Six years ago, Intel employee Winston Anderson was so fed up with the trajectory of his 401(k) plan that he filed a complaint in the U.S. Northern District of California, alleging that Intel had breached its fiduciary duty to its employees.
Six years later, the U.S. Supreme Court agreed to hear Anderson v. Intel Corp. Investment Policy Committee in a case that could change 401(k) plans forever.
Some facts about 401(k)s:
* A 401(k) is an employer-sponsored retirement plan allowing employees to contribute pre-tax (traditional) or after-tax (Roth) money from their paychecks.
* In 2025, the contribution limit was $23,500.
* There is no income limit to participate, though “highly compensated employees” (those making more than $155,000 per year, those among the top 20% of earners in the firm, or those owning more than 5% of the company) could have their contributions capped, according to SHRM.
* The employee must pay fees to the company managing the fund. Those fees are automatically deducted from the 401(k) account, explains Ellevest.
Anderson filed a putative (proposed) class action lawsuit against Intel Corp. in 2019, alleging that the company’s trustees were mishandling its employees’ retirement funds by investing heavily in hedge funds and private equity funds, which he said were risky bets.
He also alleged that Intel further harmed employees by steering retirement funds into companies in which Intel Capital, the company’s venture capital arm, had also invested.
The district court rejected his argument, essentially ruling that the process of choosing which companies to invest in is more important than the outcomes of that process. Anderson hadn’t proved that the process was corrupt, so the court dismissed his argument.
Last year, the U.S. 9th Circuit Court for the Northern District of California agreed with the district court’s ruling, saying Anderson “had not plausibly alleged a breach of either the duty of prudence or the duty of loyalty.”
Court takes up Intel employee’s 401(k) case
Intel is required by the Employee Retirement Income Security Act to act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man… would use in the conduct of an enterprise.”
Intel says it redesigned its 401(k) plans following the 2008 market crash to include not only stocks and bonds, but also hedge funds and private equity funds.
Intel told employees that the diversification was meant to reduce risk during market downturns, and the 9th Circuit Court acknowledged that Intel “also disclosed the price that participants would pay for this risk mitigation: Because of their broad diversification, the funds would not compare favorably with equity-heavy funds during bull markets.”
But the biggest problem with Anderson’s argument was that his case had not identified a “meaningful benchmark” against which to compare the Intel fund’s performance.
The U.S. Supreme Court agreed to hear the case last week, setting up a potential landmark decision that could change the way 401(k) investments are made.
The court said it will consider the “meaningful benchmark” requirement that the lower courts say Anderson has failed to meet.
Under that standard, plaintiffs must identify comparable alternative investments to show that plan fiduciaries acted improperly, according to PlanAdviser.
While the Court’s decision later this year will provide guidance, another change from the executive branch could be equally impactful.
Trump administration targets big changes to 401(k) plans
In August, the Trump administration unveiled its long-awaited plan to overhaul the rules governing 401(k) investments to allow “alternative asset investments.”
There are more than 90 million American workers participating in employer-sponsored defined-contribution plans, according to the White House.
“Burdensome lawsuits that seek to challenge reasonable decisions by loyal, regulated fiduciaries, and stifling Department of Labor guidance issued since my first term, however, have denied millions of Americans opportunities to benefit from investment in alternative assets,” President Donald Trump said in August.
“Such assets are an increasingly large portion of the portfolios of public pension and defined-benefit retirement plans and offer competitive returns along with diversification opportunities.”
The White House wants to “democratize” fund access to alternative assets, potentially allowing 401(k) plans to invest in everything from cryptocurrency to NFTs.
But President Trump doesn’t only want to grant more potentially risky investment vehicles access to Americans’ retirement funds; he also wants to allow investors to use some of their retirement funds to make a down payment on a house.
“We’re going to allow people to take money out of their 401(k)s and use that for down payment,” White House Economic Adviser Kevin Hassett said last week, according to Reuters.
