If you are tired of keeping track of which retirement plan investments are deemed “good” and which are suddenly “bad”, we have encouraging news. The Department of Labor’s (“DOL’s”) latest proposed rule goes back to the fundamentals and our favorite mantra—it’s not what you pick, it’s how you pick it.
The DOL’s proposed rule on selecting and monitoring 401(k) and 403(b) investment options emphasizes process over product. In doing so, it reinforces a long-standing ERISA principal—prudence is measured by the quality of a fiduciary’s decision-making, not by investment outcomes.
At the core of the proposal is a six‑factor, asset‑neutral framework for evaluating designated investment alternatives, including target‑date and other asset‑allocation funds. No investment asset class or strategy is singled out for special treatment, favorable or otherwise. Notably, the proposal says nothing about the recent boogeymen of crypto or ESG. Instead, the focus remains where committees are most comfortable (and regulators most consistent): a disciplined process, informed oversight, and contemporaneous documentation.
For fiduciary committees, the message is familiar but worth repeating—committee minutes matter, benchmarks matter, liquidity and valuation deserve attention, and knowing when to rely on expert advice is crucial.
📌 Our Legal Update summarizes the proposed rule, explains the new prudence safe harbor, and highlights practical considerations for committees reviewing their investment selection and monitoring practices.