The US Department of Labor has proposed new rules to enable savers to include alternative assets in 401K plans.
In the US, 401(k)s are the main retirement vehicles for savers. While some pensions remain, the majority of professional use either a 401K, typically sponsored by a company, or an IRA account to plan for retirement.
Changes to 401 (k) rules may affect up to 90 million citizens.
The Secretary of Labor, Lori Chavez-DeReme, stated:
“Our goal is to deliver on President Trump’s promise for a new golden age by fostering a retirement system that allows more Americans to retire with dignity. This proposed rule will show how plans can consider products that better reflect the investment landscape as it exists today. This greater diversity will drive innovation and result in a major win for American workers, retirees, and their families.”
Secretary of the Treasury Scott Bessent said the Treasury was proud of the rulemaking, adding that it is part of President Trump’s Golden Age.
“This proposed rule is an initial step in implementing the President’s Executive Order in a safe and smart manner, broadening access to additional retirement plan options for millions of Americans while being mindful of the importance of protecting retirement assets. Treasury is grateful for the Department of Labor’s partnership and looks forward to continued engagement as the rulemaking process continues.”
Under the proposed rule, plan fiduciaries would need to make determinations regarding factors such as performance, fees, liquidity, valuation, performance benchmarks, and complexity.
Private equity is an asset class that is included in the proposal. Other assets include real estate, digital assets like Bitcoin, and more.
Deputy Secretary of Labor Keith Sonderling declared that the days of the federal government picking winners and losers are now over.
“This proposal is decidedly neutral and refrains from saying that any asset class is any better or worse than other investment types, as the law requires.”
Karen Kerrigan, President and CEO of the Small Business & Entrepreneurship Council (SBE Council), welcomed the proposal, as it would provide the masses with access to investments long available to large pension funds.
“Everyday investors, including millions of small business owners, entrepreneurs, and their employees, have been limited in their ability to participate in high-growth investment opportunities such as private equity and other alternative assets. This proposal represents an important step toward leveling the playing field and modernizing retirement investing,” said Kerrigan.
She noted that the change will also boost capital formation for the startups and smaller firms in need of private investment.