A big change is coming for how Americans can invest their retirement savings. The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) announced a notice of proposed rulemaking (NPRM). This seeks to lower the regulatory risk when 401(k) plans have nontraditional investments like private equity and cryptocurrency.
This is one of the most important changes to retirement plan rules in decades. It impacts over 90 million Americans who are part of employer-sponsored retirement plans.
The Background: How We Got Here
The story begins with a policy reversal at the highest level of government.
This proposal follows President Trump’s executive order to boost access to alternative assets. It also goes against earlier guidance from the Biden administration. They had discouraged these investments due to risk concerns.
On August 7, 2025, President Donald Trump signed an executive order called “Democratizing Access to Alternative Assets for 401(k) Investors.” This order states that the administration will ease regulatory burdens and litigation risks. This change helps American workers earn more from their retirement accounts and spread out their assets.
EO 14330 shows a change in policy from the Biden administration’s 2021 choice to reverse guidance from Trump’s first term. That guidance had shown support for private equity investments. Biden-era guidance advised retirement plans not to invest in cryptocurrency and similar products because of risk concerns.
On May 28, 2025, the DOL also rescinded a 2022 compliance release. This release told fiduciaries to “exercise extreme care” before adding cryptocurrency options to investment menus. The DOL is going back to its usual position. It won’t endorse or disapprove fiduciaries who think that including cryptocurrency is suitable.
What Does “Alternative Assets” Mean?
Not all investments are the same. Traditional 401(k) plans usually offer mutual funds, index funds, and target-date funds. The executive order defines alternative assets as:
- Private market investments include equity, debt, and other financial instruments not traded on exchanges.
- Direct and indirect investments in real estate.
- Holdings in actively managed vehicles that invest in digital assets.
- Direct and indirect investments in commodities.
- Interests in projects that finance infrastructure development.
- Lifetime income investment strategies.
You might soon see options like private equity, crypto funds, real estate, and infrastructure in your workplace retirement plan.
The Proposed Rule: What It Actually Does
The proposed rule, titled “Fiduciary Duties in Selecting Designated Investment Alternatives,” does not simply mandate that your employer add Bitcoin to your 401(k). Instead, it works by reducing legal barriers for plan administrators.
The proposed rule provides that a prudent fiduciary has “maximum discretion” to select investments to further the purposes of the plan, confirming that ERISA does not require or restrict any specific type of investment option.
The DOL proposed a six-factor safe harbor to meet a fiduciary’s duty of prudence when selecting designated investment alternatives under participant-directed defined contribution plans. According to Reuters, trustees who abide by those standards will be granted a safe harbor that protects them from lawsuits.
Crucially, the proposed rule does not require or restrict any specific type of designated investment alternative, except insofar as a designated investment alternative might be otherwise illegal. It is asset-class neutral.
How Would Alternative Assets Actually Appear in Your Plan?
Don’t expect to log into your 401(k) portal tomorrow and find a standalone crypto fund next to your S&P 500 index fund. The DOL anticipates that the main channel through which 401(k) plans would gain exposure to alternative assets would be via target-date funds.
In other words, alternatives would likely be folded into existing diversified fund structures — not offered as direct, standalone investments. As attorney Erin Cho of Mayer Brown put it, the rule “will not open the floodgates for private equity, private credit or crypto funds to move into the retirement space,” but only provides a process.
The Case For — and Against
Supporters argue: Many wealthy Americans, and government workers in public pension plans, can already invest in alternative assets, yet more than 90 million Americans who participate in employer-sponsored defined contribution plans do not have the opportunity to participate in the potential growth and diversification opportunities associated with alternative asset investments. The goal is to democratize access.
Critics and legal experts caution: Some analysts remain skeptical that this will encourage fiduciaries to include alternatives in 401(k) plans until the courts have concurred that the language protects advisors from litigation, meaning it could be several years before we see the real impact from this proposal.
There is also an active Supreme Court case in the mix. The Supreme Court granted certiorari in *Anderson v. Intel* on January 26, 2026. This ensures ongoing judicial review of fiduciary standards. The case lets claims of fiduciary breach under ERISA challenge private equity allocations in a target-date structure. This means they can advance beyond the pleading stage.
What Happens Next?
The Department of Labor will start a 60-day comment period for the rule. During this time, the public, industry groups, and finance experts can submit formal comments.
Changes to ERISA and securities rules could create a new way for defined contribution plans to invest in private equity and venture capital by 2026 or 2027. Real changes for individual accounts depend on how employers, plan administrators, and fund managers respond to the final rule.
Frequently Asked Questions (FAQs)
Q: Will my 401(k) automatically include crypto or private equity?
No. The proposed rule lets plan sponsors *consider* these options, but it doesn’t require them to add anything. Employers and plan administrators will make those choices.
Q: What is ERISA, and why does it matter here?
ERISA stands for the Employee Retirement Income Security Act of 1974. It is the federal law that governs retirement plans in the private sector. It sets fiduciary duties for plan administrators. They must act in the best interests of participants. The proposed rule explains what “prudent” investing means under ERISA, especially with alternative assets.
Q: Are alternative assets riskier than traditional investments?
Yes, generally. Alternative assets like private equity and cryptocurrency are less liquid. They are also harder to value and more volatile. Higher potential returns often bring higher risk. This is why critics urge caution before adding these assets to retirement options.
Q: Does this rule apply to IRAs or just 401(k)s?
The proposed rule targets participant-directed defined contribution plans, such as 401(k)s. IRA rules are managed separately by the IRS and have different regulations.
Q: Can I opt out if my employer adds alternatives?
In most cases, yes. 401(k) plans typically allow participants to choose how to allocate their contributions among available options. You would not be forced into any specific fund.
Q: When would this rule take effect?
The 60-day public comment period must close before the DOL can finalize the rule. After finalization, there would typically be an implementation period. A realistic timeline for any changes reaching individual plan menus would likely be late 2026 at the earliest — and potentially longer, given pending litigation.
