On August 7, 2025, the Trump administration issued an executive order directing federal agencies to broaden retirement plan participants’ access to alternative assets—including cryptocurrency, private equity, private credit, and venture capital—through 401(k) plans. Market advocates quickly hailed the move as a democratization of investment opportunity. Critics, however, warned that expanded access without equally robust fiduciary safeguards could magnify legal exposure for plan sponsors.
Other recent publications highlighted the risks of private equity in retirement plans and ERISA legal practitioners emphasized the importance of a robust retirement plan fiduciary compliance paradigm.
For plan fiduciaries, the executive order changes the political and regulatory conversation, but it does not alter the core legal reality: the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) still requires the highest duty of prudence and loyalty when selecting and monitoring plan investments.
I. Executive Order Overview and Scope
According to the White House Fact Sheet and supporting agency statements, the executive order’s stated objective is to “democratize access” to alternative assets historically reserved for institutional and high-net-worth investors. The directive calls for the Department of Labor (DOL), the Department of the Treasury, and other agencies (such as the Securities and Exchange Commission (SEC)) to review and revise existing guidance that may discourage such investments in defined contribution (DC) plans, such as 401(k) and 403(b) plans.
The order identifies multiple categories of alternative assets—cryptocurrency, real estate, private equity, private credit, venture capital—and signals a preference for integrating them into widely used investment structures such as target-date funds. While it encourages innovation in plan design, the order notably stops short of creating a statutory safe harbor or providing any guidance on a potential regulatory framework. ERISA’s fiduciary standards remain fully applicable, and any regulatory changes will ostensibly still require fiduciaries to engage in rigorous due diligence, document their processes, and be prepared to defend their decisions under potential scrutiny from courts and regulators.
II. DOL’s Historic and Current Position on Alternative Investments in DC Plans
The executive order marks a departure in tone from the DOL’s historic caution toward alternative investments in DC plans. Two contrasting positions illustrate this point.
Private Equity
In June 2020, the DOL issued an Information Letter clarifying that fiduciaries could include a limited allocation to private equity within a diversified, professionally managed investment option—such as a target-date, target-risk, or balanced fund—offered in a 401(k) or similar plan. The DOL stressed that such allocations must be prudent in light of the plan’s circumstances, participant demographics, and the characteristics of the private equity investment. Fiduciaries were instructed to evaluate liquidity constraints, valuation complexity, and fee structures, and to ensure that participant disclosures were clear and comprehensive. The letter stopped well short of endorsing stand-alone private equity options for participant direction.
Cryptocurrency
By contrast, in March 2022 the DOL issued Compliance Assistance Release 2022-01, cautioning plan fiduciaries against adding cryptocurrencies or related products to 401(k) core investment menus. The DOL cited concerns over extreme volatility, custodial and recordkeeping challenges, valuation uncertainty, and the heightened risk of participant losses. The agency warned that it would conduct investigative inquiries targeting plans that offered crypto, emphasizing the need for fiduciaries to justify the prudence of such decisions under ERISA’s demanding standards.
These positions have not been rescinded, and while the executive order invites agencies to “review and revise” guidance, no immediate regulatory changes have been announced. For now, fiduciaries face a policy crossroads: a presidential directive encouraging access on one hand, and existing DOL guidance urging caution—particularly for crypto—on the other.
III. Industry Reactions: Large Plan Managers & Recordkeepers
The executive order’s announcement drew swift responses from major retirement plan managers and recordkeepers—revealing a split between those ready to integrate alternative assets and those taking a more measured approach.
Supportive voices include BlackRock, Vanguard, Voya Financial, and Empower, all of which have announced or reiterated plans to introduce private markets exposure within target-date funds. These initiatives often involve partnerships with large private markets managers such as Apollo Global Management, Blackstone, and Blue Owl Capital. Advocates point to the diversification benefits of private assets, potential for higher long-term returns, and the shrinking pool of publicly traded companies as a rationale for expanding the investment toolkit.
Cautious or resistant voices remain, particularly when it comes to cryptocurrency. Fidelity, which in 2022 launched a digital-assets platform enabling Bitcoin access within 401(k) plans, faced strong DOL pushback and has since adopted a more guarded stance. TIAA and State Street Global Advisors have not made public commitments to offer crypto or significant private equity allocations in participant-directed menus.
Underlying the hesitance is a consistent concern: litigation risk. Many providers acknowledge that alternative assets bring heightened fee scrutiny, valuation complexity, and potential participant confusion. No major recordkeeper has yet offered unrestricted participant-directed cryptocurrency as a core menu option, a sign that even with a supportive executive order, market adoption will likely remain incremental and focused on professionally managed, diversified vehicles rather than stand-alone alternative funds.
IV. Current Pathways for Alternative Asset Inclusion
Even before the executive order, some fiduciaries had cautiously integrated alternatives into defined contribution plans through established mechanisms.
Private Equity via Target-Date Funds: Under the DOL’s 2020 guidance, fiduciaries can include a modest allocation to private equity within a diversified, professionally managed fund. This structure allows access while mitigating liquidity and valuation concerns.
