The Supreme Court this week heard a major case involving Intel’s retirement plan, a decision that could impact employers’ appetite for private investments in 401(k)s.
Even as the asset management industry gears up for new products, many plan sponsors are in limbo, awaiting the Supreme Court’s ruling and the Department of Labor’s final rules covering alternative investments before making changes to their 401(k) menus.
“I think companies want to know what will happen with this proposal and what will happen in the Supreme Court case before they rush to change their investment strategies,” said Elizabeth Hopkins, a principal at the Hopkins ERISA law firm and a former senior trial attorney at the Department of Labor who filed amicus briefs in the Supreme Court case on behalf of former DOL officials.
Here’s what employers and employees need to know about the forces influencing the market for private investment in 401(k) plans.
Remarks by Justices Thomas, Alito, Gorsuch, and Kagan
Employers have been hurt in recent years by government policy changes regarding alternative investments in 401(k) plans and a high-profile lawsuit filed in 2019 by a former executive. intel employee. The case, Anderson v. Intel Corporation Investment Policy Board, for which the Supreme Court heard oral arguments on Tuesday, October 6, concerns private investments in defined contribution plans, such as 401(k)s, and the circumstances in which these investments are appropriate.
Whether alternative assets such as hedge funds and private equity can be used in 401(k) plans alongside stocks and bonds is not at issue. Rather, the question before the court is whether a “meaningful standard” must be asserted in a retirement plan’s underperformance claim. The controversy centers on how to handle claims by employees that plan sponsors invested their retirement funds imprudently.
Employees argue that the relatively low returns in Intel’s plans reflect a breach of fiduciary duty. Lower courts disagreed. Their argument is that a claim of poor performance alone is not sufficient unless the court provides a “meaningful benchmark” against which to evaluate performance.
During arguments, the Supreme Court justices seemed skeptical that a plan sponsor’s investment choices would provide fodder for individuals suing. Justices often noted the fruit metaphor, and Justice Clarence Thomas summed up his view of the Ninth Circuit’s decision: “You can’t compare apples to oranges…if you have a fund…it’s designed to produce a higher return, but it’s designed to produce a riskier return…you can’t compare it to a fund that protects you from losses.”
Several other justices, including some of the court’s liberals, appear to agree with his reasoning, noted Ronald Mann, co-director of the Charles Evans Garber Center for Transactional Research at Columbia Law School, in an analysis for SCOTUSblog. For example, Justice Elena Kagan commented, “What you need…is another apple.”
Justice Samuel Alito asked Matthew Wessler, the employee’s lawyer, to clarify his position: “You can make your case by comparing apples to oranges, but you compensate by suggesting that the strategy was flawed.”
Justice Amy Coney Barrett chose the same metaphor.
Justice Neil Gorsuch, on the other hand, asked Wessler to agree with the general principle that “when limited to claims of poor performance, there must be some meaningful benchmark. Apples, not oranges.”
Mr. Wessler did not respond to requests for comment for this article.
The fundamental problem for courts appears to be a lack of benchmarks. Notably, the justices specifically asked Assistant Solicitor General Amy Brown how much guidance the court should provide in this case.
Brown’s view was that the court should suggest “some parameters” for what a “meaningful benchmark” should be. “Prudence is a process, not a performance,” she told the judges.
Legal experts say SCOTUS is likely to side with Intel
Lawyers who attended the arguments in person, listened to the recordings and read the transcripts took the judge’s questions as a sign that the Ninth Circuit is leaning toward Intel’s side. “When a judge asks opposing counsel to choose the approach they will take in delivering their opinion, you can be sure that they will not usually vote for you,” Mann wrote.
In his rebuttal, Mr. Wessler pointed out that all allegations must be considered holistically and holistically. “I think that’s important in a case like this, where there’s an allegation about a shoddy strategy and the execution of that strategy, and then there’s a bad outcome,” he told the court.
Employers are awaiting court rulings and, in some cases, hoping for guidance that will ease future litigation. “Private funds can be an effective and completely appropriate component of a 401(k) plan’s investment options,” Eugene Scalia, a partner at Gibson, Dunn & Crutcher, said in an email. “The court’s decision against Intel will confirm that and further support the Department of Labor’s rulemaking efforts,” said the former U.S. Labor Secretary, who filed amicus briefs on behalf of the American Investment Council and Managed Funds Association.
