Subject to two exceptions, the Internal Revenue Code and ERISA do not contain any specific rule as to what types of investments are appropriate (or inappropriate) for retirement plan investments. Rather, ERISA's fiduciary standards govern whether investment decisions by plan fiduciaries are appropriate and "fundamentally sound."

ERISA limits the amount of employer stock that can be held by certain types of plans. In addition, both the Internal Revenue Code and ERISA contain prohibited transaction rules that prohibit plan fiduciaries and other persons with a close relationship to a plan from engaging in transactions with the plan. These rules are not targeted toward particular types of investments, but rather seek to prevent self-dealing transactions.