On August 7, 2025, President Trump signed an Executive Order titled “Democratizing Access to Alternative Assets for 401(k) Investors.” This order aims to expand access to alternative investments, such as private equity, real estate, digital assets, commodities, and infrastructure, within defined contribution retirement plans like 401(k)s and 403(b)s.
The Department of Labor (DOL) has 180 days (until February 3, 2026) to issue updated guidance and consider new regulations. This means that sometime in 2026, plan fiduciaries and governance committees will face new definitions of fiduciary liability and an expanded investment universe for participants.
So, what should plan sponsors be thinking about now? Here are three key considerations:
Cost-Benefit Analysis
Alternative assets are complex, illiquid, and often come with higher fees. While they offer potential for greater returns and diversification, sponsors must weigh these benefits against participant behavior.
Reality check: Most participants prefer simplicity. In fact, 83% of plan participants invest in target-date funds (TDFs), which dominate as the Qualified Default Investment Alternative (QDIA) and that number continues to grow.
Key question: Will adding alternative investments truly benefit your participants, or will it introduce unnecessary complexity and cost?
Service Provider Capabilities
Before adding alternative assets, confirm that your recordkeeper and custodian can handle the operational demands, including:
- Complex reporting and valuation requirements
- Participant education and communication
- Certification of asset valuations for audit purposes (critical for audit-sized plans to avoid additional costs)
Investment Policy Updates
If you decide to include alternative investments into your Plan’s investment lineup, update your Investment Policy Statement (IPS) to reflect the changes. Also, document your decision-making process thoroughly. This demonstrates fiduciary prudence and helps mitigate litigation risk.
Bottom Line
The Executive Order opens the door to new opportunities, but also new responsibilities. Plan sponsors should start evaluating whether alternative investments align with participant needs, operational capabilities, and fiduciary obligations.
Need help navigating these changes?
Boyum Barenscheer’s Employee Benefit Plan team partners with you for a smooth and efficient audit process. Contact our employee benefit plan audit team to learn more about our process. https://myboyum.com/services/audit-and-assurance/employee-benefit-plan-audits/