DOL Proposes New Rule Clarifying 401(k) Investment Selection
The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has issued a proposed regulation aimed at expanding and clarifying how fiduciaries select investment options in 401(k) plans. The proposal is designed to increase flexibility for plan sponsors while reinforcing long-standing fiduciary principles under ERISA.
At its core, the rule emphasizes that fiduciary decision-making should be process-driven and asset-neutral, meaning plan sponsors are not encouraged—or discouraged—from selecting any specific type of investment. Instead, the focus is on ensuring decisions are made prudently and in the best interest of participants.
The proposal outlines a framework for evaluating investment options, requiring fiduciaries to conduct a thorough and objective review of factors such as fees, performance, liquidity, valuation, and overall complexity. It also introduces process-based “safe harbors” intended to reduce litigation risk for fiduciaries who follow a prudent, well-documented process.
While the rule has drawn attention for potentially broadening access to alternative investments—such as private market assets—it does not mandate or favor their inclusion. Instead, it reinforces that fiduciaries retain discretion to consider any permissible investment, provided they adhere to ERISA’s standards of prudence and loyalty.
If finalized, the rule is expected to provide clearer guidance for plan sponsors navigating an increasingly complex investment landscape, while maintaining strong protections for retirement plan participants.
Reach out to the Enza Financial team to learn how these proposed changes could impact your 401(k) plan and investment strategy.
Source:
News Release (3/30/2026)
US Department of Labor proposes landmark rule to democratize access to alternative investments in 401(k) plans