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This regulatory action is in response to Executive Order 14219, entitled Ensuring Lawful Governance and Implementing the President's "Department of Government Efficiency" Deregulatory Initiative, and would revise the Department’s regulation at 29 CFR 2550.404a-1 so that plan fiduciaries select investments and exercise shareholder rights based only on financial considerations relevant to the risk-adjusted economic value of a particular investment, and not to advance social causes.

Statement of Need:

The Employee Retirement Income Security Act is a comprehensive statute designed to protect the interests of employees and their beneficiaries in employee benefit plans. It does this primarily by imposing, in section 404, a number of stringent duties on plan fiduciaries, including a duty of loyalty, a duty to act for the exclusive purpose of providing plan benefits and defraying reasonable expenses, and a duty of prudence. 29 U.S.C. 1104(a)(1)(A), (B). This regulatory action is needed to ensure that plan fiduciaries select investments and exercise shareholder rights based only on financial considerations relevant to the risk-adjusted economic value of a particular investment, and not to advance social causes. See Executive Order 14219, titled Ensuring Lawful Governance and Implementing the President’s Department of Government Efficiency Deregulatory Initiative. See also Executive Order 14366 of December 11, 2025, titled Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors.

Summary of the Legal Basis:

Under development

Alternatives:

Under development

Anticipated Costs and Benefits:

The proposed regulation will provide clarity regarding the factors that can be considered when making investment selection, as well as the circumstances in which fiduciaries to are required to participate in shareholder activities on behalf of plan participants. Estimates of the cost are still under development and will be reflected in the notice of proposed rulemaking.

Risks:

Under development