DOL Reverses Policy to Allow Alternative Assets in Retirement Plans

The U.S. Department of Labor ("DOL") rescinded previous guidance that discouraged fiduciaries from including alternative assets in 401(k) retirement portfolios.

In a statement, the DOL Employee Benefits Security Administration withdrew its December 21, 2021, supplemental statement that discouraged fiduciaries from considering alternative assets in 401(k) retirement plan investment menus. The 2021 supplement statement cautioned that most plan fiduciaries were "not likely suited" to evaluate the use of private equity investments in individual account plans. In withdrawing the 2021 statement, the DOL said that the statement had marked a departure from DOL's longstanding principles-based approach to investment decision-making under ERISA. The DOL reemphasized its neutral stance on the offering of alternative assets as part of a plan moving forward. 

The DOL said the rescission of the 2021 supplement statement follows President Trump’s Executive Order, "Democratizing Access to Alternative Assets for 401(k) Investors," which directs the Department to revisit its guidance to ensure that asset allocation funds with alternative investments remain available to plan participants.(See previous coverage.) 

In response to the DOL's action, the Investment Company Institute ("ICI") described the move as a return to the "principles-based" framework long applied under the Employee Retirement Income Security Act.