News Release

US Department of Labor releases Supplemental Statement on private equity investments in participant-directed retirement savings plans

WASHINGTON ­– The U.S. Department of Labor today released a Supplemental Statement clarifying a June 2020 Information Letter on private equity investments as a component of a professionally managed asset allocation fund offered as an investment option in participant-directed retirement savings plans, such as 401(k) plans. 

The statement from the department’s Employee Benefits Security Administration is in response to stakeholder concerns that the letter could be marketed as broadly endorsing the benefits of private equity investments – outside the letter’s limited context – while downplaying associated risks. The statement addresses these concerns and stresses the provisions in the Information Letter on the fiduciary expertise needed to evaluate and monitor such private equity investment options.

The statement also cautions plan fiduciaries against the perception that private equity is generally appropriate as a component of a designated investment alternative in a typical 401(k) plan. It expresses the department’s view that plan-level fiduciaries of small plans typically will not have the expertise necessary for the complex evaluation needed to determine the prudence of private equity investments in designated investment options in participant-directed plans.

“The Supplemental Statement emphasizes the limited focus of the Information Letter as a response to large plan sponsors who offer both defined benefit plans and participant-directed retirement savings plans, and who invest in private equity for their defined benefit plans but do not do so for the participant-directed plans,” said Acting Assistant Secretary for Employee Benefits Security Ali Khawar. “After considering reactions to the Information Letter by stakeholders, the department concluded it was important to release a statement cautioning fiduciaries, especially in small plans, against marketing efforts that may misrepresent the Information Letter as a U.S. Department of Labor endorsement or recommendation of these investments for 401(k) plans.” 

Read the Supplemental Statement and Information Letter.


Employee Benefits Security Administration
December 21, 2021
Release Number
Media Contact: Grant Vaught
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