Executive Order 14330: A Solution in Search of a Problem

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Executive Order 14330: A Solution in Search of a Problem Executive Order 14330: A Solution in Search of a Problem

Edward A. Zelinsky

de•novo

EXECUTIVE ORDER 14330: A SOLUTION IN SEARCH OF A PROBLEM

Edward A. Zelinsky†

its President Trump’s Executive Order 14330 proclaims determination to “democratiz[e] access to alternative investments for 401(k) investors.”1 Among its other provisions, Executive Order 14330 requires the Department of Labor (DOL) to “clarify the duties that a fiduciary owes to plan participants.”2 Such clarification shall “relieve the

regulatory burdens and litigation risk that” allegedly deny 401(k) participants access to alternative investments.3 However, the order states, DOL’s administrative guidance on alternative investments must be “consistent with applicable law.”4

Executive Order 14330 is a solution in search of a problem. Applicable law already clarifies when a plan fiduciary can and cannot offer alternative investment choices to participants in 401(k) plans.5 This law consists of the fiduciary provisions of the Employee Retirement Income Security Act of 1974 (ERISA) which impose the duties of the DOL’s prudence and diversification upon plan fiduciaries,6 regulations which elaborate these fiduciary duties, and the case law explicating these fiduciary duties.

Many alternative investments, particularly private equity and hedge funds, promise higher returns at the cost of great risk, illiquidity, and high fees.7 Defined benefit pensions are often large, professionally-managed pools of capital held for thousands of participants, many of whom have decades until retirement.8 Such retirement plans can prudently absorb these risks, illiquidity, and fees in search of higher returns.9 In contrast, participants in 401(k) plans are typically unsophisticated investors, who have relatively small accounts and who are often close to retirement and the the circumstances, an ERISA fiduciary may be able to prudently offer alternative investments to 401(k) participants with appropriate limits to prevent excessive concentration of participants’ retirement accounts in such investments.11 But, it is imprudent to offer illiquid, risky, and high

retirement entails.10 Depending upon

liquidity needs

fee investment choices to plan participants when their choices imperil participants’ retirement savings.12

Applicable ERISA law, including carefully-reasoned case law, makes all of this clear. Like my Grandma Polly’s chicken soup, a presidentially-ordered DOL summary of this law couldn’t hurt, but it will not provoke the pronounced changes anticipated by some proponents of the President’s order.13

This suggests that the agenda pursued by at least some advocates of Executive Order 14330 is not the clarification of applicable law. Rather, these proponents seek affirmative modification of this ERISA-based law to actively encourage 401(k) arrangements to offer plan participants14 alternative investments, most prominently private equity. An analogy is the Biden administration’s encouragement of economic-socialgovernance (ESG) investing by ERISA plans.15 While some proponents of ESG investing characterized the Biden administration’s regulatory guidance as clarifying in nature, others sought to put a finger on the scale to encourage ESG investing by ERISA-regulated plans.16

Just as efforts to encourage ESG-investing by ERISA plans deserve skepticism, efforts to “clarify” the ERISA-based fiduciary law governing alternative investments should meet skepticism. Existing law already permits plan fiduciaries to offer alternative investment choices like private equity when it is prudent to do so and requires them to eschew such investments when they are imprudent.17 Restating this law will not add any substance to ERISA’s fact-intensive legal norms of prudence and diversification.

Insofar as Executive Order 14330 is intended to weigh the scales in favor of particular alternative investment choices such as private equity, that agenda would weaken ERISA’s protections safeguarding participants’ retirement assets.18 These fact-based protective standards should not be attenuated to promote any industry’s products, whether those products are ESG assets or alternative investments.

President Trump’s Executive Order 14330 starts from the premise that the “vast majority”19 of 401(k) participants cannot invest their respective retirement funds in alternative investment assets.20 The ability to invest in alternative investment assets, the Order maintains, has been “denied”21 to these “millions of Americans”22 by “[b]urdensome lawsuits”23 and “stifling Department of Labor guidance”24 though, we are told, such alternative investments are proliferating in private defined benefit plans and public pensions.25 The “combination of regulatory overreach and encouragement of lawsuits filed by opportunistic trial lawyers”26 has denied 401(k) plan participants the “long-term net benefits”27 of alternative investments, benefits now obtained “by public pension plans and other institutional investors.”28

