Part 3 · Chapter 1

Fiduciary Duties and Prohibited Transactions

Law stated as of October 3, 2026 · Fiduciary Duties and Prohibited Transactions

Scope and status

This area moves with litigation and rulemaking — most acutely the 2024 fiduciary "Retirement Security Rule," which was vacated, restoring the 1975 five-part investment-advice test (A4). Verify the investment-advice rule status, the current PTE conditions, indexed figures, and controlling circuit/Supreme Court law before relying on them.

Citations are to primary authority (ERISA §§3(21), 404–408, 412; Code §4975; the DOL regulations in 29 C.F.R. Parts 2509, 2510, 2550, 2570; the prohibited-transaction class exemptions (PTEs); and controlling case law). Run the fiduciary-breach analysis (§404) and the prohibited-transaction analysis (§406/§4975) as two separate tracks — a transaction can violate one and not the other. Related questions are treated elsewhere: VFCP/Form 5330 correction mechanics in Part 21 (Plan Corrections: EPCRS, VFCP, and DFVCP) (including its VFCP chapter); §408(b)(2)/§404a-5 disclosure detail in Part 4 (Reporting, Disclosure, Recordkeeping, and Claims); and DC investment menu selection, fees, and the 2026 investment rulemakings in this Part's companion DC Plan Investment Menu Governance.

Sections

Part A is shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Fiduciary Status (the gateway question)

A1.ERISA defines a fiduciary by function, not title

Part 3, ch. 1, § A1

A person is a fiduciary to the extent they (1) exercise discretionary authority or control over plan management, (2) exercise any authority or control over plan assets, (3) render investment advice for a fee (or have authority to do so), or (4) have discretionary authority or responsibility in plan administration. Statute: ERISA §3(21)(A); 29 U.S.C. §1002(21). Fiduciary status is functional and transaction-specific — one acts as a fiduciary only when performing a fiduciary function, and liability attaches to that conduct.

A2.Named fiduciaries, trustee, administrator, and the §3(38) investment manager

Part 3, ch. 1, § A2

Every plan must name one or more named fiduciaries with authority to control and manage the plan. Statute: ERISA §402(a). The trustee has exclusive authority over plan assets unless the plan provides the trustee is subject to the direction of a named fiduciary, or authority is delegated to a §3(38) investment manager (a registered adviser, bank, or insurer that acknowledges fiduciary status in writing). Statute: ERISA §§403(a), 3(38). Appointing a §3(38) manager shifts investment-management fiduciary liability away from the appointing fiduciary (which retains the duty to prudently select and monitor the manager and remains liable for its own acts, including knowing participation in or concealment of the manager's breach). Statute: ERISA §405(a)(1), (d).

A3.Functional ("de facto") fiduciaries and the service-provider line

Part 3, ch. 1, § A3

A person who is not named can still be a functional fiduciary by exercising discretionary control in fact. Statute: ERISA §3(21); DOL guidance: interpretive bulletin, 29 C.F.R. §2509.75-8 (D-2 et seq.). A service provider (recordkeeper, TPA, broker) performing ministerial functions within a framework set by others is not a fiduciary; it becomes one if it exercises any authority or control over plan assets, exercises discretion over plan management or administration, or renders investment advice for a fee.

A4.Investment-advice fiduciary — the five-part test (current after the 2024-rule vacatur)

Part 3, ch. 1, § A4

Currency item (central). The DOL's 2024 "Retirement Security Rule," which broadened the investment-advice fiduciary definition, was vacated by federal courts; on March 20, 2026 (effective April 20, 2026) the DOL recodified the 1975 five-part test (the 2024 rule had been stayed and never took effect). Final reg: 29 C.F.R. §2510.3-21 (restored five-part test); DOL guidance: 2026 Federal Register vacatur/recodification notice. Under the operative test, a person is an investment-advice fiduciary only if they: (1) render advice as to the value of or advisability of investing in securities/property, (2) on a regular basis, (3) pursuant to a mutual understanding that the advice (4) will serve as a primary basis for investment decisions and (5) is individualized to the plan/participant — for a fee. Final reg: 29 C.F.R. §2510.3-21(c) (1975 test). With the 2024 amendments non-operative, PTE 2020-02 applies in its 2020 form (Impartial Conduct Standards, written fiduciary acknowledgment, and a documented rationale for rollover recommendations); the 2024 amendments to PTEs 75-1, 77-4, 80-83, 83-1, and 86-128 are likewise non-operative; and DOL now treats the entire preamble of PTE 2020-02 (Dec. 18, 2020), including its "regular basis" interpretation for rollovers, as effectively vacated, after ASA v. DOL (M.D. Fla. 2023) vacated the policy in DOL's April 2021 FAQ 7 and FACC v. DOL (N.D. Tex. July 9, 2025) vacated the preamble's five-part-test interpretation; the exemption's own conditions remain in effect.

A5.Settlor versus fiduciary functions

Part 3, ch. 1, § A5

Business decisions about the plan's existence and design — whether to establish, amend, or terminate a plan, and benefit-level design — are settlor acts to which ERISA's fiduciary duties do not apply; the same person wears a fiduciary hat when administering or investing the plan. DOL guidance: Settlor-expense guidance; Lockheed Corp. v. Spink, 517 U.S. 882 (1996).

A6.Service in more than one capacity

Part 3, ch. 1, § A6

A person may act in both fiduciary and non-fiduciary capacities, and may hold multiple fiduciary roles, but is judged as a fiduciary only as to the fiduciary acts; wearing "two hats" does not by itself violate ERISA, though it heightens §406(b) conflict scrutiny. Statute: ERISA §408(c)(3); Pegram v. Herdrich, 530 U.S. 211 (2000).

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.