SCOTUS and Department of Labor Open the Gates to $13.8 Trillion 401(k) Market for Private Credit

A massive structural shift is underway in early 2026 that could unlock the $13.8 trillion U.S. defined contribution/401(k) market for private credit, private equity, and other alternative assets. This expansion is being driven by a highly coordinated regulatory push from the Trump Administration and a landmark case currently under review by the U.S. Supreme Court.

The Supreme Court Review: Anderson v. Intel

On January 16, 2026, the U.S. Supreme Court granted certiorari in Anderson v. Intel Corp. Investment Policy Committee, a pivotal Employee Retirement Income Security Act (ERISA) case that could dramatically reduce litigation risks for plan sponsors who include alternative investments in their 401(k) lineups.

• The Case: Former Intel employees sued the company's plan fiduciaries, claiming they breached their duty of prudence by allocating billions of dollars in plan assets to custom target-date funds (TDFs) that held exposure to hedge funds, private equity, and private credit. The plaintiffs argued these custom allocations led to high fees and underperformance relative to traditional mutual funds and standard market indices.
• The Core Legal Issue: The Supreme Court will address whether ERISA plaintiffs alleging imprudent investment decisions based on fund underperformance must plead a "meaningful benchmark"—a comparator fund with sufficiently similar aims, risks, and objectives—at the motion-to-dismiss stage.
• Why It Matters: The Ninth Circuit previously affirmed the dismissal of the lawsuit in May 2025, holding that the plaintiffs failed to state a claim because their proposed comparators (such as standard indices or peer groups) did not share the same complex investment strategies. An affirmation by the Supreme Court would establish a strict, nationwide pleading hurdle, protecting fiduciaries from hindsight-driven class-action lawsuits and paving the way for sponsors to confidently add private market alternatives to retirement menus.

The Department of Labor's Proposed Safe Harbor: "Presumptive Prudence"

Concurrently, on March 30, 2026 (published in the Federal Register on March 31, 2026), the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) issued a landmark proposed regulation titled "Fiduciary Duties in Selecting Designated Investment Alternatives."

• The Policy Intent: The proposed rule directly implements Section 3(c) of President Donald Trump's August 7, 2025 Executive Order 14330, "Democratizing Access to Alternative Assets for 401(k) Investors," aimed at expanding long-term wealth creation for American workers by clearing regulatory burdens.
• The Safe Harbor Framework: The rule establishes a process-based "presumptive prudence" safe harbor under a new regulation (29 CFR § 2550.404a-6). It outlines six non-exclusive elements that fiduciaries must objectively, thoroughly, and analytically consider and document when selecting any designated investment alternative (DIA):
  1. Performance: Evaluated in light of long-term participant outcomes, rather than short-term performance in isolation.
  2. Fees: Confirms that fiduciaries are not required to select the cheapest option; fees can be higher if they offer commensurate value (such as diversification or risk management).
  3. Liquidity: Recognizes that 401(k) plans are long-term vehicles and do not require 100% daily liquidity, as long as liquidity is managed consistently with participant needs (e.g., loans, hardship withdrawals).
  4. Valuation: Requires fiduciaries to ensure valuations are credible, well-governed, and free of conflict, especially for hard-to-price private assets.
  5. Benchmarking: Requires comparison against a "meaningful benchmark" with similar mandates, objectives, and risks to prevent misleading comparisons—directly mirroring the core issue in Anderson v. Intel.
  6. Complexity: Notes that complexity does not disqualify an asset class but requires stronger diligence and the potential engagement of knowledgeable experts.

Strategic Market Implications

Historically, despite having the legal authority to allocate to alternative assets, virtually no 401(k) plan sponsors did so due to fear of class-action litigation and a lack of regulatory safe harbors. The double-whammy of a favorable SCOTUS ruling in Anderson v. Intel and the finalization of the DOL's "presumptive prudence" safe harbor is expected to trigger a structural shift.

• Asset managers are actively preparing product offerings, such as custom Target Date Funds (TDFs) with private credit and private equity "sleeves," to pitch to 401(k) plan sponsors.
• As J.P. Morgan Asset Management noted in March 2026, the proposed rule "is broader and more consequential than a 'private assets in DC' headline suggests—it would create a new prudence framework and a process-based safe harbor for selecting any designated investment alternative."