The US administration issued an executive order aiming to expand access to alternative investments, including cryptocurrency, private equity, and real estate, in ERISA-governed retirement accounts.
Aiming to modernize retirement plan investment options, the US administration has issued an executive order titled Democratizing Access to Alternative Investments for America’s Workers and a corresponding Fact Sheet (the Order). Released on August 7, 2025, the Order, which is not self-executing, seeks to expand access to alternative investments—including, but not limited to, private equity, private credit, real estate, and digital assets like cryptocurrency—within retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The Order highlights these assets as offering “competitive returns along with diversification benefits” and calls on federal regulators to take coordinated steps to support their inclusion in 401(k) and other defined contribution plans.
The Order states that “every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity…to enhance the net risk-adjusted returns on their retirement assets.”
Among other directives, the Order instructs the Department of Labor (DOL) to clarify its position on a fiduciary’s responsibilities when offering asset allocation funds containing alternative assets within 180 days, and to propose new rules or guidance, including potential safe harbors. It also directs the DOL to coordinate with other federal agencies and instructs the Securities and Exchange Commission (SEC) to revise applicable regulations to facilitate access to these investment types in participant-directed accounts.
In 2020, during President Donald Trump’s first term, the DOL issued Information Letter 06-03-2020 (2020 Information Letter), which expressed the DOL’s view that including private equity in certain retirement plan investment structures would not, by itself, violate ERISA’s fiduciary duties.
Specifically, the 2020 Information Letter addressed the inclusion of private equity in professionally managed asset allocation funds, such as target-date funds. While noting private equity’s longer time horizon, valuation complexity, illiquidity and higher fees, the letter also explained that, when included as a component of a diversified fund managed by a professional investment manager, private equity could be a permissible investment—provided that fiduciaries evaluate it under ERISA’s prudence and loyalty standards.
The 2020 Information Letter did not endorse private equity as appropriate in all circumstances, but instead stated that there may be reasons why a fiduciary may properly select an asset allocation fund with a private equity component, and that private equity investments present additional considerations which should be evaluated through an “objective, thorough, and analytical process that compares the asset allocation fund with appropriate alternative funds that do not include a private equity component, anticipated opportunities for investment diversification and enhanced investment returns, as well as the complexities associated with the private equity component.”
The 2020 Information Letter was seen as supporting the use of alternative assets in defined contribution plans —with appropriate fiduciary review given that private equity investments “present additional considerations to participant-directed individual account plans that are different than those involved in defined benefit plans.”
The Biden administration DOL, however, took a more cautionary approach by issuing a “supplemental statement” to the 2020 Information Letter in December 2021 (the “Supplemental Statement”). The Supplemental Statement clarified that the 2020 Information Letter did not endorse or recommend private equity investments.
The Biden administration DOL stated it believed the Supplemental Statement was necessary so that the 2020 Information Letter would not be misread as “saying that PE—as a component of a designated investment alternative—is generally appropriate for a typical 401(k) plan.” The Supplemental Statement also clarified that the 2020 Information Letter responded to the example of a plan-level fiduciary with experience evaluating private equity in the defined benefit plan context “particularly with the assistance of a qualified fiduciary investment adviser” and urged caution “against application of the [2020] Information Letter outside of that context.”
With the Order (and as discussed below) the White House is encouraging a view that is in line with—and goes beyond—the 2020 Information Letter.
On May 28, 2025, the DOL issued Compliance Assistance Release No. 2025-01 ( 2025 Release), to rescind “in full” the Biden administration’s 2022 guidance on cryptocurrency in 401(k) plans. The earlier 2022 guidance (which we covered in a prior LawFlash) had urged plan fiduciaries to exercise “extreme care” before offering cryptocurrency investment options, citing concerns such as fraud, volatility, lack of custody protections, and legal uncertainty.
The 2025 Release rescinded that approach, stating that the “extreme care” standard went beyond ERISA’s ordinary fiduciary principles. Instead, the DOL reaffirmed a “facts and circumstances” standard, requiring plan fiduciaries to assess crypto and other digital assets just as they would any other investment—through prudent, context-specific evaluation.
While the 2025 Release does not explicitly endorse crypto in retirement plans, it returned to what it described as the Department’s historical neutral approach: neither approving nor disapproving such investments but emphasizing that decisions must consider all relevant facts and circumstances. In support of its 2025 Release, the DOL cited the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer, noting that fiduciaries must base decisions on the specific context and risk profile of the plan and its participants. In other words, there should not be per se restrictions on particular asset classes.
Notably, the 2025 Release was only three paragraphs in length and beyond as described above, did not revisit the structural concerns flagged in 2022 related to digital assets—such as volatility, custody concerns, valuation models, and the evolving legal regulatory environment in the crypto space.
The Order directs the DOL to issue guidance or take regulatory steps to support the use of alternative investments in 401(k) plans and other ERISA-covered retirement vehicles. The Order defines “alternative assets” to mean
Additionally, the Order
The Order also instructs the Secretary of Labor to “propose rules, regulations, or guidance” which “may include appropriately calibrated safe harbors” that reduce uncertainty and curb the use of “ERISA litigation tactics that constrains fiduciaries’ ability to apply their best judgment in offering investment opportunities to relevant plan participants.”
