Update: On March 30, 2026, the U.S. Department of Labor proposed a regulation to expand the ability for retirement plans to invest in alternative assets. Among other components, the rule would expand “safe harbor” provisions that reduce the liability for fiduciaries, who have the legal responsibility to act in their client’s best interest when managing their money, when investing in certain types of riskier alternative assets.
The rationale for taxpayers subsidizing retirement accounts is to help workers build secure retirements, not to promote risky investment strategies that are at best suitable for wealthy investors. The Department of Labor’s new proposed rule on alternative investments ignores the plain meaning of plan fiduciaries’ duty of prudence under the Employee Retirement Income Security Act of 1974, reframing the purpose of these accounts as maximizing risk-adjusted returns no matter how high the risk, rather than offering balanced investment portfolios suitable for retirement savers.
In addition to steering new customers to private equity, private credit, and cryptocurrency funds to the benefit of Wall Street and crypto insiders, the DOL’s proposed rule potentially helps wealthy investors who can shift risky investments to tax-favored accounts while endangering ordinary workers who do not have the necessary information to assess the risks and costs of these opaque and speculative investments.
For more on President Trump’s executive order instructing DOL to issue such a rule, see EPI’s FAQ on the subject.
Timeline:
On August 7, 2025, President Trump issued an Executive Order directing agencies to “reexamine” regulations and guidance for retirement plan administrators to encourage the inclusion of alternative assets, or “alts,” among the investment options available to participants in 401(k) and similar retirement plans. Alts can include funds invested in private equity and cryptocurrencies.
The EO:
- Listed direct and indirect interests in private market investments, real estate, digital assets, commodities, infrastructure, and longevity risk-sharing pools.
- Directed the Department of Labor (DOL) to consider rescinding a Biden-era guidance expressing concern about risks associated with private equity. DOL dutifully rescinded the guidance on August 12, less than a week after Trump’s order, supported by a report from the president’s Council of Economic Advisors touting the supposed benefits of alts for retirement savers.
- Directed DOL to look for ways to curb litigation under the Employee Retirement Income Security Act of 1974 (ERISA), including possibly expanding “safe harbor” protocols that, if followed, would relieve fiduciaries’ legal liability for losses arising from plan sponsors’ and advisors’ choice of investment options.
- Directed the Securities and Exchange Commission (SEC) to help facilitate access to alts, including possibly relaxing rules that currently limit some investments to accredited investors or qualified purchasers.
The DOL and SEC are expected to issue proposed rules for comment on these instructions by early February 2026.
“Private market” investments include private equity funds, private credit, and other investments that are subject to far fewer regulations than publicly-traded stocks and bonds. Private market investments are normally restricted to sophisticated investors, who are assumed to have enough financial knowledge, experience, and wealth to understand and take on significant risk.
“Digital assets” include cryptocurrencies – artificially scarce “objects” that can be used as stores of value and means of exchange. Cryptocurrencies operate similarly to currencies issued by governments in some ways, but they are decentralized and privately issued.
Though offering these and other types of alt investments in participant-directed retirement plans is not explicitly banned under current law, employers and advisors who serve as retirement plan fiduciaries can be sued for including inappropriately risky and costly assets among investment options. Outside of retirement plans, marketing private equity and other largely unregulated alternative assets to small investors is mostly prohibited by securities laws, regulations, and agency guidance—though cryptocurrencies and other digital assets are sold to anyone.
“Alts” like private equity have so far made little headway in the 401(k) space, though some major players began marketing managed funds with alternative asset components to 401(k) plan sponsors even before Trump issued his executive order.
Impact:
This EO targets regulations and guidance that protect retirement savers and also help financial markets steer capital to productive uses for the long-term health of the economy and protect the taxpaying public. To date, Congress has failed to provide low- and moderate-income workers with subsidies that effectively promote retirement saving, while allowing the wealthy to use retirement accounts to reduce taxes on investment income, exacerbating wealth inequality. The SEC and DOL could make matters even worse by giving the green light to opaque alts that wealthy insiders can use to further game the system, while ordinary retirement savers are lured to invest in underperforming, high-cost, and inappropriately risky investments.
There is a danger that some individual retirement savers will face costs and risks they are unaware of through investing in riskier assets. There is also a larger-scale risk that deregulation will fuel a speculative “bubble” in alternative markets.