Alternatives Are Coming to 401(k) Plans
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Alternatives Are Coming to 401(k) Plans
What EO 14330 and the DOL safe harbor actually change, and what they don’t
Nate Moody, CPFA | Senior Financial Advisor & Partner | Employer Financial Services
If you sit on a retirement plan committee, you’ve probably heard the headlines. Private equity is coming to 401(k) plans. The White House and the Department of Labor are throwing open the doors. A whole new world of alternative investments is about to land on your plan menu.
The reality is more measured, and more interesting. An executive order and a proposed DOL rule have genuinely shifted the ground under this issue. But nothing about your fiduciary duty has changed, the rule isn’t final, and the practical decision in front of most committees is subtler than the headlines suggest. Here’s what actually happened, what it means for your plan, and what to weigh before you do anything.
What actually happened
Two things, about eight months apart.
The executive order. On August 7, 2025, President Trump signed Executive Order 14330, “Democratizing Access to Alternative Assets for 401(k) Investors.”1 It set a federal policy goal of opening participant-directed plans to alternative assets and directed the DOL, the SEC, and the Treasury to clear regulatory barriers. The order defines alternative assets broadly: private equity and private credit, real estate, digital assets like cryptocurrency, commodities, infrastructure, and lifetime income strategies.1 Within days, the DOL rescinded its 2021 statement that had cautioned fiduciaries against private equity.2
The proposed rule. On March 30, 2026, the DOL followed up with a proposed rule titled “Fiduciary Duties in Selecting Designated Investment Alternatives.”3 This is the substance. It would create a process-based safe harbor: if a fiduciary follows a defined evaluation process when selecting an investment option, that fiduciary earns a rebuttable presumption of having satisfied ERISA’s duty of prudence.4 The comment period closed June 1, 2026, and the rule has now entered the final rulemaking phase. The DOL has signaled it’s aiming to finalize by the end of 2026, though the final version could differ from the proposal.5
Where this stands today
The rule is proposed, not final. Plan fiduciaries cannot rely on the safe harbor yet. Committees should treat it as directional guidance for strengthening their selection process, not as a green light to add alternatives. We’ll update clients when a final rule is published.
The problem the rule is trying to solve
Alternatives have been rare in 401(k) plans, and it hasn’t been because they lack merit. Pension funds, endowments, and other large institutions have used private equity, real estate, and infrastructure for decades to diversify and pursue returns. The reason participants rarely see them comes down to litigation risk.
The Plan Sponsor Council of America counts more than 500 fee-related lawsuits filed since 2016, producing over $1 billion in settlements paid by plan sponsors.6 Alternatives carry higher fees, less liquidity, and harder-to-benchmark returns, which are exactly the features that draw plaintiff attention. Faced with that risk, most committees have simply left alternatives off the menu, even in cases where a modest allocation might have helped participants.
The DOL’s goal is to change that calculus. By defining a clear, defensible process, the rule aims to give committees confidence that a well-documented decision to include an alternative won’t automatically invite a lawsuit.4
The six factors: the “Prudence Prism”
At the center of the proposed safe harbor are six factors a fiduciary is expected to consider when selecting a designated investment alternative. Industry commentators have started calling them the Prudence Prism.7 The list is non-exhaustive, and how each applies depends on the facts.
| Factor | What the committee weighs |
|---|---|
| Performance | Expected long-term, risk-adjusted returns and how the option fits the plan’s objectives. |
| Fees and expenses | Total cost, including performance-based fees, and whether it’s reasonable for what participants receive. |
| Liquidity | How readily the investment can be valued and redeemed, and how that fits daily-valued plan mechanics. |
| Valuation | Fair-value practices for holdings that don’t trade on public markets. |
| Benchmarking | Whether a meaningful benchmark exists to measure the option against over time. |
| Complexity | Whether participants and the committee can reasonably understand the strategy and its risks. |
Source: DOL proposed rule, “Fiduciary Duties in Selecting Designated Investment Alternatives,” March 2026.7
If any of this looks familiar, it should. These are the same questions a prudent committee already asks about every fund on the menu. That’s the point the DOL is making. The rule is asset-neutral. It doesn’t favor or require alternatives, and it applies the same prudence process to a private equity sleeve that it does to an index fund.8
What the rule does not do
This is where the headlines and the reality part ways. Three limits matter for committees.
