Can investors count on a comfortable retirement funded by investments in cryptocurrency, private equity, and real estate? The Trump administration seems to think so. Whether Americans who depend on their 401(k) plans for financial security in their golden years will agree remains to be seen.
On March 31, 2026, the U.S. Department of Labor released a Notice of Proposed Rulemaking (NPRM) entitled “Fiduciary Duties in Selecting Designated Investment Alternatives.” Drafted by the Employee Benefits Security Administration (EBSA), the proposed rule seeks to expand access to investing in alternative assets by reducing the litigation risk fiduciaries could face when their investment decisions are challenged. It would do so by adding a new prudence framework under ERISA's fiduciary duty rules. It would use six factors to act as guidelines for investment managers and 401(k) plan fiduciaries.
Alternative investment options were the focus of President Trump’s Executive Order 14330, issued by the White House in August 2025 to roll back safeguards put in place during the Biden administration. Intended to boost the inclusion of digital assets and other asset‑allocation funds for 401(k) investors, it comes at a time when private credit investing faces serious concerns about its illiquidity. The rule may indeed become law at some point, but there’s doubt whether retirement plan participants will be eager for higher‑risk private‑market investments.
When I’m 64 (or 67, or 70)
Social Security is intended to be a supplement rather than a sole source of income, which means future retirees should try to save as much money as possible. There are many types of retirement savings, but employer-sponsored 401(k) plans are the most common. Employers may make matching contributions in a safe-harbor 401(k) plan. Employee deposits can be automatically deducted from their salary and are usually tax-deferred. Many defined-contribution plans are participant-directed, which allows investors to choose how much risk they’re comfortable with.
Intended to provide a return on investment over decades rather than months, 401(k) plans have traditionally favored index funds in the stock market. These generally offer steady, low-risk returns, allowing the retirement plans of 401(k) savers to accrue significant gains over a long period. This system provides substantial tax breaks on lifetime income for the investors.
Alternative asset investments were available before the issuance of EO 14330, but hadn’t found wide acceptance or usage. Often more sophisticated, volatile, and risky than established index funds, they left fiduciaries and plan managers open to litigation from investors dissatisfied with substandard returns. The DOL’s proposed rule aims to give plan fiduciaries more comfort in offering alternative‑asset exposure in 401(k)s, but it’s unclear whether that will increase participants’ interest in investment alternatives.
They’re Making a List, They’re Checking It Twice
As currently written, the DOL’s proposed rule removes perceived barriers for fiduciaries to consider alternative investment options, such as private equity and crypto. Fiduciaries are required to meet ERISA’s duty of prudence under the Investment Duties Regulation, which essentially says that they need to fully understand the investment opportunities and act accordingly.
The proposed regulation’s framework asserts that ERISA gives “maximum discretion and flexibility to plan fiduciaries in selecting designated investment alternatives.” This, it contends, means that “arbiters of disputes should defer to fiduciaries under a presumption of prudence.” The wording suggests that courts and mediators should assume the fiduciary acted in good faith toward their investors, provided they followed the guidelines set forth in the proposed rule. However, plan participants can still sue for breach, even if the fiduciary believed it acted in good faith. Compliance with a regulatory framework can be relevant evidence in a lawsuit, but it is not automatic immunity. It may reduce litigation risk, but it doesn't eliminate it.
So, what’s in that process intended to insulate fiduciaries? It’s comprised of six factors that must be assessed and considered in decisions about potential investment opportunities. Let’s take a look at each of them.
Complexity
Fiduciaries should not be afraid to consider and implement sophisticated investment opportunities, as long as they feel that they fully understand the complexities involved. If a fiduciary doesn’t think they fully grasp the intricacies of the investment, they should consult with someone who does.
The determination of whether they have the required understanding of the risks an investment presents is fully at their own discretion. There is no safe harbor requirement to seek assistance from a financial expert if the fiduciary believes they have sufficient knowledge.
Fees
Fiduciaries have the latitude to select investments that don’t have the lowest possible fee. The proposal states that the fiduciary would not be responsible for comparing the fees and potential returns of every similar investment opportunity available, but instead must consider a “reasonable number of similar alternatives” in the market.
Liquidity
While fiduciaries must deliver on any promises they make about the ability to provide investors with actual funds when requested, they don’t need to offer full liquidity for plans that include alternative investment options. The proposed rule suggests that younger workers with longer investment horizon timelines better “fit the profile of an investor who can benefit from a liquidity premium.”
Performance
When considering alternative investment options, a fiduciary should consider more than expected returns. This includes fees, expenses, risk factors, and the investment horizon of the participants.
Performance Benchmarks
Meaningful performance benchmarks for alternative investments should be based on their historical performances. If one doesn’t exist, fiduciaries should use the history of a similar type of investment to replace the need for a meaningful benchmark. The rule states, as an unassailable principle, that no single benchmark is meaningful for all designated investment alternatives on a plan investment menu.
Valuation
Fiduciaries must assess the valuation of potential alternative investments and ensure that measures are in place to meet the fund’s participants' needs. While stock index funds and some alternative assets are regulated by the Securities and Exchange Commission (SEC), the proposed rule gives fiduciaries the leeway to consider securities traded on a non-public market if they are valued by an “independent, conflict-free” process on a quarterly basis. They also retain the power to adopt “alternative valuation procedures” if a “temporary emergency” arises, as long as they act in good faith.
If the proposed rule becomes law, fiduciaries who manage their clients' accounts under these factors would be less likely to face litigation from their clients for risky choices involving alternative investments like non-fungible tokens (NFTs) or crypto.
Drink, Water, Horse, Make, Etc.
The proposed rule for the fiduciary process is open for public comment until June 1, 2026. After the public comment period is over, the DOL and the EBSA can modify the rule, withdraw it, or proceed to a final rule. This requires at least 30 days and a review by the Office of Management and Budget (OMB) before it is finalized and published in the Federal Register.
Passage of the proposed rule does not guarantee that fund managers will immediately begin adding real estate and private equity assets to their clients’ 401(k) portfolios. Financial institutions and professionals tend to favor low-risk investments for retirement funds, especially after the 2008 financial crisis. They’re also likely to see how the new rule holds up in court if enacted.
Related Resouces
- Executive Order Encourages Alternative 401(k) Investing, but Will Fund Managers Take the Risk? (FindLaw’s Law and Daily Life)
- Is Online Art a Security? The Debate Over NFTs (FindLaw’s Federal Courts)
- Breach of Fiduciary Duty (FindLaw’s Small Business Law)