It is therefore necessary, Executive Order 14330 states, to “relieve the regulatory burdens and litigation risk that”29 deny 401(k) investors access to alternative investments.30 An alternative investment should be available to a participant selecting investments for her retirement account if a plan fiduciary determines that such investment is an “appropriate

opportunity for plan participants and beneficiaries.”31 For these purposes, Executive Order 14330 defines six types of “alternative investments”: “private market investments,”32 “real estate,”33 “digital assets,”34 “commodities,”35 “projects financing infrastructure development,”36 and “lifetime income investment strategies.”37 Much of the public discussion about Executive Order 14330 has focused on investments falling in the first of these categories, private equity.38

law”39

Executive Order 14330 further acknowledges that the DOL’s support of alternative investments must be “appropriate and consistent including “appropriately calibrated safe with applicable harbors.”40 In its clarification of applicable law, the DOL “must aim to identify the criteria that fiduciaries should use to prudently balance potentially higher expenses against the objectives of seeking greater longterm net returns and broader diversification of investments.”41 While the DOL’s guidance on alternative investments must “clarify the duties that a fiduciary owes to plan participants,”42 such guidance shall also “prioritize actions that may curb ERISA litigation.”43

While Executive Order 14330 characterizes the DOL’s “guidance”44 as “stifling,”45 in a 2020 information letter,46 the DOL advised that, depending on the circumstances, a 401(k) plan might properly offer on its investment menu for “participant-directed individual account[s]”47 “a

multi-asset class vehicle,”48 such as a diversified target date fund, which includes “private equity investments with other investments in a range of asset classes with different risk and return characteristics and investment horizons.”49 Each vehicle described in the DOL’s 2020 information letter will diversify its exposure to private equity investments by capping such investments to “a specified portion of”50 its assets with the rest of its assets “invested in publicly traded securities or other liquid investments with readily ascertainable market values.”51 The DOL’s 2020 information letter concludes that, in light of ERISA’s fiduciary duties, such “an asset allocation fund with a private equity component” “may” be offered to participants directing the investment of their respective 401(k) retirement accounts.52 However, the letter observes that defined benefit plans and individual account/defined contribution53 arrangements have “important differences” in the context of private equity investments.54 When compared with “typical public market investments,”55 private equity investments tend to have “longer time horizons,”56 are “more complex,”57 often have “higher fees”58 and typically “have no easily observed market value.”59 Consequently, the 2020 information letter instructs, a fiduciary who contemplates offering plan participants the option of investing some of their respective retirement accounts in a vehicle which includes private equity must consider, inter alia, not only “the plan’s features”60 but also the “profile”61 of the plan’s participants including whether private equity “align[s] with. . . . needs of plan participants.”62

In sum, according to DOL’s 2020 information letter, diversified vehicles partially dedicated to private equity may satisfy an ERISA

fiduciary’s duties in the selection of participants’ investment options.63 to However, private equity “present[s] additional considerations participant-directed individual account plans that are different than those involved in defined benefit plans.”64 In determining whether a 401(k) or other defined contribution arrangement can offer participants investment choices which include private equity components, a fiduciary must prudently undertake “an objective, thorough, and analytical”65 assessment of such choices in contrast to more conventional, liquid, publicly-traded investments.66

Executive Order 14330 acknowledges that it must be “implemented consistent with applicable law”67 governing ERISA fiduciaries’ investment decisions.68 This law starts with the well-known statutory duties which ERISA incorporates from the common law of trusts.69 Pursuant to these statutory duties, an ERISA fiduciary must invest prudently, loyally, and diversely.70 These fact-specific duties apply, not only when an ERISA fiduciary makes the actual decisions about investing plan assets but also when a plan fiduciary formulates a menu of

investment choices from which participants select for their respective retirement accounts.71

Reflecting the common law origins of ERISA’s fiduciary duties,72 the case law largely defines ERISA’s duty of prudence in procedural terms. An ERISA fiduciary acts prudently when the fiduciary uses “the appropriate methods to investigate the merits of the investment and to structure the investment.”73 Accordingly, courts “evaluate prudence prospectively, based on the methods the fiduciaries employed, rather than retrospectively, based on the results they achieved . . . .”74

The DOL’s fiduciary regulations likewise cast prudence as a procedural matter, requiring an ERISA-regulated fiduciary to make decisions by “giv[ing] appropriate consideration”75 to the “relevant”76 factors. These the plan,”77 include “the purposes of “diversification,”78 “liquidity”79 and “projected return.”80

factors

In addition to its procedural aspects, the duty of prudence has an objective facet as well. If an ERISA fiduciary has proceeded imprudently but the investment the fiduciary made would have been undertaken by a fiduciary’s procedural “hypothetical prudent

fiduciary,”81

this

imprudence does not cause investment loss because the investment was “objectively prudent.”82 Logically, the converse is true: On particular facts, an ERISA fiduciary can make a decision so substantively wrong that no prudent process could have resulted in this decision.

