US Labor Department rule on 401(k) alternative assets reaches White House

The United States Department of Labor has submitted a final rule to the White House for review that could allow 401(k) retirement plans to include alternative assets such as cryptocurrency, private equity, and real estate.

The proposed regulation, titled “Fiduciary Duties in Selecting Designated Investment Alternatives,” has arrived at the Office of Information and Regulatory Affairs (OIRA) for its final vetting process. Once cleared, the rule is expected to be officially published.

A central component of the rule is the creation of a “safe harbor” for plan managers and employers. This legal framework is designed to protect fiduciaries from litigation if they follow a specific, documented process for selecting and monitoring alternative investments. By providing a clear standard based on factors such as liquidity, valuation, and complexity, the rule aims to reduce the fear of lawsuits that has previously discouraged the inclusion of volatile assets in retirement menus.

The rule does not mandate that employers offer these assets, nor does it require the inclusion of specific cryptocurrencies like Bitcoin. It maintains the existing duty for managers to continuously monitor all investments offered within a plan.