Coming (Very) Soon: Public’s First Look at DOL Proposed Rule on Alternative Investments
Well, it took longer than expected, but the White House Office of Management and Budget (OMB) has finally completed its review of the Department of Labor’s much anticipated proposed rule, “Fiduciary Duties in Selecting Designated Investment Alternatives.”
OMB late Tuesday released its review of the proposed rule, clearing the way for the DOL to finally release it and open up what is expected to be a very active comment period that could last 30 but more likely 60 days.
So the industry will finally get its first look at what’s actually included in the proposed rule, possibly before the end of this week or early next week, as nothing now prevents it from being published in the Federal Register.
On Jan. 13, the DOL submitted the proposed rule to OMB for review. The review process—which can take up to 90 days (which would have expired on April 13)—was expected to be expedited to meet a 180-day deadline from the August 7, 2025 Executive Order from President Trump (“Democratizing Access to Alternative Assets for 401(k) Investors”). But that 180-day deadline quietly came and went on Feb. 3, and the wait continued until March 24.
With the imminent beginning of a 30- or 60-day comment period, a potential final rule could still be published later this year, allowing for implementation in 2027.
How we got here
President Trump’s Executive Order directed the DOL to reevaluate previous guidance around alternative asset investments in retirement plans and to clarify the government’s position on the fiduciary responsibilities associated with offering asset allocation funds that include alternative holdings, and, as it deems appropriate and consistent with applicable law, to propose new guidance (including safe harbors) that would curb ERISA litigation that constrains ERISA fiduciaries’ ability to apply their best judgment in allowing alternative investments for DC Plan participants.
The DOL under the second Trump administration on Aug. 12, 2025 rescinded earlier Biden-era guidance from 2021 that discouraged private equity in 401(k) plans. That was less than a week after Trump’s order, and was supported by a report from the president’s Council of Economic Advisers touting the supposed benefits of alts for retirement savers.
The DOL then went about its work to craft the proposed rule that was submitted to OMB on Jan. 13. It is widely expected that the rule will be consistent with the directives of the Executive Order, and will aim to ease restrictions on including alternative assets—such as private equity, private credit, and digital assets—within 401(k) and other defined contribution plans.
PESP warns of rule’s impact
The Private Equity Stakeholder Project (PESP) on Wednesday warned that the rule’s goal of expanding access to private equity investments in 401(k) retirement plans would expose tens of millions of workers to higher fees, lower returns, and opaque risks that are poorly suited to retirement savings.
“Private equity firms should not get a free pass to loot workers’ 401(k) retirement savings; PESP opposes any safe harbor that would weaken fiduciary protections for retirement savers.”
PESP’s Jim Baker
Wednesday’s press release from PESP said the organization is particularly concerned about proposals to provide a regulatory safe harbor for private equity investments in 401(k) plans, noting that President Trump’s executive order directed the DOL to explore safe harbors that would limit the ability of consumers to sue if private equity managers or 401(k) managers or providers make recommendations that are contrary to their fiduciary duty to retirement savers, and multiple U.S. senators have pressed the department to formalize those. PESP warns that broad safe harbors could insulate private equity firms from scrutiny while shifting risk onto workers saving for retirement.
“Private equity firms should not get a free pass to loot workers’ 401(k) retirement savings; PESP opposes any safe harbor that would weaken fiduciary protections for retirement savers,” said Jim Baker, Executive Director of PESP. “At a minimum, the Department of Labor should hold private equity to the same disclosure and transparency standards expected of publicly traded stocks, mutual funds, and ETFs, including clear reporting on what funds are investing in, the fees and expenses retirement savers are paying, the amount of debt funds are using, and how these investments are actually performing compared with stocks.”
Devil in the details
Critics such as the Economic Policy Institute also warn that expanding access to alternatives could expose participants to higher fees, added complexity, and weaker protections, arguing that institutional investors themselves have been pulling back from these strategies. Supporters, however, contend that with proper structure and clearer rules, fiduciaries can responsibly incorporate alternatives into professionally managed solutions.
ERISA attorneys say the key issue isn’t whether alternative investments will be permitted in defined contribution plans, but whether the DOL’s proposed rule will provide meaningful legal clarity for fiduciaries. Industry observers note that while demand for alternatives is growing among providers, plan sponsors and participants, the real test will be whether the rule offers actionable guidance—or simply restates existing principles without reducing litigation risk.
The outcome could either provide long-awaited clarity or introduce new uncertainty for plan sponsors navigating the evolving investment landscape. It remains to be seen how comments will impact the rule, but parties including the American Retirement Association hope to shape it favorably by providing feedback.
“After publication, ARA and other stakeholders will have the opportunity to evaluate the Department’s approach to fiduciary duties in selecting designated investment alternatives and provide feedback before the rule is finalized,” ARA’s Chief of Retirement Policy and Regulatory Affairs Kelsey Mayo said in an article published today on the association’s website.
SEE ALSO:
• Wait Continues for DOL Proposed Rule on Alternative Assets
• ICI, DCALTA Partner on Research, Education for Private Assets in 401(k)s
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.