The Labor Department’s Employee Benefits Security Administration published a 57-page proposed rule on March 30, 2026, and its central move is not a mandate but an escape hatch: a legal safe harbor shielding 401(k) fiduciaries from lawsuits if they document a six-factor review before adding crypto, private equity or real estate to a plan’s menu. The proposal carries out an executive order President Trump signed on August 7, 2025, directing the department to clear a regulatory path for those assets inside the retirement accounts covering tens of millions of American workers. Whether any employer adds them now depends less on the new paperwork than on how nervous plan sponsors remain about being sued.
A Six-Factor Safe Harbor, Not a Mandate
The rule, formally titled “Fiduciary Duties in Selecting Designated Investment Alternatives,” does not let an individual account holder buy cryptocurrency, a private equity stake or a parcel of real estate directly inside a 401(k). It applies narrowly to fiduciaries selecting professionally managed asset allocation or target-date funds that carry alternative assets as one component of a diversified mix. Before adding such a fund to a plan’s investment menu, the proposal directs a fiduciary to objectively, thoroughly, and analytically consider six factors: performance, fees, liquidity, valuation, benchmarks and complexity.
A fiduciary who works through those six factors and documents the analysis earns a rebuttable legal presumption of prudence, a formal defense against the breach-of-duty lawsuits that have discouraged plan sponsors from touching alternative assets for more than a decade. That presumption attaches to the fund-selection process itself, not to the underlying asset; a plan can still be sued over a specific fund’s performance, but the proposed regulation shifts the central legal question from whether an alternative asset belonged in a 401(k) at all to whether the fiduciary’s documented process was thorough.
The stakes are sized to the entire employer-sponsored retirement system. More than 90 million Americans participate in employer-sponsored defined-contribution plans, according to the administration’s own accounting, and the vast majority currently have no menu option resembling the private equity and real estate holdings long available to public pension funds and other institutional investors. The department’s 1979 Investment Duties Regulation already requires fiduciaries to weigh risk, return, diversification and liquidity for any plan investment, and the new proposal states explicitly that it supplements rather than disturbs that older rule.
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A Six-Year Reversal Chain Created the Risk the Rule Targets
The litigation exposure this rule targets never came from ERISA’s statutory text, which the department has long treated as neutral on asset classes; it came from a decade of contradictory subregulatory guidance. In a June 3, 2020 information letter, the first Trump administration’s Labor Department concluded that a fiduciary would not violate its duties merely by offering a professionally managed asset allocation fund with a private equity component, so long as the fiduciary ran the same kind of objective, thorough analysis required for any other investment.
The Biden administration reversed course on December 21, 2021, issuing a supplemental statement that specifically cautioned fiduciaries against including private equity in a typical 401(k) menu unless they already had experience evaluating such investments for a defined-benefit pension plan. That single statement, unaccompanied by any change in the underlying statute or the 1979 regulation, was enough to freeze most employer interest in alternative-asset funds for the next three and a half years, since plan sponsors had little incentive to invite a lawsuit testing an unsettled standard.
President Trump signed Executive Order 14330 on August 7, 2025, directing the Secretary of Labor to reexamine that guidance and specifically consider rescinding the 2021 statement within 180 days. The department rescinded it five days later, on August 12, 2025, calling the statement a deviation from its historically neutral approach that risked a costly chilling effect on the market. The proposed rule now pending is the second half of that directive: a durable regulation meant to survive a future change in administration in a way an information letter or a rescindable statement cannot.
A Record Comment Docket and No Final Rule Yet
Public comments on the proposal closed June 1, 2026, and the docket drew 47,104 submissions, an unusually large volume for a technical ERISA fiduciary-duty rulemaking that would ordinarily draw comments only from benefits attorneys, plan administrators and industry trade groups. The Federal Register posting itself had logged more than 36,000 page views by late August, evidence the proposal drew attention well beyond the retirement-plan compliance circles that typically track Department of Labor rulemakings.
None of that volume forces a particular outcome. The department must review the full comment record, decide whether to revise the six-factor framework in response, and then publish a final rule before the safe harbor carries any legal force; a proposed rule creates no binding obligation or protection until that step is complete. Large employers weighing whether to add an alternative-asset fund to a 2027 plan lineup are, for now, still measuring that decision against the six-year history of reversed guidance rather than a settled legal standard.
The rule’s own design concedes the limits of what a regulation can accomplish here: it does not order a single plan to add crypto, private equity or real estate, because ERISA gives that discretion to fiduciaries, not to the department. Its bet is narrower and more legal than financial, that a written six-factor record will finally persuade risk-averse plan sponsors that a court will defer to their judgment rather than second-guess it. Until a final rule replaces the proposal now sitting in a 47,000-comment docket, that bet remains untested, and the menu inside most 401(k) plans looks exactly as it did before March.
This article was researched and drafted with the assistance of artificial intelligence.
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