Workers’ Retirement Savings Protection Act of 2026
- Sponsor
- Rep. Scott, Robert C. "Bobby" [D-VA-3]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Oct 1, 2026
Bottom line
This bill significantly expands the scope of fiduciary duty for retirement investment advisors, aiming to protect savers by requiring advisors to prioritize client interests over their own.
What it actually does
This bill significantly expands the definition of "fiduciary" under the Employee Retirement Income Security Act of 1974 (ERISA) to include more individuals and entities providing retirement investment advice for a fee. It broadens the types of advice and compensation that trigger fiduciary status, requiring advisors to act in the best interest of their clients, including those with individual retirement accounts (IRAs).
Proponents argue
Proponents argue that the current regulatory landscape allows many financial advisors to operate under a less stringent "suitability" standard, leading to conflicts of interest where advisors can recommend products that earn them higher commissions but are not necessarily in the client's best interest. This bill would close loopholes, ensuring that all who provide individualized retirement investment advice for a fee are held to a fiduciary standard, thereby protecting workers' retirement savings from conflicted advice.
Opponents contend
Opponents might argue that expanding the fiduciary definition too broadly could increase compliance costs for financial advisors, potentially leading to fewer advisors serving smaller accounts or offering a more limited range of products. They may contend that existing regulations are sufficient and that a broader fiduciary rule could make financial advice less accessible or more expensive for everyday investors, particularly those with modest savings.
The bill text is short and relatively straightforward, allowing a quick read. However, understanding its full implications requires familiarity with existing ERISA regulations and financial industry practices.
Section 2(a)(2), adding new subparagraph (C) to 29 U.S.C. 1002(21)
Redefining Fiduciary for Retirement Investment Advice
This provision states that a person becomes a fiduciary if they provide individualized advice on investment property or strategies for a fee, or if they recommend actions like rolling over retirement assets. This significantly broadens who is considered a fiduciary, moving beyond the previous, narrower "five-part test" to include anyone giving personalized retirement investment advice for compensation.
Supporters argue
Supporters argue this ensures advisors prioritize client interests, reducing conflicts that can erode retirement savings. It creates a level playing field where all retirement advice is held to the same high standard.
Critics contend
Critics may argue this could increase compliance costs for advisors, potentially leading to reduced access to advice for small investors or a more limited range of product offerings, as firms may shy away from perceived higher liability.
Tradeoffs
The tension lies between protecting investors from conflicted advice and ensuring broad access to affordable financial advice. Stricter rules may offer greater protection but could also increase costs or reduce availability for some.
Section 2(a)(2), adding new subparagraphs (D) and (E) to 29 U.S.C. 1002(21)
Comprehensive Definition of Compensation Triggering Fiduciary Status
This provision explicitly defines "fee or other compensation" to include a wide array of direct and indirect payments, such as commissions, loads, revenue sharing, marketing fees, and even non-cash compensation, received from any source. It clarifies that if any part of this compensation would not have been paid without the recommended transaction or advice, it counts towards triggering fiduciary status. This aims to capture all forms of compensation that could create a conflict of interest.
Section 2(a)(2), adding new subparagraph (F) to 29 U.S.C. 1002(21)
Extending Fiduciary Protections to IRAs
This provision explicitly states that the expanded fiduciary definition applies not only to traditional employee benefit plans but also to individual retirement accounts (IRAs) and annuities. This is a crucial expansion, as IRAs represent a significant portion of Americans' retirement savings and were often not covered by the same strict fiduciary standards as employer-sponsored plans.
Section 2(b)
Nullification of Prior Fiduciary Definition Regulation
This section explicitly states that Section 2510.3-21(c) of title 29, Code of Federal Regulations, which contained the Department of Labor's previous "five-part test" for determining fiduciary status, will have no force or effect. This effectively clears the way for the bill's new, broader statutory definition of fiduciary to be the sole standard.
This provision explicitly repeals the Department of Labor's regulation 2510.3-21(c), which established the previous "five-part test" for determining when an investment advisor was an ERISA fiduciary.
Section 2(b)
Why it matters:This is standard legislative practice to ensure that new statutory language supersedes prior regulatory interpretations. It's not necessarily evasive but requires specific knowledge to understand its full impact.
Case for: Supporters argue this is crucial to ensure the new, broader statutory fiduciary standard takes full effect without being constrained or contradicted by outdated regulatory guidance that was seen as too narrow.
Case against: Critics might argue that immediately nullifying existing guidance without a clear, detailed replacement could create a period of regulatory uncertainty for financial institutions, potentially disrupting service provision.
Estimated impact: This provision has a significant, immediate impact on the regulatory landscape, effectively resetting the baseline for fiduciary determination under ERISA.