The White House has framed the Order as part of a larger effort to offer “stronger and more financially secure retirement outcomes” by modernizing retirement investing and allowing US workers equal access to private market opportunities that institutional and high-net-worth investors already enjoy. The Order claims that private equity, private credit, real estate, infrastructure, digital assets and other alternative investments are already being made available to wealthy investors and participants in certain other public and private defined benefit pension plans.
As of 2024, only a limited number of plan sponsors offered private equity and other forms of alternative assets (as defined by the Order) in their 401(k) plan lineups – often the largest institutional 401(k) plans. That number is expected to shift in response to the Order—with the eventual guidance from the DOL—giving plan sponsors wishing to add exposure to those asset types some additional confidence.
Including these types of alternative assets present additional considerations for plan fiduciaries. While alternative assets can offer higher potential returns and diversification, depending on how the investments in private assets and other alternative assets are offered, they can also raise unique considerations.
While the prior guidance provided a road map for sophisticated plan fiduciaries already investing their defined benefit plans in alternative assets, the new guidance may go farther, including by supporting a plan fiduciary’s obtaining exposure to private assets through asset allocation funds or multi-strategy funds such as target date funds, custom-white label funds or managed accounts, where one or more fiduciary investment professionals (such as a professional asset manager or trustee) oversees the investment program.
Further, as in the past, the DOL could suggest a focus on procedural prudence supported by the use of professional advisor and consultants and, taking the example of recent case law, [1] the DOL could also focus on participant demographics, and as reflected in prior DOL guidance, some of the legal and operational considerations accompanying alternative investments may include
It will also remain to be seen whether future regulatory guidance will support access to alternative assets offered to participants through direct investment options—or whether any regulatory guidance will instead focus on asset allocation or broader strategies, whether they are target-date funds, stable value funds, multi-manager or multi-strategy investment options or custom white-label funds or managed accounts.
In addition, the SEC and DOL may need to address current restrictions around accredited investor and qualified purchaser requirements and whether such thresholds apply in the retirement plan context, particularly for non-SEC registered private funds. These rules can create an impediment to offering direct private fund investment options to individual plan participants in participant-directed 401(k) plans, where plan participants, rather than the plan itself, would need to meet the accredited investor or qualified purchaser thresholds.
While the Order calls for “appropriately calibrated safe harbors,” it will be important to monitor how such regulatory protections—once developed—might dampen the risk of fiduciary litigation. This is especially true given the Supreme Court’s Loper Bright decision which can limit the deference courts may give to pronouncements by the DOL or SEC in this area. Prior statutory fiduciary safe harbors available to target date funds and other “QDIAs” have been supported in court decisions and are expected to continue to receive deference. This means we will also keep a watch on how any EO-supported regulatory safe harbor will be drafted in light of Loper Bright and what—if any—actions Congress might take to support fiduciaries and limit ERISA litigation.
Additionally, plan sponsors and recordkeepers should review how proposed investments in private assets and other alternative assets will address practical administrative issues, including how to manage illiquid assets in plans that typically require daily liquidity.
While any broad adoption by plan sponsors and fiduciaries would likely occur over time, we expect to continue to see early adopters move ahead with new product offerings (even without guidance), as has already been happening.
The defined contribution retirement plan market is a massive new capital pool representing more than $12 trillion of untapped retirement savings that could be invested in private equity, digital assets and other types of alternative investments. This could represent a potential boon to private assets which would gain access to new investors, beyond their traditional institutional and high-net-worth investor base.
The Order is also expected to positively impact cryptoassets, another early focus of the US administration, which recently passed the GENIUS Act (which we summarized in a prior LawFlash), by potentially injecting billions of dollars of new capital into cryptoassets and infrastructure, thereby significantly boosting market growth and ultimately market confidence and legitimacy in the asset class.
Of course, the devil is always in the details as far as how the regulatory agencies draft and implement the new rules and safe harbors, but the practical impact of a significant new source of investment capital flowing into these markets could be significant in driving faster adoption of new technologies and price appreciation in these asset classes.
Plan sponsors may prepare for potential changes in the regulatory environment relating to alternative assets, such as through the following:
Asset managers of alternative assets and other service providers (such as platform providers and custodians) may also seek to begin preparing for potential changes in the regulatory environment relating to retirement plans. Appropriate actions could include the following:
How We Can Help
We are continuing to monitor the guidance applicable to ERISA-covered retirement accounts, including the regulations or other guidance that are expected to result from the Order. We work closely with plan sponsors, asset managers, and financial institutions navigating the ever-changing retirement landscape. Our team is well positioned to help clients
For plan sponsors and their fiduciary or investment committees, we can support the committee and its investment consultants in evaluating whether alternative investments are appropriate for your participant base, assist with committee training, and assist in the development and documentation of a prudent decision-making process.
For asset managers and other market participants, we can help with the development and structuring of investment products that are consistent with the eventual DOL guidance on alternative assets.
Visit our US Administration Policies and Priorities resource center and subscribe to our mailing list for the latest on programming, guidance, and current legal and business developments.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:
[1] See Waldner v. Natixis Inv. Managers, L.P., No. 1:21-cv-10273 (D. Mass. June 26, 2025).