The Supreme Court's 401(k) Case Is Colliding With Washington's Push for Riskier Retirement Bets

On October 6, the Supreme Court heard argument in a case that will decide something far more consequential than its dry caption suggests: how hard it should be for an ordinary 401(k) saver to sue when the people managing their retirement plan put a large share of it into hedge funds and private equity that underperform. The justices in Anderson v. Intel Corp. Investment Policy Committee sounded skeptical of the workers bringing the claim. That skepticism is arriving at a strange moment, just as the White House is pushing to steer more retirement savings into exactly the kind of investments at issue in the case.

A Six-Year-Old Case Reaches the Court

The dispute traces back to 2019, when former Intel employee Winston Anderson sued the committee that oversees the company's 401(k) and retirement-contribution plans, alleging its fiduciaries breached their duties under the Employee Retirement Income Security Act by loading the plans' target-date and diversified funds with unusually heavy allocations to hedge funds and private equity. A federal district court dismissed the suit, and the Ninth Circuit affirmed that dismissal in May 2025, holding that Anderson had failed to identify a "meaningful benchmark," a sufficiently comparable alternative investment strategy, to plausibly show the allocation was imprudent rather than merely different. The Supreme Court agreed in January 2026 to review that standard, and heard argument from Matthew Wessler for the plan participants and Charles McCloud for Intel's investment committee, with the Solicitor General's office appearing as an amicus supporting Intel.

The stakes are not abstract. Defined-contribution plans, chiefly 401(k)s, held roughly $10.1 trillion in assets at the end of 2025, according to Investment Company Institute data, and the outcome will shape how much legal exposure every company managing one of those plans faces when its investment choices go wrong.

What the Justices Actually Said

The argument transcript shows the central tension plainly. Justice Alito pressed Wessler on whether the complaint was really built on performance data at all: "The question presented concerns underperformance. But there's a lot in your brief about denigrating the strategy, featuring such a heavy reliance on private equity and hedge funds," he said, according to the official argument transcript. Wessler responded that the complaint was not challenging fiduciaries' general authority to invest in alternatives at all:

"The complaint does not challenge, as a category, the ability that fiduciaries have to invest in hedge funds or private equity. What the complaint challenges as the basis for its imprudence claim is the strategy that the Intel fiduciaries adopted in which they overallocated these target-date funds and a global diversified fund to this kind of asset."

Justice Kavanaugh pushed from a different angle, asking why performance comparisons should matter at all if the real complaint was about Intel's choice of a low-risk strategy and the means used to pursue it, "namely, hedge funds." The exchange captured the doctrinal problem the Court must resolve: ERISA requires fiduciaries to act prudently, but prudence is usually proven by comparison, and workers rarely have access to the kind of internal data needed to construct a precise comparator before a lawsuit even gets past the pleading stage.

A Policy Collision Nobody Scheduled

The case would matter in any year. It matters more in this one because of what happened fourteen months before the argument. On August 7, 2025, President Trump signed Executive Order 14330, "Democratizing Access to Alternative Assets for 401(k) Investors," which directs the Department of Labor to re-examine its fiduciary guidance and consider safe-harbor protections for plan sponsors that add private equity, real estate, infrastructure and digital assets to retirement menus. The order's own text frames the problem as one of access: more than 90 million Americans save through employer-sponsored defined-contribution plans, it states, but most have no practical way to invest in the alternative assets wealthier investors and public pension funds already use.

Whatever the merits of that access argument, it sits awkwardly beside Anderson. The same assets the administration wants more plans to offer are the ones Intel's workers say were mismanaged inside their own plan for the better part of a decade. A Supreme Court ruling that makes it substantially harder to plead an imprudence claim without a near-identical benchmark would arrive just as federal policy is actively encouraging sponsors to adopt investments for which clean, publicly available benchmarks often do not exist. Consumer-finance reporting on the order has flagged the same concern: private equity holdings are illiquid and thinly traded, which makes both independent valuation and after-the-fact comparison difficult in ways that mutual funds, with their daily published prices, simply are not.

Who Is Lining Up on Each Side

The amicus filings track the institutional interests cleanly. AARP, AARP Foundation, the Pension Rights Center and the investor-advocacy group Better Markets filed a brief supporting the Intel workers, arguing in a joint press statement that the plan's fiduciaries put "unprecedented amounts of plan assets" into private equity and hedge funds despite high fees and a decade of relative underperformance, and that the Ninth Circuit's benchmark rule would let fiduciaries escape scrutiny simply by choosing an unconventional enough strategy that no close comparator exists. On the other side, the Investment Company Institute and the National Association of Manufacturers filed in support of Intel, reflecting the employer and asset-management industry's longstanding worry that a looser pleading standard invites costly, speculative ERISA litigation against every plan sponsor who deviates from an index-fund-only menu. Intel itself, after years of defending the suit, won at the Ninth Circuit on the theory that comparing its diversified strategy to "equity-heavy retail funds" pursuing different objectives proved nothing about imprudence.

What the Court Should Avoid Doing

Both sides have a legitimate point, which is precisely why the Ninth Circuit's rule, as written, is the wrong resting place. Requiring a near-twin benchmark at the pleading stage effectively immunizes any investment strategy novel enough to lack a close peer, which is backwards: the more unusual and opaque an allocation, the easier it should be to get past a motion to dismiss and into discovery, not harder. But the plaintiffs' advocates are also right that ERISA litigation can become a tax on ordinary fiduciary judgment if any underperformance, measured against any benchmark a creative plaintiff's lawyer can construct, is enough to proceed to expensive discovery. The right line is closer to what Kavanaugh's questioning implied without quite stating: let plaintiffs plead non-performance facts, such as unusually high fees, undisclosed conflicts, or allocation decisions inconsistent with the fiduciaries' own stated strategy, without requiring a statistically clean comparator standing in for proof.

If the Court instead affirms the Ninth Circuit's rule largely intact, the practical effect will be to insulate exactly the kind of allocation decisions the Trump administration's executive order is encouraging more plans to make, at the same moment Congress and regulators have done nothing to require the liquidity disclosures, fee transparency or valuation standards that would let a worker like Anderson construct a benchmark in the first place. Expanding access to alternative assets inside 401(k) plans may well be good policy. Doing so while simultaneously narrowing the one legal tool participants have to challenge a bad bet is not a coincidence regulators should be comfortable with, and it is not one the Court should finalize by accident of a pleading-standard case that began six years before anyone wrote that executive order.