(The Washington Post, April 8, 2026)
The Department of Labor has decided that a more urgent issue than the fact that millions of workers don’t have access to workplace retirement plans is giving Wall Street firms access to a lucrative market: your 401(k). A proposed rule would encourage adding alternative assets like private equity, private credit, and cryptocurrencies to 401(k) menus. Companies can already offer these assets, but employers have a fiduciary duty to act in the best interest of workers and, since these assets are costly and difficult to value, many plan sponsors fear potential lawsuits from workers.
If finalized, this rule – currently open for public comment – would add protection against lawsuits. Provided your 401(k) managers can demonstrate they have checked certain boxes, such as fee review, the rule would provide companies a “safe harbor” that essentially creates a legal shield making it much harder for you to hold your company accountable if it chooses to offer risky investments.
This proposal comes directly from an executive order signed by President Donald Trump in August, instructing the Department of Labor to change the rules so that 401(k) plans can include “alternative” investments. This is a move the administration claims will give ordinary investors more options, but I don’t believe for a second that it’s a move to help ordinary investors. Instead, it’s a massive grab for greed by Wall Street firms seeking to tap into the money workers are trying to save for retirement.
Proposed rule for alternative assets in 401(k)s
“A proposed rule would encourage adding alternative assets like private equity, private credit, and cryptocurrencies to 401(k) menus. If finalized, this rule would add protection against lawsuits. Provided your 401(k) managers can demonstrate they have checked certain boxes, such as fee review, the rule would provide companies a ‘safe harbor.’”
Criticism of Trump’s move
“This proposal comes directly from an executive order signed by President Donald Trump in August, instructing the Department of Labor to change the rules so that 401(k) plans can include ‘alternative’ investments. I don’t believe for a second that it’s a move to help ordinary investors. Instead, it’s a massive grab for greed by Wall Street firms seeking to tap into the money workers are trying to save for retirement.”
Higher fees and greater risks
“Fees for private assets typically range from 1.5% to 5%, compared to 0.06% to 0.60% for typical target-date funds according to Vanguard. The promise is that you pay more money to make more money. Higher returns are not guaranteed, though it will make fund managers richer by charging higher fees.”
Wrong priorities
“This push to add complex investments seems like a case of ‘wrong priorities,’ focusing on Wall Street’s needs while ignoring the struggles of average workers. Instead of pursuing high-cost private securities, the focus should be on accessibility and helping people understand how to generate sustainable income from their portfolios.”
Limited access to retirement plans
“About half of workers don’t have access to a workplace retirement savings plan. Many small businesses still can’t offer them because they face high administrative costs and lack the bargaining power of large companies to negotiate lower fees for their employees. We know people save more when they have access to a workplace retirement plan.”
(Excerpt from Giuseppe Liturri’s newsletter)
