Today is the final day to submit public comments on the Department of Labor’s proposed rule on 401(k) alternative assets, and it’s worth taking a moment to explain exactly what that rule does and why it matters. We showed how regulatory barriers have locked 90 million Americans out of private markets that pension funds and wealthy investors have accessed for decades. We examined the performance record behind private equity and the diversification benefits it adds to a retirement portfolio. And we showed how the CEA estimates that fully opening 401(k)s to private markets could add $35 billion to the U.S. economy.
The next question is: how would it actually happen? What is the rule that would make this possible, and what does it do?
The barrier keeping alternative assets out of 401(k) plans is not statutory. ERISA, the federal law governing retirement plans, contains no categorical restriction on investment types. Plan fiduciaries have always had the legal authority to include alternatives. The problem is litigation risk.
Over the past decade, class-action lawsuits targeting plan fiduciaries have surged to all-time highs. ERISA litigation class action filings hit a record in 2024, with more than half of plans with $1 billion or more in assets targeted by at least one lawsuit since 2016. The cost of defending even a meritless case runs into the millions. The result: plan fiduciaries have retreated to the most litigation-proof menu possible, overwhelmingly choosing passive index funds and avoiding anything novel or complex that could invite a claim.
Alternative assets are exactly the kind of investment that triggers that avoidance instinct. Private equity, real estate, infrastructure, and private credit all involve more complex fee structures, less frequent valuations, and liquidity considerations that differ from publicly traded securities. Without clear guidance on how to evaluate them prudently, fiduciaries faced a simple calculus: the risk of getting sued outweighed the potential benefit to savers.
On March 30, 2026, the Department of Labor’s Employee Benefits Security Administration published a proposed rule titled “Fiduciary Duties in Selecting Designated Investment Alternatives” (RIN 1210-AC38). It implements President Trump’s Executive Order 14330, “Democratizing Access to Alternative Assets for 401(k) Investors,” signed August 7, 2025.
The rule does two things.
First, it reaffirms that ERISA is asset-neutral. No investment type is categorically permitted or prohibited. A fiduciary that follows a prudent process can offer private equity, private credit, real estate, infrastructure, digital assets, commodities, or lifetime income strategies as part of a plan’s investment menu. The rule makes clear that “zero percent exposure” to alternatives is not inherently safer or more prudent than any other allocation — the question is always whether the selection process was sound.
Second, and more importantly, it creates a process-based safe harbor. Under the safe harbor, if a plan fiduciary objectively, thoroughly, and analytically considers six enumerated factors when selecting a designated investment alternative, its judgment on those factors is presumed prudent and entitled to significant deference. A fiduciary that can document compliance with the safe harbor should be able to defend its decisions without the kind of expensive, prolonged litigation that has chilled innovation in plan menus.
The Six Factors
The six safe harbor factors are:
The rule is explicit that these factors apply to any designated investment alternative, not just alternatives. The safe harbor is asset-neutral by design.
Today, only 4 percent of defined contribution plans offer any alternative investments, and just 0.1 percent of all DC plan assets are in alternatives. Public pension funds — managing money for teachers and government workers — allocate roughly 20 percent to alternatives. The gap is not explained by suitability. It is explained by regulatory ambiguity and litigation fear.
The DOL rule directly addresses that gap. By giving plan fiduciaries a documented process they can rely on, it removes the chilling effect that has kept a generation of retirement savers from accessing the same investments that have driven outperformance in pension funds for decades.
The DOL’s public comment period on this proposed rule closes today, June 1, 2026. Pinpoint Policy Institute has submitted a comment in support of the rule, urging the Department to finalize it without delay. The case is straightforward: 90 million American retirement savers deserve the same access to private markets that institutional investors have enjoyed for decades. This rule gives fiduciaries the roadmap to get them there.
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