Contrary to Executive Order 14330’s emphasis on “regulatory burdens”83 and “litigation risk[s],”84 ERISA’s fact-intensive fiduciary standards make it difficult for a plaintiff to plausibly plead the imprudence of an ERISA-regulated fiduciary. In the face of a moneylosing investment, a plaintiff must pursue one of two courses to properly plead fiduciary imprudence. First, a plaintiff must plausibly “alleg[e] facts that would directly show that the fiduciaries employed unsound methods in making their investment decisions.”85 At the pleading stage, an ERISA plaintiff (who has yet to undertake discovery) rarely has direct proof about a fiduciary’s decision-making process.86

Alternatively, the plaintiff must allege “circumstantial factual allegations”87 to demonstrate that an investment was objectively imprudent and thus could not have resulted from a proper decisionmaking process. As to this second kind of proof—circumstantial evidence—the courts have established a high bar for allegations that investments are objectively imprudent. To establish such objective imprudence, the plaintiff must plausibly allege for comparison “a meaningful benchmark––not just alleg[e] that costs are too high or returns are too low.”88 For a meaningful benchmark to be pled, a plaintiff must cite “a relevant comparator with similar objectives––not just a betterperforming plan or investment.”89

This understanding of ERISA makes

to plead imprudence. Instructive of such difficulty is the carefully-reasoned decision of the U.S. Court of Appeals for the Ninth Circuit in Anderson v. Intel Corporation Investment Policy Committee.90 In that case, the appeals court confirmed that the plaintiff-participants failed to adequately allege that adding hedge funds and private equity funds to 401(k)

it difficult

investment menus violated ERISA’s fiduciary duty of prudence.91 The Intel plaintiffs, the Ninth Circuit held, advanced in their complaint neither direct evidence of a flawed fiduciary decision-making process nor a “meaningful benchmark,” circumstantial evidence that the investments selected were objectively worse than truly comparable investments.92

Intel’s employees invest their 401(k) accounts in “customized funds.”93 Historically, these included “target-date funds”94 and “global diversified funds.”95 “In response to the 2008 market crash,”96 Intel added to these investment choices “hedge funds and private equity funds.”97 Intel justified these additional choices as a matter of “risk mitigation.”98 While these new funds were understood to have less upside potential when conventional equity markets are robust, these hedge and private equity funds are likely to have lower losses in equity market downturns.99 The plaintiffs participated in the Intel 401(k) plan and claimed that these hedge and private equity funds violated the fiduciary’s ERISA duty of prudence.100 The district court dismissed the complaint because the plaintiffs failed to provide “a meaningful benchmark against which to compare the Intel Funds.”101 In particular, the trial court found, the plaintiffs failed to allege facts indicating that the plaintiffs’ “comparable funds” “were indeed meaningful benchmarks . . . .”102

Affirming the district court, the Ninth Circuit agreed that the Intel plaintiffs in their complaint had “not stated an imprudence claim under ERISA.”103 Repeating a much cited quip, the appeals court observed that ERISA “requires prudence, not prescience.”104 “We therefore assess a fiduciary’s actions based upon information available to the fiduciary at the time of each investment decision and not from the vantage point of hindsight.”105

Consequently, the appeals court stated, prudence is a procedural matter of “a fiduciary’s conduct in arriving at an investment decision, not on its result.”106 In assessing such prudence, the relevant fact-driven inquiry is whether the fiduciary used “appropriate methods to investigate the merits of the investment and to structure the investment.”107 Since “[w]e evaluate prudence prospectively, based on the methods the fiduciaries employed, rather than retrospectively, based on the results they achieved,”108 the Ninth Circuit declared, “it is not enough for a plaintiff simply to allege that the fiduciaries could have obtained better results.”109

Because the Intel plaintiffs made “no direct allegation about Intel’s investment-selection methods,”110 the Ninth Circuit stated, they were required to prove imprudence “through the circumstantial route.”111 But the district court found and the court of appeals agreed that the Intel plaintiffs “did not plausibly allege that Intel’s funds underperformed other funds with comparable aims.”112

