HedgeCo.Net — A final Department of Labor rule that would ease the inclusion of alternative assets such as private equity, real estate and cryptocurrency in 401(k) plans is now under review at the White House. The Office of Information and Regulatory Affairs received the rule, titled “Fiduciary Duties in Selecting Designated Investment Alternatives” (RIN 1210-AC38), on November 5, according to the government’s regulatory review dashboard, which lists it as a final rule from the Employee Benefits Security Administration and designates it economically significant.
The rule’s arrival at OIRA signals that it is nearing completion and public release, Bloomberg Government reported. The Labor Department unveiled the proposed version on March 30, and it drew thousands of public comments.
The proposal would create a legal safe harbor for plan fiduciaries who satisfy six factors when adding private assets to a 401(k) investment menu: performance, fees, liquidity, valuation, performance benchmarks and complexity. The final text has not been released, so it is not yet clear whether those factors survived unchanged.
For alternative asset managers, the rule is the regulatory piece that has been missing from the defined contribution push. Large managers have spent the past two years building target-date sleeves, interval funds and evergreen vehicles for retirement channels, but plan sponsors have been held back largely by litigation risk. A clear safe harbor would shift the debate from whether fiduciaries may offer private assets to how they document fees, liquidity and valuation when they do.
The questions to watch on publication are how prescriptive the six-factor test is, whether the rule addresses crypto differently from private equity and real estate, and how quickly recordkeepers and plan sponsors move from pilot allocations to broader adoption.