This week, the Supreme Court engaged in a significant case involving Intel’s retirement plan that could shape how employers approach private investments in 401(k)s.
Many companies are currently in a holding pattern, waiting for both the Supreme Court ruling and finalized Labor Department regulations on alternative investments before making changes to their 401(k) offerings, despite the asset management industry preparing new products.
Elizabeth Hopkins, a principal at Hopkins ERISA Law and former senior trial attorney with the Labor Department, noted, “Companies are eager to see how the Supreme Court will rule and what the proposals will look like before making any hasty adjustments to their investment strategies.” She submitted an amicus brief in this case on behalf of former high-ranking Labor Department officials.
So, what should employers and employees consider about the current factors impacting the market for private investments in 401(k) plans?
What Justices Thomas, Alito, Gorsuch, and Kagan Expressed
Employers have faced a whirlwind in recent years, navigating changing regulations on alternative investments and a notable lawsuit initiated in 2019 by a former Intel employee. This case, known as Anderson v. Intel Corp. Investment Policy Committee, which was heard by the Supreme Court on October 6, is focused on private investments in defined contribution plans like 401(k)s and under what conditions such investments are reasonable.
It’s important to clarify that the case isn’t contesting whether assets like hedge funds or private equity can coexist in a 401(k) with traditional stocks and bonds. Instead, it addresses whether a claim of underperformance in a retirement plan necessitates demonstrating a “meaningful benchmark.” At the crux of this dispute lies how to address claims from employees who argue that plan sponsors have mismanaged their retirement funds.
Employees maintain that the underwhelming returns from Intel’s plans signify a potential breach of fiduciary duty, but the lower courts found otherwise. They argued that claims of underperformance must also show what constitutes a “meaningful benchmark” for assessment.
During the proceedings, the justices appeared doubtful about allowing plan sponsors’ investment decisions to be scrutinized so easily. Justice Clarence Thomas notably summed up his perspective with a fruit metaphor, stating, “You can’t compare apples and oranges…if you have a fund designed for high returns with corresponding risks, you can’t compare it to a fund solely aimed at preventing losses.”
Other justices, even from the court’s liberal faction, appeared to align with his argument. For example, Justice Elena Kagan remarked that another “apple” is indeed necessary.
Justice Samuel Alito questioned the employees’ attorney, Matthew Wessler, for clarification on whether he believed that one could assert a claim by comparing dissimilar items but still suggest a flawed strategy.
Justice Amy Coney Barrett also utilized the same metaphor, while Justice Neil Gorsuch asked Wessler if he agreed that underperformance claims typically need a meaningful benchmark, once again referencing apples, not oranges.
Wessler did not provide comments for this article.
The primary issue for the court seemed to be the absence of a benchmark. Notably, the justices queried Aimee Brown, an assistant to the Solicitor General, about the level of guidance the court should provide in this matter.
Brown expressed that the court should establish “some parameters” defining what a “meaningful benchmark” ought to be. She emphasized to the justices, “Prudence is about process, not just performance.”
Legal Analysts Suggest SCOTUS is Likely to Favor Intel
Attorneys who observed the oral arguments suggested that the justices’ inquiries point toward a favorable ruling for Intel, solidifying the 9th Circuit’s decision. Ronald Mann, a co-director at Columbia Law School, observed that when justices urge opposing counsel to select among various approaches for their opinions, it’s often a sign they’re leaning against that position.
On rebuttal, Wessler argued that all allegations should be assessed collectively. “That context is crucial, especially with claims about imprudent strategies or their implementation yielding negative outcomes,” he asserted during the court proceedings.
Employers are hopeful for the court’s guidance that could mitigate future litigation risks. Eugene Scalia, a partner at Gibson Dunn & Crutcher, noted, “Private funds can be a valid and appropriate addition to 401(k) investment options.” He believes a ruling in Intel’s favor would bolster support for Labor Department rule-making, having submitted an amicus brief on behalf of the American Investment Council and The Managed Funds Association.
“A favorable decision will significantly boost the confidence of plan sponsors who have hesitated to adopt these options due to fears of litigation,” remarked Joshua Lichtenstein, a partner at Ropes & Gray and co-author of an amicus brief representing the Investment Company Institute.
ERISA Does Not Bar Alternative Investments
The Employee Retirement Income Security Act of 1974 (ERISA) does not explicitly cover alternative investments in 401(k) plans. However, during his administration, President Trump advocated for their inclusion, resulting in a Labor Department Information Letter in June 2020 aimed at allowing broader access to potentially lucrative alternative investments, according to then-Secretary of Labor Scalia.
Yet, in December 2021, the Labor Department under the Biden administration issued a supplemental statement arguing that most plan fiduciaries were ill-prepared to evaluate the complexities and risks of alternative investments, which stunted market growth.
The momentum shifted again during Trump’s second term when he signed an executive order in August 2025 designed to “democratize access to alternative assets for 401(k) investors.” Subsequently, Congressman Troy Downing introduced the Retirement Investment Choice Act in October 2025, aiming to codify that executive order into law. Following that, in March, the Labor Department proposed a rule intended to lower legal and regulatory hurdles for incorporating alternative investments into retirement plans.
Lichtenstein remarked, “This proposal represents the clearest guidance the department has ever provided on how plan sponsors should navigate investment decision-making processes.”
Large Employers May Proceed Slowly with Private Investments
Many large corporations still do not include private investments in their 401(k) plans, despite ERISA not prohibiting them, stated Kent Mason, a partner at Davis & Harman, who submitted an amicus brief on behalf of the American Benefits Council and represents significant employers and retirement plan service providers.
However, the recent developments may not expedite this process. “The largest corporations will likely be the most hesitant to adopt these changes,” Mason noted, predicting that smaller and mid-sized companies might be quicker to incorporate private investments into their 401(k) offerings compared to larger firms, which face higher litigation risks.
Even if the Supreme Court rules in Intel’s favor and new Labor Department rules are implemented, he remains skeptical. “While these rules provide a valuable framework, the analysis remains subjective,” referring to the Labor Department’s recent guidance on investment selection in plans. “Litigators will likely continue targeting large companies, claiming they failed their fiduciary obligations.”
Nevertheless, alternative investments are prevalent in defined benefit plans, even while 401(k)s have been slower to adapt. A shift is expected, driven by investors’ demand, the availability of new products, and greater comfort among companies, albeit at a gradual pace.
“There’s a distinct business case for ensuring plans offer employees a diverse array of investment options,” said Harvey Bines, a partner at Sullivan & Worcester, who specializes in investment management law. However, employers must exercise due diligence to address all legal and fiduciary responsibilities. “The more unique and risk-laden the options, the more thorough the care and oversight needed for those offerings,” Bines emphasized.
Momentum appears to be increasing. During Trump’s second term, asset managers and plan providers have initiated collaborations to incorporate alternative investments in 401(k)s, as seen by announcements from Empower in May 2025 and Voya Financial in July. OneDigital and Principal Financial Group also disclosed similar partnerships in January and August of this year. Constitution Capital Partners recently launched a new collective investment trust with over $50 million in initial assets intended for retirement plans.
Amy Vaillancourt, president of retirement at Voya Financial, shared in an email that there is a noticeable trend: sponsors, along with their advisors, are reevaluating private market investments to integrate them thoughtfully. Notably, nearly two-thirds of participants expressed interest in accessing private market investments, according to Voya’s research.
Brett Fisher, the head of investment product strategy at Principal Financial Group, highlighted that sponsors wish to discern how private markets may enhance participants’ long-term retirement outcomes while ensuring adherence to their fiduciary duties.
