If you’ve been paying attention to retirement plan news lately, you know that alternative investments are no longer a fringe conversation. They’re front and center. The Department of Labor has now taken a significant step by sending a proposed rule on alternative investments to the White House for review. This isn’t casual guidance or a vague press statement. It’s a formal regulatory move that could shape how defined contribution plans look for years to come.
This proposal traces back to last year’s executive order directing the DOL, Treasury, and SEC to reexamine how ERISA fiduciaries handle private markets and other non-traditional investments. For decades, the retirement plan world has played it safe. Stocks, bonds, and cash ruled the day, largely because anything outside that box felt like an invitation to litigation. Illiquidity, valuation challenges, and participant understanding have always made alternatives a tough sell.
Now the government appears to be signaling that modernization is on the table. The proposed rule has been sent to the Office of Management and Budget, which means the formal review process has begun. The text isn’t public yet, but once it is, there will be a comment period where industry stakeholders can weigh in. That alone tells you this isn’t theoretical. This is moving.
The big question is what the final rule will actually say. Will it provide clearer standards for fiduciaries? Will it offer any comfort that private equity, real estate, infrastructure, or even digital assets can be used prudently in defined contribution plans? Or will it simply restate existing fiduciary principles with a new label slapped on the cover?
What’s clear is that the industry is changing whether regulators like it or not. Providers are pushing alternatives. Sponsors are curious. Participants are asking for diversification beyond the traditional menu. The DOL now has a chance to either bring clarity or add another layer of uncertainty.
Innovation is fine. But under ERISA, process still matters more than novelty. This proposal could be a turning point—or just another rule that looks important until the first lawsuit tests it. Either way, fiduciaries would be wise to pay attention.
