Executive Order Expands Access To Alternative Assets For 401(k) Plans

In August 2025, President Trump signed an executive order, "Democratizing Access to Alternative Assets for 401(k) Investors" (the Order), which directs federal agencies to reexamine and clarify regulatory guidance to help facilitate access to alternative assets for participant-directed defined-contribution retirement savings plans (DC Plans). The Order defines "alternative assets" broadly to include private market investments, real estate, digital assets, commodities, infrastructure development financing and lifetime income strategies.

The intent of the Order is to "relieve the regulatory burdens and litigation risk that impede American workers' retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement." The Order further provides that it is the policy of the United States that every American planning for retirement have access to funds that include investments in alternative assets when DC Plan fiduciaries determine that such access is appropriate.

While the Order does not change relevant laws or create any safe harbors, the Order does require regulatory collaboration and directs the following federal actions, including those actions detailed below:

• Directs the U.S. Department of Labor (DOL) to reexamine previously issued guidance on a fiduciary's duties regarding alternative asset investments in defined-contribution plans and 401(k) plans governed by the Employee Retirement Income Security Act of 1974 (ERISA).
• Instructs the DOL to clarify its position on alternative assets and the appropriate fiduciary process associated with offering asset allocation funds containing investments in alternative assets.
• Requires the DOL to consult with the Secretary of the Treasury (Secretary), the Securities and Exchange Commission (SEC) and other federal regulators to determine any necessary parallel regulatory changes.
• Calls for the DOL to facilitate access to alternative assets for DC Plans by revising applicable regulations and guidance.

Revaluation of Prior Department Guidance. When conducting this reexamination, the Order specifically requires the DOL to consider whether to rescind its December 21, 2021, Supplemental Private Equity Statement (the Supplemental Statement), detailed in our January 2022 Benefits Counselor. The DOL's Supplemental Statement cautioned DC Plan fiduciaries, particularly fiduciaries of small plans, not to misinterpret DOL guidance as saying that funds with private equity investments are appropriate for all 401(k) plans. In the Supplemental Statement, the DOL further warned fiduciaries against applying guidance outside its original context and discouraged the use of private equity investments in small individual account plans.

Immediately following publication of the Order, the DOL elected to rescind the Supplemental Statement and advised plan fiduciaries to consider all relevant facts and circumstances when evaluating any particular investment type. The DOL further asserted that it is inappropriate to single out particular investments or investment strategies for additional or special scrutiny.

Clarification of Guidance on Fiduciary Duties in Investment Selection. In addition to directing the DOL to reconsider previously issued guidance, the Order directs the DOL to identify the criteria that fiduciaries should use to prudently balance potentially higher expenses against the objectives of seeking greater long-term net returns and broader diversification of investments. The Order also instructs the DOL to clarify the duties that a fiduciary owes to plan participants under ERISA when deciding whether to offer an asset allocation fund that includes investments in alternative assets.

While ERISA applies the same fiduciary standard to all investments and does not ban any asset types, the DOL has generally discouraged alternative assets in DC Plans, requiring advisers and sponsors to navigate heightened fiduciary obligations. The Order marks the beginning of what could be a significant shift in private market and retirement plan investments by enabling plan sponsors to make alternative investments available under ERISA-covered plans. Because these investment categories typically carry high fees, long-term lock up of assets and volatile investment returns, the DOL may evaluate whether a fiduciary safe harbor would be appropriate when considering the addition of these investment options.

Collaboration with Other Government Agencies. To carry out the policy objectives of the Order, the DOL must work closely with the Secretary, the U.S. Securities and Exchange Commission (SEC) and other regulators. Specifically, the SEC must consider revisions to "accredited investor" and "qualified purchaser" definitions so DC Plan participants can access these opportunities. Any changes to these definitions could expand the scope of investors who can access alternative investment opportunities currently limited to institutional and high-net-worth investors. Another potential measure the agencies could encourage is the utilization of funds regulated under the Investment Company Act of 1940 (the Act) that provides access to alternative assets.

While the Order signals an upcoming shift in ERISA plan investment guidance, it does not directly change any existing law or guidance. DC Plan fiduciaries should continue to carefully review any potential plan investment under the existing regulatory framework.

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