A new chapter begins

DC plans await DOL’s Trump-ordered alternative asset guidance 

August 25, 2025
An Aug. 7 executive order charges the Department of Labor (DOL) with taking action aimed at encouraging defined contribution (DC) plan fiduciaries to offer participants greater exposure to private equity, digital currencies and other “alternative assets.” DOL has until Feb. 3, 2026, to re-evaluate existing ERISA guidance on asset allocation funds that include these investments and clarify the agency’s views. The order instructs DOL to prioritize actions that will deter private plaintiffs from bringing ERISA lawsuits. While there is no immediate action for sponsors or fiduciaries to take, this article provides an overview of the order and key questions DOL may address in future guidance.

Wide range of alternative assets are covered

The order announces a new policy regarding participants’ access to funds with direct and indirect investments in the following categories of alternative assets:

  • Private market investments holding equity, debt or other financial instruments not traded on public exchanges, including funds whose managers take an active role in the management of the issuers of these securities (e.g., private equity funds)
  • Actively managed vehicles that invest in digital assets (e.g., cryptocurrencies)
  • Real estate
  • Commodities
  • Infrastructure development projects
  • Lifetime income investment strategies, including “longevity risk-sharing pools” (a term the order doesn’t define)

According to the order, participants should have access to funds that invest in alternative assets when the plan fiduciary determines they provide an appropriate opportunity for participants “to enhance the net risk-adjusted returns on their retirement assets.”

The order recognizes that many defined benefit plans already invest in these assets but blames litigation risk and “burdensome” DOL guidance for discouraging DC fiduciaries from offering them. (One set of fiduciaries who began incorporating alternative assets into their DC plan’s investment line-up over a decade ago recently prevailed in a long-running ERISA lawsuit).

DOL must review and clarify ERISA guidance

The order doesn’t make any changes to existing ERISA regulations or guidance. Instead, it directs DOL to take certain actions aimed at implementing this new policy within 180 days (i.e., by Feb. 3, 2026).

Review of existing ERISA fiduciary guidance

DOL must reexamine past and present ERISA fiduciary guidance on asset allocation funds that include investments in alternative assets.
  • Private equity statement rescinded
    The order specifically instructs DOL to consider rescinding the agency’s previous statement — issued during the Biden administration — which cautioned fiduciaries of “typical” DC plans about including private equity investments as components of investment options like target-date or balanced funds. That statement supplemented DOL’s 2020 information letter detailing factors for DC plan fiduciaries to consider when evaluating a professionally managed asset allocation fund with a private equity component. DOL rescinded the statement on Aug. 12, less than a week after the order was signed.
  • Cryptocurrency guidance already revoked
    The agency had already revoked another piece of Biden-era guidance cautioning 401(k) plan fiduciaries about offering cryptocurrency and other digital assets — including tokens, coins and other derivative products — as an investment option for participants. DOL explained that revoking that guidance restored the agency’s historically neutral approach to particular investment types and strategies. The agency indicated that fiduciaries should consider all relevant facts and circumstances when evaluating any potential investment but didn’t explain what factors are relevant for fiduciaries considering investments in digital assets.

Clarification of appropriate fiduciary process

DOL must also seek to clarify the agency’s position on alternative assets and the appropriate process for ERISA fiduciaries when deciding to offer asset allocation funds with exposure to alternative assets. The order specifies that DOL must identify criteria for fiduciaries “to prudently balance potentially higher expenses against the objectives of seeking greater long-term net returns and a broader diversification of investments.” The agency must also propose regulations or guidance — which may include “appropriately calibrated” safe harbors — that describe the duties fiduciaries owe to participants when deciding whether to offer these investments. In carrying out these directives, the order instructs DOL to “prioritize actions that may curb ERISA litigation.”

Potential attention to lifetime income strategies

The order’s inclusion of lifetime income strategies as a type of alternative asset raises the potential for renewed attention to these investments. Last year’s ERISA Advisory Council recommended that DOL issue guidance to assist plan fiduciaries when selecting and monitoring lifetime income options, including as part of a plan’s qualified default investment alternative (QDIA). The order may lead to additional lifetime income guidance along these lines. Explanation of the meaning of the term “longevity risk-sharing pool” in the context of DC plans would also be helpful.

Consultation with other agencies

DOL must also consult with Treasury, the Securities and Exchange Commission (SEC) and other federal agencies to implement the order’s objectives. (The order suggests these other agencies may need to make “parallel regulatory changes.”) The SEC must also consider ways to facilitate DC plan participants’ access to alternative assets, such as through changes to existing federal securities law guidance that currently limits direct investment in these assets to certain high net worth and institutional investors.

Attention now shifts to DOL

While the form and timing of guidance DOL may issue in response to the order remains to be seen, sponsors and fiduciaries should continue to monitor for further developments. The order’s directives raise a number of questions that DOL’s guidance may address:
  • Are diversified asset allocation funds the only way for DC plans to offer participants access to alternative investments?
    The order’s focus appears to be on incorporating exposure to alternative assets through asset allocation funds — such as target date or balanced funds — instead of offering participants direct access to these investments. However, the order’s directive for SEC to revise its guidance on investor qualifications suggests potentially broader flexibility in the future.
  • What information should fiduciaries communicate to participants to meet their ERISA disclosure obligations?
    DOL regulations adopted in 2010 require DC plan administrators to furnish comprehensive information about a plan’s designated investment alternatives to participants on an ongoing basis. However, the regulation and related guidance don’t explain how these rules apply to funds that include investments in alternative assets.
  • Can DOL effectively curb ERISA lawsuits through regulatory guidance?
    ERISA empowers plan participants and beneficiaries to bring civil lawsuits in federal court to redress fiduciary violations. While a regulatory safe harbor may help plan fiduciaries defend these lawsuits, it wouldn’t necessarily prevent participants from filing new lawsuits alleging that fiduciaries acted imprudently by selecting funds that include investment in alternative assets.

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Matthew Calloway
Brian J. Kearney
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