News Release
US Department of Labor continues to boldly implement President Trump’s Executive Order on alternative assets in 401(k) plans
WASHINGTON – The U.S. Department of Labor’s Employee Benefits Security Administration continued its work clarifying retirement investment options in defined contribution plans by issuing a new advisory opinion today. The opinion specifically addresses when lifetime income investment options can be considered qualified default investment alternatives under federal law.
The advisory opinion follows President Trump’s Executive Order 14330, “Democratizing Access to Alternative Assets for 401(k) Investors,” which directed the department to reexamine its guidance regarding fiduciary duties under the Employee Retirement Income Security Act in connection with making asset allocation funds that include alternative asset investments available to participants.
“This Advisory Opinion provides much-needed clarity and certainty to stakeholders. As the department works toward issuing proposed regulations, we remain committed to considering ways to facilitate access to investments in alternative assets,” said Deputy Secretary Keith Sonderling.
The advisory opinion concludes that the requestor’s lifetime income strategy program meets the department’s requirements to be a qualified default investment alternative under ERISA section 404(c)(5) and the implementing regulation at 29 CFR 2550.404c-5(e).
In addition to today’s advisory opinion, the department recently rescinded guidance from a Dec. 21, 2021, supplemental statement that discouraged fiduciaries from considering alternative assets in 401(k) retirement plan investment menus.
As part of its continuing work to implement the President’s directive, the department intends to issue a notice of proposed rulemaking that clarifies the duties that a fiduciary owes to plan participants under ERISA when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets, including potential safe harbors.
EBSA’s Office of Regulations and Interpretations answers inquiries from individuals and organizations in the form of advisory opinions, which apply the law to a specific set of facts, or information letters, which merely call attention to well established principles or interpretations.
