Three of the largest financial industry trade groups have expressed general support for the Department of Labor's proposed rule updating fiduciary duties under ERISA for defined contribution plans, while pressing for targeted revisions to address how annuities and alternative assets fit within the safe harbor framework.
The proposal, published in March, adopts a principles-based, asset-neutral approach. It outlines a process-driven framework for plan fiduciaries selecting investment options; following the framework would provide a presumption of prudence and safe harbor protection. The DOL aims to modernize standards for the $7.3 trillion 401(k) market, where participants increasingly bear investment risk.
The Insured Retirement Institute, which represents about 90% of U.S. annuity assets, noted that annuities are largely absent from the proposed framework. In a letter filed Monday, IRI urged the DOL to clarify that guaranteed lifetime income products—including annuities, longevity-protection vehicles, and income-focused target-date strategies—can be considered as designated investment alternatives or components of qualified default investment alternatives. IRI argued that fiduciaries evaluating such products should weigh factors like income stability and longevity protection, not just expense ratios or short-term performance metrics used for accumulation-only investments. "A final rule that appropriately recognizes those differences would advance an important retirement security objective without compromising ERISA's core fiduciary standards," said Emily Micale, IRI's director of Federal Regulatory Affairs.
The Securities Industry and Financial Markets Association and its asset management group also filed a joint letter supporting the proposal's process-based approach but recommending changes to strengthen fiduciary discretion. SIFMA called for allowing plan fiduciaries to determine which evaluation factors are relevant to their specific plan design, and for harmonizing conflict-of-interest language with existing SEC standards. The group also urged equal treatment of collective investment trusts alongside mutual funds in the safe harbor examples, and modernizing the decades-old prohibited transaction exemption PTE 77-4 to cover a broader range of investment vehicles now common in retirement plans. SIFMA highlighted the growing importance of private markets, noting that many companies stay private longer, and pointed to SEC efforts under Commissioner Paul Atkins to reduce public listing burdens, including lighter semiannual reporting and rolling back climate disclosure rules introduced in 2024 under Gary Gensler.
The Managed Funds Association, representing hedge funds and alternative investment managers, urged the DOL to lower barriers to private-market strategies in 401(k) plans. "American workers deserve access to the same types of investment strategies that pensions and other institutional investors have benefited from for decades," said MFA President and CEO Bryan Corbett. Research shows diversified portfolios including alternatives can improve long-term returns and reduce risk, he added. MFA recommended that the DOL clarify that examples in the proposed rule are illustrative, not prescriptive, and that fiduciaries who follow the evaluation steps satisfy safe harbor requirements. The group also argued that investment products already governed by the Investment Company Act and ERISA are subject to comprehensive regulation on valuation, liquidity, and complexity, making additional analytical requirements duplicative. MFA further urged the DOL to avoid suggesting fiduciaries may evaluate alternative asset exposure only by comparison to existing plan options, as that could limit diversification benefits.
The comments come as the DOL continues to refine the proposal, which aims to provide clearer guidance for plan fiduciaries while protecting participants. The trade groups' letters underscore the tension between maintaining flexibility for fiduciaries and ensuring robust protections. Industry observers expect the DOL to issue a final rule later this year, potentially incorporating some of the requested changes.
For advisors, the outcome could reshape how they recommend annuities and alternative investments within 401(k) plans. The push for equal access to private markets aligns with broader trends, as firms like RFG Advisory integrate iCapital's alternatives platform to meet advisor demand. Meanwhile, regulatory developments such as the SEC and CFTC proposal easing Form PF filing burdens for private fund advisors signal a shifting landscape.
