March 31, 2026
What happened?
On Monday, March 30, 2026, the Department of Labor (“DOL”) proposed a rule that would establish a framework for expanding access to alternative investments in 401(k) retirement plans. This proposed rule has been long in the making. In May of last year, the DOL rescinded guidance under the Biden administration that cautioned against including digital assets in 401(k)s. President Trump issued an Executive Order in August of last year seeking to “democratize” 401(k) access to alternative assets. The proposed rule would give retirement plans a way to incorporate these less liquid and less transparent assets.
Alternatives are a broad asset class that includes real estate, cryptocurrency, and private equity. These are not currently prohibited in 401(k) plans, but the risk of litigation for plan fiduciaries, who must act in the best interest of investors, has limited the use of alternative assets. The proposed rule would create a safe harbor protecting fiduciaries from lawsuits when they use a prudent process to “objectively, thoroughly, and analytically consider, and make determinations on factors including performance, fees, liquidity, valuation, performance benchmarks, and complexity” when selecting these investments.
What does this mean for me?
The DOL is giving fiduciaries a path to include alternative investments in 401(k) plans. The proposed rule is published in the Federal Register for a 60-day public comment period, and then we will have to wait and see how fast the administrative process moves toward a final rulemaking.
The regulatory framework seeks to be neutral. Supporters of the rule say it would allow more diversification for retail investors in an asset class currently accessed by institutional investors and the wealthy. Critics point to recent cracks in the private credit market and the danger of exposing retirement plans to risky assets. If finalized, fiduciaries would have a safe harbor from legal action and could choose to incorporate alternative investments or not.
We will continue to monitor new developments that impact investment advisers and compliance programs. If you have questions, contact us. Fairview is here to help.
