Key Takeaways
- The Executive Order marks a significant moment in efforts to broaden access to alternative assets for U.S. 401(k) participants.
- The Executive Order instructs the Department of Labor (DOL) to clarify fiduciary guidance on alternative assets in DC plans, and to consult with the Securities and Exchange Commission and other agencies on possible regulatory changes to expand investment options for participants within 180 days.
- The specific implications will be dependent on the regulatory actions taken by the DOL and other administrative agencies. Lasting change would be enhanced if the DOL promulgated formal regulations, and even more so if Congress were to pass reform legislation.
- Plan fiduciaries should evaluate the suitability of private markets for their plans and participants so that they are prepared for these regulatory developments.
Regulatory Context
Alternative assets have long been meaningful allocations in the portfolios of defined benefit pension plans, other institutional investors and wealthy individuals, due to their historical potential to enhance performance and provide portfolio diversification. Despite these potential benefits, plan fiduciaries of DC plans have exercised caution due to regulatory uncertainty, litigation risk and concerns about fiduciary liability.
In June 2020, the DOL issued an information letter under the first Trump administration clarifying that including private equity in a professionally managed fund within a DC plan could be consistent with a fiduciary’s duties under the Employee Retirement Income Security Act of 1974 (ERISA). In 2021, the Biden administration issued a supplemental information letter cautioning on the use of alternatives in 401(k)s, which was withdrawn by the DOL on August 12, 2025.1
Executive Order Overview
On August 7, 2025, President Trump signed an Executive Order titled “Democratizing Access to Alternative Assets for 401(k) Investors,” seeking to “relieve regulatory burdens and litigation risk” associated with including alternative assets in DC plans.2 Importantly, the Executive Order recognized that “many wealthy Americans, and government workers who participate in public pension plans, can invest in, or are the beneficiaries of investment in, a number of alternative assets,” while most DC participants “do not have the opportunity to participate” and benefit from these options.3
The order reinforces the June 2020 guidance and directs the DOL to “reexamine the DOL’s past and present guidance regarding a fiduciary’s duties… in connection with making available to participants an asset allocation fund that includes investments in alternative assets,” including private equity, private credit, real estate, digital assets, commodities and infrastructure investments.4
The Order also requires the DOL to “clarify [its] position on alternative assets and the appropriate fiduciary process associated with offering asset allocation funds containing investments in alternative assets under ERISA,” and states that “Such clarification must aim to identify the criteria that fiduciaries should use to prudently balance potentially higher expenses against the objectives of seeking greater long-term net returns and broader diversification of investments.”5
It is important to note that the DOL was instructed to address inclusion of alternative assets in a professionally managed asset allocation fund, not plan participants investing in alternative assets directly.
Neuberger Berman Research
Our proprietary research supports the Executive Order’s position regarding the potential benefits of alternatives in target date funds. Our recent study found that reallocating 10% of a target date fund portfolio to private equity, while modestly increasing fees, may potentially boost annualized net returns, resulting in 19% more monthly retirement income for a typical participant.6
Executive Order Implications and Call to Action
The Executive Order elevates private market access for DC plans on the regulatory agenda, serving as a call to action for plan sponsors and asset managers. It sets a deadline of 180 days for the DOL to take these actions, underscoring a commitment to change that could result in expanding investment options for millions of 401(k) participants in the near term. We expect that the DOL will issue additional sub-regulatory guidance to address these issues in the near term and may also propose clarifying regulations. These steps would be welcome.
Congressional legislation would provide the greatest regulatory clarity on the issues raised by the Executive Order. However, we believe that well-crafted guidance and/or regulations will be sufficient to provide a meaningful catalyst for many plan fiduciaries to include alternative assets in their plans.
Plan fiduciaries, managers and consultants should be prepared to analyze the integration of private markets into their DC plans, including thorough investment and operational due diligence tailored to their plan’s profile. Those managing large custom target date funds, target risk funds or managed account platforms may be especially well positioned to consider these options. Plan fiduciaries should assess operational readiness and product structures proactively.
As guidance continues to evolve, plan fiduciaries are encouraged to engage stakeholders and prepare for potential implementation. Fiduciaries should focus on the differentiated needs of DC plan investors regarding alternative assets, including fees and expenses, timing and frequency of valuation, and the method and timing of inflows and outflows.
Within the next 180 days, the U.S. DC market will likely see material clarification regarding the inclusion of alternative assets. In the meantime, the core fundamental duty remains: Plan fiduciaries should thoughtfully consider what is in the best interest of their participants and which assets are suitable for inclusion in their plans.