"For the moment, though, pay particular attention to the Proposal's six defined factors. For each factor, there is a standard that reflects the DOL's expectations of plan fiduciaries. In addition, there are examples of prudent and imprudent fiduciary behavior under each example. Those factors, standards, and examples reflect the DOL's thinking. That thinking is consistent with views on retirement plan professionals in most cases. While some may be different or more demanding than current practices, they still reflect the behavior that the DOL clearly expects from fiduciaries, and fiduciaries should take that into account as they undertake their activities on behalf of plans." MORE >>
"The DOL's recently proposed rule on alternative investments ignores the fact that ERISA section 404(a) requires a plan sponsor to conduct an independent investigation and evaluation on each investment option chosen for a 401k plan. However, the very nature of alternative investments typically involves a basic lack of transparency, which effectively prevents the verification by a plan sponsor required by ERISA 404(a)." MORE >>
"Public pensions, normally the first to lead securities fraud cases, have been notably absent from the Apollo/Epstein stock drop litigation. That absence may reflect a deeper conflict: the same pensions that could sue Apollo for misleading disclosures are heavily invested in its private equity and private credit funds, where valuations remain opaque and untested." MORE >>
"The DOL's proposal is much broader than anticipated and represents a new interpretation by the DOL of ERISA's duty of prudence.... Managers of alternative investments should consider the proposal's implications on fee transparency, liquidity management, and valuation processes.... The DOL anticipates issuing separate interpretive guidance relating to the duty to monitor. Public comments on the proposal are due on June 1, 2026[.]" MORE >>
"[T]he Proposed Rule provides a welcome roadmap to plan fiduciaries responsible for selecting all of a plan's designated investment alternatives, not only those that relate to alternative assets. The regulation, when finalized, will allow fiduciaries to demonstrate their compliance with ERISA's fiduciary duty of prudence. However, it remains to be seen whether the Proposed Rule will deter ERISA litigation." MORE >>
Slide Deck. "[1] Background -- executive order: Democratizing access to alternative assets for 401(k) investors ... [2] Summary of proposed rule: Fiduciary duties in selecting designated investment alternatives ... [3] Safe harbor factors when selecting designated investment alternative ... [4] Specific requests for comments within 60 Days ... [5] Topics explicitly not addressed ... [6] Considerations for plan fiduciaries." MORE >>
"The familiar contours of what has been feasible for decades, and which have shown recent signs of renewed energy -- so-called target-date, life-cycle and other 'allocator' strategies of which Alternative Assets are a component -- will continue to be the likely theatre of operations for the near future." MORE >>
"The Proposed Rule provides guidance to plan fiduciaries but does not ensure that asset managers will offer products that satisfy fiduciary standards.... The Proposed Rule anticipates that plan fiduciaries will turn to their investment advisers and asset managers to obtain representations regarding the six factors in the safe harbor.... [T]he additional representations and due diligence required to rely on the safe harbor may increase fees charged by investment advisers, asset managers, or both. Plan fiduciaries should review their service agreements to determine whether these extra services are included and at what cost. " MORE >>
"While the general statement of the requirement of prudence on the part of an ERISA plan fiduciary states that there is an obligation of the fiduciary to consider all relevant factors, and that this applies to the valuation of alternative assets as a plan investment option available to participants, this same fiduciary obligation can equally be read to require, with respect to more traditional types of plan investment options, that there be an evaluation of such matters as the impact on an investment of environmental factors, benefits of a diverse workforce and other governance and societal implications of the businesses included in the investment choices available to plan participants." MORE >>
"Annuity contracts have long provided the following capabilities to DC plans: [1] Asset accumulation.... [2] Protection of asset accumulations.... [3] Accumulations of guarantees.... [4] Protection and distribution of guarantees.... The question raised by the DOL's proposed prudence safe harbor, at least from the lifetime income side, will be whether and how any of the description of the standards apply to any of these particular features and the different types of contracts under which they are provided." MORE >>
"The proposed rule sets out a compelling analytical framework focused on six-factors -- performance, fees, liquidity, valuation, benchmarking and complexity ... [T]he proposed rule invites and encourages plan fiduciaries to consider all asset classes that will provide retirement investors with risk-adjusted returns that further the purposes of the plan, including through the use of alternative asset classes." MORE >>
"The DOL's proposal would introduce a safe harbor for offering alternative investments in 401(k) plans. The Supreme Court's review could clarify fiduciary liability and proof standards. These changes may accelerate adoption of private market assets in defined contribution plans." [Anderson v. Intel Corp. Inv. Policy Comm., No. 22-16268 (9th Cir. May 22, 2025; cert. pet. granted Jan 16, 2026, No. 25-498)] MORE >>
