EBSA Head Aronowitz Asks for Industry Input on DOL Investment Rule

Employee Benefits Security Administration Head Daniel Aronowitz defended the Department of Labor’s proposed rule for determining the prudence of including any investment in a defined contribution plan, asserting that the proposed rule is built to withstand legal challenges and encourage innovation in retirement investing, while the agency seeks industry input to further improve it.

Speaking at a Mayer Brown event in Washington, Aronowitz outlined the agency’s approach to modernizing fiduciary standards under the Employee Retirement Income Security Act through the recently proposed Fiduciary Duties in Selecting Designated Investment Alternatives rule. He emphasized that the proposal is intended to create a process-driven framework and legal durability under administrative law after the Supreme Court’s 2024 Loper Bright Enterprises v. Raimondo decision that overturned Chevron deference. He also stated a broader goal of unlocking flexibility for plan sponsors while protecting retirement savers.

Aronowitz described the proposed rule as grounded in what he called an “objective, thorough and analytical” fiduciary process shaped by years of litigation and regulatory experience. The proposal includes 20 practical examples aimed at helping plan fiduciaries navigate complex decisions related to fees, performance, benchmarking, valuation and liquidity.

‘Where the Rubber Meets the Road’

EBSA tried to examine “where the rubber meets the road,” Aronowitz said, noting that the examples in the proposal were informed by high-profile cases, including litigation involving Intel. The Intel case, Anderson v. Intel Corp. Investment Policy Committee, is scheduled to be heard by the Supreme Court during its next term, which begins in October. The case, which has already had a motion ruled on by the Supreme Court, will return for a review of the so-called “meaningful benchmark” rule that could have significant implications for the inclusion of alternative investments in defined contribution plans.

The DOL’s proposal, which in part seeks to broaden access to alternative investments, has already drawn significant attention, with roughly 24,000 public comments submitted so far.

Jeffrey Hooke, a retired investment banker and finance lecturer at John Hopkins University, and Michael Imerman, a finance professor at the University of California, Irvine, joined in a scathing 11-page rebuke of the DOL’s rule, insisting that a traditional 60/40 portfolio typically performs better than portfolios with allocations to alternative investments.

On the other side of the argument, an attorney at Davis & Harman confirmed that the firm, which represents employers, will provide a comment letter close to the June 1 deadline.

Aronowitz urged stakeholders to continue engaging with the process, saying the agency is open to revising or expanding its framework.

“Hopefully we can see more thoughtful comments that will help us if there’s a seventh or eighth factor that we’re missing, or if you can improve on the rule,” he said, referencing the proposal’s inclusion of six specific factors for fiduciaries to evaluate when selecting investments. “We don’t pretend to be the smartest people in the world, even though I have a really smart team.”

The six factors for evaluating investments are fund performance, fees, liquidity, valuation, benchmarking and complexity.

Built for a Post-Chevron Legal Landscape

One key message Aronowitz delivered was that the rule is designed to withstand judicial review, following the Supreme Court’s decision in Loper Bright, which curtailed federal courts’ deference to federal agencies.

To that end, the DOL explicitly structured the proposed rule to align with decades of precedent and is seeking so-called Skidmore deference—persuasive authority based on consistency and expertise, Aronowitz stated.

“We went out of our way to be thoughtful and follow all administrative procedures,” he said, adding that the agency is confident the rule could withstand claims that it is arbitrary or capricious.

Flexibility as a Core Principle

Aronowitz repeatedly stressed that ERISA allows for flexibility and discretion in fiduciary decisionmaking, an idea he hopes courts will continue to recognize. He cited longstanding legal principles, including trust law dating back to 1959 and the Supreme Court’s 1989 decision in Firestone Tire & Rubber Co. v. Bruch, which affirmed discretionary authority in benefit determinations.

The proposed rule reinforces that fiduciaries are not bound to a single methodology, but must follow a prudent, well-documented process, he said.

While declining to preview specific future actions, Aronowitz confirmed that the agency is considering additional guidance—particularly on the fiduciary “duty to monitor” investments and service providers.

He also acknowledged ongoing coordination with the Department of the Treasury on emerging initiatives such as Section 530A Trump Accounts, which are designed to enable savings and investing to benefit children younger than age 18, though he declined to detail EBSA’s role.

Looking ahead, Aronowitz said he hopes the proposed investments rule will encourage plan sponsors to adopt more creative and diversified strategies, including next-generation target-date funds and broader use of alternative assets.

Aronowitz framed EBSA’s broader regulatory agenda as based on three priorities: providing clarity for plan sponsors, ensuring fair and consistent enforcement, and unlocking the full potential of the U.S. retirement system.

“We’re looking at every issue in which we believe conscientious plan sponsors need clarity,” Aronowitz said, adding that the agency is also focused on improving oversight of health plans.

With roughly 1,000 days remaining in the current administration, Aronowitz called on industry leaders to help shape policy outcomes.

“We’re running a marathon—and we’re running a fast marathon,” he said.