Aronowitz Proposes 401(k) Lawsuit Shield for $10 Trillion Plans, Easing Path for Private Equity
Updated
Updated · ProPublica · Jul 8
Aronowitz Proposes 401(k) Lawsuit Shield for $10 Trillion Plans, Easing Path for Private Equity
1 articles · Updated · ProPublica · Jul 8
Summary
A Labor Department rule proposed by Daniel Aronowitz would give employers “significant deference” in court if they document a review process before adding 401(k) investments, making worker lawsuits much harder.
The change targets ERISA’s core fiduciary safeguard as the Trump administration pushes plans toward less-regulated assets such as private equity and cryptocurrency that employers have long avoided over liability and cost concerns.
Labor’s own math says an extra 1% in annual fees can cut a retirement nest egg by 28%, yet the proposal could still protect employers that approve high-fee options if they can show they followed the required steps.
Aronowitz is also tightening enforcement—requiring his sign-off for major EBSA actions and steering investigators away from second-guessing process-based decisions—while the department has recently backed employers in court.
Wall Street firms are chasing a bigger share of the $10 trillion 401(k) market, and the rule predicts plans covering about 5 million participants will add target-date funds with alternative assets after it is finalized.