The Supreme Court heard a major case this week involving an Intel retirement plan that could result in a decision that influences employers’ appetite for private investments in 401(k)s.
Many plan sponsors are in limbo, awaiting the Supreme Court’s decision and finalized Department of Labor rules regarding alternative investments before making changes to their 401(k) menus, even as the asset management industry prepares for new products.
“I think companies want to know what’s going to happen with the proposal and what’s going to happen with the Supreme Court case before they rush to change their investment strategies,” said Elizabeth Hopkins, principal of Hopkins ERISA Law and former senior attorney at the Department of Labor, who filed an amicus brief in the Supreme Court case on behalf of former top DOL officials.
Here’s what employers and employees need to know about the forces influencing the private investment market in 401(k) plans.
What Justices Thomas, Alito, Gorsuch and Kagan said
Employers have been battered in recent years by changing government policies on alternative investments in 401(k) plans and by a high-profile lawsuit filed in 2019 by a former Intel employee. This case, Anderson v. Intel Corp. Investment Policy Committee, for which the Supreme Court heard oral arguments on Tuesday, October 6, concerns private investments in a defined contribution plan such as a 401(k) and the circumstances under which such investments are appropriate.
It’s not a question of whether alternative assets such as hedge funds and private equity can be used in a 401(k) plan alongside stocks and bonds. Rather, the question before the court is whether an allegation of pension plan underperformance requires alleging a “significant benchmark.” The heart of the conflict centers on how to handle employee claims that plan sponsors invested their retirement funds imprudently.
Employees say the relatively low returns on Intel’s plans reflect a breach of fiduciary duty. Lower courts disagreed. Their reasoning: Allegations of underperformance are not enough without providing a “meaningful benchmark” for courts to evaluate performance.
During the arguments, the Supreme Court justices seemed skeptical that plan sponsors’ investment choices should be easy fodder for individuals in litigation. The justices often turned to a fruit metaphor, with Justice Clarence Thomas summarizing his view of the Ninth Circuit’s decision this way: “You can’t compare apples and oranges…if you have a fund…designed to produce high returns but riskier returns…you can’t compare that to a fund designed to protect you against losses.”
Several other justices, including on the liberal side of the Court, seemed to agree with his reasoning, noted Ronald Mann, co-director of the Charles Evans Gerber Transactional Studies Center at Columbia Law School, in an analysis on SCOTUSblog. Justice Elena Kagan, for example, said, “the thing you need…is another apple.”
Justice Samuel Alito asked the employees’ lawyer, Matthew Wessler, to clarify whether his position was that one could “make a statement comparing apples and oranges, but supplement it by suggesting that the strategy was flawed.”
Justice Amy Coney Barrett also opted for the same metaphor.
Meanwhile, Justice Neil Gorsuch asked Wessler to “accept the general principle that when we limit ourselves to allegations of underperformance…a meaningful benchmark is required, apples, not oranges.”
Wessler did not respond to a request for comment for this article.
The underlying problem for the court appeared to be the lack of a reference point. Notably, the justices explicitly asked Aimee Brown, assistant to the solicitor general, what guidance the court should provide in this case.
Brown’s view was that the court should suggest “certain parameters” for defining what a “meaningful benchmark” should be. “Care is about process, not performance,” she told the judges.
Legal experts say SCOTUS appears likely to side with Intel
Lawyers who attended the proceedings in person, listened to the recording or read the transcript took the justices’ questions as a sign that they were leaning toward siding with Intel and affirming the 9th Circuit. “When judges ask opposing counsel to choose which approaches to use in an opinion, it’s usually a safe bet that they won’t vote for you,” Mann wrote.
In rebuttal, Wessler noted that all allegations must be considered together and holistically. “I think that’s important in a case like this, where you have an allegation about a reckless strategy or an implementation of that strategy gone wrong,” he told the court.
Employers are awaiting the court’s decision, hoping in some cases for guidance that would help temper future litigation. “Private funds can be an effective and entirely appropriate component of 401(k) plan investment options,” Eugene Scalia, a partner at Gibson Dunn & Crutcher, said in an email. “A court ruling in favor of Intel would confirm this and provide additional support for the Department of Labor’s rulemaking,” said the former U.S. Secretary of Labor who submitted an amicus brief on behalf of the American Investment Council and the Managed Funds Association.
