In August 2025, President Trump issued an executive order directing the Department of Labor (DOL) to reexamine its guidance on fiduciary duties related to alternative investments in ERISA‑governed defined contribution plans. In response, the DOL released a proposed regulation on March 30, 2026 titled “Fiduciary Duties in Selecting Designated Investment Alternatives.” While the executive order focused on alternative assets, the DOL emphasizes that the proposed rule applies broadly to all plan investments and does not favor or discourage any specific asset type.
Here’s What You Really Need to Know
The proposed regulation:
- Reaffirms that ERISA’s fiduciary duty of prudence is process‑based, giving plan fiduciaries broad discretion and flexibility when selecting investments.
- Clarifies that fiduciary responsibilities apply consistently across all investment types, regardless of asset class.
- Introduces a safe harbor framework fiduciaries may use to satisfy ERISA prudence requirements.
- Emphasizes the importance of engaging qualified investment professionals when plan sponsors lack the expertise to evaluate investment options.
This is a proposed rule only. Comments will be accepted for 60 days following publication in the Federal Register, and no action is currently required.
Let’s Dive In
To satisfy ERISA’s duty of prudence when selecting plan investment options, fiduciaries must follow a prudent, well‑documented process that considers the relevant facts and circumstances of each investment. The proposed regulation reinforces three core principles: ERISA is grounded in process, fiduciaries are afforded broad discretion and flexibility, and decisions made through a prudent process should be afforded deference.
The proposal focuses solely on the duty of prudence and does not address the duty of loyalty or other ERISA obligations. It also makes clear that ERISA does not require or prohibit any specific type of investment, except where an investment would otherwise be unlawful.
Safe Harbor Framework
The proposed rule introduces a voluntary safe harbor framework outlining six key factors fiduciaries should evaluate when selecting and monitoring plan investments. While not exhaustive, the DOL notes these factors are relevant to most investment options and should be assessed by comparing a reasonable number of similar alternatives and considering how each supports the plan’s objectives:
- Performance: Risk‑adjusted expected returns, net of fees, over an appropriate time horizon
- Fees: Whether costs are reasonable relative to expected returns and overall value provided
- Liquidity: The investment’s ability to meet anticipated plan‑ and participant‑level needs
- Valuation: The ability to value the investment accurately and in a timely manner
- Benchmarks: Use of a meaningful benchmark aligned with the investment’s objectives and risks
- Complexity: Whether the fiduciary has sufficient expertise to evaluate the investment or needs to engage qualified assistance
The DOL includes examples addressing common concerns—such as liquidity, valuation, and complexity—often associated with alternative investments, including private markets and retirement income solutions.
Action Items for Plan Sponsors
Plan sponsors should consider the following:
- Review the proposed regulation with your plan advisor or consultant to understand potential impacts on your investment lineup.
- Reaffirm that your investment selection and monitoring process—including your Investment Policy Statement—aligns with the proposed safe harbor framework.
- Evaluate how these considerations may apply to future investment options, such as expanded target date funds, managed accounts, private market exposures, or retirement income solutions.
- Monitor developments as the DOL moves toward a final rule to understand what changes may apply to your investment selection process.
[i] Donald J. Trump, “Democratizing Access to Alternative Assets for 401(k) Investors,” Executive Order, August 7, 2025, https://www.whitehouse.gov/presidential-actions/2025/08/democratizing-access-to-alternative-assets-for-401k-investors/.
[ii] U.S. Department of Labor, Employee Benefits Security Administration, “Fiduciary Duties in Selecting Designated Investment Alternatives Proposed Rule,” fact sheet, March 30, 2026, https://beta.dol.gov/research-data/fact-sheet/fiduciary-duties-selecting-designated-investment-alternatives-proposed-rule.