President Trump has issued an Executive Order (EO) that could reshape how alternative assets are treated in defined contribution retirement plans. The directive requires the Department of Labor (DOL) to revisit its past guidance on private equity and other nontraditional investments.
Although Executive Order 14330 makes no immediate changes, it has the potential to lead to a clarifying of fiduciary standards and could open the door to broader use of alternatives in 401(k) lineups.
If the agencies follow through, this initiative could touch nearly every corner of retirement investing: how fiduciaries assess risk, the scope of permissible asset classes, and the way participants are informed about complex and often costly investment options. The changes under discussion are not immediate, but they have the potential to alter both regulatory expectations and the practical decisions plan sponsors will need to make.
The Baseline: Fiduciary Duties Under ERISA
ERISA continues to set the governing standard. Fiduciaries must act with care, skill, prudence and loyalty when selecting and monitoring investments. Courts have reinforced this duty in cases such as Tibble v. Edison International and Hughes v. Northwestern University, emphasizing ongoing oversight, fee scrutiny and the removal of imprudent options.
The EO does not alter these principles. But it does direct the DOL to revisit how alternatives are evaluated within this framework. It also raises the possibility of safe harbors that could reduce litigation risk.
What the EO Requires
The DOL must, within 180 days, reexamine past guidance, including the 2021 statement that urged caution about private equity in defined contribution plans. It must also clarify how fiduciaries should weigh higher fees and complexity against the potential benefits of diversification and enhanced returns.
The order further directs the DOL to coordinate with the Treasury Department and the SEC, which may spark related changes to investor qualifications and other regulatory standards. The scope is broad: the EO points not only to private equity but also to real estate, infrastructure, commodities and digital assets.
Implications for Plan Sponsors
If regulators follow the directive, plan sponsors may soon see clearer pathways for offering alternatives in 401(k) plans. That could mean broader investment menus, more diversification and the potential for stronger long-term growth.
At the same time, the risks associated with alternatives — higher fees, limited liquidity, and complex valuation — remain real.
Looking Ahead
EO 14330 sets a course, but the real impact will depends on how the DOL and other regulators respond in the coming months. For now, plan sponsors and fiduciaries should monitor developments and be ready to evaluate new opportunities once the rules are clarified.
Key Takeaways
- Timing and Expectations
The EO gives the DOL 180 days. Plan sponsors and fiduciaries should not take action now, but should prepare for possible new guidance by early 2026.
- Safe Harbors and Litigation Risk
The EO contemplates new safe harbors, which could give fiduciaries more confidence in evaluating alternatives and ease litigation pressure.
- Investment Committees
Committees should revisit their investment policy statements to ensure they are ready to consider alternatives in a structured way.
- Regulatory Coordination
The EO’s call for consultation, when appropriate, with SEC and Treasury could ripple beyond retirement plans, particularly if definitions of “accredited investor” or “qualified purchaser” change.
- Participant Communications
Sponsors and administrators should think now about how they would explain alternative assets to participants, especially around fees, liquidity, and valuation.
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