It doesn’t change your fiduciary duty. ERISA’s duties of prudence and diversification are untouched. The safe harbor is a process you can follow, not a shield that lets you skip the work. A poorly documented decision to add a high-fee, illiquid fund is just as exposed as it was before. If anything, the rule raises the bar on documentation.
It doesn’t cover brokerage windows. The proposed safe harbor applies to designated investment alternatives, the options you formally select for the menu. It does not apply to self-directed brokerage accounts or brokerage windows.9 If participants reach alternatives through a brokerage window, this rule doesn’t help you there.
It doesn’t bless your whole menu. The safe harbor covers the selection of an individual option. It does not provide protection for the overall design and composition of your investment lineup. The DOL has said separate guidance on menu curation and on the ongoing duty to monitor may come later.10 For now, those responsibilities sit outside the safe harbor.
The courts are still deciding too
In January 2026, the Supreme Court agreed to hear Anderson v. Intel, a case about whether a fiduciary can be liable for including private equity and hedge funds inside a target date fund.11 The case likely won’t be argued before fall 2026, and a decision may not come until after the DOL rule is final.
Until courts start ruling in fiduciaries’ favor under the new framework, some litigation uncertainty will remain regardless of what the final rule says. This is a moving target on two fronts at once.
How alternatives would actually show up
If your plan does eventually add alternatives, it probably won’t look like participants picking individual private equity deals. Most plans that move will do so through professionally managed, diversified vehicles: a target date fund, collective investment trust, or multi-asset fund that holds a modest sleeve of alternatives inside a broader portfolio.12
A target date fund might allocate 10 to 15 percent to private equity or real estate, with the rest in public stocks and bonds.12 That structure keeps the allocation diversified, keeps the illiquid portion capped, and puts a professional manager in charge of valuation and rebalancing. It’s a very different risk profile from handing participants direct access to a single private fund.
Even with a final rule, expect adoption to be gradual. Large employers in particular are likely to wait, watching how the litigation shakes out before they move.12 Being deliberate here is not falling behind. It’s prudence.
What this means for your committee
You don’t need to add anything to your plan right now. Nothing in the current state of the law requires it, and the safe harbor isn’t available to rely on yet. But there is useful work you can do now, whether or not you ever add an alternative.
The six factors are a strong template for tightening how you select and document any investment decision. Committees that adopt that discipline now will be better positioned no matter where the rule lands. A few concrete steps make sense today.
The Bottom Line
An executive order and a proposed DOL rule are opening a door that’s been shut for decades. That’s real, and it’s worth understanding. But the door isn’t fully open, your fiduciary duty hasn’t changed, and the smart move for most committees is to prepare rather than react. Here’s where to focus.
- Treat the rule as directional, not final. Don’t add alternatives in reliance on a safe harbor you can’t use yet. Watch for the final rule, expected around year-end 2026.
- Review your investment selection process against the six factors. Performance, fees, liquidity, valuation, benchmarking, and complexity. Make sure your process addresses each and that you document it.
- Update your Investment Policy Statement. Consider whether your IPS reflects the selection criteria, valuation procedures, liquidity requirements, and benchmarking standards you’d want if alternatives ever came up.
- Assess your committee’s expertise. Decide honestly whether you have the resources to evaluate alternatives, or whether delegating to an investment manager or advisor makes more sense.
- Mind the gaps. Remember the safe harbor won’t cover your brokerage window or your overall menu design. Keep those decisions well documented on their own.
- Talk to your advisor before acting. If your committee is feeling pressure to consider alternatives, bring us in early. We’ll help you separate the headlines from the fiduciary reality.
Want a read on what this means for your plan?
We’re tracking the DOL rule and the Anderson case closely, and we’re helping committees strengthen their selection process ahead of a final rule. If your committee wants a briefing on alternatives, or a review of how your current process measures up against the six factors, reach out to nmoody@lebelharriman.com.
Frequently asked questions
Can my 401(k) plan add private equity now?
Legally, ERISA has never flatly prohibited alternatives, so a plan could include them if a fiduciary prudently selected them. What’s new is the proposed DOL safe harbor that would make that decision more defensible. But the rule isn’t final, so fiduciaries can’t rely on it yet. Most committees should wait for the final rule and, if they act, do so through diversified, professionally managed vehicles.
Does the DOL safe harbor change my fiduciary duty?
