On July 10, the Department of Labor told the Supreme Court that retirement plan fiduciaries should be judged by how they made their decision, not by whether the decision made money. The brief, filed in Anderson v. Intel Corp. Investment Policy Committee, argues that ERISA imprudence claims require a named benchmark and a documented process, not just a bad quarter. Washington is treating this as doctrine in the making. A Massachusetts judge settled the question 196 years ago.
Justice Samuel Putnam answered this in Harvard College v. Amory, a case about a trust that lost money in manufacturing stocks during the 1820s. Harvard and Massachusetts General Hospital sued the trustee, Francis Amory, over the loss. Putnam refused to hold him liable simply because the investments had underperformed. His standard asked whether a trustee had managed the money the way a sensible person manages his own, weighing income against "the probable safety of the capital to be invested," and it judged the decision by the thinking that produced it, not by the market that followed. That formulation became the prudent man rule, later codified into ERISA's own duty of prudence at 29 U.S.C. § 1104(a)(1)(B): a fiduciary must act with "the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent [person] acting in a like capacity . . . would use."
Anderson v. Intel puts Putnam's rule back in front of the Court. The plaintiffs allege that Intel's fiduciaries breached their duty by allocating billions in 401(k) assets to custom target-date funds carrying hedge funds and private equity. The Ninth Circuit dismissed the case, holding that "ERISA requires prudence, not prescience." The Department's brief, filed alongside amici from the ERISA Industry Committee, the Investment Company Institute, and the American Benefits Council, asks the Court to affirm that dismissal and to require plaintiffs to plead a comparator fund with a genuinely similar mandate before a court will even entertain the claim. Underperformance against a fund that was never a candidate for the plan proves nothing about the process that selected it.
The second front is regulatory. On March 31, the DOL proposed a rule, "Fiduciary Duties in Selecting Designated Investment Alternatives," that would give plan fiduciaries a safe harbor if they document six factors before adding any investment option: performance, fees, liquidity, valuation, benchmarking, and complexity. Satisfy all six, on the record, and a fiduciary is presumed prudent. The comment period ended on June 1. The rule grew out of last August's executive order directing regulators to widen access to private equity, real estate, and other alternatives inside 401(k) plans, where only a small fraction of plan sponsors currently offer them, largely out of fear of exactly the lawsuit Intel is now defending.
Two federal actions eight weeks apart, from the same department, aimed at the same statutory phrase, is not a coincidence. It is a coordinated bet that plan sponsors won’t open 401(k) menus to private equity, private credit, and other alternatives until the litigation risk around doing so gets smaller. I have spent a career on the other side of that door, structuring exactly these strategies for family offices that face no such exposure. The retail retirement saver deserves the same access to diversification that ultra-high-net-worth portfolios have used for decades. Whether they get it depends on whether the fiduciary who selects that access can prove a thoughtful process and document those steps in a form a court will accept.
Here is where I sharpen the verdict rather than soften it. Putnam was right that process, not result, is the correct measure of prudence, and for a reason more basic than convenience: nobody can know in advance which investment will perform best. Not Putnam, not the DOL, not a federal judge weighing a complaint filed years after the fact with the benefit of a chart nobody had when the decision was made. A standard built on results asks fiduciaries to do something no one can do. A standard built on process asks something that can actually be verified. That principle deserves to survive contact with the Supreme Court, and I hope it does.
But process alone answers only half of what uncertainty demands, and the DOL's six factors answer even less of it than they appear to. A 401(k) is a defined contribution plan: the participant chooses among the options on the menu, and ERISA already reflects that division of labor. Section 404(c) relieves the plan sponsor of liability for a participant's own investment decisions, but only if the participant exercises independent control after receiving "sufficient information to make informed investment decisions." The DOL's six factors test whether the sponsor built and monitored a prudent menu, screening out funds carrying bloated expense ratios or advisory fees that serve the provider rather than the participant. That is exactly what a process test should verify. What it cannot verify, and does not try to, is whether the participant ever received the informed-choice piece the statute already requires before the sponsor's liability shield attaches.
That gap belongs to a specific party, and it is not the plan sponsor's human resources department. It is the investment advisor servicing the plan, the party typically compensated through advisory fees or 12b-1 revenue sharing precisely for that function and already carrying fiduciary status for it. EBSA's own FY2026 national enforcement priorities, announced January 15, name 404(c) compliance and conflicts of interest involving 3(21) and 3(38) fiduciaries at the service-provider level as target areas, which is another way of saying the regulator already suspects the party this argument is about. The fix is not a new factor bolted onto the DOL's safe harbor. It is enforcement of Section 404(c)'s existing information requirement against the party paid to satisfy it. An advisor who collects a fee for servicing the plan and leaves participant education to a benefits packet nobody reads has not earned the 404(c) shield for the sponsor. They have collected a fee.
Financial history rewards patience more often than it rewards vindication, and this is a case of both. A Massachusetts judge got the standard right in 1830, before there was a Securities and Exchange Commission, before there was ERISA, before anyone had heard of a target-date fund. Congress got most of the rest right in 1974, when it built the participant's own informed choice into the price of the sponsor's liability shield. Washington does not need a new rule. It needs to enforce the one it already has, against the party already paid to comply with it.
