DOL Releases Rule Proposal Allowing 401(k) Plan Exposure to Alternative Investments

April 8, 2026

On March 30, the Department of Labor (DOL) released a rule proposal titled “Fiduciary Duties in Selecting Designated Investment Alternatives.” The proposal was in response to President Donald J Trump’s Executive Order “Democratizing Access to Alternative Assets for 401(k) Investors” which was executed on August 7, 2025. The Executive Order, in part, directed the DOL and Securities and Exchange Commission (SEC) to facilitate access to investments in alternative assets in defined-contribution retirement savings plans.

The DOL rule proposal creates a “process-based safe harbor,” which names six factors that fiduciaries must thoroughly consider and determine when selecting alternatives. The non-exhaustive list of factors include: performance, fees, liquidity, valuation, performance benchmarks, and complexity, which are each explained in more detail below.

Performance: Fiduciaries need not select the investment with the highest return, rather, the plan fiduciary should consider a reasonable number of similar alternatives and determine that the risk-adjusted expected returns further enable participants to maximize risk-adjusted returns.
Fees: After examining a reasonable number of similar alternatives, the fiduciary does not breach its duty solely because it does not select the product with the lowest fees. The fiduciary needs to determine whether determine that fees and expenses are appropriate.
Liquidity: Fiduciaries must determine that the investment will have sufficient liquidity to meet the plan’s and individuals’ needs, and further notes that a fiduciary may satisfy this requirement by relying on written representations from the investment manager that the fund has adopted a liquidity risk management program substantially similar to those required for mutual funds under the Investment Company Act of 1940.
Valuation: The fiduciary must find that the investment has adopted adequate measures to ensure it is capable of being timely and accurately valued, and that the valuation process is “conflict-free and independent”.
Performance Benchmarks: The fiduciary must determine that each fund has an “meaningful” benchmark in which to compare risk-adjusted expected returns.
Complexity: The fiduciary must ensure it has the skill, knowledge and capacity to understand the investments. If it does not, it must hire an independent professional advisor.

Importantly, the proposal does not limit the rule’s potential scope to only alternative assets, rather it offers an expansive view of a fiduciary’s responsibility under ERISA and applies to the selection of any designated investment alternative. According to a Ropes & Gray client alert, this approach is consistent with the DOL’s historically neutral posture that neither favors nor disfavors any particular type of investment or investment strategy. According to the Ropes & Gray alert, the proposal “reflects a well-designed and thoughtful—though non-exhaustive—set of substantive considerations that, when genuinely followed and documented, should provide plan fiduciaries with a meaningful degree of protection against litigation challenging their investment decisions.”