The idea of making alternative investments available to retirement plan participants has gained momentum in recent months, and the U.S. Supreme Court will weigh in on the topic later this year. On August 7, 2025, President Donald Trump issued an executive order stating that “every American preparing for retirement should have access to funds that include investments in alternative assets.” On January 13, 2026, to implement the executive order, the Department of Labor submitted proposed rules to the Office of Management and Budget on the availability of these types of investment choices in retirement plans.
But the decision by plan fiduciaries to actually offer such investment choices to plan participants clearly remains subject to the general principles that govern the decision-making processes used by plan fiduciaries as set forth in the Employee Retirement Income Security Act (ERISA). Specifically, ERISA requires that a plan fiduciary act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” This is often referred to as the “prudent expert” standard. Similarly, a plan fiduciary must discharge his or her duties with respect to a plan solely in the interest of the participants and beneficiaries, for the exclusive purpose of providing benefits to participants and their beneficiaries, and defraying reasonable expenses of administering the plan.
How these general ERISA principles apply to a fiduciary decision to offer alternative investments or other nontraditional investment choices in a retirement plan, and how courts may scrutinize this decision, is less clear right now. So much so that on January 16, 2026, the U.S. Supreme Court granted certiorari in Anderson v. Intel Corp. Investment Policy Committee, a case involving former employees of Intel Corporation who claimed that plan fiduciaries breached their ERISA duties by selecting, as investment choices for the Intel retirement plan, nontraditional target-date funds that allocated assets to investments such as hedge funds and private equity funds. The former employees allege those assets ultimately underperformed and charged higher fees.
The Supreme Court will decide whether the Ninth Circuit Court of Appeals (which includes California) was correct in holding that at the pleading stage, plaintiffs cannot simply allege that an investment choice underperformed or that fees were too high, but rather that plaintiffs must provide “a meaningful benchmark.” This approach provides added protection to plan fiduciaries, as it is easier to justify the selection of an investment choice in alternative assets that may not have any funds with similar profiles. Other courts have held that such a meaningful benchmark does not need to be provided at the pleading stage. In Johnson v. Parker-Hannifin Corp., for example, the Sixth Circuit (which includes Tennessee) held that the question as to the selection of an investment choice in a retirement plan by an ERISA fiduciary was in breach of applicable fiduciary duties is “context-specific.”
Given the relative uncertainty surrounding the selection of alternative investments as investment choices in retirement plans, fiduciaries should remember to use procedures that will clearly establish that they acted as “prudent experts.” As mentioned above, the traditional principles set forth in ERISA and regulations adopted thereunder remain generally applicable. Alternative assets have a particular risk-return profile, which may or may not be appropriate for retirement savings in a particular 401(k) plan. As is the case with the selection of any investment choice for plan participants, plan fiduciaries should be able to demonstrate that the selection of an investment choice is justified.
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