The challenged private equity and hedge fund investments were part of Intel’s disclosed “risk-mitigation objective.”113 The Intel plaintiffs unconvincingly compared these “funds to equity-heavy retail funds that pursued different objectives––typically revenue generation.”114 Consequently, the plaintiff’s “putative comparators were not truly comparable because they had ‘different aims, different risks, and different potential rewards.’”115

At its core, the Ninth Circuit observed, the Intel plaintiffs mounted a “per se challenge to hedge funds and private equity investments.”116 The district and appeals courts rejected this per se challenge.117 Because fiduciaries must construct an overall diversified portfolio, “generalized attacks on hedge funds and private equity funds as a category have been rejected both by courts . . . and by the Department of Labor.”118 The Intel

plaintiffs advanced “only general arguments about the riskiness and costliness of hedge funds and private equity funds.”119 This does not “support the claim that the investments that were actually made were illsuited to the Intel funds.”120

In light of the foregoing, there are, contrary to the contention of Executive Order 14330, no “regulatory burdens”121 or “litigation risk[s]”122 that inordinately discourage ERISA fiduciaries from offering participants the option of directing their retirement investments into private equity or hedge funds. As to these and other alternative investments, the same fact-driven fiduciary standards apply as those governing conventional, publicly-traded investments. As a factual matter, all investments offered to 401(k) participants must be selected in a prudent manner and must be objectively defensible as advancing such participants’ retirement interests.123

If that fact-based standard of prudence is satisfied, an ERISA fiduciary can offer an alternative investment to a 401(k) plan participant. If that fact-intensive standard is not met, an ERISA fiduciary fails in her duties if she offers such an investment. It is not apparent what “clarification” of applicable law the DOL can properly undertake in response to Executive Order 14330.

Besides prudence, ERISA requires that plan investments be is a diversified.124 The selection of prudent investment menus responsibility of plan fiduciaries.125 As the statute recognizes, diversification is both an independent requirement for the sound investment of retirement resources and an overlapping facet of prudence.126 Diversification can be eschewed only when it is prudent to do so. The DOL’s 2020 information letter gets this right. Each funding vehicle described in that letter will diversify its exposure to private equity

investments by capping such investments to “a specified portion of”127 its assets with the rest of its assets “invested in publicly traded securities or other liquid investments with readily ascertainable market values.”128

Thoughtful supporters of Executive Order 14330 recognize the need for prudent ERISA fiduciaries to prevent 401(k) participants from making undiversified investment choices.129 This requires limits on the amounts which plan participants can devote to private equity, hedge funds, and other risky alternative investments.

While there is no magic number under the fact-based standard of prudence, the prevailing practices of private defined benefit trustees are instructive. When defined benefit in alternative investments, they typically invest up to 10% of their respective plans’ resources in each such category.130 This suggests that the fiduciaries of 401(k) plans who offer alternative investments to their investmentchoosing participants should, in the interests of diversification, limit such investments to 10% of each participant’s account, probably less.

trustees

invest

ERISA fiduciaries offering alternative investments should also consider age-based diversification limits for such investments. The riskiness and illiquidity of hedge fund and private equity investments makes them less suitable for older participants who have less time until retirement and thus have impending needs for liquidity.131 It may also be appropriate to limit alternative investments based on the size of a participant’s account. A participant whose 401(k) account balance is $1,000,000 is better positioned to absorb the risk of a failed hedge-fund or private equity investment than is a participant whose account balance is $100,000.132 In this vein, Professors Ayres and Curtis urge that 401(k) investors seeking more aggressive investments for their accounts be required “to demonstrate financial competence by passing a financial literacy test.”133 While the Internal Revenue Code’s nondiscrimination rules pose a challenge to these kinds of limits,134 such limits are compelling to prevent 401(k) participants from excessively concentrating their accounts in risky assets.

