agent who merely complies with state insurance laws when dealing with an ERISA plan member or owner of an [IRA].'"
And "complying with the Rule while this lawsuit is pending, they argue, will subject them to 'significant compliance burdens, … potential liability under ERISA, and potential enforcement actions by DOL,'" the decision continues.
