The Department of Labor (the “DOL”) issued a proposed rule on March 30, 2026 addressing how ERISA fiduciaries select designated investment alternatives in participant-directed defined contribution plans. If finalized, the proposed rule would create a process-based safe harbor intended to help fiduciaries defend investment selection decisions.

The proposed rule emphasizes that ERISA claims typically turn on how a fiduciary made the decision and what the fiduciary documented at the time. It sets forth six non-exhaustive factors that plan fiduciaries should consider and a process for making and documenting those decisions. Under the proposed rule, fiduciaries who follow the process would be presumed to have satisfied ERISA’s duty of prudence for the factor(s) they addressed. The six factors are:

1. Performance – risk-adjusted expected net returns over appropriate time-horizons, compared to a reasonable number of similar alternatives
2. Fees – costs weighed against risk-adjusted expected returns and the benefits, features, or services provided
3. Liquidity – ability to meet anticipated liquidity needs at both the plan and participant level
4. Valuation – ability to timely and accurately value the investment option in a way that works for the plan
5. Benchmarks –meaningful comparators for evaluating risk-adjusted expected returns
6. Complexity – the skills, knowledge, experience, and capacity required to comprehend an investment alternative sufficiently

These factors reflect familiar themes from existing guidance and litigation. The proposed rule also appears aimed at ongoing class action litigation by attempting to give fiduciaries a clearer process roadmap and stronger arguments at the pleading and summary judgment stages. It may also influence how committees document investment decisions going forward. Notably, the proposed rule also includes a series of detailed scenarios and examples illustrating how the DOL expects fiduciaries to apply the safe harbor process.

The proposed rule is the latest development in the back-and-forth between administrations about alternative assets, such as cryptocurrency and private credit. It follows President Trump’s August 7, 2025 executive order (see our past Client Alert) and is written to be asset-class neutral, meaning it tries not to favor or disfavor any particular type of investment.

Key caveats for fiduciaries:

• Litigation protection is uncertain. Even if the proposed rule is finalized, plaintiffs may challenge how much weight courts should give to the DOL’s presumption / deference framing, especially in light of Loper Bright and Relentless (see our past Client Alert).

• Alternative assets remain harder to evaluate. A new safe harbor process framework does not eliminate the practical issue that alternative assets often involve more limited transparency, different fee structures, liquidity constraints, and valuation methodologies that can be harder to benchmark that can be more difficult to benchmark and defend. It is likely that plaintiffs’ counsel would focus heavily on benchmarking, valuation practices, and fee reasonableness relative to documented expected benefits.

Ultimately, alternative assets are more likely to enter investment menus through professionally managed options (such as target date funds) than as standalone investment options.

Comments on the proposed rule are due June 1, 2026.

If you have questions about ERISA fiduciary duties or the selection of designated investment alternatives, please contact your SGR benefits counsel.