It is also compelling to distinguish the different forms of investments together as “alternative

which Executive Order 14330

treats

investments.” For example, publicly-traded real estate investment trusts (REITs) are often internally diversified funds which hold a variety of properties and which are readily convertible to cash when a participant needs to retire.135 There are several generations of experience with REITs.136 Many REITs accordingly resemble conventional, tradable investments like diversified mutual funds and exchanged-traded funds. Indeed, there is an argument that there is nothing really “alternative” about offering publicly-traded REITs as investment options for plan participants who are selecting their own investments.137

On the other hand, most electronic currencies are of recent origin and “display[] significant price volatility.”138 Few defined benefit trustees embrace such currencies.139 Electronic currencies are thus the most alternative of alternative investments.140 As Professor Chason observes, “fiduciaries must exercise particular care when investing beyond Bitcoin and a handful of other mainstream cryptocurrencies . . . fiduciaries must investigate cryptocurrencies more than conventional investments and consider how they would be incorporated into the investment portfolio.”141

thoroughly

In all these settings, ERISA’s fact-based fiduciary standards of prudence and diversification provide an established legal framework for evaluating these investment alternatives in light of participants’ needs and circumstances. It is, at best, unclear what needs to be clarified.

ERISA, the DOL’s ERISA-related fiduciary regulations, and the case law elaborating ERISA already clarify the legal duties governing the investment decisions of ERISA fiduciaries. ERISA’s duties permit plan fiduciaries to offer alternative investment choices like private equity to 401(k) participants when it is prudent to do so. Likewise, these fiduciary duties preclude alternative investments when it is imprudent to offer them. When offered, such alternative investments should be capped to prevent unsophisticated 401(k) participants from overinvesting in them. True clarification of the law will not add to the existing articulation of ERISA’s fact-intensive legal norms of prudence and diversification.

This implies that at least some supporters of Executive Order 14330 seek, not the clarification of applicable law, but rather want affirmative modification of this ERISA-based law to actively encourage 401(k) arrangements to offer to plan participants alternative investments, most prominently private equity. This encouragement would weaken the protections safeguarding participants’ retirement assets. ERISA’s standards of prudence and diversification permit ERISA plan fiduciaries to offer 401(k) plan participants alternative investments with limits and when it is appropriate to do so. These protective standards should not be attenuated to promote any industry’s products, whether those industries are selling ESG products or alternative investments.

In the final analysis, Executive Order 14330 is a solution in search

of a problem.

--- FOOTNOTES ---

Part of the Administrative Law Commons, Banking and Finance Law Commons, Labor and

Employment Law Commons, President/Executive Department Commons, and the Securities Law

Commons

TABLE OF CONTENTS

INTRODUCTION....................................................................................................... 137 I. EXECUTIVE ORDER 14330 AND THE DOL’S 2020 INFORMATION LETTER ...... 140

II. “APPLICABLE LAW”: ERISA, THE DOL REGULATIONS, AND THE CASE LAW

III. DIVERSIFICATION AND THE DIFFERENT FORMS OF ALTERNATIVE

INVESTMENTS ................................................................................................. 148 CONCLUSION .......................................................................................................... 150

INTRODUCTION

†Morris and Annie Trachman Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University. For helpful comments on an earlier draft, Professor Zelinsky thanks his Cardozo colleague, Professor Stewart Sterk.

1 EXEC. ORDER NO. 14330, 90 Fed. Reg. 38705, 38921 (Aug. 12, 2025). 2 Id. at 38922.

3 Id. at 38921. 4 Id. at 38922. 5 Participants in defined contribution pensions (sometimes called money purchase pensions) can also be permitted to select investments for their respective retirement accounts. However, 401(k) plans today dominate among qualified retirement arrangements. Thus Executive Order 14330 unsurprisingly focuses upon “401(k) investors.” This article similarly refers to 401(k) participants, but its analysis applies as well to defined contribution pensions which permit participant-directed investing. See generally Edward A. Zelinsky, THE ORIGINS OF THE OWNERSHIP SOCIETY: HOW THE DEFINED CONTRIBUTION PARADIGM CHANGED AMERICA (2007) (describing the causes and consequences of the emergence of the 401(k) plan as the dominant form of qualified retirement arrangement); John H. Langbein, ERISA’s Role in the Demise of Defined Benefit Pension Plans in the United States, in NEW YORK UNIVERSITY REVIEW OF EMPLOYEE BENEFITS AND EXECUTIVE COMPENSATION Chapter 6 (David Pratt ed., 2025) (explaining “the regulatory interventions of ERISA . . . became ever more onerous for DB plan sponsors”).

6 Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1104(a)(1). 7 EXEC. ORDER NO. 14330, 90 Fed. Reg. at 38921; Edward A. Zelinsky, Is Bitcoin Prudent? Is Art Diversified? Offering Alternative Investments to 401(k) Participants, 54 CONN. L. REV. 509, 539–40 (2022).

