The U.S. Department of Labor (DOL) has proposed a new safe harbor rule under the Employee Retirement Income Security Act (ERISA). The purpose of the newly proposed rule is to allow 401(k) plan sponsors to more effectively defend investment-selection decisions, including those that rely on alternative assets. By proposing this rule, DOL is preserving fiduciary neutrality toward assets while lowering litigation risks that may discourage plans from more innovative investments.
According to the DOL’s Federal Register notice, the proposed rule would provide a safe harbor for a fiduciary’s prudence duty when selecting investment alternatives for plan participants, including asset-allocation funds that include alternative assets. The notice specifically states that the DOL does not intend to impose any restrictions on any certain type of asset. Rather, the DOL hopes to give fiduciaries discretion and flexibility if they utilize a prudent and reasonable decision-making process.
