At the end of October, the Department of Labor unveiled a new version of its fiduciary rule. This version is even more expansive, despite a similar version being struck down by an appeals court in 2018.

According to the Biden administration, the newer rule would expand the definition of who is acting as an investment advice fiduciary. It aims to “close loopholes” and eliminate “junk fees” for fixed-index annuities. For the first time, it would also apply to those who give advice to employers and plan fiduciaries and to those who give onetime counsel for transactions like 401(k) and IRA rollovers.

“While investment professionals deserve to be paid fairly for helping people meet their savings goals and retire with dignity, there are some financial advisors who put their interests before their clients’ interests. This can result in reduced returns and higher costs, which are junk fees that chip away at many Americans’ savings,” the U.S. Department of Labor said in a statement.

In 2022, Americans rolled over about $779 billion from defined contribution plans such as 401(k)s into IRAs, according to Cerulli Associates.

According to the White House, which also cited Cerulli’s analysis, “conflicted advice” about fixed-index annuities alone could cost savers up to $5 billion per year.

“America’s workers and their families should not have excess fees and lost investment returns chipping away at their retirement savings due to the cost of conflicted investment advice,” said Julie Su, the acting secretary of labor, in a statement about the proposed rule.

The existing DOL rule gives advisors—particularly commission-based brokers and insurance agents—the legal cover they need to make certain transactions otherwise prohibited in their roles as fiduciaries. The new rule would require investment advice fiduciaries to give advice that meets a professional standard of care or duty of prudence and puts the retirement investor first, and it would prohibit advisors from misleading investors or charging more than reasonable compensation, the DOL said.

For the first time, the new DOL proposal applies the fiduciary standard to those giving onetime advice to investors to roll assets out of an employer-sponsored plan like a 401(k) and into an IRA or annuity. There is currently a loophole that allows advisors to escape a best-interest standard in these cases, the DOL said.

“Onetime advice is often the most important advice the retirement investor will ever receive,” the agency said.

The new DOL rule would also cover those advisors who counsel plan sponsors, as well as the advice they give on the selection of investments to make available as options in 401(k)s and other employer-sponsored plans.

“When advisors make recommendations to plan sponsors, including small employers … that advice is not subject to the SEC’s Regulation Best Interest and right now is not required to be in the customer’s best interest,” the DOL said.

The insurance and annuities industries, which have successfully overturned DOL rules in the past, are poised to challenge the proposal.

Kevin Mayeux, CEO of the National Association of Insurance and Financial Advisors, called the proposal “the offspring of the department’s failed fiduciary-only model for advisory services that would limit consumers’ choices and curtail the access of many middle- and lower-income investors to individualized advice and services. This is the fourth time since 2010 the federal government has tried to expand fiduciary requirements for advisors.”

The CFP Board, on the other hand, supported the DOL’s proposal.

Current law “does not prevent advisors from taking advantage of gaps in the regulations to steer their clients into high-cost, substandard investments that pay the advisor well but eat away at retirement investors’ nest eggs over time,” the CFP Board said.