8 Zelinsky, supra note 7, at 516–17. 9 Id. 10 Id. 11 Id. at 525.

12 Id. at 515; EXEC. ORDER NO. 14330, 90 Fed. Reg. at 38921. 13 See, e.g., Khorri Atkinson, Trump’s 401(k) Crypto Order Would Become Law Under House Bill, BLOOMBERG LAW (Oct. 14, 2025, at 17:03 ET), https://www.bloomberglaw.com/ bloomberglawnews/daily-labor-report/X40CHMA8000000?bna_news_filter=daily-laborreport#jcite [https://perma.cc/C5A4-P62P] (quoting Rep. Troy Downing that Executive Order 14330 is a “major victory for industries looking to tap some of the roughly $12.5 trillion held in those retirement accounts.”); Hal Scott & John Gulliver, Trump Plans to Give Your 401(k) a Boost, WALL ST. J. (Aug. 10, 2025, at 15:51 ET), https://www.wsj.com/iopinion/trump-plans-to-giveyour-401-k-a-boost-private-markets-investments-eoa03d5c92?reflink=desktopwebshare_permalink.

14 For ease of expression, this article uses the term “participants” to include participants’ beneficiaries, including persons receiving death benefits from participants’ accounts, and individuals with interests in former spouses’ retirement accounts.

15 See Edward A. Zelinsky, Tie-breaking and Diversification: The Continuing Relevance of the District Court Opinion in Utah v. Micone, in NEW YORK UNIVERSITY REVIEW OF EMPLOYEE BENEFITS AND EXECUTIVE COMPENSATION § 8.02 (David Pratt ed., 2025).

16 See e.g., Edward A. Zelinsky, (Some) ESG Supporters Should Oppose the DOL’s Tiebreaker Rule, in NEW YORK UNIVERSITY REVIEW OF EMPLOYEE BENEFITS AND EXECUTIVE COMPENSATION § 4.02 (David Pratt ed., 2023).

17 Zelinsky, supra note 7, at 514.

I. EXECUTIVE ORDER 14330 AND THE DOL’S 2020 INFORMATION LETTER

18 Alicia H. Munnell is a prominent voice arguing that it is never appropriate to offer plan participants the choice of investing their retirement resources in private equity. Alicia H. Munnell, Workers Do Not Need Private Equity in Their 401(k) Accounts, MARKETWATCH (Aug. 10, 2025, at 14:41 ET), https://www.marketwatch.com/story/workers-do-not-need-private-equity-in-their401-k-plans-5bd8fd8c [https://perma.cc/7F6X-ALM2] (“Private equity is illiquid, has high fees, and hasn’t produced high returns for state and local plans.”).

19 EXEC. ORDER NO. 14330, 90 Fed. Reg. 38705, 38921 (Aug. 12, 2025). 20 Id. 21 Id. 22 Id. 23 Id. 24 Id. 25 Id. 26 Id. 27 Id. 28 Id. 29 Id. 30 Id.

31 Id. 32 Id. at 38922. 33 Id. 34 Id. 35 Id. 36 Id. 37 Id. 38 See, e.g., Miriam Gottfried, Blackstone Joins Race to Bring Private Assets to 401(k) Market, WALL. ST. J. (Oct. 15, 2025, at 8:00 ET), https://www.wsj.com/finance/investing/blackstone-joinsrace-to-bring-private-assets-to-401-k-market-9401bbe4?reflink=desktopwebshare_permalink.

39 EXEC. ORDER NO. 14330, 90 Fed. Reg. at 38922. 40 Id. 41 Id. 42 Id. 43 Id. 44 Id. at 38921. 45 Id. 46 Letter from Louis J. Campagna, Chief, Div. of Fiduciary Interpretations, to Jon W. Breyfogle (June 3, 2020), https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource[hereinafter “2020 center/information-letters/06-03-2020.pdf information letter”“]. The DOL defines an “information letter” as a “written statement” issued by the DOL which “call[s] attention to a well-established interpretation or principle of [ERISA], without applying it to a specific factual situation.” ERISA Procedure 76-1, § 3.01 (defining “information letter”).

[https://perma.cc/RS2K-PVEF]

47 2020 information letter, supra note 46, at 1.

48 Id. at 2. 49 Id. 50 Id. 51 Id. (“In no case would the private equity component of the asset allocation fund be available

as a vehicle for direct investment by plan participants and beneficiaries on a stand-alone basis.”).

