The U.S. Supreme Court recently heard arguments in a significant case involving Intel’s 401(k) retirement plan that may influence how private investments such as hedge funds and private equity are viewed in employer-sponsored plans. The dispute centers on whether claims of underperformance alone can prove fiduciary breach, or if plaintiffs must introduce a meaningful benchmark for courts to assess investment performance. Lower courts ruled that underperformance without proper comparisons is insufficient for legal claims, and several justices appeared sympathetic to this stance during oral arguments held on October 6, 2026.

Justices including Clarence Thomas, Elena Kagan, Samuel Alito, Amy Coney Barrett, and Neil Gorsuch used an “apples to apples” metaphor to emphasize the importance of appropriate benchmarks rather than comparing fundamentally different investment types. This suggests a tendency toward ruling in favor of Intel and confirming the lower court decision, which would ease concerns over litigation risk for plan sponsors. A ruling supporting Intel could give employers more confidence to include alternative assets in 401(k) plans, particularly as the Department of Labor moves to clarify rules regarding these investments.

The regulatory environment around alternative investments in 401(k) plans has shifted repeatedly in recent years. During President Trump’s administration, the Labor Department encouraged access to alternative assets, but the Biden administration raised concerns about the suitability and risks of such investments for retirement plans. Trump later issued an executive order to increase accessibility, and legislative efforts like the Retirement Investment Choice Act aim to support this push. Currently, the Labor Department is considering a proposed rule that would ease barriers to adding alternative investments, providing clearer guidelines for plan fiduciaries.

Despite increasing interest and new product offerings from firms like Voya Financial and Constitution Capital Partners, large employers remain cautious about adding private funds to their 401(k)s due to litigation risks and fiduciary concerns. Experts predict smaller and mid-sized companies may adopt these investment options first, as they face less regulatory scrutiny. Momentum is building in the market, but employers will need to carefully follow legal and regulatory guidance to manage the complexities and risks associated with alternative assets in retirement plans.