On August 12, 2025, the U.S. Department of Labor (DOL) officially rescinded its December 2021 supplemental statement, which had previously advised fiduciaries of smaller 401(k) plans against including alternative assets—such as private equity—as part of their investment offerings. The release is a response to President Trump’s Executive Order “Democratizing Access to Alternative Assets for 401(k) Investors,” which directs the DOL to reexamine its previous guidance regarding fiduciary decisions, in the pursuit of ensuring that alternative investments are available to plan participants.
Background: The 2021 Guidance
In its release, the DOL states that the 2021 guidance represented a deviation from established practices, which “dictate a neutral, principle-based approach to fiduciary investment decisions” in accordance with ERISA. The release further emphasizes that the DOL should not single out particular investments to heightened scrutiny; and instead, fiduciaries should assess all investment options by considering all pertinent facts and circumstances. This position aligns with the DOL’s May 28, 2025, Compliance Assistance Release No. 2025-01, which rescinded its 2022 guidance that cautioned plan fiduciaries about offering cryptocurrencies in a plan’s investment lineup. Rescinding of the previous 2021 and 2022 guidance, nor the contents of the 2025 DOL releases, changes a plan fiduciary’s responsibility to act within the requirements of ERISA in considering and providing investment options.
Key Takeaways from the DOL’s August 12 Release
- Neutral Fiduciary Standards Restored: The DOL clarified that fiduciaries should assess all investment options objectively, including alternative assets, without giving extra attention to any particular asset class for heightened scrutiny.
- ERISA Compliance Remains Paramount: Although the rescission provides broader investment options, fiduciaries are still required to exercise prudent judgment and act solely in the best interests of plan participants and beneficiaries.
- Market Implications: Industry leaders suggest this shift could reinvigorate interest in private equity and other alternative investments within 401(k) plans, particularly through professionally managed asset allocation funds.
What This Means for Plan Sponsors and Fiduciaries
Plan sponsors should revisit their investment policy statements and consult with advisors to assess whether alternative assets may be appropriate for their participant base. While the regulatory environment is now more permissive, the fiduciary duty to act prudently and in participants’ best interests remains unchanged.
At McConnell Jones, we continue to monitor regulatory developments that impact retirement plan governance and investment strategy. If you have questions about how this change may affect your organization’s retirement offerings, our team is here to help.
References:
Democratizing Access to Alternative Assets for 401(K) Investors – The White House
