Alternative assets in DC plans Executive Order: Fiduciary FAQ 

On August 7, 2025, President Trump signed an Executive Order (EO) entitled “Democratizing Access To Alternative Assets for 401(k) Investors.” The main purpose of the EO is to address the perceived gap Defined Contribution (DC) plans have in accessing various alternative investments that may provide differentiated growth and diversification opportunities. The EO also mentioned the burden that litigation has put on innovation within DC plans and asks the Department of Labor (DOL) to prioritize related actions to mitigate litigation for ERISA fiduciaries. Following we provide responses to common questions plan sponsors may have on the EO. 

Q) Do 401(k) plan sponsors have to take action now as a result of the EO?

A) No, the EO directs the DOL to review current and past guidance for ERISA fiduciaries in connection with making alternative assets available through asset allocation funds and seek to clarify the agency’s views through further regulations or guidance. The EO gives the agency 180 days (i.e., until February 3, 2026) to complete these actions. It is important to note that the focus here is on asset allocation funds, such as target date funds, balanced funds, etc., rather than single asset class investment options. It also directs the Securities and Exchange Commission (SEC) to help facilitate the inclusion of alternative assets in partnership with the DOL, including through changes to accredited investor and qualified purchaser status.

Q) Will this only impact 401(k) plans?

A) While the title of the EO specifies 401(k) plans, the EO broadly references other defined contribution plans. Any guidance the DOL provides will likely apply to all ERISA defined contribution plans.

Q) What does the EO include under the umbrella of “alternative assets”?

A) The EO specifies the following:

• Private market investments, including private equity, credit and other instruments not publicly traded.
• Direct and indirect investments in real estate (including debt), commodities and infrastructure.
• Actively managed digital assets.
• Lifetime income strategies, including longevity risk sharing pools. This is likely meant to apply predominantly to annuities which may be backed by pools of assets that include private market investments. Longevity risk sharing pools generally provide increased lifetime income, without additional investment risk, using mortality credits. Not widely available in the U.S. today, additional regulatory and/or legislative action would be needed to allow for widespread use of these types of programs.

Q) What do you anticipate the DOL will do in response?

A) It is difficult to predict the outcome of the DOL’s review given the large number of asset-classes and sub-asset classes included in the EO. The EO specifically directed the DOL to consider rescinding its 2021 Supplement Statement on Private Equity in Defined Contribution Plan Designated Investment Alternatives, an action DOL completed^[1] on August 12^th. The EO also specifically called out the need for the DOL to identify criteria for fiduciaries to use to balance potentially higher fees associated with alternative investments with net-returns and diversification benefits, which could manifest in various forms of guidance, but the form and timing of any new DOL guidance is still unknown. Any regulations would need to go through a public notice and comment period that could extend beyond the order’s 180-day timeframe, but the DOL might decide to release guidance in the form of information letters or tip sheets without needing to seek public input.

Q) Did the EO provide a fiduciary safe harbor for inclusion of alternative assets in a 401(k) plan?

A) No. However, the EO did specify that future guidance from the DOL may include “appropriately calibrated safe harbors”, among other things.

Q) Does the EO do anything to prevent ERISA class-action litigation?

A) No, there is nothing in the EO that directly impacts litigation today. The EO acknowledges that fiduciary litigation is a risk that impedes fiduciaries from implementing alternative assets and stifles participant access to beneficial diversification – but these statements don’t directly prevent the filing of civil lawsuits for alleged violations of ERISA (which is a right expressly granted to participants and beneficiaries under ERISA). It is also difficult to ascertain what steps the DOL could take to curb ERISA lawsuits. As noted earlier, the DOL may decide to issue new fiduciary safe harbors. However, even a safe-harbor regulation would be unlikely to prevent private plaintiffs from bringing ERISA fiduciary breach lawsuits. Legislative proposals aimed at ERISA litigation reform are in the early stages of development, but it is too early to tell if they will be successful.

Q) Is there anything plan sponsors should be doing today?

A) Plan sponsors should consider education on the various alternative asset sets outlined in the EO to start building a knowledge base. Mercer has published papers covering many of these topics, including:

• A Primer: Private investments in defined contribution plans
• Looking to the future: The Evolution of Private Investments in DC Plans
• Update for DC Plan fiduciaries on DOL’s cryptocurrency related guidance
• Retirement income for US DC Plans: Point of View

Plan sponsors could perform a review of their investment structure to determine where alternative assets could be considered, potentially including a review of asset allocation funds that include investments in alternative assets. Mercer encourages plan sponsors to stay alert for forthcoming DOL guidance, as well as undertake education on alternative assets as appropriate for their own plan’s unique circumstances. We are pleased to see the challenges surrounding ERISA litigation acknowledged and a broader definition applied to alternative assets, including lifetime income strategies. We believe innovation is critical to the long-term success of DC plans and appreciate the acknowledgement that plan fiduciaries need to balance all aspects of investing in a prudent manner.

^[1] https://www.dol.gov/newsroom/releases/ebsa/ebsa20250812

If you have additional questions about the Executive Order or would like to discuss how it may impact your plan, we're here to help.

Download this article as a PDF: DC Fiduciary FAQ on Executive Order “Democratizing Access to Alternative Assets for 401(k) Investors”

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