Collective Investment Trusts (CITs): Certain CITs, available primarily to larger plans, incorporate sleeves of private equity or private debt. While not subject to SEC registration, CITs are generally limited to institutional investors and require fiduciaries to evaluate provider transparency and valuation methods.
Self-Directed Brokerage Windows (SDBAs): Some plans allow participants to use SDBAs to purchase alternative asset vehicles, such as publicly traded crypto trusts or listed private equity funds. However, these arrangements demand heightened fiduciary oversight, as courts have signaled that sponsors may still be liable for imprudent investments accessed through SDBAs.
Crypto-Specific Products: Limited pilots—such as the 2022 Fidelity Bitcoin option—have seen muted uptake following DOL’s warning. Most fiduciaries have deferred broader adoption pending further regulatory clarity and market testing.
These pathways illustrate that the infrastructure for integrating alternatives already exists, but fiduciaries have largely deployed it sparingly to manage both operational and legal risk.
V. Fiduciary Duty Analysis Under ERISA
While the executive order may shift the political narrative, it leaves ERISA’s fiduciary framework untouched. The duties of prudence and loyalty remain the same: fiduciaries must act solely in the interest of participants and beneficiaries, and with the care, skill, prudence, and diligence of a prudent person under similar circumstances.
For alternative assets, prudence requires a deeper analysis than for traditional investments. Fiduciaries must evaluate:
- Cost reasonableness: Are the higher fees of private equity or crypto justified by potential returns and diversification benefits?
- Liquidity and valuation: Can the asset be valued accurately and accessed when needed for participant distributions?
- Participant understanding: Do disclosures convey the risks, costs, and performance expectations in plain language?
- Operational risks: How are custody, cybersecurity, and transaction integrity assured—especially for digital assets?
Recent case law reinforces that process and documentation are paramount. Decisions from the US Supreme Court in Hughes v. Northwestern University, Tibble v. Edison International, and 2025’s Cunningham v. Cornell University highlight that courts scrutinize how fiduciaries make decisions, not just the outcomes. Benchmarking against peer plans, comparing cost structures, and maintaining a robust paper trail are no longer best practices—they are litigation defenses.
In short, the EO’s invitation to innovate does not dilute the fiduciary obligation to conduct rigorous due diligence, maintain ongoing oversight, and revisit decisions as markets, regulations, and participant needs evolve.
VI. Litigation and Enforcement Risk Landscape
For plan sponsors, the executive order does not erase the legal headwinds that have historically discouraged widespread adoption of alternatives in 401(k) plans.
Plaintiff-side ERISA attorneys have made excessive-fee litigation a well-honed specialty, with 57 to 66 such cases filed annually since 2016 and more than $550 million in settlements over the past two years alone. Cumming, Chris, and Luis Garcia, Plaintiffs’ Lawyers Are Ready to Pounce if Private Equity Pushes into 401(k) Plans, The Wall Street Journal (July 20, 2025). Attorney Jerry Schlichter, who pioneered these cases, has warned that private equity’s high fees, illiquidity, and opacity create an “easy target” for litigation. Crypto adds another layer of volatility and operational uncertainty that plaintiffs’ lawyers can frame as imprudent.
Development of a robust fiduciary compliance paradigm is critical. Even with a favorable policy climate, fiduciaries remain bound by ERISA’s stringent standards, which class-action counsel will test aggressively.
Enforcement risk extends beyond litigation. The DOL retains full investigative authority, and its historic skepticism toward crypto suggests continued scrutiny. Any inclusion of alternative assets—whether via target-date funds, collective investment trusts, or brokerage windows—should be prepared to withstand both discovery in court and questioning from regulators.
VII. Practical and Strategic Takeaways for Plan Sponsors
The potential benefits of alternative assets must be balanced against the realities of fiduciary exposure. A disciplined approach can help sponsors navigate this evolving landscape:
- Start small and diversify: Limit allocations to a modest percentage of plan assets, ideally through diversified, professionally managed vehicles.
- Document every step: Update the investment policy statement, record due diligence findings, and retain cost-benefit analyses to create a defensible decision-making trail.
- Vet providers rigorously: Require transparent fee schedules, clear valuation methodologies, and evidence of robust liquidity management.
- Educate participants: Provide plain-English explanations of risks, costs, and performance characteristics, particularly for illiquid or volatile assets.
- Engage ERISA counsel early: Legal advisors can help align investment decisions with current DOL guidance and evolving case law, ensuring compliance is embedded from the outset.
The safest path for early adopters may be to integrate alternatives gradually, in ways that maintain liquidity, transparency, and participant protections—rather than making wholesale menu changes.
VIII. Conclusion: Opportunity Within Guardrails
The August 2025 executive order signals a policy embrace of alternatives in retirement plans, but it does not alter ERISA’s uncompromising fiduciary standards. Sponsors willing to innovate must do so within a framework of prudence, loyalty, and transparency — recognizing that litigation and regulatory scrutiny are not going away. Those who build the right guardrails may find defensible ways to expand participant opportunity; those who do not risk becoming test cases in the next wave of fiduciary lawsuits.
