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This action implements Executive Order 14330 (Aug. 2, 2025), titled Democratizing Access to Alternative Assets for 401(k) Investors, 90 FR 3891 (Aug. 12, 2025), which directs the Secretary of Labor, within 180 days of the date of the order, to clarify, as she deems appropriate and consistent with applicable law, the Department of Labor's position on alternative assets and the appropriate fiduciary process associated with offering asset allocation funds containing investments in alternative assets under the Employee Retirement Income Security Act (ERISA). Such clarification must aim to identify the criteria that fiduciaries should use to prudently balance potentially higher expenses against the objectives of seeking greater long-term net returns and broader diversification of investments. The Secretary shall also propose rules, regulations, or guidance, as the Secretary deems appropriate, that clarify the duties that a fiduciary owes to plan participants under ERISA when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets, which rules, regulations, and guidance may include appropriately calibrated safe harbors. In carrying out the directives in this section to further the policy set forth in EO 14330, the Secretary shall prioritize actions that may curb ERISA litigation that constrains fiduciaries' ability to apply their best judgment in offering investment opportunities to relevant plan participants.

Statement of Need:

The Employee Retirement Income Security Act (ERISA) is a comprehensive statute designed to protect the interests of employees and their beneficiaries in employee benefit plans. It does this primarily by imposing, in section 404, a number of stringent duties on plan fiduciaries, including a duty of prudence. 29 U.S.C. 1104(a)(1)(B). This regulatory action is needed to relieve the regulatory burdens and litigation risk that impede American workers' retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement. This regulatory action will clarify the duties that a fiduciary owes to plan participants under ERISA when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets, which rules, regulations, and guidance may include appropriately calibrated safe harbors. See Executive Order 14330 titled Democratizing Access to Alternative Assets for 401(k) Investors.

Summary of the Legal Basis:

Under development

Alternatives:

Under development

Anticipated Costs and Benefits:

By clarifying the steps fiduciaries may take to prudently balance potentially higher expenses against the objectives of seeking greater long-term net returns and broader diversification of investments when selecting investment opportunities to relevant plan participants, the proposed regulation will enable responsible plan fiduciaries to consider all prudent and appropriate investment vehicles when making menu selections in order to improve retirement savings outcomes for plan participants and beneficiaries. Estimates of the cost are still under development and will be reflected in the notice of proposed rulemaking.

Risks:

Under development