On March 31, the Department of Labor (DOL) published a Notice of Proposed Rulemaking (NPRM) titled “Fiduciary Duties in Selecting Designated Investment Alternatives.” The proposed rule clarifies what it means for retirement plan fiduciaries to act prudently when selecting investment options, including alternative assets such as private equity, real estate, digital assets, and infrastructure, for defined contribution plans like 403(b)s and 401(k)s. The rule also establishes a safe harbor that fiduciaries can follow to demonstrate compliance with their duties under the Employee Retirement Income Security Act of 1974 (ERISA).
The proposed rule carries a public comment period that closes June 1, 2026.
Background
The proposed rule stems from President Trump’s August 2025 executive order (EO 14330), “Democratizing Access to Alternative Assets for 401(k) Investors,” which directed the DOL to clarify ERISA fiduciary standards in connection with offering investment options that include alternative assets. The order identified regulatory uncertainty and litigation risk as barriers that have discouraged plan fiduciaries from offering participants access to a broader range of investments that could potentially improve retirement outcomes.
Details of the Proposed Rule
Rather than limiting the rule’s scope only to alternative asset investments (as directed by the executive order), the DOL has taken a broader approach. The proposed rule addresses a fiduciary’s duty of prudence when selecting any designated investment alternative — the investment options made available to participants on a plan’s menu. The department states that this approach is consistent with its longstanding practice of providing investment-neutral guidance that does not favor or disfavor any particular type of investment.
The DOL relies on three key principles in the proposal to assert its goal of allowing fiduciaries to offer investment options with alternative assets:
- ERISA is grounded in process.
- ERISA gives maximum discretion and flexibility to plan fiduciaries in selecting designated investment alternatives.
- Arbiters of disputes should defer to ERISA fiduciaries under a presumption of prudence.
The proposal also includes a process-based safe harbor built around six factors that fiduciaries should consider when selecting a designated investment alternative: performance, fees, liquidity, valuation, performance benchmarking and complexity. According to the proposal, plan fiduciaries are entitled to significant deference in selecting alternative assets if each of these factors is considered objectively, thoroughly and analytically.
What’s Next
The proposal impacts the regulatory scheme for sponsors of participant-directed defined contribution retirement plans. Institutions should work with third-party vendors to understand the changes proposed.