President Trump’s August 7, 2025 executive order directed federal regulators to reexamine the rules that have long kept private equity, cryptocurrency and other alternative assets out of most 401(k) menus, and the Labor Department has since moved to turn that direction into a formal rule. A proposed regulation published March 30, 2026 would give retirement-plan fiduciaries a defined process for adding those assets without inviting new litigation risk. Nothing has taken effect yet — the rule remains a proposal, and no 401(k) plan is required to add alternative investments even after a final version is adopted. The order clears a legal path; individual plans still decide whether to walk it.
The executive order and the Labor Department’s proposed safe harbor
Executive Order 14330, “Democratizing Access to Alternative Assets for 401(k) Investors,” directed the Department of Labor to reexamine its guidance on fiduciary duties under the Employee Retirement Income Security Act within 180 days of the August 2025 signing. It followed a separate May 2025 move by the department’s Employee Benefits Security Administration to rescind Biden-era guidance that had told 401(k) fiduciaries to exercise “extreme care” before adding cryptocurrency to plan menus.
The department’s actual response arrived March 30, 2026, when the Employee Benefits Security Administration published a Notice of Proposed Rulemaking titled “Fiduciary Duties in Selecting Designated Investment Alternatives,” a shift SHRM’s coverage of the order traces directly to Executive Order 14330. As Ogletree Deakins’ analysis of the proposal explains, it would create a six-factor process — covering performance, fees, liquidity, valuation, benchmarking and complexity — that, if followed, would make a fiduciary’s investment decision “presumed to be reasonable” and entitled to legal deference. The rule does not name private equity or crypto specifically; it applies the same safe harbor to any investment class a plan chooses to add.
Each of the six factors carries its own test. A fiduciary would need to weigh a reasonable number of comparable alternatives for expected risk-adjusted return, confirm that fees are appropriate relative to that return, and determine that an investment has adequate valuation and liquidity procedures to meet the plan’s needs. Notably, the proposal states that a fully liquid product is not required, since 401(k) plans are long-term savings vehicles that may reasonably trade some liquidity for additional expected return. The remaining two factors require a meaningful performance benchmark for comparison and an honest assessment of whether the fiduciary understands a complex asset well enough to hold it, or needs to bring in outside expertise before adding it to a plan menu.
The proposal cites its own reason for existing: research the department references shows more than 500 fee-related lawsuits filed against retirement plans since 2016, resulting in more than $1 billion in litigation settlements. That litigation history is the regulatory risk the rule is built to reduce, and it explains why the department chose a process-based safe harbor rather than a list of approved assets.
Free 2026 deadline calendar: Retirement-account, tax and Medicare deadlines don’t sit on one calendar, and a missed one can carry a penalty. Get every key date on the free calendar.
Free download from RetireShield. Getting it also signs you up for the free Retirement Money Brief, a weekday email. Unsubscribe anytime.
What changes for a plan participant, and what does not
The proposed rule is, in the department’s own description, “asset-class neutral”: it gives plan fiduciaries “maximum discretion” to select investments but does not require any plan to add private equity, digital assets or any other alternative. Whether an individual worker’s 401(k) ever offers those options depends entirely on whether that worker’s employer and plan administrator decide to add them, a decision that involves its own cost, valuation and recordkeeping questions apart from the federal rule itself. The regulation also does not touch brokerage windows or self-directed accounts within defined-contribution plans, which already could hold a broader range of assets before this proposal existed.
The rule is also not final. Public comments were accepted for 60 days after the March 30, 2026 publication, and the department must review that input before issuing a final regulation. A final rule capable of taking effect is not expected before late 2026 at the earliest, and adoption by individual plans — which requires fiduciaries to update investment committee documentation and menus — would follow on its own separate timeline after that.
The proposal does not eliminate a fiduciary’s underlying duty of care, and it does not bar a plan participant from bringing a claim over a specific investment decision gone wrong. Fiduciaries remain barred from selecting any investment that is otherwise illegal, and the safe harbor only shifts how courts weigh a documented decision-making process — it does not certify that any individual alternative asset is a sound retirement holding.
The proposed safe harbor also carries less legal weight than it might have a few years ago. With the Supreme Court’s 2024 decision ending automatic judicial deference to federal agency rules, the Labor Department’s own proposal acknowledges the regulation would provide only “persuasive authority” on what counts as a prudent process, rather than a rule courts are bound to follow without independent review.
The push follows years of stalled confidence in retirement savings
The policy shift arrives against a backdrop of retirement-savings data the administration has cited to justify wider investment access. A Northwestern Mutual report referenced in SHRM’s coverage of the order found that one in four workers with retirement savings have one year or less of their current income set aside for retirement, and 51% of those surveyed said it is somewhat or very likely they will outlive their savings. Only 16% said they feel confident enough to call that outcome very unlikely.
Those figures are the backdrop, not a guarantee that alternative assets solve the problem they describe. Retirement-plan compliance specialists interviewed in SHRM’s reporting cautioned that private equity and crypto carry higher fees, less transparency and greater valuation uncertainty than the index funds most 401(k) menus rely on today — trade-offs a plan fiduciary, not a federal rule, will ultimately have to weigh before any of it reaches a saver’s account statement.
A Wider Menu Still Runs Through the Same Withdrawal and Tax Rules
Whatever a 401(k) menu eventually includes, the required minimum distribution schedule, the tax bracket a withdrawal lands in, and the order accounts get tapped in retirement do not change because a plan added a new asset class.
The Retirement Tax & Withdrawal Planner is a 12-page planner built around four calculators — provisional income, IRMAA tier, RMD schedule and Roth bracket fill — plus the account withdrawal order.
Work through the sequencing in The Retirement Tax & Withdrawal Planner.
This article was produced with the assistance of AI and reviewed by The Money Overview editorial team before publication.
