This week, the U.S. Supreme Court heard a major case involving Intel’s retirement plan, which could affect employers’ willingness to allocate private investments in 401(k) plans.
As the asset management industry rushes to launch new products, many plan sponsors are still holding off, waiting for the Supreme Court’s ruling and the Department of Labor’s final rules on alternative investments before deciding whether to adjust their 401(k) investment menus.
Elizabeth Hopkins, a partner at Hopkins ERISA Law and former senior trial attorney at the Department of Labor, said, “I think companies want to first understand what will happen with the proposal and the Supreme Court case before rushing to change their investment strategies.” She also filed an amicus curiae brief on behalf of former senior Department of Labor officials in support of the case before the Supreme Court.
Here are several factors affecting the private investment market within 401(k) plans that employers and employees should understand.
What did Justices Thomas, Alito, Gorsuch, and Kagan say?
Over the past several years, employers have been unsettled by the government’s shifting policies regarding alternative investments in 401(k) plans, alongside a high-profile lawsuit filed in 2019 by a former Intel employee. The case, Anderson v. Intel Corp. Investment Policy Committee, was heard by the Supreme Court on Tuesday, October 6, addressing the definition of private investments within defined contribution plans such as 401(k)s and under what circumstances such investments are appropriate.
This case is not questioning whether alternative assets such as hedge funds and private equity can be included alongside stocks and bonds in 401(k) plans. The issue before the court is whether allegations of a retirement plan’s poor performance require asserting a “meaningful benchmark.” The core dispute centers on how to address employees’ claims that plan sponsors acted imprudently in investing their retirement funds.
Employees believed that Intel’s plan for relatively low returns reflected a breach of fiduciary duty. The lower court disagreed, reasoning that allegations of poor performance alone are insufficient without a "meaningful benchmark" for the court to evaluate performance.
During the oral arguments, Supreme Court justices appeared skeptical that the plan sponsor’s investment choices should be easily turned into litigation tools. The justices repeatedly used the analogy of “apples and oranges.” Chief Justice Clarence Thomas summarized his view of the Ninth Circuit’s ruling by saying, “You can’t compare apples and oranges… If you have a fund… designed to achieve higher returns but with greater risk… you can’t compare it to a fund designed to guard against losses.”
Ronald Mann, Co-Director of the Charles Evans Gerber Transactional Studies Center at Columbia Law School, noted in his analysis on SCOTUSblog that several justices, including those in the liberal bloc, appeared to agree with this reasoning. For instance, Justice Elena Kagan remarked, “What you need… is another apple.”
Justice Samuel Alito pressed employee attorney Matthew Wessler on whether his position was that one could “make a claim by comparing apples and oranges, but then add that the strategy is flawed.”
Justice Amy Coney Barrett also used the same analogy.
Meanwhile, Justice Neil Gorsuch asked Wessler to agree with the general principle that “when we are limited to claims of poor performance… some meaningful benchmark is necessary, and it must be apples, not oranges.”
Wessler did not respond to requests for comment on this article.
The fundamental issue facing the court appears to be a lack of benchmarks. Notably, the justices explicitly asked Assistant Solicitor General Aimee Brown how much guidance the court should provide in this case.
Brown believes the court should offer some guidance on what "parameters" a "meaningful benchmark" needs to have. She told the justices, "The focus should be on the process, not the performance."
Legal experts say the Supreme Court appears more likely to support Intel.
Lawyers who attended the oral arguments in person, listened to the audio recordings, or read the transcript believed that the justices’ questions indicated a倾向 to support Intel and uphold the Ninth Circuit’s ruling. Mann wrote, “When justices ask opposing counsel to choose among several approaches to use in the opinion, it is usually a safe bet that they will not vote for you.”
During the rebuttal, Wessler pointed out that all allegations must be considered holistically and in combination. He told the court, “I believe this is important in cases like this, because here we are dealing with allegations of an imprudent strategy or the manner in which the strategy was implemented, and the end result was poor.”
The employer is awaiting a court ruling, with some hoping the decision will dampen future litigation. In an email, Eugene Scalia, partner at Gibson Dunn & Crutcher and former U.S. Secretary of Labor, stated, “Private funds can be an effective and entirely appropriate investment option in 401(k) plans.” The former labor secretary filed an amicus brief on behalf of The American Investment Council and The Managed Funds Association, adding, “A ruling in favor of Intel would affirm this and further support the Department of Labor’s rulemaking.”