No. ERISA’s duties of prudence and diversification are unchanged. The safe harbor describes a process that, if followed and documented, gives you a rebuttable presumption of prudence when selecting an investment. It’s a roadmap, not a release from responsibility. You still have to do the work.
What are the six factors in the proposed rule?
Performance, fees and expenses, liquidity, valuation, benchmarking, and complexity. Some commentators call them the Prudence Prism. A fiduciary who considers these objectively and thoroughly, where they apply, and documents that analysis is likely to satisfy the safe harbor if the rule is finalized as proposed.
When will the DOL rule be final?
The comment period closed June 1, 2026, and the rule is in the final rulemaking phase. The DOL has signaled it’s aiming to finalize by the end of 2026, though the final version could differ from the proposal and the timeline could shift.
Should our committee do anything right now?
Yes, but not what you might think. You don’t need to add alternatives. You should use the six factors to review and tighten your investment selection process, update your Investment Policy Statement, and confirm your committee has the expertise to evaluate complex options. That work pays off regardless of whether you ever add an alternative.
About Lebel & Harriman Retirement Advisors
Lebel & Harriman is a Maine-based fiduciary advisor to retirement plan sponsors, serving businesses and families for over 45 years. We advise 250+ ERISA retirement plans representing over $6 billion in assets across our Employer Financial Services and Personal Financial Services practices.
Nate Moody, CPFA | Senior Financial Advisor & Partner | nmoody@lebelharriman.com
Sources
1 Executive Order 14330, “Democratizing Access to Alternative Assets for 401(k) Investors,” The White House, August 7, 2025.
2 U.S. Department of Labor, rescission of the 2021 Supplemental Private Equity Statement, August 12, 2025; Ogletree Deakins, “DOL Unveils Proposed Rule to Remove Restrictions on Alternative Investments in 401(k) Plans,” March 30, 2026.
3 U.S. Department of Labor, “US Department of Labor proposes landmark rule to democratize access to alternative investments in 401(k) plans,” March 30, 2026.
4 Winston & Strawn, “DOL Proposes Safe Harbor for Alternative Investments in 401(k) Plans,” April 2, 2026.
5 PLANADVISER, “DOL Rule List Focuses on Alts, End of ESG,” July 2026; Chapman and Cutler LLP client alert on the proposed safe harbor, 2026.
6 Ogletree Deakins, citing Plan Sponsor Council of America data referenced in the proposed rule, March 30, 2026.
7 EisnerAmper, “The Department of Labor’s Proposed Safe Harbor for Alternative Investments in 401(k) Plans,” June 9, 2026; Chapman and Cutler LLP client alert, 2026.
8 401(k) Specialist, “Industry Orgs Issue Final Comments on DOL Proposed Alternative Assets Regulation,” June 2, 2026.
9 Ogletree Deakins, “DOL Unveils Proposed Rule to Remove Restrictions on Alternative Investments in 401(k) Plans,” March 30, 2026.
10 Morrison & Foerster, “Department of Labor Proposes Rule to Reduce Risks Associated with Opening 401(k) Plans to Private Market Assets,” April 3, 2026.
11 Alston & Bird, “DOL Proposal and Supreme Court Review Poised to Clarify Fiduciary Standards for Alternatives in 401(k) Plans,” April 6, 2026; Anderson v. Intel Corp. Investment Policy Committee, cert. granted January 16, 2026.
12 IRA Financial, “The New Era of 401(k) Investing: What the DOL’s Alternative Asset Safe Harbor Really Means,” May 12, 2026.
This article is provided for informational and educational purposes only and should not be construed as legal, tax, or investment advice. The information is based on publicly available sources believed to be reliable as of July 2026, but accuracy and completeness are not guaranteed. The DOL rule discussed here is proposed and not final; it may be modified or withdrawn, and plan fiduciaries cannot currently rely on its safe harbor. Regulatory summaries and pending litigation are subject to change. Alternative investments involve risks, including higher fees, limited liquidity, and valuation challenges, and are not suitable for every plan or participant. Readers should consult with qualified legal counsel, tax advisors, and plan consultants before making decisions based on this information. This article does not constitute a recommendation to buy or sell any security or to adopt any particular investment strategy.
Securities offered through Valmark Securities, Inc. Member FINRA/SIPC. Advisory services offered through Valmark Advisers, Inc., a SEC-registered investment advisor. Lebel & Harriman Retirement Advisors is a separately owned entity from Valmark Securities, Inc. and Valmark Advisers, Inc.