“A positive outcome in this case will go a long way in winning over plan sponsors who have wanted to do this for years but have been deterred by fear of being sued,” said Joshua Lichtenstein, a partner at Ropes & Gray who heads the firm’s ERISA fiduciary practice and co-authored the amicus brief on behalf of the Investment Company Association.
ERISA does not prohibit alternative investments
Although the Employee Retirement Income Security Act of 1974 (ERISA) does not discuss alternative investments in 401(k)s, President Trump pushed for their inclusion during the previous administration. In a statement, then-Labor Secretary Scalia said that under his watch, the Department issued an information letter in June 2020 aimed at “helping Americans who are saving for retirement access alternative investments that often offer high returns.”
However, in December 2021, the DOL under the Biden administration issued a supplemental statement asserting that most plan fiduciaries are not qualified to evaluate alternative investments given their complexity and high risk. It had a chilling effect on the market.
The tide has changed again in President Trump’s second term. In August 2025, he issued an executive order democratizing access to alternative assets for 401(k) investors. Then, in October 2025, Congressman Troy Downing introduced the Retirement Investment Choices Act, which would codify the executive order. And in March, the Department of Labor released a proposed rule that would ease legal and regulatory barriers to adding alternative investments to retirement plans. The deadline for comments was June 1st.
“This proposal is the clearest guidance the Department has ever provided on the type of information and processes plan sponsors must go through when making investment decisions,” Lichtenstein said.
Large employers may still be slow to add private capital
“There’s nothing in ERISA that says you can’t, but most large companies don’t offer private investments within their 401(k) plans,” said Kent Mason, a partner at Davis & Harman, who filed amicus briefs in the Intel case on behalf of the U.S. Benefits Council and represents large employers, large plans, and national vendors of retirement plan services.
The latest developments in the courts and regulatory environment may not change this situation. “Large companies are going to be the last to follow this,” Mason said, adding that he expects smaller companies to start adding private investments to their 401(k) lineups rather than larger companies, which face increased litigation risk.
He expects this even if the Supreme Court sides with Intel and the Labor Department rules are adopted. “While the regulations provide a good and useful framework, the six-factor analysis remains subjective,” he said, referring to recently proposed Department of Labor guidance on selecting investment options in plans. “Plaintiffs’ lawyers remain likely to sue large corporations for failing to meet their safe harbor fiduciary duties.”
Despite being slower to adopt in 401(k)s, alternative investments are already common in defined benefit plans. But we expect that to change over time, even if it’s slow to begin with, as investors push it forward, more products become available, and more companies become comfortable with it.
“There is a clear business case for ensuring that employees have a wide range of investment options,” said Harvey Vines, a partner at law firm Sullivan & Worcester who specializes in investment management law. However, employers must take special care to cover all legal and fiduciary bases. “The more novel and risky the option you offer, the more care and oversight it will require to continue offering it,” Vines said.
The momentum is growing. During President Trump’s second term, asset managers and plan providers continued to forge partnerships to offer alternative investments within the 401(k), with announcements from Empower in May 2025 and Boya Financial in July. OneDigital and Principal Financial Group announced similar partnerships in January and August of this year. In September, Constitution Capital Partners announced Constitution Capital Horizon CIT, a collective investment trust. The mutual fund was launched with more than $50 million in initial assets across 18 retirement plans and short-term commitments, bringing total plan assets to more than $1 billion.
“We are seeing plan sponsors begin to take a closer look at private market investments with their advisors and consultants and incorporate them in thoughtful ways,” Amy Vaillancourt, president of retirement at Voya Financial, said in an email. She pointed out that interest is not just coming from employers. According to Voya research, nearly two-thirds of participants want access to private market investments.
“Sponsors want to understand how private markets can potentially benefit participants’ long-term retirement outcomes,” Brett Fischer, head of investment product strategy at Principal Financial Group, said in an email. At the same time, they “want to make those decisions in a manner consistent with their fiduciary duties.”
