The DOL's Proposed Six-Factor Prudence Rule: Our Comment to the DOL

The DOL's proposed "Fiduciary Duties in Selecting Designated Investment Alternatives" regulation was triggered by an executive order to expand 401(k) access to private equity, real estate, infrastructure, and cryptocurrency — and the asset managers who sell those products have been quick to celebrate it. What the rule has generated considerably less of is commentary from the people it's supposed to protect.

The rule — published March 30, 2026 — gives 401(k) plan fiduciaries a structured six-factor framework for prudent investment selection and a process-based safe harbor from litigation. It's a genuine improvement over the vague "prudent expert" standard that has long-invited hindsight lawsuits. But genuine improvement isn't the same as good enough — and at Employee Fiduciary, we submitted a formal comment letter urging the DOL to close three significant gaps before finalizing the rule.

Where We Stand

We support the rule's six-factor framework. A structured, documented process for investment selection is a genuine improvement over the vague "prudent expert" standard that has long left plan sponsors vulnerable to hindsight litigation. We also believe the framework, rigorously applied, actually strengthens the case for low-cost passive menus rather than pressuring sponsors to add alternatives — an underappreciated outcome the Department may not have fully anticipated.

But support for the framework doesn't mean the rule is ready to finalize. Three significant gaps remain, and each one matters more to participants than to the financial industry commenters who will dominate the comment record.

What We Asked the DOL to Fix

While we support the rule's framework, our comment letter focused on three gaps that must be closed before finalization. Two of them — the CIT fee disclosure problem and the absence of meaningful crypto protections — could expose participants to risks they have no practical way to see or evaluate. The third reflects the rule's most fundamental structural flaw: it creates robust new legal protections for fiduciaries without creating any corresponding rights for participants. Here is what we asked the DOL to fix, and why.

Close the CIT Fee Transparency Gap

The rule cannot achieve its fee comparison goals without first resolving how collective investment trusts disclose their costs. CITs are explicitly covered by the six-factor test as designated investment alternatives — but unlike mutual funds, they are exempt from SEC registration and the fee disclosure standards that come with it. Because their sponsoring trustees are regulated by state or federal banking authorities rather than the SEC, and their use in retirement plans is governed by ERISA, neither framework imposes the same fee disclosure standards as registered mutual funds.

Until the DOL clarifies whether CITs must include carried interest, leverage costs, and acquired fund fees in the expense ratios shown to participants, plan sponsors comparing CIT vehicles to registered funds will be comparing apples to oranges without knowing it. We urged the DOL to include explicit CIT fee disclosure requirements — in both percentage and dollar terms — in the final rule. Without them, the safe harbor's fee factor cannot be meaningfully satisfied for private market CIT investments.

Move Beyond Disclosure on Crypto — Participants Need Real Protections

The rule's asset-neutral stance opens the door to cryptocurrency in 401(k) plans by reversing prior DOL guidance that specifically warned against it. Disclosure requirements alone are not sufficient protection. A participant who receives a crypto disclosure they don't fully understand has not been protected — and sophisticated financial industry participants are well-practiced at satisfying disclosure requirements on paper while continuing business as usual.

We asked for four substantive safeguards: a participant opt-in requirement so no one is passively exposed to crypto; a suitability standard modeled on blue sky law qualifications, recognizing that retirement savings are many participants' primary financial security; enhanced independent valuation requirements; and a clarification that a benchmark constructed by an adviser with a financial relationship to the digital asset manager does not satisfy the rule's benchmarking standard. None of these prohibit crypto — they simply ensure participants cannot be exposed to it without their informed consent and a meaningful suitability determination.

Give Participants Transparency Rights That Match the New Protections for Fiduciaries

The rule's most significant structural flaw is its asymmetry: robust new legal protections for fiduciaries, nothing new for participants. A participant has no way to know whether the six-factor test was applied rigorously or reduced to a compliance checklist, whether benchmarks were genuinely meaningful or constructed to favor a preferred investment, or whether fee comparisons reflected the true all-in cost of CIT vehicles.

We urged the DOL to require an annual plain-language summary for each participant covering each investment option, the benchmark used, net-of-fees performance relative to that benchmark, and total fees paid in dollar terms. We also asked that fiduciaries be required to make their six-factor documentation available upon participant request — including a plain-language summary, not just the full technical documentation. Without the summary, the right of access simply replicates the existing problem of disclosures that are technically available but practically impenetrable.

The Bottom Line

For over 22 years, Employee Fiduciary has operated on a simple premise: that a 401(k) provider's first obligation is to plan participants, not to the financial industry intermediaries who profit from their retirement savings. That's the lens through which we read this rule — and it's what drove us to put our views on the record.

The comment period is still open. We encourage other plan providers, advisers, and participant advocates to submit their own views. The final rule will be shaped by who speaks up — and right now, the industry voices are louder.