2025 Executive Order on Democratizing
401(k) Access to Alternative Assets
By Charles C. Shulman, Esq.
On August 7, 2025, President Trump issued an executive order titled “Democratizing Access to Alternative Assets for 401(k) Investors”, which directs the Department of Labor to revise guidance to facilitate alternative asset inclusion in 401(k) plans.
On June 3, 2020, under the first Trump administration, the DOL issued an Information Letter stating that ERISA does not expressly prohibit private equity investments within a professionally managed asset allocation fund offered in a 401(k) plan. On Dec. 21, 2021, under the Biden administration, the DOL issued a Supplemental Statement that discouraged fiduciaries from considering alternative assets in 401(k) retirement plan investments. cast doubt on the 2020 letter. The 2021 Supplemental Statement warned that fiduciaries of small, individual account plans were not likely suited to evaluate such investments, effectively precluding access for most plan sponsors.
The Executive Order directs the DOL the SEC to reassess existing fiduciary guidance under ERISA and consider regulatory changes that would enable plan sponsors to include alternative assets in professionally managed asset allocation funds. It also calls for the creation of safe harbor provisions to protect fiduciaries from excessive litigation when making prudent investment decisions involving alternative assets. The goal is to ensure that fiduciaries can balance the potential for higher long-term returns and diversification against the risks and costs associated with these complex investments. It mandates proposing rules or safe harbors within 180 days to reduce litigation risks, which deter fiduciaries due to fears of excessive fee or underperformance lawsuits.
The Executive Order defines “alternative assets” broadly, including private market investments, real estate holdings, digital assets, commodities, infrastructure projects, and longevity risk-sharing pools.
On August 12th, 2025, the DOL rescinded a December 21st, 2021, Supplemental Statement that discouraged fiduciaries from considering alternative assets in 401(k) plans.
Note that even after the Executive Order, ERISA’s core fiduciary duties of prudence, loyalty, and diversification remain unchanged, and fiduciaries must act solely in participants’ best interests, using care, skill, and diligence when considering alternative assets like private equity, real estate, or cryptocurrencies. A rigorous, well-documented process for selecting and monitoring investments is critical to comply with ERISA’s fiduciary obligation and defend against potential litigation. Plan sponsors and fiduciaries should strengthen due diligence, update investment policy statements, and monitor regulatory developments to navigate the evolving landscape. Note also, that Congressional action may be needed for significant litigation reform due to ERISA’s private right of action. Also, alternative assets pose risks due to illiquidity, high fees, valuation complexities, and volatility, requiring fiduciaries to balance potential returns and diversification benefits against these challenges.
The Executive Order signals a policy shift to expand 401(k) access to alternative assets by reducing regulatory and litigation barriers, but it does not alter ERISA’s stringent fiduciary standards. The DOL’s rescission of prior restrictive guidance and its mandate to issue new rules or safe harbors reflect a move toward fiduciary empowerment. However, fiduciaries must navigate the complexities of alternative assets through robust due diligence, participant education, and prudent plan design, while awaiting further regulatory clarity from the government.
