During oral arguments on October 6, 2026, U.S. Supreme Court justices signaled the need for a meaningful comparison standard in 401(k) fund underperformance lawsuits. The case, Anderson v. Intel Corp.
The U.S. Supreme Court heard oral arguments on October 6, 2026, in Anderson v. Intel Corp. Investment Policy Committee, a case addressing whether employees can challenge retirement plan investments without showing a comparable benchmark. Under the Employee Retirement Income Security Act of 1974, workers enrolled in retirement plans hold the right to sue employers for fiduciary breaches when allocators fail to act in participant best interests. These complaints frequently center on underperforming returns. Unlike traditional pension plans where employers guarantee a payout, participants in defined contribution plans like a 401(k) are responsible for deciding how to invest their contributions and bear the investment risk.
The underlying litigation began when former employees challenged target-date and diversified funds on the Intel plan’s investment menu.
The U.S. District Court for the Northern District of California previously dismissed the case, and the 9th Circuit Court of Appeals affirmed that ruling in May 2025. The appeals court held that it was not enough for the plaintiffs to merely claim that fiduciaries could have achieved higher investment returns, determining that plaintiffs relying on comparisons with alternative investments must provide a sound basis for those comparisons. During oral arguments before the high court, justices appeared largely sympathetic to that view.
Apples to Apples: Justices Debate the Meaningful Benchmark Standard
Throughout the Tuesday hearing, several justices emphasized the necessity of comparable evaluation criteria when examining investment performance claims. Justice Elena Kagan noted that the thing that you need … is another apple.
“Agree with the general principle that when we’re limited to underperformance claims … a meaningful benchmark of some kind is required, apples, not oranges.”
Justice Neil Gorsuch, via CNBC and Suaragarut
Justice Clarence Thomas observed that a fund designed to pursue higher, riskier returns cannot fairly be compared with a fund structured to protect against losses. Similarly, Justice Amy Coney Barrett asked whether a comparable evaluation criterion was necessary.
Arguing on behalf of the United States, Assistant Solicitor General Aimee Brown told the court that outlining parameters for a meaningful benchmark could assist future evaluations. Prudence is about process and not about performance,
Brown stated during the proceedings. Matthew Wessler, the attorney for the petitioners, argued that courts must assess all non-conclusory allegations together in determining if a complaint plausibly states a claim, asking how courts should weigh factors like asset allocations and risks.
Employer Appetite for Private Investments and Fiduciary Stakes
A ruling in favor of Intel could raise procedural hurdles for plaintiffs bringing ERISA underperformance claims, potentially sparing defendants from the time and expense of discovery. Legal analysts observing the arguments suggest the bench may affirm the Ninth Circuit decision before the spring of 2027.
Industry attorneys note that plan sponsors have remained cautious while awaiting clarity from both the judicial branch and federal regulators.
Eugene Scalia, a partner at Gibson Dunn & Crutcher and former U.S. official who filed an amicus brief supporting Intel, noted that alternative assets can form a legitimate part of workplace savings options, stating that private funds can be an effective and entirely appropriate component of 401(k) plan investment options. Amy Vaillancourt, president of retirement at Voya Financial, said in an email that interest is coming from employers who want to make those decisions in a way that aligns with their fiduciary obligations. Joshua Lichtenstein, partner at Ropes & Gray, noted that a positive outcome in the case will go a long way toward giving plan sponsors more confidence to act with less fear of being sued.
At the same time, advocates for retirement savers argue that strict benchmark requirements risk shutting out workers who challenge unconventional strategies. Dominick Freda, legal director at Better Markets, which filed briefs supporting the plaintiffs alongside AARP, AARP Foundation, and the Pension Rights Center, stated that employees deserve robust mechanisms to hold plan managers accountable for high risk and high fees, noting that workers claim plan managers gambled with savings and refused to change course despite predictable underperformance. Better Markets’ recent report details how Supreme Court decisions impact the economic and financial well-being of Americans.
The Supreme Court is expected to issue its official ruling in Anderson v. Intel Corp. by summer 2027.
Contact Newsweek editors on this story: Jason Lemon and Gray R. Thomas
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