On April 1, 2026, the US Department of Labor’s (DOL) Employee Benefits Security Administration issued Technical Release 26-01. This classifies many proxy advisory firms as ERISA fiduciaries, following a December 2025 executive order, and requires plan fiduciaries to more closely scrutinize proxy advisory services.
In simple terms, Companies that advise on shareholder votes (proxy firms) now face strict legal duties under retirement laws. HR leaders and investment committees managing 401(k) plans must carefully review this advice instead of following it blindly. Plan fiduciaries remain ultimately responsible for voting decisions, even if proxy firms share fiduciary status.
*Note: This article aims to explain the DOL’s new rules on proxy firms under ERISA. It is not legal advice. Consult your legal team/partner for guidance.
Quick Term Guide
- Department of Labor (DOL): U.S. agency overseeing retirement plan rules.
- Employee Retirement Income Security Act of 1974 (ERISA): Law protecting 401(k)/pension savings through fiduciary standards.
- Fiduciary: Legal “money guardian” duty to prioritize plan participants’ financial gains.
- Employer Role: Sponsors of ERISA plans act as fiduciaries, overseeing investments and voting prudently.
- Proxy: Shareholder votes on company issues (board elections, mergers).
Practical Steps for Employers – Reviewing your Proxy
Plan sponsors and administrators should audit their proxy processes immediately to mitigate risks.
| Suggested Step | Purpose | Suggested Timelines |
|---|---|---|
| Audit proxy processes | Spot blind reliance risks | Now |
| Check vendor contracts | Block unintended delegation | Immediate |
| Document vote decisions | Prove prudence in audits | Ongoing |
| Train committees | Recognize biased advice | Within 60 days |
| Build override policy | Show independent judgment | Q2 2026 |
| Monitor state laws | Stay ahead of disclosures | As enacted |
Why this matters: DOL Technical Release 26-01 makes proxy firms potential co-fiduciaries. One bad vote hurting returns means potential for employee lawsuits claiming “you should’ve known better.” These steps keep retirement plans safe and show everyone is working to grow employees’ savings.
Potential Problems Employers Face with Their Proxy
New rules increase the chances of government checks (DOL audits) on retirement plans. Employees might sue if proxy votes hurt savings growth, like lower stock returns from rejecting profitable mergers. Proxy firms sharing legal duties means plans face questions about blindly following advice that prioritizes social goals over profits.
Some states add rules requiring proxy firms to flag non-money reasons for votes, and federal ERISA law doesn’t block these. Plans likely reject more “social goal” votes (climate, diversity) to focus strictly on financial returns, matching 2020 DOL priorities.
HR leaders should start reviewing their proxy processes to spot blind-follow patterns and start building safeguards.
Summary
The Trump administration is aiming to protect retirement savings from non-financial proxy advice through the December 2025 executive order. Large employers already manage many votes internally, while smaller plans can benchmark against peers for best practices.
DOL Technical Release 26-01 requires closer review of proxy firm recommendations to prioritize employee financial returns. Retirement plans that actively oversee shareholder votes and reject non-pecuniary influences will most likely stay compliant and safeguard participant assets as regulations evolve.
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