The Advisors' Blog

I must admit I haven’t given enough thought to the August executive order that aims to facilitate the inclusion of alternative assets in 401(k) plans. This Cleary alert addresses what boards of companies that sponsor 401(k) plans need to know. First, the alert says the order doesn’t “usher in any immediate regulatory changes,” but it did direct “the DOL to reexamine its guidance regarding the investment of 401(k) plans in alternative assets and, to the extent deemed appropriate by the DOL, to issue clarifying guidance by early February 2026.” That’s now, and it sounds like that guidance may be imminent. Troutman Pepper reports that the DOL submitted that rule to the Office of Management and Budget on January 13, so we should see that soon. In the meantime, the Cleary alert suggests the following actions:

Determining the Board’s Role: Consider what role (if any) the board will play in determining next steps (if any) relating to alternative assets and the 401(k) plan.

Assessing Current Plan: Encourage management to review the current governing documents, investment policy statement and investment line-up for the company’s 401(k) plan to determine whether investment options with exposure to alternative assets are permitted and/or currently held by the plan.

Evaluating Fiduciary Capabilities: Consider evaluating whether the 401(k) plan’s current fiduciaries (e.g., retirement committee or third-party investment advisor/manager) have the requisite expertise to select, evaluate and monitor investment options with exposure to private equity.

– Meredith Ervine