DOL sends final 401(k) alternatives rule to White House review

The Labor Department sent its final 401(k) alternatives rule to the White House Office of Management and Budget on Nov. 5, the last step before publication in the Federal Register. The Insured Retirement Institute expects OMB and its Office of Information and Regulatory Affairs to take 60 to 90 days, 401(k) Specialist reported, and OMB has no deadline for clearing the rule.

The rule, Fiduciary Duties in Selecting Designated Investment Alternatives (RIN 1210-AC38), would establish a process-based, asset-neutral safe harbor for a fiduciary's duty of prudence under ERISA when selecting designated investment alternatives for participant-directed defined contribution plans. The proposal said the safe harbor would not eliminate fiduciaries' responsibilities under ERISA or automatically make alternative investments appropriate for every plan. OIRA classifies the final rule as economically significant.

For advisers who sit on plan committees, the six factors in the March proposal are the framework fiduciaries have to work from until the final text is published: performance, fees, liquidity, valuation, performance benchmarks and complexity, as Bitcoin Magazine described the draft. Adding a private-markets, real estate or digital-asset sleeve means documenting a review against each factor, and the final regulation is expected to take effect toward the end of the first quarter of 2027.

The proposal implements President Donald Trump's Aug. 7, 2025, executive order, "Democratizing Access to Alternative Assets for 401(k) Investors," which directed the Labor secretary to reexamine ERISA guidance and propose rules with appropriately calibrated safe harbors. That order defined alternative assets to include private-market equity and debt, real estate, holdings in actively managed vehicles that invest in digital assets, commodities, infrastructure and lifetime-income strategies.

The comment period produced more than 47,000 comments and prompted House and Senate committee leaders to call for investigations into potentially fraudulent submissions after thousands of near-identical comments arrived in support of the proposal, 401(k) Specialist reported. OMB approved the proposal before its release in March, and the rulemaking phase began in June at the end of the 60-day comment period, PLANADVISER reported.

The department in May 2025 rescinded a March 2022 compliance release that told fiduciaries to use "extreme care" before adding cryptocurrency to a plan menu, saying the phrase did not appear in ERISA and restoring a context-specific standard, Bitcoin Magazine reported. Deputy Labor Secretary Keith Sonderling described the approach as neutral.

On the political side, Sen. Elizabeth Warren of Massachusetts is among the Democrats who have criticized retirement plans investing in private assets, and PLANADVISER reported that an incoming majority-Democratic Congress could take an oppositional stance toward the administration's push.

A separate DC bill moves Monday: the House Rules Committee plans to meet to consider advancing the Retirement Fairness for Charities and Educational Institutions Act of 2025, a bipartisan bill from Reps. Frank Lucas and Bill Foster that would let many 403(b) plans sponsored by charities, educational institutions and other nonprofits invest in collective investment trusts.

The bill would amend federal securities laws to give those plans access to vehicles already common in the DC market; supporters argue it would narrow the investment gap between 403(b) and 401(k) plans and could lower participant costs, according to the House committee report on the measure.