The retirement industry has plenty to say about the Department of Labor’s proposed investment selection rule.
Nearly 45,000 comments poured into the Department of Labor in response to its proposed rule on fiduciary duties in selecting qualified designated investment alternatives for 401(k) and other defined contribution retirement plans. They revealed a sharp divide about how far plan fiduciaries should be allowed to go when considering alternative investments ranging from private equity and private credit to digital assets.
The March 31 proposal set out a regulatory safe harbor outlining six factors fiduciaries can consider when selecting investments: performance, fees, liquidity, valuation, benchmarks and complexity. The proposal, issued following President Donald Trump’s August 2025 executive order on expanding access to alternative assets in retirement plans, is intended to clarify fiduciary prudence when selecting investments, while reducing litigation risk for plan sponsors.
Supporters argued that the proposal follows the principle of the Employee Retirement Income Security Act that fiduciary prudence is determined by process, rather than by the type of investment selected.
The Supporters
The thousands of comments in support of the rule included letters from the Investment Company Institute, Vanguard, Aon and the ERISA Industry Committee, to name a few, all of which backed the proposal, describing it as an asset-neutral framework that could give fiduciaries greater confidence to consider innovative investments without fear of what they described as costly lawsuits.
They argued that litigation has become a significant deterrent to offering new investment options and that the rule appropriately focuses on whether fiduciaries follow a prudent process, rather than judging decisions based solely on investment outcomes.
“The proposal appropriately takes an asset-class-neutral, process-based approach to fiduciary prudence,” the ICI commented, while also urging the DOL to refine portions of the safe harbor proposal and clarify that it is optional and not the exclusive means of satisfying fiduciary obligations.
The ERISA Industry Committee similarly praised the proposal’s focus on managing litigation risk, arguing that excessive class action litigation has created uncertainty for employers sponsoring retirement plans. Aon called the proposal a “significant and positive step,” but urged regulators to provide more guidance on how courts should treat fiduciaries that comply with the safe harbor and how the framework should apply to ongoing monitoring of investments.
Requests for clarifications to the proposal were common, even among supporters.
Vanguard argued that the final rule should place greater emphasis on investment costs as a key component of fiduciary prudence and should provide additional guidance on the appropriate use of benchmarks. The ICI sought changes to provisions dealing with liquidity, valuation, complexity and benchmarking, warning that some examples in the proposal appear too focused on mutual funds and may not adequately account for other investment vehicles.
The Opposition
Morningstar took a more cautious approach in its comments, writing that the DOL’s effort to clarify fiduciary obligations was worthwhile, but warning that the proposal may not do enough to protect retirement savers. The investment research firm commented that the proposed presumption of prudence and judicial deference could effectively lower the fiduciary standard. The firm recommended stronger requirements related to disclosure, valuation practices, liquidity management and conflicts of interest. Morningstar also questioned whether broader access to alternative investments addresses the most pressing challenges facing retirement plans, which it identified as expanding coverage and reducing fees.
Opposition was even stronger from Democratic lawmakers, state attorneys general and labor officials.
A bicameral congressional letter led by Senators Bernie Sanders, I-Vermont; Elizabeth Warren, D-Massachusetts; and Representative Bobby Scott, D-Virginia, urged the department to withdraw the proposal altogether, arguing that it would expose workers’ savings to riskier and more expensive investments while replacing meaningful fiduciary oversight with what they described as a procedural “check-the-box” exercise.
A coalition of labor agencies and of state attorneys general from California, Illinois, New York, Pennsylvania and Oregon echoed those concerns, contending that the proposal conflicts with ERISA’s investor-protection purpose and improperly creates a presumption of prudence for fiduciaries. Both letters warned that the rule could increase exposure to assets such as private credit, cryptocurrency and other alternatives that may be difficult for participants to evaluate and understand.
Republican Lawmakers Weigh In
Republican lawmakers, by contrast, strongly endorsed the proposal. Separate letters from House and Senate Republicans argued that regulatory uncertainty and litigation risk have left defined contribution plan participants without access to the same diversification opportunities long available to pension funds and other institutional investors. They urged the department to finalize the rule, saying broader access to alternative assets could improve diversification and retirement outcomes, while preserving fiduciary protections.
During a speech at the 2026 PLANSPONSOR National Conference, Assistant Secretary of Labor Daniel Aronowitz, head of the DOL’s Employee Benefits Security Administration, said the agency will swiftly review the comment letters it has received before publishing a final rule. Other conference speakers suggested the rule could be finalized as soon as later year.