"Although rooted in an executive order on alternative assets, the proposal addresses more than just alternative assets and outlines a new process-based safe harbor for fiduciary decision-making.... [B]eyond plan fiduciaries who are directly impacted by the Rule, the Rule will also impact many other stakeholders in the DC Plan ecosystem, including plan consultants, investment advisers, fund sponsors/managers, asset managers, recordkeepers, insurers, investment advisers, broker-dealers, and other DC plan service providers and product manufacturers." MORE >>
"The Proposed Rule clarifies that investments in alternative investments, including private market investments, direct and indirect interests in real estate, holdings in actively managed investment vehicles investing in digital assets, direct and indirect investments in commodities, direct and indirect interests in projects financing infrastructure development, and lifetime income strategies, will not automatically be subject to heightened scrutiny by the DOL." MORE >>
"The [DOL] is selling its new fiduciary rule as protection. Protection from lawsuits. Protection through process. Protection via a checklist. But strip away the language, and the reality is far more troubling: This rule is not about reducing litigation. It is about unlocking new revenue streams for Wall Street and the insurance industry -- while leaving plan sponsors holding the liability." MORE >>
"Allowing alternative investments, which are usually expensive and opaque relative to core fund types, would be a step backward for 401(k) menus. Instead, the biggest problems with 401(k) plans relate to usability, accessibility, and helping 401(k) investors at key life stages, such as when they switch jobs or retire. Addressing the following issues would likely have a much bigger positive impact on workers' retirement outcomes than adding alternative-type investment options." MORE >>
"In this article [the authors] examine the involvement of PE firms (or, more generally, alternative asset managers) in the US insurance industry and address some of the risks cited by observers, including the use of reinsurance to affiliates and the use of structured and private credit." MORE >>
"The proposed regulation, through detailed examples, provides a roadmap to plan fiduciaries for investing in alternative assets, but also provides an asset-neutral 'process-based safe harbor' to guide plan fiduciaries in selecting DIAs. In providing the safe harbor, the DOL asserts that plan fiduciaries will enjoy reduced litigation risk -- another aim of the President's Executive Order. While the proposed regulation's safe harbor is helpful, there is an open question as to how effective it can be in taming the firehose of litigation that has been plaguing plans and plan fiduciaries for decades." MORE >>
"The proposed rule does not require fiduciaries to offer investments with allocations to alternative assets. However, the preamble includes extensive investment and market research supporting the benefits of institutional-quality investment diversity, and provides helpful guidance to plan fiduciaries to assist in their evaluation of such investments. Fiduciaries who wish to consider a broader universe of investments but do not have the requisite expertise should determine whether their investment consultants and advisors have such expertise and engage with them as appropriate, to determine what is best for their plan and their participants." MORE >>
"The proposed rule gives fiduciaries 'maximum discretion' to include alternative assets on plan menus. Following the safe harbor's six-factor framework is likely to establish a presumption of prudence. Plan sponsors and their counsel should begin aligning investment selection and monitoring processes with the six-factor framework now." MORE >>
"While news of the proposed rule has been met with celebration, some are examining how the process would work and its general bearing to participants." MORE >>
"America's retirement laws have one crystal clear social purpose -- to let more Americans retire with dignity. It's a new day for those 90 million Americans and their families. The [DOL] has taken its thumb off the scale. Our laws and regulations do not permit us to disfavor (or to favor) specific investments or investment types. The Department is now fully out of the game of picking winners and losers." MORE >>
"A new safe harbor process framework does not eliminate the practical issue that alternative assets often involve more limited transparency, different fee structures, liquidity constraints, and valuation methodologies that can be harder to benchmark that can be more difficult to benchmark and defend. It is likely that plaintiffs' counsel would focus heavily on benchmarking, valuation practices, and fee reasonableness relative to documented expected benefits." MORE >>
"The Proposed Rule is process‑based and asset‑neutral. It neither mandates nor prohibits any asset class, including alternative investments.... Asset‑allocation vehicles, including target‑date funds, are expressly within the rule's scope. The Proposed Rule underscores the importance of documenting the fiduciary decision making process, the appropriate use of expert advisors, and ongoing monitoring." MORE >>
"If finalized as proposed and upheld by the courts, the Proposed Regulation would potentially ... [1] Reduce litigation risk for fiduciaries that document a prudent selection process. [2] Encourage innovation in plan menus, particularly within professionally managed vehicles such as target-date funds and managed accounts. [3] Reaffirm fiduciary flexibility to consider alternative assets thoughtfully." MORE >>
