The Department of Labor (DOL) released a proposed rule that would expand access to alternative investments in 401(k) plans by clarifying how plan fiduciaries can prudently include assets such as private equity or other nontraditional options. The proposed rule is set for publication in tomorrow’s Federal Register.
The proposal establishes process-based safe harbors, emphasizing that fiduciaries must evaluate factors like fees, performance, liquidity, and risk, while maintaining flexibility under Employee Retirement Income Security Act standards. DOL states that the proposed rule aims to reduce regulatory uncertainty and litigation risk, potentially increasing adoption of alternative assets in retirement portfolios, while remaining neutral on specific asset classes.
Labor Secretary Lori Chavez-DeRemer had an editorial in The Wall Street Journal extolling the proposed rule. House Education and Workforce Committee Chair Tim Walberg (R-MI) praised the proposed rule, stating it modernizes retirement plans and gives workers more tools to grow savings, aligning with broader efforts to expand investment choice and improve long-term retirement outcomes.