Key Takeaways
- • The Department of Labor proposed a process-based safe harbor establishing six fiduciary factors for plan managers to evaluate alternative investments—including private equity, real estate, digital assets, cryptocurrencies, commodities, infrastructure, and lifetime income strategies—in 401(k) plans covering more than 90 million Americans.
- • The proposed rule removes restrictions on alternative assets in participant-directed defined contribution plans and explicitly excludes application to brokerage windows or self-directed brokerage accounts, clarifying the regulatory perimeter for fiduciary liability.
- • The regulation implements President Trump's Executive Order 14330 ("Democratizing Access to Alternative Assets for 401(k) Investors") and reverses Biden-era guidance that discouraged alternative investments due to risk concerns, reducing regulatory burden and litigation exposure for plan fiduciaries who prudently select these options.
- • By grounding fiduciary duties in a documented process rather than outcome-focused restrictions, the DOL aims to provide courts with a framework for deferential review of plan sponsor investment decisions and encourage broader adoption of alternative assets across retirement savings vehicles.
- • The proposed rule does not apply to brokerage windows or self-directed accounts, maintaining a structural distinction between designated investment alternatives (where fiduciaries control selection) and participant-directed investment windows.
Summary
The U.S. Department of Labor's Employee Benefits Security Administration issued a proposed regulation on March 30, 2026, establishing a formal safe harbor for retirement plan fiduciaries selecting alternative investments in 401(k) plans. The proposal, titled "Fiduciary Duties in Selecting Designated Investment Alternatives," implements President Trump's Executive Order 14330 and directly reverses restrictive Biden-era guidance that discouraged alternative asset inclusion in employer-sponsored plans.
The proposed rule creates a process-based framework rather than restricting investment categories. Plan fiduciaries evaluating alternative assets—such as private equity, real estate, digital assets including cryptocurrency, commodities, infrastructure investments, and lifetime income strategies—would follow documented steps meeting the fiduciary duty of prudence under the Employee Retirement Income Security Act (ERISA). The DOL explicitly anchors this framework to the SEC's 1979 investment duties regulation, expanding that guidance to address contemporary asset classes. By establishing clear procedural requirements, the rule aims to "alleviate certain regulatory burdens and litigation risk" for plan sponsors that include alternatives in their investment lineups.
U.S. Secretary of Labor Lori Chavez-DeRemer stated the goal is to "deliver on President Trump's promise for a new golden age by fostering a retirement system that allows more Americans to retire with dignity," positioning the rule as expanding investment options for workers. Treasury Secretary Scott Bessent emphasized the rule represents "a safe and smart manner" of broadening access while protecting retirement assets. The regulation specifically excludes brokerage windows and self-directed brokerage accounts from its application, maintaining the distinction between fiduciary-selected designated investment alternatives and participant-directed investment vehicles.
The proposal directly addresses a structural gap in fiduciary guidance: plan managers previously faced elevated litigation risk when including alternative assets due to regulatory ambiguity around the prudence standard. By clarifying the fiduciary process and providing a safe harbor for documented decision-making, the DOL seeks to encourage plan sponsors to incorporate alternatives that reflect the contemporary investment landscape. If finalized, the rule could reshape 401(k) investment menus for retirement accounts covering more than 90 million Americans, with downstream effects on capital allocation patterns and demand for alternative asset strategies within the defined contribution market.
The proposed rule creates a process-based framework rather than restricting investment categories. Plan fiduciaries evaluating alternative assets—such as private equity, real estate, digital assets including cryptocurrency, commodities, infrastructure investments, and lifetime income strategies—would follow documented steps meeting the fiduciary duty of prudence under the Employee Retirement Income Security Act (ERISA). The DOL explicitly anchors this framework to the SEC's 1979 investment duties regulation, expanding that guidance to address contemporary asset classes. By establishing clear procedural requirements, the rule aims to "alleviate certain regulatory burdens and litigation risk" for plan sponsors that include alternatives in their investment lineups.
U.S. Secretary of Labor Lori Chavez-DeRemer stated the goal is to "deliver on President Trump's promise for a new golden age by fostering a retirement system that allows more Americans to retire with dignity," positioning the rule as expanding investment options for workers. Treasury Secretary Scott Bessent emphasized the rule represents "a safe and smart manner" of broadening access while protecting retirement assets. The regulation specifically excludes brokerage windows and self-directed brokerage accounts from its application, maintaining the distinction between fiduciary-selected designated investment alternatives and participant-directed investment vehicles.
The proposal directly addresses a structural gap in fiduciary guidance: plan managers previously faced elevated litigation risk when including alternative assets due to regulatory ambiguity around the prudence standard. By clarifying the fiduciary process and providing a safe harbor for documented decision-making, the DOL seeks to encourage plan sponsors to incorporate alternatives that reflect the contemporary investment landscape. If finalized, the rule could reshape 401(k) investment menus for retirement accounts covering more than 90 million Americans, with downstream effects on capital allocation patterns and demand for alternative asset strategies within the defined contribution market.
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