DOL Rescinds Biden-Era 401(k) Rule on Alternative Investments

In a move to expand investment options for Americans whose employers offer 401(k)-related employment benefits, the U.S. Department of Labor officially rescinded a Biden-era supplemental statement that discouraged fiduciaries from including alternative assets in 401(k) retirement plans.

The activity follows an executive order signed last week by the president and reported by AltsWire, which directed the DOL to re-examine its guidance and ensure that alternative assets – such as private equity, real estate, and cryptocurrency – are available to plan participants.

The now-rescinded statement, issued in December 2021, had cautioned that most plan fiduciaries were not likely suited to evaluate the use of private equity investments in individual retirement accounts. This guidance effectively reversed a previous Trump-era statement from June 2020 that had been more open to such investments.

U.S. Secretary of Labor Lori Chavez-DeRemer said the decision empowers plan fiduciaries to make their own choices. “Instead of allowing Washington bureaucrats to call the shots, we believe plan fiduciaries should decide which retirement investment options are best for hardworking Americans,” she stated.

The decision aligns with the new administration’s focus on reducing perceived regulatory burdens and expanding investment access.

In addition to access within workplace retirement benefits, there has been significant momentum to increase an individual’s ability to access alternative investments. The U.S. House of Representatives recently passed the Fair Investment Opportunities for Professional Experts Act (H.R. 3394), which would expand accredited investor eligibility to individuals with certain licenses, education or job experience – both broadening access to alternative investments and supporting capital formation.

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