Joshua Lichtenstein, a partner at Ropes & Gray and head of the firm’s ERISA fiduciary responsibility practice, also filed an amicus brief on behalf of the Investment Company Institute. He said, “A favorable outcome in this case would greatly empower plan sponsors who have long wanted to act but have held back due to concerns about litigation, giving them greater confidence to move forward with less fear of being sued.”
ERISA does not prohibit alternative investments.
The Employee Retirement Income Security Act of 1974 (ERISA) did not mention alternative investments in 401(k) plans, but President Trump advocated for their inclusion during his previous term. In June 2020, the Department of Labor issued an information letter during his administration aimed at “helping Americans saving for retirement access alternative investments that typically deliver strong returns,” said then-Secretary of Labor Scalia in a statement.
However, in December 2021, the Department of Labor under the Biden administration issued a supplemental statement asserting that, due to the complexity and higher risks of alternative investments, most plan fiduciaries are not suited to evaluate such investments. This sent a chill through the market.
During Trump’s second term, the situation shifted again. In August 2025, he issued a presidential executive order promoting broader access to alternative assets for 401(k) investors. Subsequently, in October 2025, Congressman Troy Downing introduced the Retirement Investment Choice Act, aiming to codify the executive order into law. This March, the Department of Labor released a proposed rule designed to reduce legal and regulatory barriers to including alternative investments in retirement plans. The public comment period ends on June 1.
Lichtenstein said, "This proposal provides the clearest guidance the Department of Labor has ever offered on what information plan sponsors should obtain and what processes they should follow when making investment decisions."
Large employers may still slowly join private funds.
Most large U.S. companies do not offer private investments in their 401(k) plans, even though ERISA does not prohibit them from doing so, says Kent Mason, partner at Davis & Harman. He filed an amicus brief on behalf of the American Benefits Council in the Intel case and advises large employers, large plans, and national providers serving retirement plans.
Recent changes in the legal and regulatory environment may not alter this. “The largest companies will be the slowest to act,” Mason said, adding that he expects smaller and mid-sized companies to lead large companies in adding private investment options to their 401(k) offerings, as large companies face higher litigation risks.
Even if the Supreme Court sides with Intel and the labor department’s rule is enacted, he still believes this. Mason said, “Although these rules provide a very good and helpful framework, the six-factor analysis remains subjective.” He was referring to the Department of Labor’s recent guidance on selecting investment options for plans. “Plaintiffs’ attorneys will likely still file lawsuits alleging that large companies have failed to meet their safe harbor fiduciary duties.”
Alternative investments have become fairly common in defined benefit plans, but adoption in 401(k) plans has been slower. However, this is expected to change over time as investor demand grows, more products become available, and an increasing number of companies embrace them—even if the initial pace is gradual.
Harvey Bines, a partner at Sullivan & Worcester, said, “There is a clear business rationale for ensuring that the plan offers employees a broad range of investment options.” However, employers must exercise greater caution to ensure compliance with both legal and fiduciary responsibilities. Bines added, “The more novel and high-risk the options you provide, the more diligence and oversight are required to design and maintain them.”
Momentum is building. During Trump’s second term, asset managers and plan providers continue to form partnerships to offer alternative investments in 401(k) plans. Empower announced such a partnership in May 2025, followed by Voya Financial in July 2025. Earlier this year, in January and August, OneDigital and Principal Financial Group also announced similar collaborations. In September, Constitution Capital Partners announced the launch of Constitution Capital Horizon CIT, a collective investment trust that began with over $500 million in initial assets across 18 retirement plans and has recently committed to growing total plan assets to over $1 billion.
Amy Vaillancourt, President of Voya Financial’s Retirement Business, said in an email: “We are seeing plan sponsors, along with their advisors and consultants, taking a closer look at private market investments and beginning to incorporate them in a thoughtful manner.” She noted that this interest is not coming solely from employers. Voya’s research found that nearly two-thirds of participants want access to private market investments.
Brett Fisher, Head of Investment Product Strategy at Principal Financial Group, said in an email: “Sponsors want to understand where private markets may benefit participants’ long-term retirement outcomes.” At the same time, they “seek to make these decisions in a manner consistent with their fiduciary responsibilities.”