On March 30, the Department of Labor published a proposed rule that could change how fiduciaries select investments in 401(k) plans. It creates a process-based safe harbor built around six factors: performance, fees, liquidity, valuation, benchmarking, and complexity. If a fiduciary evaluates each factor objectively and documents the process, the rule provides a presumption of prudence.
That's a meaningful shift. It reduces the legal ambiguity that has kept many plan sponsors from acting, particularly around guaranteed income products and alternative asset sleeves inside target-date funds.
But having a framework and having the ability to use it are two very different things.
The Demand Is Loud. The Adoption Isn't.
The momentum behind guaranteed income in DC plans has been building for years. The SECURE Act removed barriers for plan sponsors to offer in-plan annuity solutions. SECURE 2.0 extended that direction. Executive Order 14330 pushed the DOL to reduce regulatory risk around alternatives. And now this proposed rule gives fiduciaries a documented path to evaluate and defend their decisions.
The products are arriving. Target-date funds with embedded income features reached $139 billion in assets by year-end 2025, up from $83 billion just twelve months earlier (Sway Research). BlackRock's LifePath Paycheck launched in April 2024, closed that year at $16 billion, and reached $27 billion by year-end 2025. Vanguard announced its first new target-date series since 2003, a CIT incorporating the TIAA Secure Income Account. TIAA's RetirePlus crossed $72 billion.
Participant demand matches. A 2025 Nuveen/TIAA Institute survey found 93% of 401(k) participants consider it important for their plan to offer options that convert savings into guaranteed monthly income. About 90% said they'd be interested in a fixed annuity if one were included.
And yet the other side of the equation hasn't moved. Callan's 2025 DC survey found only 2% of plan sponsors had actually added guaranteed income features to their target-date lineup. PLANSPONSOR's 2026 benchmarking data: 2.9% of sponsors offered any investment option that includes alternatives.
93% of participants want it. Under 3% of sponsors offer it. That's not a product gap. That's a process gap.
The Barriers are well Documented
The hesitation isn't about whether guaranteed income belongs in a 401(k). It's about what happens when a sponsor tries to put it there.
Fiduciary risk perception sits at the top. Litigation risk, particularly around fee disclosure, remains a persistent barrier. When a private-markets sleeve outperforms, fees appear to spike in disclosure reports, even though the outcome was positive for participants. The outcomes improve, but the optics invite lawsuits. It's an asymmetric risk for the fiduciary (NEPC).
Then there's operational complexity. Coordinating between carriers, recordkeepers, and asset managers to embed an annuity inside a target-date fund requires compatibility checks, data alignment, and ongoing administration that most plan sponsors aren't staffed to manage.
And even if a sponsor wants to move forward, there's no standardized process for evaluating whether a specific guaranteed income product is prudent for their specific plan. No scoring. No documented methodology. No audit trail that would survive regulatory scrutiny.
The DOL's six-factor safe harbor addresses the what. It doesn't address the how.
What the Safe Harbor Creates, and What It Doesn't
Let me be clear about what the proposed rule accomplishes. For the first time, there is a documented prudence framework for selecting designated investment alternatives in DC plans. The six factors are process-oriented, asset-neutral, and designed to protect fiduciaries who follow them. Multiple ERISA practitioners have called it the most significant development in fiduciary investment guidance since the DOL's 1979 Investment Duties Regulation.
That matters. It could change how courts evaluate prudence claims. It could reduce discovery costs. Over time, it could shift litigation dynamics entirely.
But the safe harbor is a legal framework, not an operational one. It tells fiduciaries what to evaluate. It doesn't help them score, compare, document, or repeat that evaluation at scale. It doesn't confirm whether a recordkeeper can administer the product. It doesn't generate the compliance trail automatically.
A one-time analysis in a spreadsheet doesn't satisfy what this rule contemplates. The presumption of prudence requires a process that is objective, thorough, and analytical. It requires contemporaneous records. Plan sponsors who want the protection need systems, not checklists.
Two Layers. Same Architecture.
What carriers and plan sponsors need to close the adoption gap is infrastructure that operates at two levels.
First: product-to-plan. This is the DOL's six-factor evaluation applied at the plan level. Score a guaranteed income product against performance, fees, liquidity, valuation, benchmarking, and complexity, adjusted for the plan's demographics, size, and participant profile. Confirm recordkeeper compatibility. Generate fiduciary documentation that demonstrates the process was followed.
Second: product-to-person. Once a product is on the plan menu, the question shifts. Is this product appropriate for this participant? That's where suitability frameworks like NAIC Model #275 apply, assessing age, risk tolerance, income needs, and existing coverage to determine fit.
These aren't separate problems. They're the same problem at different scales. The same architecture applies at both levels: weighted scoring factors, contextual adjustments, tiered recommendations, documented rationale. Build it once. Run it twice.
For Carriers, This Is a Distribution Problem
You can build the right product. But if plan sponsors don't have a fiduciary framework to evaluate and adopt it, the product doesn't reach participants.
Plan sponsors don't want to hire a consulting firm every time they evaluate a new income product against six factors. They want pre-scored documentation. Configurable questionnaires that capture plan context. Scoring engines that weight factors by demographics. Operational readiness checks that confirm recordkeeper compatibility. All before a participant ever sees the product.
$4.8 trillion sits in target-date strategies today (Morningstar). The major players are already embedding annuities into those structures. The differentiator won't be who has the best product. It will be who makes it easiest for a plan sponsor to say yes.
The Comment Period Closes June 1
The proposed rule is open for 60 days. The final rule is expected later this year. Questions remain: whether courts will uphold the "significant deference" standard, whether additional factors will be added, how monitoring guidance will follow. But the direction is clear.
The carriers and plan sponsors who build that infrastructure now will be positioned when adoption accelerates. Those who wait for the final rule will be a cycle behind.
What We're Building
We've been working at this intersection. Suitability scoring, rules engines, fiduciary documentation, configurable journeys for carriers and distributors. Our NAIC #275 scoring engine is in production. The DOL six-factor extension uses the same architecture: weighted factors, plan-context adjustments, tiered recommendations, auto-generated compliance documentation.
The framework now exists. The products are arriving. The demand is there. What's missing is the connective tissue between a regulatory framework and a working process.
That's what we're building.
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