Employee Benefits Security Administration proposes a safe harbor for fiduciaries choosing retirement plan investment options
As of our last check on November 2, 2026, this is a proposal, not a requirement. Comments closed June 1, 2026.
We check the Federal Register daily for later actions. We check federal court opinions for rulings on published rules weekly, on Mondays. A ruling can take time to reach us, so not finding one here does not mean there is none.
In short
- What changed
- The Employee Benefits Security Administration (EBSA) proposes a rule under the Employee Retirement Income Security Act (ERISA) on how fiduciaries choose investment options for participant-directed retirement plans such as 401(k) plans. A fiduciary that weighs six factors (performance, fees, liquidity, valuation, benchmark and complexity) would be presumed to have acted prudently, and the proposal says ERISA neither requires nor bars any type of investment, including alternative assets.
- Who's affected
- Employers that sponsor participant-directed plans and the people or committees who pick the plan's investment menu, along with their investment advisers and plan service providers. The agency expects many small plans to be affected mostly through their service providers.
- What to do
- This proposal creates no new duties for employers, and the safe harbor would be voluntary if finalized. Comments are due on or before June 1, 2026. Plan investment committees may want to review how they document fund selections against the six proposed factors.
What changed
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From the sourceSUMMARY
a proposed regulation that clarifies, and provides a safe harbor for, a fiduciary's duty of prudence under the Employee Retirement Income Security Act of 1974 (ERISA) in connection with selecting designated investment alternatives for a participant-directed individual account plan
EBSA proposes a new section of the Code of Federal Regulations (CFR), 29 CFR 2550.404a-6, that would clarify, and provide a safe harbor for, a fiduciary's duty of prudence under ERISA when selecting investment options (designated investment alternatives) for a participant-directed individual account plan.
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From the sourceSUMMARY
This proposal implements section 3(c) of President Trump's Executive Order 14330, Democratizing Access to Alternative Assets for 401(k) Investors.
The proposal carries out section 3(c) of Executive Order 14330 on access to alternative assets for 401(k) investors.
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From the sourceSupplementary Information, 4.5 Safe Harbor
the six factors are as follows: performance, fees, liquidity, valuation, benchmarking, and the complexity of the designated investment alternative.
The proposal lists six factors for fiduciaries to consider when selecting an investment option: performance, fees, liquidity, valuation, benchmarking and complexity.
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From the sourceProposed 29 CFR 2550.404a-6(f)
the plan fiduciary's judgment with respect to the particular factor or factors, including the relationship between the factors, is presumed to have met the duties under section 404(a)(1)(B) of ERISA of such fiduciary and is entitled to significant deference.
A fiduciary that follows the proposed process for a factor would be presumed to have met ERISA's prudence duty for that factor and would be entitled to significant deference.
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From the sourceProposed 29 CFR 2550.404a-6(c)
Section 404(a)(1)(B) of ERISA does not require or restrict any specific type of designated investment alternative, except insofar as a designated investment alternative might be otherwise illegal.
The proposal states that ERISA's prudence duty neither requires nor restricts any specific type of investment option, unless the investment is otherwise illegal.
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From the sourceProposed 29 CFR 2550.404a-6(m)(2)
The term ``designated investment alternative'' shall not include ``brokerage windows,'' ``self-directed brokerage accounts,'' or similar plan arrangements
Brokerage windows and self-directed brokerage accounts would not count as designated investment alternatives under the proposal.
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From the sourceSupplementary Information, 4.1 Scope
The proposed regulation does not address ERISA's well-established duty for fiduciaries to monitor designated investment options at regular intervals after their selection.
Also: Supplementary Information, 4.1 Scope
The Department anticipates issuing interpretive guidance in the near term concerning fiduciary obligations under ERISA to monitor designated investment alternatives following their inclusion on a plan's investment menu.
The proposal does not cover the ongoing duty to monitor investments after they are selected. EBSA says it expects to issue separate interpretive guidance on monitoring.
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From the sourceSupplementary Information, 2.2
Nothing in today's proposed regulation is intended to disturb the 1979 Investment Duties Regulation.
Also: Supplementary Information, 4.4
nothing in the proposed regulation excuses a fiduciary from complying with its obligations to act loyally or avoid prohibited conflicts of interest under sections 404(a)(1)(A) or 406 of ERISA respectively.
The proposal does not change the existing 1979 investment duties regulation or the separate duties of loyalty and the rules against conflicts of interest.
Who is affected
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From the sourceProposed 29 CFR 2550.404a-6(b)
The selection of a designated investment alternative (as defined in paragraph (m) of this section) for a participant-directed individual account plan is a fiduciary act governed by the fiduciary standards of section 404(a)(1)(B) of ERISA.