52 Id. at 3. 53 The terms “individual account plan” and “defined contribution plan” are synonymous and can be used interchangeably. See Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(34).

54 2020 information letter, supra note 46, at 3. 55 Id. 56 Id. 57 Id. 58 Id. 59 Id. 60 Id. 61 Id. 62 Id at 4.

II. “APPLICABLE LAW”: ERISA, THE DOL REGULATIONS, AND THE CASE LAW

63 Id at 5. 64 Id. 65 Id. 66 EXEC. ORDER NO. 14330, 90 Fed. Reg. 38705, 38922 (Aug. 12, 2025) instructed the Secretary of Labor to “consider whether to rescind the Department of Labor’s December 21, 2021, Supplemental Private Equity Statement.” This statement elaborated the DOL’s 2020 information letter. Id. Five days after President Trump issued Executive Order 14330, the DOL did just that, rescinding the DOL’s 2021 Supplemental Private Equity Statement. See US Department of Labor Rescinds 2021 Supplemental Statement on Alternative Investments in 401(k) Plans Release No. 25-1297-NAT (Aug. 12, 2025). However, the 2020 information letter was not revoked and remains outstanding. Id.

67 EXEC. ORDER NO. 14330, 90 Fed. Reg. at 38922. 68 Id. 69 Cunningham v. Cornell Univ., 604 U.S. 693, 696 (2025) (“ERISA subjects plan fiduciaries to certain fiduciary duties derived from the common law of trusts.”); JOHN H. LANGBEIN, DAVID A. PRATT, SUSAN J. STABILE & ANDREW W. STUMPFF, PENSION AND EMPLOYEE BENEFIT LAW 507 (6th ed. 2015) (“ERISA fiduciary law is derived from and patterned on the Anglo-American law of trusts”); LAWRENCE A. FROLIK & KATHRYN L. MOORE, LAW OF EMPLOYEE PENSION AND WELFARE BENEFITS 308 (3d ed. 2012) (explaining that ERISA’s “fundamental fiduciary duties have their origin in the basic law of trusts.”); STEWART E. STERK & MELANIE LESLIE, ESTATES AND TRUSTS: CASES AND MATERIALS 675–707 (7th ed. 2024) (discussing fiduciary duties of trustees).

70 Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1104(a)(1).

71 Rules and Regulations for Fiduciary Responsibility, 29 C.F.R. § 2550.404c-1(d)(2)(iv) (2025) (explaining that a fiduciary has a “duty to prudently select and monitor any . . . designated investment alternative offered under the plan.”); Schweitzer v. Inv. Comm. of the Phillips 66 Savings Plan, 960 F.3d 190, 197 (5th Cir. 2020) (explaining that in context of defined contribution plan with participant-directed investing, “fiduciaries must engage in a reasoned decision-making process for investigating the merits of each investment option and ensure that each one ‘remain[s] in the best interest of plan participants.’”(quoting Tatum v. RJR Pension Inv. Comm., 761 F.3d 346, 358 (4th Cir. 2014 .

72 RESTATEMENT (THIRD) OF TRUSTS, § 90, cmt. b (AM. L. INST. 2007):

The trustee’s compliance with these fiduciary standards is to be judged as of the time the investment

decision in question was made, not with the benefit of hindsight or by taking account of

developments that occurred after the time of a decision to make, retain, or sell an investment. The

question of whether a breach of trust has occurred turns on the prudence and propriety of the trustee’s

conduct, not on the eventual results of investment decisions. The trustee is not a guarantor of the

trust’s investment performance.

73 Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4th 1015, 1021 (9th Cir. 2025) (quoting

Wright v. Or. Metallurgical Corp., 360 F.3d 1090, 1097 (9th Cir. 2004 .

74 Id. 75 Rules and Regulations for Fiduciary Responsibility, 29 C.F.R. § 2550.404a-1(b)(1)(i)

(2025).

76 Id. 77 Id. § 2550.404a-1(b)(2)(i). 78 Id. § 2550.404a-1(b)(2)(ii)(A). 79 Id. § 2550.404a-1(b)(2)(ii)(B). 80 Id. § 2550.404a-1(b)(2)(ii)(C). 81 Brotherston v. Putnam Invs., LLC, 907 F.3d 17, 33 (1st Cir. 2018) (quoting Roth v. SawyerCleator Lumber Co., 16 F.3d 915, 919 (8th Cir. 1994 ; Tatum v. RJR Pension Inv. Comm., 855 F.3d 553, 571 (4th Cir. 2017) (Diaz, J., dissenting); Renfro v. Unisys Corp., 671 F.3d 314, 322 (3d Cir. 2011) (quoting Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 919 (8th Cir. 1994 .