“A positive outcome in this case will go a long way toward making plan sponsors who have wanted to do so for years but have hesitated, for fear of being sued, feel more confident that they can do so with less fear of being sued,” said Joshua Lichtenstein, a partner at Ropes & Gray, who leads the firm’s ERISA fiduciary practice and was co-author of an amicus brief to the court on behalf of the Investment Company Institute.
ERISA does not prohibit alternative investments
The Employee Retirement Income Security Act of 1974, or ERISA, does not address alternative investments in 401(k)s, but President Trump pushed for their inclusion under his previous administration. Under his leadership, the Department of Labor issued an information letter in June 2020 intended to “help Americans saving for retirement access alternative investments that often offer strong returns,” Scalia, then-Labour Secretary, said in a statement.
However, in December 2021, the DOL under the Biden administration issued an additional statement, asserting that most plan fiduciaries were not qualified to evaluate alternative investments, given their complexity and high risk. This had a chilling effect on the market.
The tide changed once again during Trump’s second term. In August 2025, he issued an executive order aimed at democratizing access to alternative assets for 401(k) investors. Then, in October 2025, Congressman Troy Downing introduced the Retirement Investment Choice Act to codify the executive order into law. And in March, the Department of Labor released a proposed rule aimed at easing legal and regulatory barriers to adding alternative investments to retirement plans. Comments were due by June 1.
“The proposal represents the clearest guidance the department has ever given on the types of information and processes a plan sponsor should follow when making investment decisions,” Lichtenstein said.
Large employers may still be slow to add private funds
Most large companies do not offer private investments as part of their 401(k) plans, although nothing in ERISA prohibits it, said Kent Mason, a partner at Davis & Harman, who filed an amicus brief in the Intel case on behalf of the American Benefits Council and represents major employers, large plans and national retirement plan service providers.
The latest legal and regulatory developments may not change this situation. “The largest companies will be the slowest to do this,” Mason said, adding that he expects small and medium-sized companies to begin adding private investments to their 401(k) lineups before larger companies, which are subject to more litigation risks.
He expects this even if the Supreme Court sides with Intel and the Department of Labor rules are adopted. “While the rules provide an excellent and useful framework, the six-factor analysis remains subjective,” he said, referring to guidance recently proposed by the Department of Labor on the selection of investment options in plans. “Plaintiffs’ attorneys are still likely to file lawsuits alleging that big companies failed to meet their fiduciary duties to protect.”
Alternative investments are already common in defined benefit plans, although 401(k)s have been slower to adopt them. But that should change over time, as investors clamor for it, more products become available, and more companies get comfortable, even if it’s a slow start.
“There is a clear business case for ensuring that plans offer employees a wide range of investment options,” said Harvey Bines, a partner at the law firm Sullivan & Worcester, whose practice includes investment management law. However, employers will need to be extra careful to cover all legal and fiduciary bases. “The newer and riskier the options you offer, the more care and oversight you need to use in proposing and pursuing the offering,” Bines said.
Momentum is building. During Trump’s second term, asset managers and plan providers continue to form partnerships to offer alternative investments within 401(k)s, with the announcements of Empower in May 2025 and Voya Financial in July. OneDigital and Principal Financial Group announced similar partnerships in January and August of this year. In September, Constitution Capital Partners announced the creation of Constitution Capital Horizon CIT, a collective investment trust, 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, and their advisors and consultants, take a closer look at private market investments and begin to thoughtfully integrate them,” Amy Vaillancourt, president of retirement at Voya Financial, said in an email. She emphasized that interest is not just coming from employers. Voya’s study found that almost two-thirds of participants want to access investments in the private market.
“Sponsors want to understand how private markets can benefit their participants’ long-term retirement outcomes,” Brett Fisher, head of investment product strategy at Principal Financial Group, said in an email. At the same time, they “want to make these decisions in a way that is consistent with their fiduciary duties.”
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