Following President Trump executive order last week that paved the way for alternative assets to be included in 401(k) plans, the Department of Labor's Employee Benefits Security Administration has followed suit. The DOL has rescinded a Biden-era supplemental statement that cautioned fiduciaries from considering alternative assets in 401(k) investment portfolios.

In the previous supplemental statement, the Biden administration warned that most plan fiduciaries would be "not likely suited to evaluate the use of [private equity] investments in designated alternatives in individual account plans." This assertion had a chilling effect on the market and took a dismissive view of alternative assets and the capabilities of plan fiduciaries, according to the DOL.

"This is just another example of how the Biden administration put their thumb on the scale to pick winners and losers," said Secretary of Labor Lori Chavez-DeRemer. "Instead of allowing Washington bureaucrats to call the shots, we believe plan fiduciaries should decide which retirement investment options are best for hardworking Americans."

"Retiring with dignity is a key part of the American Dream, but far too few Americans have the opportunity to realize that dream today due to unnecessary government overreach," Deputy Secretary Keith Sonderling said. "By repealing the Biden administration's stifling guidance, we look forward to a future where innovative retirement products can deliver increased upside, diversification, and security to the American worker."

The decision to rescind the previous supplemental statement follows President Trump's latest Executive Order, "Democratizing Access to Alternative Assets for 401(k) Investors," which directs the DOL to reexamine its guidance regarding fiduciary decisions, ensuring asset allocation funds that include alternative asset investments are available to plan participants.

Instant Insights /

DOL rescinds warning on alternative assets in 401(k)s, removing hurdle for plan sponsors

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