Democratizing Access to Alternative Assets for 401(k) Investors
This Executive Order directs federal agencies to make it easier for participants in 401(k) and other defined-contribution retirement plans to gain access to "alternative assets" (private markets, real estate, digital assets, commodities, infrastructure, and certain lifetime-income products). It tasks the Department of Labor (DOL) with reexamining and clarifying ERISA fiduciary guidance (including whether to rescind the DOL’s December 21, 2021, Supplemental Private Equity Statement), with the goal of reducing regulatory and litigation barriers that the Administration says have limited retirement-plan access to these investments. The SEC is also asked to consider changes (for example, to accredited investor and qualified purchaser tests) to facilitate broader access. The Order aims to increase diversification and long‑term net returns for retirement savers but does not itself change statutes; it directs agencies to propose regulations, guidance, or safe harbors consistent with law.
Key Points
- 1Definition of "alternative assets": explicitly includes private market investments (private equity/debt), direct and indirect real estate, actively managed digital asset vehicles, commodities, infrastructure finance, and lifetime income/ longevity risk‑sharing pools.
- 2DOL review and possible rescission: within 180 days, the Secretary of Labor must reexamine past and present ERISA guidance on fiduciary duties related to offering asset allocation funds containing alternative assets and consider rescinding the DOL’s Dec. 21, 2021, Supplemental Private Equity Statement.
- 3Clarify fiduciary process and propose safe harbors: within 180 days, the DOL is to clarify criteria fiduciaries should use to balance higher expenses versus potential long‑term net returns and diversification, and may propose rules, regulations, guidance, or calibrated safe harbors to reduce litigation risk that the Order says constrains fiduciary decision making.
- 4Interagency coordination: the Secretary of Labor is to consult with the Treasury, the SEC, and other regulators; the SEC is separately directed to consider ways (including changes to accredited investor/qualified purchaser rules) to facilitate access to alternative assets for participant‑directed plans.
- 5Limits and implementation: the Order is to be implemented consistent with existing law and available appropriations, does not create enforceable private rights, and does not supplant the statutory authority of agencies or the Office of Management and Budget.