EBSA's Aronowitz outlines process safe harbors in proposed Investment Selection Rule

Prompted by an August 2025 executive order, the Labor Department's proposed Investment Selection Rule would establish process-based safe harbors for 401(k) plan fiduciaries selecting designated investment alternatives, EBSA Assistant Secretary Dan Aronowitz said Monday.

Aronowitz made his first remarks on the proposal on a Zoom call reported by NAPA Net on March 30, 2026. He described the rule as "a principle and process-based standard that the law requires" and said it is asset-neutral: "responsible fiduciaries decide what investments go into a retirement plan, not plaintiff lawyers or regulators."

The proposal, titled Fiduciary Duties in Selecting Designated Investment Alternatives, takes two steps, Aronowitz said. First, it affirms that ERISA is a law of process, giving fiduciaries discretion and flexibility and entitling them to deference from courts if those decisions are challenged.

The second step provides 20 examples of safe harbors for what fiduciaries should consider in a prudent process, including weighing risk and reward to maximize risk-adjusted returns net of fees.

Jeffrey Turner, director of EBSA's Office of Regulations and Interpretations, said the safe harbor enumerates six non-exhaustive factors a fiduciary must weigh objectively, thoroughly and analytically when picking a menu option. Turner said the proposal follows the department's practice of issuing neutral guidance that "does not favor or disfavor any particular type of investment or investment strategy," and that it applies to all option types, "including those that contain investments in alternative assets."

The proposed rule solicits comments on each factor, and the department considers the six factors together as key considerations for a prudent fiduciary.