82 Brotherston, 907 F.3d at 39; Renfro, 671 F.3d at 322. See also Tatum, 855 F.3d at 571 (using

“objective prudence” standard).

83 90 FR 38921. 84 Id. 85 Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4th 1015, 1021 (9th Cir. 2025). 86 Meiners v. Wells Fargo & Co., 893 F.3d 820, 822 (8th Cir. 2018) (“ERISA plaintiffs . . . typically lack extensive information regarding the fiduciary’s ‘methods and actual knowledge’ because those details ‘tend to be in the sole possession of that fiduciary.’”) (quoting Pension Benefit Guar. Corp. ex rel. St. Vincent Cath. Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 719 (2d Cir. 2013 .

87 Anderson, 137 F.4th at 1022. 88 Id. See also Meiners, 893 F.3d at 822 (describing a “meaningful benchmark”). 89 Anderson, 137 F.4th at 1022. 90 137 F.4th 1015 (9th Cir. 2025).

91 Id. at 1019. 92 Id. at 1019–20. 93 Id. at 1019. 94 Id. 95 Id. 96 Id. 97 Id. 98 Id. 99 Id. 100 Id. 101 Id. at 1020. 102 Id. (quoting Anderson v. Intel Corp., No. 19-CV-04618, 2021 WL 229235, at *8 (N.D.C.A. Jan. 21, 2021 . 103 Id. at 1021. 104 Id. (quoting Debruyne v. Equitable Life Assurance Soc’y of the U.S., 920 F.2d 457, 465 (7th Cir. 1990 . 105 Id. (quoting PBGC ex rel. St. Vincent Cath. Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 716 (2d Cir. 2013 .

106 Id. (quoting In re Unisys Sav. Plan Litig., 74 F.3d 420, 434 (3d Cir. 1996 . 107 Id. (quoting Wright v. Or. Metallurgical Corp., 360 F.3d 1090, 1097 (9th Cir. 2004 . 108 Id. 109 Id. 110 Id. 111 Id. 112 Id. 113 Id. at 1023. 114 Id. 115 Id. (quoting Davis v. Wash. Univ. in St. Louis, 960 F.3d 478, 485 (8th Cir. 2020 . 116 Id. at 1024. 117 Id. at 1025; Anderson v. Intel Corp. Inv. Pol'y Comm., 579 F.Supp. 3d 1133, 1155 (N.D. Cal. 2022); Anderson v. Intel Corp., No. 19-CV-04618, 2021 WL 229235, at *12 (N.D.C.A. Jan. 21, 2021). 118 Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4th 1015, 1024 (9th Cir. 2025) (citing the DOL’s 2020 information letter).

III. DIVERSIFICATION AND THE DIFFERENT FORMS OF ALTERNATIVE INVESTMENTS

119 Id. at 1026. 120 Id. 121 90 Fed. Reg. 38921. 122 Id. 123 See Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1104(a)(1); see also Anderson, 137 F.4th at 1024–25. 124 29 U.S.C. § 1104(a)(1)(C) (containing the language “by diversifying the investments of the plan”). 125 See supra, note 71 and accompanying text. 126 29 U.S.C. § 1104(a)(2) (discussing “the prudence requirement . . . to the extent it requires diversification”).

127 2020 information letter, at 2. 128 Id. 129 Scott & Gulliver, supra note 13 (stating “investments in alternative assets” should be limited “to one-third of a 401(k) investment option.”). 130 Zelinsky, supra note 7, at 530, 541. 131 Id. at 539–44 (discussing liquidity of hedge funds and private equity investments). 132 See id. at 516–17. 133 Ian Ayres & Quinn Curtis, Beyond Diversification: The Pervasive Problem of Excessive Fees and “Dominated Funds” in 401(k) Plans, 124 YALE L. J. 1476, 1483, 1525–29 (2015) . 134 Zelinsky, supra note 7, at 545–46.

CONCLUSION

135 Id. at 529. 136 Id. at 529–30. 137 Id. at 528–30. 138 Eric D. Chason, Crypto and the Fiduciary Investor, 94 MISS. L.J. 193, 245 (2025). 139 Zelinsky, supra note 7, at 531–33. 140 See Chason, supra note 138, at 245–47. 141 Id. at 197.