The Department of Labor (DOL) published a proposed rule last week that clarifies fiduciary duties for the prudent selection of investment options for a defined contribution (DC) plan. The proposed rule contains a safe harbor for a fiduciary’s duty of prudence under the Employee Retirement Income Security Act (ERISA) of 1974 in connection with the selection of investment options, including funds with investments in alternatives assets. Notably, the proposed rule addresses the selection of investment options but not ongoing monitoring, which the DOL is expected to weigh in on at a later point.

Alts in DC Plans

Alternatives assets like private equity and private credit have long been used by institutional investors such as defined benefit plans, endowments, and foundations. But they have not traditionally been offered in DC plans due to concerns around liquidity, valuation, fees, and litigation risk, among others.

In August 2025, President Trump signed an executive order that directed the DOL, along with the Treasury Department and the Securities and Exchange Commission, to review and clarify fiduciary guidance around offering alternatives assets in DC plans, including:

• Private markets investments (e.g., private equity and private credit)
• Direct and indirect real estate investments
• Actively managed investment vehicles holding digital assets (e.g., cryptocurrencies)
• Direct and indirect commodities investments
• Direct and indirect investments in infrastructure projects
• Lifetime income investment strategies

The DOL’s proposed rule is a step toward implementing that directive. However, rather than limiting its scope to alternatives assets specifically, the DOL framed the proposed rule more broadly, applying it to the selection of any investment option regardless of investment exposure.

Notably, the proposed rule provides a safe harbor for the selection of an investment option based on six factors that fiduciaries must consider:

• Performance: Evaluate risk-adjusted expected returns net of fees over an appropriate time horizon, compared to a reasonable number of similar options. Selecting the highest-returning option is not required.
• Fees: Weigh them against the value the investment provides; need not be minimized. Selecting the lowest-cost option is not required.
• Liquidity: Assess whether the investment can meet the plan’s anticipated needs from a liquidity standpoint.
• Valuation: Consider the methodology used to value the investment, which is particularly relevant for alternatives assets that tend to be more difficult to price than publicly traded securities.
• Benchmarking: Identify appropriate benchmarks for evaluating the investment, recognizing that alternatives assets may require different reference points than traditional asset classes.
• Complexity: Assess whether they have sufficient expertise or access to qualified advisers to evaluate the investments given their complexity.

The proposed rule marks another step in an evolving set of DOL actions related to alternatives assets in DC plans under differing presidential administrations. The proposed rule is not law, meaning it could be reversed or changed under a future administration. Notably, in August 2025, the DOL rescinded a supplemental statement on private equity published during the Biden administration that had been perceived as offering a more cautionary tone toward the inclusion of alternatives assets in DC plans.

The comment period will close 60 days after the rule is published in the Federal Register.

Bottom Line

The proposed rule is a meaningful development, and the DOL’s decision to establish a formal safe harbor, rather than simply issuing tips or guidelines, is notable. After the rule is finalized, plan sponsors should review and update the language in their investment policy statement in light of the safe harbor. Importantly, the rule does not endorse alternatives assets or suggest that a plan sponsor add them. The same fiduciary principles apply regardless of the investment type, and a sound, documented process remains the foundation of a strong fiduciary framework.

Plan sponsors should also be mindful that the regulatory landscape around alternatives in DC plans has shifted and may continue to shift with changes in presidential administrations, underscoring the importance of a durable fiduciary process.