An August 2025 Executive Order directs the Department of Labor (DOL), Treasury, and the SEC to “clear the path” for alternative assets—including private equity, private credit/real estate, and cryptocurrency—to be offered in participant-directed defined contribution plans (e.g., 401(k)s). NPR’s coverage frames this as a significant potential expansion of the traditional stock/bond lineup in U.S. retirement plans.
While the Order signals policy intent, it does not alter ERISA’s core fiduciary standards. Plan sponsors and committees considering alternatives will still be judged under the duty of prudence and loyalty, with ongoing monitoring obligations recognized by the U.S. Supreme Court in Tibble v. Edison International (2015) and Hughes v. Northwestern University (2022).
Recent DOL actions—in particular, (i) reaffirming and supplementing its 2020 information letter on private equity in multi-asset funds and (ii) rescinding its 2022 crypto caution via a 2025 Compliance Assistance Release—suggest a regulatory pivot toward neutrality coupled with process expectations for fiduciaries. But none of this eliminates litigation risk if alternatives are imprudently selected or monitored.
Regulatory Landscape
Executive Order (Aug. 2025).
The Order instructs DOL, Treasury, and the SEC to revisit barriers to including “alternative assets” in participant-directed plans. Media summaries emphasize potential access to private equity and crypto in 401(k)s, though implementation depends on subsequent rulemaking/guidance and market infrastructure.
DOL on private equity in DC plans.
- 2020 Information Letter. DOL acknowledged that a plan may offer exposure to private equity within a professionally managed multi-asset vehicle (e.g., TDF or balanced fund) if fiduciaries meet ERISA’s prudence and loyalty standards (process, expertise, valuation, liquidity, fees, participant profile).
- 2025 Supplemental Statement. DOL recently issued a supplemental statement reiterating the 2020 framework and its limits—i.e., the letter did not bless stand-alone private equity options for participants, and fiduciaries must evaluate liquidity, valuation, fees, and participant sophistication in context.
DOL on crypto in DC plans.
- 2022 Crypto Caution (CAR 2022-01). The prior administration warned fiduciaries to exercise “extreme care” before adding crypto.
- 2025 Rescission (CAR 2025-01). DOL rescinded that caution, stating a return to “historically neutral” posture while reminding fiduciaries that ERISA prudence still governs; industry alerts note the practical effect is to remove a perceived chill, not to create a safe harbor.
SEC/Treasury coordination.
Press reports indicate the SEC has been asked to facilitate access to alternatives for participant-directed accounts—implicating disclosure, custody/safekeeping, valuation, and potential marketing/advertising considerations for funds or pooled vehicles offered on plan menus. Specific rulemakings remain to be seen.
NPR framing.
NPR (via member-station reporting) characterizes the Order as opening the door to alternatives in 401(k)s, with examples including crypto, real estate, and private equity, while noting the traditional dominance of stock/bond funds today.
ERISA Fiduciary Standards: What Does “Prudence” Look Like Here?
Selection and ongoing monitoring duties.
- In Tibble, the Supreme Court confirmed a continuing duty to monitor investments and remove imprudent ones. This duty is process-centric and does not end at selection.
- In Hughes, the Court held that offering some prudent options does not immunize fiduciaries for including imprudent ones; participant choice does not cure a flawed lineup.
404(c) is not a shield for imprudent options.
Participant control under ERISA §404(c) can limit liability for outcomes, but it does not relieve fiduciaries from prudently selecting and monitoring the investment menu (including any alternative-asset vehicles).
Litigation context.
Fee/underperformance suits have taught courts to scrutinize process, comparators, share-class selection, and monitoring cadence. Introducing illiquid/complex assets could invite challenges around valuation, fees, liquidity management, and suitability for a broad participant base—especially if slotted into QDIAs like target-date funds without robust documentation. (See Tibble/Hughes discussion above.)
Practical Implications for Plan Sponsors and Committees
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Vehicle choice matters.
The DOL has been most receptive to private equity exposure inside a diversified, professionally managed multi-asset fund (e.g., a TDF with a modest PE sleeve), not a stand-alone PE option. Any move beyond that construct will likely face heavier scrutiny. - Build a defensible record.
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- Commission independent expertise (or bolster the committee’s) regarding valuation, liquidity, fee layers (management, performance, carry), and vintage diversification.
- Document capacity constraints and manager selection; PE/VC capacity is not unlimited and access varies widely.
- Establish clear monitoring triggers (e.g., material write-downs, gate usage, secondary-market spreads, tracking error to policy benchmarks). (Process expectations flow from Tibble/Hughes.)
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Crypto-specific controls.
If crypto exposure is contemplated (direct or via ETP/fund): -
- Custody & operational risk: cold vs. warm custody, key management, insurance; service-provider due diligence.
- Valuation: pricing sources, forks/airdrops, market dislocations; NAV calculation policies.
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Participant use case: default vs. elective; caps; education;
volatility disclosures.
DOL’s 2025 rescission removes a policy headwind but does not create a safe harbor.
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Liquidity, QDIA, and cash-flow engineering.
Alternatives with limited liquidity must be stress-tested against participant behavior (loans, withdrawals, rebalancing) and target-date glidepaths. Consider sleeves, pacing programs, secondaries access, and redemption-queue governance. (Consistent with the DOL’s 2020 letter’s emphasis on liquidity and valuation.) -
Fee transparency and benchmarking.
ERISA fee disclosure rules require understandable participant-facing materials; committees should benchmark all-in fees for alternative sleeves (management, performance/carry, admin, underlying fund expenses) against appropriate peer sets. (Press and NPR coverage highlight the higher fee profile of alternatives.) -
Participant communications.
Avoid hype. Provide plain-English risk factors (volatility, valuation lag, dilution/side-letter risk, gates), and explain where the alternative fits in the asset allocation. NPR’s framing underscores that this is a departure from typical stock/bond menus—participants will need context. -
Governance updates.
Update IPS language to address: permissible alternative exposures; vehicle types; allocation caps; liquidity targets; valuation policy; due-diligence standards; and monitoring cadence. Cross-reference committee charters and vendor oversight policies.
What to Watch Next
- DOL guidance packages. Expect additional clarification on when alternatives may be used in QDIAs, and what constitutes a prudent allocation/monitoring framework in DC plans.
- SEC/Treasury actions. Potential rulemaking or staff guidance addressing disclosures and custody/valuation for retirement-plan-accessible vehicles (e.g., ’40 Act funds with PE/credit sleeves or crypto ETPs offered via brokerage windows).
- Litigation/testing the boundaries. Courts will likely apply Tibble/Hughes to any alternative-asset option that appears mismatched to participant needs or that lacks a robust process record.
Bottom Line
The Executive Order may accelerate market development of plan-ready vehicles that include private equity, private credit/real estate, and crypto. But the legal standard hasn’t moved: fiduciaries must follow a rigorous, well-documented process at selection and throughout the monitoring lifecycle, with particular attention to valuation, liquidity, fees, and participant suitability. NPR’s reporting is directionally right—the door is opening—but prudent governance will determine whether (and how) sponsors actually walk through it.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
