United States: 401(k) Plan Access to Alternative Investments–DOL Seeks to Clarify Fiduciary Duties and Proposes “Safe Harbor”

By: Sasha Burstein, Ruth E. Delaney, Pablo J. Man, Robert L. Sichel

On 30 March 2026, Department of Labor (DOL) issued a proposed rule, in response to President Trump’s August 2025 executive order, that seeks to clarify DOL’s position on fiduciary duties in connection with the selection of investment options for participant-directed individual account plans (e.g. 401(k) plans) – including investment options that feature exposure to alternative assets – and would establish a “safe harbor” for fiduciaries who follow a prudent process in making available such investment options to plan participants. Comments on the proposal are due on or before 60 days from the date of publication in the Federal Register.

The proposed rule provides that a prudent fiduciary has “maximum discretion” to select investments to further the purposes of the plan, confirming that ERISA does not require or restrict any specific type of investment option. Further, the proposed rule introduces a safe harbor whereby a plan fiduciary who follows a process set forth in the rule would be presumed to have met its duty of prudence under ERISA. The proposed safe harbor identifies a “non-exhaustive” list of six factors that fiduciaries must “objectively, thoroughly and analytically consider, and make determinations on” when prudently selecting an investment option for a plan menu. The factors are addressed in detail in the proposal, including through the use of numerous examples and factual scenarios, and include performance, fees, liquidity, valuation, benchmarking and the complexity of the investment option.

DOL anticipates that the proposed rule will result in the adoption by many 401(k) plans of new menu options that include alternative investments and that the main channel through which such plans would gain exposure to alternative assets would be via target date funds.

We believe the proposed rule will add to the momentum behind manufacturing target date funds (and other asset allocation vehicles) that include an allocation to alternative investments and, if finalized, the rule will encourage previously reluctant ERISA fiduciaries, such as 401(k) investment committees and plan sponsors, to consider such funds for their plan’s investment lineup.