Tag: 401(k) Alternative Investment

The Real Estate Roundtable (RER) submitted comments this week supporting the Department of Labor’s (DOL) proposed rule to clarify fiduciary standards for including alternative assets, such as real estate, in 401(k) retirement plans. In the letter, RER affirmed that the proposal would expand investment choice, improve diversification, and provide retirement savers with access to asset classes that have long been available to institutional investors. (Letter, June 1)

Why It Matters

• RER’s comments respond to the DOL’s proposed rule implementing the August 2025 Executive Order, “Democratizing Access to Alternative Assets for 401(k) Investors,” which seeks to clarify fiduciary obligations when plan sponsors offer investment options that include alternative assets such as private equity, real estate, private credit, and infrastructure investments. (Letter, June 1)

• The DOL proposal would also establish a process-based safe harbor under the Employee Retirement Income Security Act (ERISA), helping reduce regulatory uncertainty and litigation risk that have discouraged many employers from offering alternative investment options in defined-contribution retirement plans. (DOL Press Release, March 30)

• More than 90 million Americans participate in 401(k)-style retirement plans but generally lack access to the same alternative investment opportunities available to defined-benefit plan portfolios, such as pensions and other institutional investors. (Letter, June 1)

RER Advocacy

• RER’s letter argues that the DOL’s rule appropriately clarifies that ERISA gives fiduciaries discretion and flexibility to determine when alternative investments are suitable for plan participants. (Letter, June 1)

• RER also emphasized that defined-benefit pension plans that maintain allocations to private equity and other alternative assets have historically outperformed many defined-contribution plans, giving institutional investors access to diversification and return opportunities generally unavailable to retail retirement savers. (Letter, June 1)

• The proposal would help level the playing field between 401(k) investors and defined-benefit plans by allowing fiduciaries to consider a broader range of investment options when they determine such investments are appropriate for plan participants. (Letter, June 1)

• “RER believes that this rulemaking represents an important step toward restoring the principle that retirement savers, not regulators, determine how they invest,” the letter stated.

State of Play

• The proposal has drawn mixed reactions on Capitol Hill.

• Senior congressional Democrats, including House Education and Workforce Committee Ranking Member Bobby Scott (D-VA), Senate HELP Committee Ranking Member Bernie Sanders (I-VT), and Senate Banking Committee Ranking Member Elizabeth Warren (D-MA), urged DOL this week to withdraw the proposal. (Letter, June 1)

• The Democratic lawmakers argued that expanding access to private equity, cryptocurrency, and other alternative investments could expose retirement savers to “risky, complex, and expensive” investments and weaken fiduciary protections for retired savers. (Letter, June 1)

• Meanwhile, a group of 21 Senate Republicans, including Senate Banking Chair Tim Scott (R-SC) and HELP Chair Bill Cassidy (R-LA), submitted a letter backing the proposal, arguing that it “has the potential to materially improve long-term retirement outcomes for American workers.” (PoliticoPRO, June 2)

• A separate group of 25 House Republicans, including House Budget Chair Jodey Arrington (R-TX) and House Financial Services Subcommittee on Financial Institutions and Monetary Policy Chair Andy Barr (R-KY), also submitted a letter advocating for the policy. (PoliticoPRO, June 2)

• In a March press release, then-U.S. Secretary of Labor Lori Chavez-DeRemer explained, “This proposed rule will show how plans can consider products that better reflect the investment landscape as it exists today. This greater diversity will drive innovation and result in a major win for American workers, retirees, and their families.” (DOL Press Release, March 30)

• SEC Chairman Paul S. Atkins echoed former Secretary Chavez-DeRemer’s remarks, saying, “Americans’ ability to participate more fully in innovation and economic growth through well-diversified long-term investments is a vitally important priority for effective retirement planning.” (DOL Press Release, March 30)

What’s Next

• The public comment period closed on June 1, and DOL is reviewing stakeholder feedback before deciding whether to finalize the rule later this year.

RER will continue to engage with policymakers on retirement investment policy and support reforms that expand capital formation, balance investment flexibility with appropriate oversight, and provide American workers with broader opportunities to build long-term wealth.

The Department of Labor (DOL) proposed a new rule this week that would make it easier for 401(k) plans to offer investment options with exposure to alternative assets, including private equity, real estate, digital assets, and other nontraditional products—if fiduciaries follow a prudent, process-based framework. The proposal stems from President Trump’s Aug. 7, 2025 Executive Order directing regulators to expand access to alternative assets in defined contribution retirement plans. (DOL News Release, March 30)

Proposed Rule

• The proposed rule would clarify fiduciary duties under the Employee Retirement Income Security Act (ERISA) and establish a safe harbor for selecting designated investment alternatives, including asset allocation funds that contain alternative assets. (PoliticoPro, March 30)

• DOL says the rule is intended to reduce regulatory uncertainty and litigation risk that have discouraged plan sponsors from offering broader exposure to private markets and other alternatives in 401(k) plans, even though such investments are not expressly prohibited today.

• Under the proposal, fiduciaries would need to evaluate factors such as performance, fees, liquidity, valuation, benchmarks, and complexity through an objective and analytical process. (DOL News Release, March 30)

Background

• The rule follows President Trump’s Executive Order on “Democratizing Access to Alternative Assets for 401(k) Investors,” which called for regulatory changes to expand access to asset classes previously concentrated in institutional portfolios. (EO, Aug. 7, 2025)

• While alternative investments have long played a role in defined-benefit plans such as pensions, fiduciary obligations and litigation concerns have made it more difficult to include them in participant-directed defined contribution plans like 401(k)s.

• Since the Executive Order, regulators and administration officials have signaled growing support for expanding access to alternative investments—including real estate—while emphasizing the need for appropriate guardrails. (Reuters, March 30)

What to Watch

• The proposal would mark a meaningful shift in the federal government’s approach to alternative investments in retirement plans, particularly by replacing a more cautious posture with a framework centered on fiduciary process rather than asset-class restrictions. (CNBC, March 30)

• The rule could have important implications for real estate and other alternative asset managers if it leads to broader access to private-market exposure through participant-directed retirement plans.

• The proposal does not endorse any specific asset class, and fiduciaries would still be expected to determine whether a particular investment is appropriate for plan participants.

What’s Next

• The proposal is subject to a 60-day public comment period, with DOL signaling it hopes to finalize the rule by year’s end.

Comments are due on June 1, 2026.  RER is working on comments and welcomes input from members.