Key Takeaways
- • On August 7, 2025, President Trump issued an Executive Order aimed at expanding access to alternative assets, including private equity, real estate, private credit and digital assets, in ERISA-governed defined-contribution plans such as 401(k)s.
- • The Executive Order directs the Department of Labor to clarify within 180 days the fiduciary process for offering asset allocation funds, such as target date funds, that contain alternative asset investments.
- • The order directs the SEC, in consultation with the DOL, to consider ways to facilitate participant access, including revisiting accredited investor and qualified purchaser constraints that have limited access to private asset funds.
- • According to Dechert, the order is potentially more far-reaching than the 2020 DOL Information Letter because it is a multi-agency directive with deadlines rather than a non-binding point of view.
Summary
On August 7, 2025, President Trump issued an Executive Order intended to expand participant access to alternative assets in defined-contribution plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The order seeks to address what it characterizes as "regulatory overreach" and "litigation risks" that have limited the offering of alternative assets in such plans, according to a Dechert analysis of the order.
The order directs the U.S. Department of Labor (DOL) to reexamine its guidance on a fiduciary's duty under ERISA regarding alternative asset investments. Within 180 days, the DOL is to clarify the appropriate fiduciary process for offering asset allocation funds, such as target date funds, that contain alternative asset strategies, and to identify criteria fiduciaries should use to weigh potentially higher expenses against the goal of greater long-term net returns and diversification. The DOL is also directed to consult with the Treasury Department, the Securities and Exchange Commission (SEC) and other regulators on parallel changes. The SEC, in consultation with the DOL, is to consider ways to facilitate participant-directed access, including revising existing regulations and guidance on accredited investor and qualified purchaser status, which have historically restricted participant access to private asset funds based on individual financial status.
The order also explicitly references digital assets through actively managed vehicles, following a May 28, 2025 DOL rescission of its 2022 compliance release that had discouraged fiduciaries from including cryptocurrency options in 401(k) plans. Dechert notes that the order's focus on asset allocation funds may reflect recognition that such vehicles are likely the most practical pathway given legal constraints, the commercial structure of private asset strategies and fiduciary obligations, and may also acknowledge recent high-profile product launches using this model.
Dechert outlines the structural barriers that have constrained these offerings: open-end registered mutual funds often do not suit illiquid alternative strategies; common Investment Company Act exemptions such as Section 3(c)(7) can exclude plan participants and raise tax-qualification discrimination concerns; bank collective investment trusts avoid registration but are subject to ERISA fiduciary and prohibited transaction rules; and daily liquidity expectations and higher costs of alternatives create further disincentives.
Dechert compares the order with prior efforts. A 2020 DOL Information Letter under the first Trump administration encouraged the use of private equity within asset allocation funds, but it was not formal regulatory guidance. A 2021 Information Letter under the Biden administration offered a more cautious tone, warning that small plan fiduciaries were not likely suited to evaluate such investments. Dechert argues the new order differs because it is a directive from the White House across multiple agencies, with specific action items, timelines and deadlines that must proceed through each agency's regulatory process.
The order directs the U.S. Department of Labor (DOL) to reexamine its guidance on a fiduciary's duty under ERISA regarding alternative asset investments. Within 180 days, the DOL is to clarify the appropriate fiduciary process for offering asset allocation funds, such as target date funds, that contain alternative asset strategies, and to identify criteria fiduciaries should use to weigh potentially higher expenses against the goal of greater long-term net returns and diversification. The DOL is also directed to consult with the Treasury Department, the Securities and Exchange Commission (SEC) and other regulators on parallel changes. The SEC, in consultation with the DOL, is to consider ways to facilitate participant-directed access, including revising existing regulations and guidance on accredited investor and qualified purchaser status, which have historically restricted participant access to private asset funds based on individual financial status.
The order also explicitly references digital assets through actively managed vehicles, following a May 28, 2025 DOL rescission of its 2022 compliance release that had discouraged fiduciaries from including cryptocurrency options in 401(k) plans. Dechert notes that the order's focus on asset allocation funds may reflect recognition that such vehicles are likely the most practical pathway given legal constraints, the commercial structure of private asset strategies and fiduciary obligations, and may also acknowledge recent high-profile product launches using this model.
Dechert outlines the structural barriers that have constrained these offerings: open-end registered mutual funds often do not suit illiquid alternative strategies; common Investment Company Act exemptions such as Section 3(c)(7) can exclude plan participants and raise tax-qualification discrimination concerns; bank collective investment trusts avoid registration but are subject to ERISA fiduciary and prohibited transaction rules; and daily liquidity expectations and higher costs of alternatives create further disincentives.
Dechert compares the order with prior efforts. A 2020 DOL Information Letter under the first Trump administration encouraged the use of private equity within asset allocation funds, but it was not formal regulatory guidance. A 2021 Information Letter under the Biden administration offered a more cautious tone, warning that small plan fiduciaries were not likely suited to evaluate such investments. Dechert argues the new order differs because it is a directive from the White House across multiple agencies, with specific action items, timelines and deadlines that must proceed through each agency's regulatory process.
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