The U.S. Department of Labor has introduced a proposed rule that could make it easier for 401(k) plans to include alternative investments, building on an executive order issued in August by President Donald Trump aimed at expanding access to these asset classes.
Go deeper: Alternative investments—such as real estate, cryptocurrencies, private equity, and private credit—have long been permitted in 401(k) plans. However, many plan sponsors have been hesitant to offer them due to concerns about potential legal challenges tied to their investment decisions.
To address those concerns, the proposed rule establishes a “safe harbor” framework designed to reduce litigation risk for plan fiduciaries. Under this framework, fiduciaries would need to carefully evaluate six key factors when considering alternative investments: performance, fees, liquidity, valuation, appropriate benchmarks, and overall complexity.
Before the rule can be finalized, it will undergo additional review, including a 60-day public comment period.
