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Trump Orders 401(k) Access to Alternative Assets as DOL Withdraws 2021 Restrictions

Regulators have six months to draft guidance that could channel retirement assets into private markets with the promise of diversification at the risk of higher fees, valuation opacity and limited liquidity.

401k next to money
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401k(rypto)
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Overview

  • President Trump’s August 7 executive order directs the DOL, SEC and Treasury to re-evaluate ERISA fiduciary standards and consider safe harbors to allow alternative assets in defined-contribution plans by February.
  • On August 12 the DOL rescinded its December 2021 Supplemental Private Equity Statement, removing formal caution against private equity allocations in 401(k) menus.
  • The order defines “alternative assets” to include private equity, real estate, digital assets, commodities, infrastructure financing and lifetime income strategies.
  • Asset managers and recordkeepers are already designing wrapper vehicles, interval funds and target-date allocations to integrate private-market exposure into participant-directed plans.
  • Consumer advocates and some lawmakers warn that expanded access could expose savers to high fees, valuation opacity, illiquidity and increased fiduciary litigation risk.