Key Takeaways
- • Executive Order 14330, "Democratizing Access to Alternative Assets for 401(k) Investors," issued by the White House on August 7, 2025, directs the Department of Labor to issue guidance facilitating participant investment in alternative assets within 401(k) and other defined contribution plans, with DOL guidance expected in February 2026.
- • The Order covers private equity and debt, precious metals, real estate, infrastructure, digital assets, and lifetime income insurance products, but focuses primarily on investment through asset allocation funds such as target date and lifecycle funds.
- • The Order does not alter ERISA fiduciary duties of prudence, loyalty, and diversification; fiduciaries must document a rigorous, prudent selection process for any alternative investment.
- • Direct participant investment, including through brokerage windows, remains constrained by SEC accredited-investor rules and ERISA Section 404(c) disclosure and liquidity requirements that alternatives generally cannot yet meet.
- • The DOL rescinded its 2021 Supplemental Statement that had advised "extreme care" on alternatives, and the Order's recognition of risk-adjusted return as a legitimate consideration may support fiduciaries' defenses against litigation.
Summary
On August 7, 2025, the White House issued Executive Order 14330, Democratizing Access to Alternative Assets for 401(k) Investors, directing the Department of Labor (DOL) to issue guidance that facilitates investment in alternative assets by participants in 401(k) and other defined contribution plans. According to Pillsbury Winthrop Shaw Pittman, the stated goal is to give all retirement plan participants access to benefits such as potentially higher returns and risk diversification that large investors and governmental plans already enjoy. The Order is broader than cryptocurrency alone, covering private equity and debt, precious metals, real estate, infrastructure projects, and lifetime income insurance products, yet narrower in its operative focus on asset allocation funds such as target date or lifecycle funds.
Pillsbury notes that alternative exposure through collective investment trusts (CITs) predates the Order. The DOL's 2020 Information Letter acknowledged private equity investment through professionally managed asset allocation funds, prompting large managers to launch such products. A 2021 Supplemental Statement chilled development, but the DOL rescinded it immediately after the Order. In May 2025, Empower announced a partnership with Apollo, Franklin Templeton and Goldman Sachs to offer private equity via CITs within managed accounts; in June 2025 BlackRock began offering target date funds investing in private equity and debt; and State Street subsequently rolled out a target date fund with 10% private equity exposure through Apollo. CITs are regulated at the state level, carrying lower compliance costs and looser liquidity requirements than mutual funds, but are less transparent.
The Order does not change ERISA fiduciary obligations. Fiduciaries must continue to act solely in participants' interest, manage assets with due care and prudence, and diversify investments. Pillsbury highlights litigation risk: alternatives' opacity, volatility, higher fees and illiquidity make them vulnerable to challenge. In Anderson v. Intel Corp. Investment Policy Committee, the Ninth Circuit in May 2025 affirmed dismissal of a fiduciary breach claim concerning private equity options, citing the committee's demonstrated and followed process. Fiduciaries may also delegate to a third-party manager assuming fiduciary responsibility under ERISA Section 3(38). Pooled employer plans under the SECURE Act of 2019 could help smaller employers access alternatives, and the DOL published a request for information in July 2025 on a potential fiduciary safe harbor for small-employer participation.
Direct participant investment, including through a brokerage window, remains constrained. SEC rules generally limit private offerings to accredited investors, though the Order directs the SEC to re-examine this, and ERISA Section 404(c) safe-harbor conditions on diversification, disclosure and liquidity are not yet readily met by alternatives. Pillsbury advises employers to review fund selection processes now, maintain investment policies broad enough to accommodate alternatives yet specific enough to show a thorough process, and document all selection considerations ahead of the DOL guidance expected in February 2026.
Pillsbury notes that alternative exposure through collective investment trusts (CITs) predates the Order. The DOL's 2020 Information Letter acknowledged private equity investment through professionally managed asset allocation funds, prompting large managers to launch such products. A 2021 Supplemental Statement chilled development, but the DOL rescinded it immediately after the Order. In May 2025, Empower announced a partnership with Apollo, Franklin Templeton and Goldman Sachs to offer private equity via CITs within managed accounts; in June 2025 BlackRock began offering target date funds investing in private equity and debt; and State Street subsequently rolled out a target date fund with 10% private equity exposure through Apollo. CITs are regulated at the state level, carrying lower compliance costs and looser liquidity requirements than mutual funds, but are less transparent.
The Order does not change ERISA fiduciary obligations. Fiduciaries must continue to act solely in participants' interest, manage assets with due care and prudence, and diversify investments. Pillsbury highlights litigation risk: alternatives' opacity, volatility, higher fees and illiquidity make them vulnerable to challenge. In Anderson v. Intel Corp. Investment Policy Committee, the Ninth Circuit in May 2025 affirmed dismissal of a fiduciary breach claim concerning private equity options, citing the committee's demonstrated and followed process. Fiduciaries may also delegate to a third-party manager assuming fiduciary responsibility under ERISA Section 3(38). Pooled employer plans under the SECURE Act of 2019 could help smaller employers access alternatives, and the DOL published a request for information in July 2025 on a potential fiduciary safe harbor for small-employer participation.
Direct participant investment, including through a brokerage window, remains constrained. SEC rules generally limit private offerings to accredited investors, though the Order directs the SEC to re-examine this, and ERISA Section 404(c) safe-harbor conditions on diversification, disclosure and liquidity are not yet readily met by alternatives. Pillsbury advises employers to review fund selection processes now, maintain investment policies broad enough to accommodate alternatives yet specific enough to show a thorough process, and document all selection considerations ahead of the DOL guidance expected in February 2026.
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