The EBSA Six: A Fiduciary Shield or a Plaintiff’s Sword?

Apr 23, 2026

Leadership at the Employee Benefits Security Administration (EBSA) has proposed a six-point framework for 401(k) fiduciaries to mitigate the surge in ERISA litigation. By focusing on performance, fees, liquidity, valuation, benchmarks, and complexity, the non-exhaustive list aims to provide fiduciaries with a documented “safe harbor” for judicial deference. However, the proposal may turn out to be a double-edged sword: while it guides prudent decision-making, critics worry that it also provides a roadmap for a hungry and experienced plaintiff’s bar to challenge plan management.

Six-Point Framework

Officially published in the Federal Registry as Fiduciary Duties in Selecting Designated Investment Alternatives, EBSA has recommended a six-point framework for retirement plan fiduciaries: “A proposed regulation that clarifies, and provides a safe harbor for, a fiduciary’s duty of prudence under the Employee Retirement Income Security Act of 1974 (ERISA) in connection with selecting designated investment alternatives for a participant-directed individual account plan, including asset allocation funds that include alternative assets.” Inviting comments on the proposal until June 1, 2026, EBSA explains the intent is to reduce ERISA litigation risks impacting the ultimate success of employer sponsored retirement plans:

The overarching goal of the proposed regulation is to alleviate certain regulatory burdens and litigation risk that interfere with the ability of American workers to achieve, through their retirement accounts, the competitive returns and asset diversification necessary to secure a dignified and comfortable retirement. This goal can be achieved only by clarifying that ERISA gives fiduciaries (not opportunistic trial lawyers) the discretion and flexibility to determine when designated investment alternatives, including…alternative investments, offer the opportunity for participants to maximize risk-adjusted returns….

Three key principles form the bedrock of the proposed regulation. First, there is a need to affirm ERISA as a law grounded in process. Second, ERISA gives maximum discretion and flexibility to plan fiduciaries in selecting designated investment alternatives, including the alternative investments described in Executive Order 14330, …Third, when ERISA fiduciary decision-making follows a prudent process—such as the process reflected in the proposed regulation—arbiters of disputes should defer to fiduciaries under a presumption of prudence.

EBSA hopes that the proposed regulations will give employers sponsoring retirement plans more confidence to innovate, including through the pursuit of alternative investment options that could drive better returns for retirement savers. The administration also intends for plan sponsors to experience significant cost savings, as defense against costly ERISA lawsuits will be reduced. However, as Paul Mulholland at Plan Sponsor reports, retirement industry professionals believe there are also some new risks for fiduciaries “lurking in the proposal”:

Michael Kreps, a principal with the Groom Law Group, explained that the proposal is trying to provide deference for fiduciaries that follow a prudent process through…“persuasive guidance,”…that is intended to express DOL’s view on prudent fiduciary process that will hopefully influence judges presiding over ERISA cases.
Kreps agreed that the proposal can provide a roadmap for plaintiff firms and a stronger basis for discovery requests. The six-item list the proposal spells out can also provide “footfalls” for fiduciaries if they do not carefully consider each item explicitly. “You’re creating the potential that people trip over some of those rules.”
Kreps explained that the current “litigation landscape is so problematic for fiduciaries, it’s worth putting more rules out there to give clarity.” The proposal also functions as a “tips sheet” for responsible fiduciaries to help guide them through the process.

Is Protection Really Necessary for Plan Sponsors?

Retirement plan sponsors have more choices than ever to make related to plan design and investment options. But, as James Van Bramer has summed up at Plan Adviser, “Litigation risks have suppressed plan providers and sponsors’ innovation….” Along with rising litigation risks, plan sponsors have also faced higher costs for fiduciary liability insurance—-which is the only type of insurance that includes defense for retirement plan sponsors in the face of ERISA lawsuits. Absent fiduciary liability insurance, defense is an out of pocket cost that adds up quickly for retirement plan sponsors, averaging $600 per hour.

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