DOL proposes safe harbor for 401(k) fiduciaries

DOL proposes safe harbor for 401(k) fiduciaries Jun 8, 2026 11:03:47 AM The Department of Labor proposed a rule clarifying fiduciary responsibilities for selecting retirement plan investments. On March 30, 2026, the U.S. Department of Labor (DOL) proposed a rule implementing the Trump administration’s executive order “to democratize access to alternative assets in 401(k) plans.” In continuing the shift away from the Biden administration’s stance (which we covered here), the proposal clarifies a fiduciary’s duty of prudence when selecting investments, easing concerns around regulatory uncertainty or litigation risk. What is in the DOL’s proposed rule for retirement plan investments? The proposed rule encourages fiduciaries to consider all investment types—from stocks and bonds to private investments and digital assets—when selecting 401(k) plan options. Rather than prescribing which investments to choose, the rule establishes a six-factor framework for evaluating investments that would provide safe harbor protection for the plan’s fiduciaries, if satisfied. The six factors—performance, fees, liquidity, valuation, benchmarking, and complexity—capture the key considerations a prudent fiduciary should evaluate when selecting plan investments. Notably, the proposed rule applies equally across all asset classes, with no single investment type (such as asset allocation funds) singled out or favored. What does this mean for fiduciaries? The rule outlines six factors fiduciaries should consider when evaluating investments: Performance: risk-adjusted returns Fees: the lowest-cost option isn't required, but costs must be justified Liquidity: sufficient at both the plan and participant levels Valuation: metrics must be adequate, timely, and accurate Benchmarking: comparisons should be meaningful and relevant Complexity: fiduciaries must fully understand what they're selecting Fiduciaries who follow this process are protected under the rule's "process-based safe harbor," which rewards rigorous decision-making over performance outcomes alone. What does this mean for Betterment at Work? At Betterment, our investment process incorporates these analytical steps. Our investment process is built around the same factors the DOL’s safe harbor identifies: We evaluate risk-adjusted performance, prioritize low-cost ETFs with transparent valuations and readily available benchmarks, stress-test portfolio strategies, and automatically monitor portfolios and rebalance as participants approach their investment time horizons. We apply this disciplined process to our investment decisions made on behalf of plan participants. Betterment will continue to carefully consider all types of investments, rigorously select and monitor options as a fiduciary, while preserving the flexibility plan sponsors and participants desire. For 401(k) plans where Betterment serves as the 3(38) investment fiduciary, at this time we will continue to not offer alternative investment options such as crypto or private assets. We’ll continue to regularly review investments with appropriate oversight and governance to meet our due diligence and fiduciary duty in selecting investments suitable for participants' long-term investment objectives. What is the timeline for the DOL's proposed fiduciary rule? The proposed rule is open for comment until June 1, 2026, with a final rule expected later in the year. In the meantime, expect the asset management industry to innovate around alternatives and design ways to improve accessibility, liquidity management, transparency, and education. Why this is positive Clearer rules are good for everyone: They give fiduciaries the confidence to act, encourage competition among service providers, and ultimately mean better options and lower costs for participants saving for retirement. As always, we will continue to monitor ongoing developments and keep you informed as the landscape evolves.