The 1975 Five-Part Test Is Back: What Financial Advisors Must Do when working with “held-away” 401(k)s
The 1975 “five-part test” returned this year, and if you think that means less risk, pump the brakes.
After the March 2026 court decisions wiped out the DOL’s 2024 Retirement Security Rule, the Department of Labor (DOL) officially reverted to the old standard.
Sounds simple?
It’s not.
For advisors handling rollover conversations or managing held-away 401(k) accounts, this is not some magical compliance vacation. It’s the same minefield. Just with older signage.
So here’s the truth over coffee: the rule changed, but your exposure didn’t disappear. In some cases, it just got easier for people to misunderstand where the real danger lives.
What Actually Changed
In 2024, the DOL tried to stretch fiduciary status across a much wider range of retirement recommendations, including one-time rollover advice. Then courts in Texas shut it down in March 2026, and the DOL restored the 1975 five-part test.
That means we’re back to the old framework. Not back to safety. Back to the framework.
The 1975 Five-Part Test, Fast
Under the restored rule, you’re an ERISA investment advice fiduciary only if all five of these are true:
Specific Recommendations: You make recommendations about securities or other plan assets.
Compensation: You receive direct or indirect compensation.
Individualized Needs: The advice is tailored to the person or plan.
Primary Basis: There’s a mutual understanding the advice will be a primary basis for decisions.
Regular Basis: The advice happens on a regular basis.
That last one matters. A lot.
The “Regular Basis” Trap
This is where people get cute. And sloppy.
A lot of advisors hear “regular basis” and immediately think: “Great. One-time rollover advice probably keeps me out of ERISA fiduciary status.” Maybe. But don’t spike the football yet.
That narrow reading can run you straight into a brick wall.
Even if a one-time recommendation doesn’t satisfy every part of the 1975 test, you’re still dealing with:
Reg BI
State insurance rules
Client expectations about acting in their best interest
Potential litigation risk if your documentation is weak
In other words, the old test is not a hall pass for thin process and lazy files. If your defense is “technically I may not have tripped all five prongs,” that’s not exactly a confidence-inspiring position when things go sideways. You know that. I know that. Your E&O carrier definitely knows that.
Held-Away 401(k) Advice Still Carries Real Risk
If you work with held-away 401(k) accounts, this is where the rubber meets the road.
When you’re monitoring, reallocating, or making ongoing recommendations inside those accounts, you are likely stepping right into the regular basis and primary basis prongs. That’s the issue. Not the label. Not the marketing spin. The actual relationship.
So no, the rollback doesn’t suddenly make held-away advice easy. It just puts you back under a standard that many people misread.
If your team is giving ongoing guidance, your documentation should clearly spell out:
What you are advising on
How you are paid
Whether the relationship is ongoing
What authority you do and do not have
If that stuff is fuzzy, you’re not being flexible. You’re being exposed.
Practical Action Steps
Here’s the no-nonsense version of what to do next:
Audit your agreements. Make sure they match the real scope of your held-away advice.
Tighten rollover documentation. Even if ERISA fiduciary status is debatable, your best-interest process should not be.
Retrain your team. Especially anyone talking to participants, prospects, or rollover clients.
Document like your future self will need receipts. Because they might.
Bottom Line
The 1975 five-part test is back. Fine. But this is not the moment to get casual.
The regular basis trap is real. Held-away 401(k) advice is still risky. And one-time recommendations still carry exposure, even when ERISA fiduciary status is less clear.
So tighten the process. Clean up the paperwork. Stop looking for loopholes that don’t really pencil out.
Because in this business, “probably okay” is a terrible compliance strategy.