Alternative Investments Now Allowed in Employee Savings Plans

The President has signed an Executive Order instructing the Department of Labor to reassess their guidance on fiduciary duties concerning “alternative asset investments” such as crypto currency, real estate and private equity, in defined contribution plans (e.g., 401(k) and 403(b)). DOL is to work with both the Treasury and the Securities and Exchange commission to develop what regulatory changes might be needed to enable that program. Opinions are divided because of the volatility of some of those assets and their susceptibility to “tinkering” by malevolent actors. DOL has officially taken a neutral stance, just advising due caution. Much work is to be done, obviously, and such choices will in all likelihood be discretionary, not mandatory. The obligation of fiduciaries to be cautious and prudent remains unchanged.

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