US Labor Department Opens Door for Private Assets in 401(k) Retirement Plans

Highlights:

• The US Labor Department has proposed a new rule that allows 401(k) participants to invest in alternative assets.
• The alternative investment options include real estate, crypto, and private market assets. 
• The proposed rule aims to offer a new layer of protection for investors and guide plan managers on new asset review steps. 

The United States Department of Labor has proposed a new rule that allows retirement plans such as 401(k)s to include alternative investments, including cryptocurrencies, real estate, and private market assets. This move is in response to US President Donald Trump’s executive order requesting regulators to expand access to these investment options in retirement accounts. Reacting to the new move, Labor Secretary Lori Chavez-DeRemer noted that it aims to guide plan managers on how to review and include newer assets responsibly. 

Notably, supporters of the proposal believe that the new alternatives could help in spreading investments beyond traditional stocks and bonds. In some cases, these newer options could offer investors higher returns.

On the other hand, those opposing the move have argued that investors may not fully understand how these alternatives work. They also argued that these newer investment options carry higher risks and fees, which many investors will not appreciate.

🚨 FINANCE: US LABOR DEPARTMENT PROPOSES OPENING 401(K) PLANS TO CRYPTO AND ALTERNATIVE ASSETS

The US Labor Department officially proposed rules allowing alternative assets including cryptocurrency, private equity, and private credit to be included in 401(k) retirement accounts… pic.twitter.com/8FNtJYAlNv

— BSCN (@BSCNews) March 30, 2026

Labor Department Introduces Safe Harbor that Protects Investors from Lawsuits

Over the years, many 401(k) plans have intentionally avoided these newer assets because of the fear of lawsuits. Plan managers have been trained to act in the best interest of investors, forcing them to avoid complex or risky investments that could expose their clients to legal trouble. To address this, the US Labour Department has rolled out an initiative called the “safe harbor.” This would offer plan sponsors some level of protection if they follow certain steps when selecting investments. 

In its proposal, the US Department of Labor highlighted six key aspects that plan managers must carefully review before choosing any of the newer investment alternatives. They include investment performance, fees, ease of sale, valuation, benchmarks used to measure the investment option, and complexity.

Despite the added protection, experts believe change will not happen quickly. Jaret Seiberg, a financial analyst at TD Cowen, stated that many companies will still wait for courts to confirm that these protections are strong enough before taking action. He added that courts confirmation could take many years. 

Labor Department Moves to Expand Private Investments in 401(k) Plans

The Department of Labor has proposed a new rule broadening access to private equity and other alternative assets in 401(k) retirement plans, delivering on President Trump’s executive order to open new… pic.twitter.com/Is03nvdA8Y

— Washington Eye (@washington_EY) March 30, 2026

Experts Share Deeper Details of the Proposed Rule

Many legal experts have pointed out investment limits in the proposed rule. Many stated that the rule does not allow direct access to investments such as private equity funds or crypto funds inside 401(k) plans. Erin Cho, a partner at the Mayer Brown law firm, stressed that exposure to these investments will continue to remain limited. She added that investors can only access limited exposure through options like target-date funds.

Cho stated:

“Under this rule, plan participants are not going to wake up to find private equity funds, private credit funds, crypto funds on the menu of their 401(k) plan.”

Andrew Oringer, another legal counsel at the Wagner Law Group, explained that other rules will continue to apply. Citing an example, he noted that some alternative investments are only open to accredited investors, which most 401(k) participants are not. He also pointed out fairness rules that prevent higher-income workers from accessing benefits that other investors can not access. 

Josh Brown, the Chief Executive Officer (CEO) of Ritholtz Wealth Management, argued that the average investor does not need alternative assets. “There’s no chance 401(k) investors would get access to the best alts managers. Even if they did, they’d pay through the nose for it because they lack the buying power to reduce investment fees,” he added.