business Plan Sponsors Take Note: Alternative Investments Are Now on the Table for 401(k)s September 15, 2025 A new Executive Order could change the way 401(k) plans look in the future. For the first time, savers may get access to investments like private equity, real estate, infrastructure, and even digital assets, options that have mostly been out of reach until now. Here’s what you should know. President Trump has recently signed an Executive Order aimed at “democratizing access to alternative assets” in 401(k) and other defined-contribution retirement plans. For employers and plan fiduciaries, this creates new opportunities to diversify plan menus, but it also raises important questions around oversight and compliance. Here’s what you need to know.Background:The Department of Labor (DOL) has long been cautious about allowing alternative assets in 401(k) plans. Big pension funds have used them for years, but most 401(k) sponsors avoided them because of strict rules and the risk of lawsuits.In 2020, the DOL opened the door slightly by allowing alternatives in target-date funds, but later guidance in 2021 pulled back, creating more uncertainty for sponsors. The DOL has now officially rescinded its 2021 supplemental statement discouraging fiduciaries from considering alternative assets in 401(k) menus, signaling a stronger shift toward expanding access. This new Executive Order signals a shift back toward expanding options and easing fiduciary concerns.What’s Changing in 401(k) Plans?Broader investment options: 401(k) investments for all savers may now include alternative assets like private equity, real estate, infrastructure development, commodities, digital assets, and lifetime income strategies.Regulatory review: The DOL will review past guidance that made sponsors hesitant to offer alternative assets and may remove or revise rules that were overly restrictive.Safe harbors likely: The DOL is expected to propose clearer rules and protections that reduce fiduciary litigation risk when offering these investments.Coordination with SEC: The Securities and Exchange Commission (SEC) will also consider changes to broaden access to alternative investments for retirement savers.What This Means for Plan SponsorsMore flexibility: You may have the option to include alternative investments in your plan’s menu.Fiduciary standards remain critical: Sponsors must continue to perform careful due diligence and evaluation of costs and risks, ensuring plan decisions are in the participants’ best interest. Offering these types of alternative assets increases risk and Plan Sponsors and fiduciaries who offer these options may be subject to increased scrutiny. The DOL has up to 180 days from the Executive Order to reexamine its guidance and clarify its position on alternative assets and the fiduciary process under the Employee Retirement Security Act of 1974.Education is key: Plan fiduciaries should understand how these alternative assets operate, their additional complexities and potential impact participants retirement savings. Additionally, if alternatives are introduced, participants will need support and education to understand both the opportunities and risks.Next StepsWatch for updated guidance from the DOL and SEC over the next 6 months. Stay connected with your KLR team. We’ll provide updates as regulations are clarified.If interested, begin conversations with your investment advisors about whether alternative assets may fit into your plan’s strategy and if permitted under the Plan’s current investment policy statementFAQs: 401(k) Alternative InvestmentsCan I start offering alternative assets in my plan right now?Not yet. The DOL and SEC are still reviewing guidance. Plan sponsors should monitor updates over the next 6 months before making changes.Are fiduciary responsibilities changing? No. Sponsors will still need to carefully vet managers, costs, and risks. The goal is to provide clearer rules and protections, not to reduce fiduciary duties.Will participants automatically have access to these investments? Not automatically. If alternatives are added, plan sponsors will need to provide education so participants understand the options.Bottom line: This Executive Order may assist in reshaping 401(k) investment menus by opening the door to asset classes previously reserved for private investors and pension funds, however, has not modified the law. We’ll continue to monitor these changes and help you navigate what they mean for your plan.
