401(k) participants may have more access to investment strategies under which a portion of their contributions are allocated to alternative assets under an executive order issued by President Trump in August. The order emphasizes that alternative assets, such as private equity, real estate, and digital assets, offer competitive returns and diversification benefits that could help defined contribution plan participants accumulate more money in their retirement accounts. The labor department looks “forward to a future where innovative retirement products can deliver increased upside, diversification, and security to the American worker,” Deputy Secretary of Labor Keith Sonderling said in an August 12, 2025 press release.

The order “Democratizing Access to Alternative Assets for 401(k) Investors” directs the Secretary of Labor to reexamine the Department of Labor’s (DOL’s) past and present guidance under the Employee Retirement Income Security Act (ERISA) on the matter of “making available to participants an asset allocation fund that includes investments in alternative assets.”

Defined contribution plan fiduciaries could receive DOL guidance on offering alternative investment asset allocation funds to investment menus. Learn more about how this Trump administration policy directive could impact plan sponsors.

Purpose

ERISA’s fiduciary standards of prudence and loyalty apply to all asset classes. Six alternative asset classes are included in the order: private equity/debt, real estate, digital assets, commodities, infrastructure, and lifetime income investment strategies. Part two of this blog will define the types of alternative investments that the executive order identifies. The executive order’s purpose statement is as follows. “Fiduciaries of 401(k) and other defined-contribution retirement plans must carefully vet and consider all aspects of private offerings, including investment managers’ capabilities, experiences, and effectiveness managing alternative asset investments. They do so to protect the Americans whose retirement accounts they administer and for whom they have fiduciary duties to invest safely and prudently.”   

Policy and directives

“It is the policy of the United States that every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity for plan participants and beneficiaries to enhance the net risk-adjusted returns on their retirement assets,” the executive order states. A fact sheet outlines the following directions to the Secretary of Labor in the executive order.

• Clarify DOL’s position on alternative assets and the appropriate fiduciary process associated with offering asset allocation funds containing investments in alternative assets.
• 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.
• Clarify the duties that a fiduciary owes to plan participants under ERISA when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets (Rules, regulations, and guidance may include “appropriately calibrated safe harbors.”)
• Prioritize actions that “curb frivolous ERISA litigation, which can constrain fiduciaries from applying their best judgment when selecting investments and investment options”  

Investment vehicles with an allocation of private equity

As part of reexamining existing guidance, the Secretary of Labor was directed to consider whether to rescind DOL’s December 21, 2021, “Supplemental Private Equity Statement.” On August 12, 2025, DOL announced its decision to rescind the 2021 statement because it discouraged fiduciaries from considering alternative assets in 401(k) retirement plan investment menus. In the recission announcement, DOL said the 2021 statement undermined an earlier June 3, 2020, information letter on the private equity investments. This information letter detailed DOL’s views during the first Trump administration, therefore, in the current Trump administration it provides some indication of what future DOL guidance could cover regarding the use of private equity investments in designated investment alternatives made available to participants in 401(k) plans subject to ERISA.

According to sub regulatory views of DOL in the 2020 information letter,some of thefiduciary considerations in determining whether to include a particular asset allocation fund with a private equity component as a designated investment alternative, are whether the asset allocation fund:

• Offers diversification opportunities for plan participants
• Is overseen by investment professionals that have the capabilities, experience, and stability for effective management
• Aligns with the plan’s characteristics and needs of plan participants, considering things such as
  • Investment allocation and strategies
  • Fees and other expenses
  • Nature and duration of any liquidity restrictions
  • Participants’ ability to access funds in their accounts (e.g., loans and distributions when employees separate from service with the sponsoring employer)
  • Participants’ ability to change investment selections on a potentially frequent basis.

Guidance plan sponsors might be looking for

The executive order directed DOL to review the inclusion of alternative assets in plans as part of an asset allocation fund. Plan sponsors are looking for a due diligence process (e.g., selecting and monitoring service providers) or safe harbor that would align with ERISA fiduciary duties.

• Appropriate for the plan’s features and participant profile (e.g., participant ages, normal retirement age, anticipated employee turnover, and contribution and withdrawal patterns)
• Appropriate range of expected returns net of fees (e.g., management fees, performance compensation, or other expenses that would impact the returns received)
• Liquidity component to manage the participant directed deposits and withdrawals from the fund
• A fiduciary must consider whether it has the skills, knowledge, and experience to make the required determinations or whether the plan fiduciary needs assistance from a qualified investment professional.
• When selecting and monitoring a professional service provider, a fiduciary must evaluate the experience and capabilities with alternative asset components in allocation funds. (e.g., what types of information to review)
• Appropriate disclosures to participants about the characteristics and risks of the investment to enable them to make an informed choice regarding making or continuing an investment in the fund.

Next steps

Alternative assets offer competitive returns and diversification benefits that could help defined contribution plan participants accumulate more money in their retirement accounts. How soon? Next steps from DOL are expected around February 2026. The executive order sets a timeline for DOL to clarify its position on the appropriate ERISA fiduciary process associated with offering asset allocation funds containing investments in alternative assets. It’s unclear how specific that process will be and what format the guidance will be in. In the meantime, plan sponsors can familiarize themselves with alternative asset classes. (See part two, which will be published on Thursday, September 18.)

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.