On August 7, 2025, President Trump signed an Executive Order (EO) titled “Democratizing Access to Alternative Assets for 401(k) Investors.” This EO aims to expand access to alternative assets for the more than 90 million Americans participating in employer-sponsored DC plans. While the EO does not have the force of law, it directs the U.S. Department of Labor (DOL) and the Securities and Exchange Commission (SEC) to consider regulatory changes that could facilitate the inclusion of private assets in DC plans.

Understanding Alternative Assets

The EO defines "alternative assets" as private market investments, including direct and indirect interests in equity, debt, real estate, digital assets (e.g., cryptocurrency), commodities, infrastructure projects and lifetime income strategies. These assets are not traded on public exchanges and offer potential for enhanced net risk-adjusted returns when included in professionally managed investment products.

Key Directives of the EO

The EO includes four key directives: three for the DOL, one for the SEC.

1. DOL must review current guidance and clarify the process that plan fiduciaries should follow when considering alternative assets. DOL can decide whether to issue proposed rules, regulations and other guidance that “may include appropriately calibrated safe harbors.”
2. In recognition of the chilling effect of class action litigation on plan fiduciaries’ leveraging industry innovation, the DOL is further directed to “prioritize actions that may curb ERISA litigation that constrains fiduciaries’ ability to apply their best judgement in offering investment opportunities to relevant participants.” 
3. The DOL is also tasked with consulting the Treasury, the SEC and other regulators to address necessary regulatory changes.
4. The SEC, in turn, is directed to consider revisions to its regulations to facilitate DC participant access to alternative assets.

ERISA fiduciary duties

While the EO boosts current momentum for consideration of alternative assets in DC plans, it is a relatively new concept for many plan fiduciaries. It is important to keep in mind the continued applicability of ERISA’s strict participant protections as well as plan fiduciary decision making authority as follows:

• ERISA does not prohibit the inclusion of alternative assets in DC plans, and some plans already offer them. It is up to plan fiduciaries to follow a prudent process in determining whether to include them for the sole and exclusive benefit of plan participants and beneficiaries. The DOL's 2020 Information Letter related to private equity investments in DC plans outlines this long-standing position. In addition, the recent Ninth Circuit decision in Anderson v. Intel Corporation Investment Policy Committee⁽¹⁾ affirmed dismissal of fiduciary breach claims against plan fiduciaries, emphasizing that it’s the fiduciary decision-making process and not hindsight review of results that determines whether a breach occurred. 
• The DOL’s recent rescission of Compliance Release 2022-01 on investments in cryptocurrency is indicative of the DOL’s shift toward a more neutral stance on plan investments and the view that it is plan fiduciaries, not the government that should make plan investment decisions in accordance with ERISA fiduciary standards. 
• The EO specifically encourages the DOL to consider rescinding the prior administration’s 2021 cautionary Supplemental Statement to the 2020 Information Letter, reinforcing the plan fiduciary’s decision making authority. 
• The EO references professionally managed funds (e.g. target date funds, managed accounts, etc.) that include allocations to alternative assets, not standalone options that individual participants may select.
• The EO does not have the force of law. Rather, it directs the DOL and SEC to consider regulatory changes to facilitate private assets in DC plans in accordance with ERISA and other applicable law.

Action Steps for Plan Fiduciaries

Over the next six months the DOL and SEC will conduct their respective regulatory reviews in accordance with the EO. At this stage, the timing for release of guidance is uncertain and could extend well into 2026. It is an opportune time for plan fiduciaries to begin to explore the alternative investment landscape and review plan demographics and participant behavior to determine whether and how participant outcomes might be enhanced. Even at this preliminary stage, key elements of a prudent process should be considered.

Key elements of a prudent process:

1. Expert Engagement: Ensure that fiduciaries have the requisite expertise to understand and evaluate various products available in the marketplace. If not, engage knowledgeable investment professionals and experienced asset managers to provide guidance and support. Consult with legal counsel.
2. Objective Evaluation: Engage in an objective, thorough and analytical due diligence process to evaluate anticipated opportunities for investment diversification and enhanced investment returns. Perform a comprehensive evaluation of potential alternative investment options. This includes, but is not limited to, assessing investment structure, management, valuation, liquidity, fees and historical performance. Develop a risk assessment framework to identify and mitigate potential risks.
3. Decision Framework: Establish a decision-making framework that incorporates core ERISA fiduciary duties and considers the specific facts and circumstances of the plan, including a detailed analysis of participant demographics, including age, tenure, salary, investment sophistication, average account balance, contribution and withdrawal patterns, turnover rates and other relevant factors. Consider the level of participant education and engagement that may be beneficial to the process.
4. Continuous Learning: Regularly review updates and guidance from the DOL and SEC to ensure compliance with fiduciary duties under ERISA. Encourage continuous learning and development for fiduciaries to enhance their understanding of alternative assets and investment strategies.

Conclusion

The Executive Order represents an opportunity for plan sponsors and their trusted advisors and consultants to explore greater diversification through expanded DC plan investment options. By following a comprehensive and prudent process to evaluate the potential benefits, as well as risks, engaging with experts and staying informed about regulatory developments, fiduciaries can make informed decisions that may enhance retirement outcomes for participants. As the DOL and SEC work on regulatory guidance in the coming months, plan fiduciaries should remain proactive in seeking experienced advisors, consultants and asset managers to understand and evaluate alternative asset strategies.

(1)    Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4^th 1015 (9^th Cir. 2025)