WASHINGTON—The U.S. Department of Labor on Monday unveiled a proposed rule that would make it easier for 401(k) and other participant-directed retirement plans to include alternative assets—such as private equity, private credit, real estate and digital assets—by creating a process-based “safe harbor” for fiduciaries that follow specified diligence steps when selecting investment options.
The proposal is part of the Trump Administration’s push to widen access to nontraditional investments in retirement plans and follows President Trump’s 2025 executive order directing DOL to revisit earlier guidance.
Under the proposal, fiduciaries would not get a blank check to load retirement menus with riskier assets, but they would receive added litigation protection if they document a prudent review of issues such as fees, liquidity, valuation, diversification, operational complexity and participant suitability before offering a designated investment alternative. DOL said the safe harbor is intended to clarify fiduciary duties under ERISA and reduce the legal uncertainty that has discouraged plan sponsors from considering alternatives, while Reuters reported the rule would apply to decisions involving options that may include private equity and cryptocurrencies.
The move is being welcomed by large asset managers and private-markets firms that have long sought broader access to the trillions of dollars in defined-contribution retirement assets, with Reuters noting firms such as Blackstone, KKR and BlackRock stand to benefit if more plan sponsors begin offering exposure to private markets. But the proposal is already drawing criticism from consumer advocates and Democrats who warn that illiquid, complex or volatile investments could expose everyday savers to higher fees, tougher valuation questions and sharper losses if guardrails prove insufficient.
The proposal is now open for a 60-day public comment period and is far from final, meaning plan sponsors and service providers will likely spend months parsing exactly how much legal comfort the rule truly offers—and whether it materially changes the willingness of employers to offer broader alternative-asset exposure in retirement plans. Even if finalized, the rule would establish a pathway rather than a mandate, leaving fiduciaries to decide whether the potential diversification and return benefits outweigh the operational, compliance and member-protection risks, Reuters said.