The Department of Labor will soon finalize a rule that will meaningfully benefit retirement savers. Originally proposed in March, the rule provides safe harbor for fiduciaries selecting investment options for 401(k)s and other defined contribution plans, thereby expanding access to alternative investments for savers and investors. The Department has received more than 46,000 comments in response to its initial proposal, many asserting the rule is too novel of a step. Yet the Department of Labor is simply allowing America’s main retirement law to work as intended—for workers’ benefit.
The Employee Retirement Income Security Act (ERISA), the fiduciary framework Congress created in 1974, established commonsense standards for private-sector retirement plans. It gave freedom and flexibility to plan sponsors, empowering them to innovate and better serve workers. Yet over the past 50 years, the law has been eroded because of uncertainty, litigation risk, and constant regulatory second-guessing. As a result, too many retirement plan sponsors are now afraid to use tools that can improve plan design and retirement income outcomes, including private market assets.
The proposed federal rule addresses these challenges for 401(k) and other defined contribution plans. It is principles-based and asset-neutral, setting out six factors—risk-adjusted performance, fees, liquidity, valuation, benchmarks, and complexity—for fiduciaries to consider objectively and document. A fiduciary who follows this process then earns a legal presumption of prudence, allowing them to create new options for workers. This isn’t some sea-change in retirement law. It’s what ERISA was designed to allow.
Critics point to a rough 2025 for private equity—with many boom-era investments expected to underperform—as reason for caution.” That criticism deserves a direct answer, not a dismissal: it’s exactly why this rule is structured as a process requirement, not a blanket mandate. A fiduciary who adds a risky, overleveraged private-equity stake without documenting risk-adjusted performance, fees, valuation, and liquidity against the other five factors would not earn the rule’s legal presumption of prudence — and would remain fully exposed to liability. The rule doesn’t bless private assets; it forces the same rigor onto them that fiduciaries already apply to public equities and bonds.
ERISA sets the rules of the road. It asks fiduciaries to act with care, skill, diligence, and loyalty to plan participants—but it does not micromanage every investment decision they make. It trusts fiduciaries to exercise sound judgment within a disciplined process and holds them accountable when they fall short of those standards. The proposed rule makes this principle explicit by clarifying that fiduciaries, not trial lawyers or regulators, have the discretion to determine which investments best serve participants—including private market assets. Innovation cannot thrive when every judgment is subject to challenge under the assumption of bad faith.
That assumption has a real cost for workers. At the Georgetown University Center for Retirement Initiatives at the McCourt School of Public Policy, we have examined the inclusion of private market assets in DC plans for several years. Our research has consistently shown that the inclusion of private equity, private credit, and private real assets in target-date funds can materially improve retirement outcomes. A 2022 study found that even modest allocations of 15 to 20 percent to alternative assets could boost retirement income by 6 to 8 percent, net of fees. Our 2025 report examined five real-world worker profiles—average workers, family caregivers, lower-income workers, job hoppers, and those facing early forced retirement—and found a 7 to 8 percent improvement in retirement income net of fees across all profiles when a target-date fund included private assets.
The DOL cited this research in its regulatory analysis for the proposed rule because the evidence is consistent and compelling. Yet the lack of legal certainty and threat of legal penalties have so far prevented defined contribution plan sponsors from delivering these benefits to workers.
Fairness for workers is also at stake. The number of publicly listed U.S. companies has fallen from more than 8,000 in 1996 to just over 4,000 today, and the indexed returns are increasingly concentrated in a handful of companies. Private markets have grown to more than $15 trillion in total assets. High net worth and institutional investors have long used private assets to diversify and improve returns. Workers saving in 410(k) plans deserve access to the same tools.
None of this means that private assets belong in every retirement plan. Plan sponsors with small plans, high workforce turnover, or limited in-house expertise may reasonably conclude that the added costs, complexity, and fiduciary requirements outweigh the potential benefits. This is a fiduciary judgment and the proposed rule reinforces sponsors’ ability to make them. The rule aims to mitigate litigation risk and give plan sponsors greater flexibility and discretion to make investment selections that they believe are appropriate for plan participants. This is precisely what ERISA was intended to allow.
The retirement savings landscape is changing. Plan sponsors need clarity, not litigation, to best serve their plan participants. The Department of Labor’s proposed investment rule will help restore confidence in the ERISA legal framework and give more American workers a better shot at creating the retirement security they have worked so hard to earn. For workers, a timely final rule would give plan sponsors the clarity they need to put these tools to use.
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