What Plan Sponsors Need to Know About Private Assets in Retirement Plans with Eric Milano of T. Rowe Price

Private Assets Enter 401(k)s

In August 2025, President Trump issued an executive order titled 'Democratizing Access to Alternative Assets for 401(k) Investors.' This directed the Department of Labor to reexamine ERISA fiduciary guidance that had previously discouraged inclusion of alternative investments—such as private equity, private credit, real estate, and digital assets—in participant-directed retirement plans.

The DOL quickly rescinded its 2021 supplemental statement cautioning against private equity in 401(k)s. By January 13, 2026, it submitted a proposed rule to the Office of Management and Budget for review, aiming to clarify fiduciary responsibilities and potentially introduce safe harbors to reduce litigation fears that have deterred plan sponsors.

These developments matter because defined contribution plans, primarily 401(k)s holding trillions in assets, have historically limited participants to public-market investments. Private assets offer potential for higher risk-adjusted returns and diversification, mirroring allocations common in public pension funds. Yet they carry illiquidity—often lock-up periods—and valuation challenges due to infrequent pricing, complicating daily participant access and fiduciary monitoring.

Plan sponsors, as ERISA fiduciaries, bear personal liability for imprudent decisions. Adding private assets demands thorough due diligence on managers, fees, and fit within diversified structures like target-date funds or managed accounts, rather than standalone options. Critics highlight risks to unsophisticated savers, including volatility and misalignment with retirement needs, while proponents argue regulatory overreach has unfairly barred everyday investors from institutional-grade opportunities.

With the proposed rule's review ongoing and a possible final version later in 2026, sponsors must weigh enhanced returns against administrative burdens, participant education demands, and persistent ERISA litigation threats that surged in recent years.