A retirement plan puts hedge funds and private equity into its target-date funds. The funds lag. A participant sues. Who has to prove what, and when? That is the question nine justices heard on October 6, and the answer will shape how comfortable any employer feels about putting private assets in your 401(k) for years.
The case behind the headlines
The case is Anderson v. Intel Corporation Investment Policy Committee. According to a Ropes & Gray briefing, starting in 2009 Intel’s fiduciaries allegedly steered billions of dollars of plan assets into custom target-date funds with exposure to hedge funds, private equity and other nontraditional investments. By 2014, the same summary says, the Intel 2030 fund reportedly held about 21 percent of its assets in hedge funds. Plaintiffs allege those funds charged higher fees and trailed comparable mutual funds.
The participant filed in 2019. A federal district court dismissed the claims, and in May 2025 the Ninth Circuit affirmed. Its reasoning was that anyone arguing a fund was imprudent because of cost or performance has to point to a meaningful benchmark, meaning a comparison with similar objectives and risks. The Supreme Court agreed to hear the dispute on January 16, 2026, in a case that touches a split among the circuits. Per the same Ropes & Gray summary, the Sixth Circuit did not strictly demand a benchmark, while the Seventh, Eighth, Ninth and Tenth required one in some form.
Notice what the Court is not being asked. Nobody is asking whether private assets belong in a retirement plan. The narrower question is whether a plaintiff has to plead a meaningful benchmark at the very start of a lawsuit, and if so, what counts as meaningful. It sounds like procedural housekeeping. It is not.
What the justices signaled
Speaking to 401(k) Specialist after the October 6 argument, Emily Zimmer said several justices, including Kagan, Barrett and Gorsuch, pressed the petitioners’ lawyer to concede that some comparator with similar aims is necessary. The questions to Intel’s lawyer and to the government, which supported the fiduciaries, mostly concerned how to define and apply the standard. Zimmer said Justice Kagan and others signaled interest in giving lower courts more concrete guidance rather than a bare yes-or-no ruling.
Outside lawyers read the room similarly. Caroline Wong of Sidley Austin said the Court appears poised to most likely rule for the respondents and affirm the Ninth Circuit. Ronald Mann of Columbia Law predicted what he called a pretty brisk and likely unanimous affirmance. Emily Zimmer of Troutman Pepper Locke offered a sharper framing: the real fight at argument was not over whether a benchmark is required, but over how much content the Court should put into the word meaningful. Charles Field of Sanford Heisler warned against turning a meaningful benchmark into a requirement that employees find an investment twin.
That warning deserves a second look. If every comparison must be a perfect match, almost no participant could ever get past a motion to dismiss. If any comparison will do, every plan sponsor with a lagging fund gets dragged into expensive discovery. Somewhere between those poles sits a workable rule, and the justices have until roughly late June or early July of 2027 to find it, though Mann expects a ruling before the cherry blossoms turn in the spring.
Why private assets make the yardstick slippery
For a plain index fund, benchmarking is easy. Pick the index, compare the numbers, done. Private markets resist that. Matthew Eickman, quoted by 401(k) Specialist, noted that public benchmarks are plentiful for traditional asset classes but scarce for private ones, so fiduciaries may struggle to find an appropriate comparator for alternatives. Bradford Campbell put the same worry as a question: how should a fiduciary evaluate an investment when no public index exists?
The Intel defendants have a version of this defense baked into their facts. According to the same coverage, Intel’s custom target-date funds were designed to be less volatile than other target-date suites, and Intel disclosed that they might trail equity-heavy funds in strong markets. Fred Reish argues that performance should be judged against a fund’s purpose and design, saying that the proper way to measure the performance of an investment is to look at its purpose and design. Judge a cautious fund against a stock-heavy rival in a bull market and it will look bad nearly every time. Whether that is a fair test or a convenient excuse is the heart of the dispute.
Here is the tension nobody should wave away. A rule that protects fiduciaries from weak lawsuits may also make it harder for ordinary savers to challenge a costly, underperforming fund. A rule that lets more suits survive may make employers shy away from anything unusual. Reish has said a plaintiff win could discourage fiduciaries from choosing investments that differ from the norm. Campbell adds that the legal test is about the selection process rather than market results. Both can be partly right.
The Labor Department is writing the same story in parallel
The Court is not the only institution wrestling with this. The Department of Labor published a proposed rule on March 31, 2026, titled Fiduciary Duties in Selecting Designated Investment Alternatives, with comments due June 1. It would create a process-based safe harbor. According to a summary from the International Foundation of Employee Benefit Plans, fiduciaries would weigh six factors, including performance, fees, liquidity, valuation, complexity and, notably, a meaningful benchmark with similar mandates, strategies, objectives and risks, then document how they reached a decision.
Two details matter for anyone reading this as a saver rather than a lawyer. First, the same summary says the department stated it does not intend to relax the loyalty requirement, so conflicts of interest remain off limits. Second, the proposal does not tell any employer to add private assets. It describes how to defend a decision either way. The Investment Company Institute has pointed out that the proposal also contemplates meaningful benchmarks, which is why a Supreme Court ruling could influence how sponsors document their choices.
Put the two together and a pattern shows. Regulators and courts are both signaling that the process matters more than the outcome of any single year. Zimmer said clearly documented investment rationale will likely matter however the Court rules. That is a message to plan committees. It is also a clue for you.
What this means if you are the one holding the account
None of this is a prediction about returns, and nothing here argues for or against owning private assets. But a few practical questions follow from the legal debate, and they are worth asking about any fund in your plan that holds illiquid holdings.
What is it being compared to, and does that comparison make sense given what the fund is trying to do? How often are the private holdings valued, and by whom? What do you pay in total fees compared with a plain version of the same strategy? And what happens if many participants want out at once? The department’s own list of factors, liquidity and valuation among them, reads like a checklist any individual could borrow.
There is also a simple humility lesson in the Intel facts. A fund designed to be calmer than its peers may look disappointing in rising markets, and a fund full of hard-to-value assets may look steadier on paper than it feels in practice. Neither fact makes a fund good or bad. They are reasons to read the disclosure documents rather than the marketing.
The ruling will not arrive for months. In the meantime, the argument has already told us something useful: the industry is racing to bring private markets to retirement savers, and the legal system has not yet decided how to measure whether that was a wise idea. Until it does, the sensible default is to know exactly what you own, what it is supposed to do, and what yardstick you would use to judge it.
This article is written for educational and informational purposes only and does not constitute financial or legal advice. The views and analytical frameworks presented draw on publicly available information and reported commentary from industry participants. Readers are encouraged to consult primary sources and form their own informed views on these complex topics.