Also: Supplementary Information, 2.3.3
today's proposed regulation applies to defined contribution plans
The proposal addresses fiduciaries who select investment options for participant-directed individual account plans, which are defined contribution plans.
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From the sourceRegulatory Impact Analysis, 12.6 Affected Entities
The proposed rule would likely affect most participant-directed defined contribution plans as well as their participants and beneficiaries
Also: Regulatory Impact Analysis, 12.6 Affected Entities
The Department anticipates that many service providers would also be affected by the proposed rule.
EBSA expects the proposal to affect most participant-directed defined contribution plans and their participants, and many plan service providers.
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From the sourceRegulatory Impact Analysis, 12.6 Affected Entities
Smaller plans, on the other hand, often rely on a service provider to design their plan's menu. In such cases, they likely would not utilize the proposed rule directly
EBSA says smaller plans often rely on a service provider to build their investment menu and likely would not use the rule directly.
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Our analysisProposed 29 CFR 2550.404a-6(h)(2)
The plan document specifies that the director of human resources is the named fiduciary of the plan
Employer staff can be the plan fiduciary. One of the proposal's examples names a human resources director as the named fiduciary, so human resources and benefits leaders who sit on investment committees would be among those the proposal speaks to.
What it means in practice
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From the sourceRegulatory Impact Analysis, 12.8 Costs
The Department expects the rule, when finalized, will reduce costs by $488.0 million in the first year and $591.9 million in subsequent years
Also: Regulatory Impact Analysis, 12.8.3
The Department assumes that these time reductions will be most felt at Investment Committee Meetings, where litigation trends and their impact on plan investments are routinely discussed.
EBSA estimates that, if finalized, the rule would reduce costs by $488.0 million in the first year and $591.9 million in later years, mainly through shorter investment committee work on litigation risk.
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From the sourceRegulatory Impact Analysis, 12.8.1 Rule Review
it will take legal professionals roughly 5 hours to review the proposed rule for those plans that handle plan administration in-house, and 10 hours for service providers.
EBSA estimates that reviewing the rule would take legal staff about 5 hours for plans that handle administration in-house and 10 hours for service providers.
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From the sourceRegulatory Impact Analysis, 12.11.1
plans are under no obligation to use the safe harbor or to change their plan investment menu in response to the proposed rule.
Also: Regulatory Flexibility Act, 14.5.5
Plans are not required to obtain this written documentation by the proposal
The safe harbor would be voluntary: plans would not have to use it or change their investment menus, and written representations from fund managers described in the examples would not be required.
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Our analysisRegulatory Impact Analysis, 12.6.2
The Department anticipates that the main channel through which this proposal would lead to greater defined contribution plan investment in alternative assets would be within target date funds.
Plan sponsors may see more target date funds that include alternative assets offered by their providers, since EBSA expects that to be the main way alternative assets reach these plans.
What to do
Required
This is a proposed rule, so it creates no requirement for employers. Even if finalized, the safe harbor would be voluntary: the agency says plans are under no obligation to use it. Comments are due on or before June 1, 2026.
Worth considering
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Our suggestionDATES
Comments are due on or before June 1, 2026.
Consider whether your organization or plan committee wants to submit comments on the proposal.
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Our suggestionSupplementary Information, 4.5 Safe Harbor
the six factors are as follows: performance, fees, liquidity, valuation, benchmarking, and the complexity of the designated investment alternative.
Consider confirming who the named fiduciary for investment selection is under your plan documents, and reviewing how your investment committee records its review of performance, fees, liquidity, valuation, benchmark and complexity.
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Our suggestionRegulatory Impact Analysis, 12.6 Affected Entities
Smaller plans, on the other hand, often rely on a service provider to design their plan's menu. In such cases, they likely would not utilize the proposed rule directly
Consider asking your plan's investment adviser or service provider how they expect to respond to the proposal, especially if they build or recommend your investment menu.
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Our suggestionSupplementary Information, 4.1 Scope
The Department anticipates issuing interpretive guidance in the near term concerning fiduciary obligations under ERISA to monitor designated investment alternatives following their inclusion on a plan's investment menu.
Consider watching for EBSA's separate interpretive guidance on the duty to monitor plan investments after selection.
Open questions
The source leaves these open. We'll update this record if a later document answers them.
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How would the proposed factors apply to the ongoing duty to monitor plan investments after they are selected?
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How much weight would courts give the safe harbor if it is finalized?
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Will a final rule add participant profiles or characteristics as a seventh factor?
History
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Fiduciary Duties in Selecting Designated Investment Alternatives Source (opens in a new tab)