Department of Labor Rescinds 2021 Supplemental Statement on Alternative Assets in 401(k) Plans
Washington D.C. – August 12, 2025 – The U.S. Department of Labor announced today its decision to rescind the 2021 supplemental statement concerning the inclusion of alternative assets within 401(k) and other individual account retirement plans. This action marks a significant shift in the Department’s guidance, reflecting a careful consideration of evolving market dynamics and participant needs.
The 2021 supplemental statement, issued by the Employee Benefits Security Administration (EBSA), aimed to provide clarity and address concerns surrounding the prudent selection and monitoring of alternative investment options within employer-sponsored retirement plans. While intended to offer guidance, the Department has determined that the statement may have inadvertently created unnecessary complexities and potentially limited responsible fiduciaries’ ability to consider a broader range of investment vehicles that could benefit plan participants.
In rescinding the statement, the Department emphasizes its continued commitment to ensuring that retirement plan fiduciaries act in the sole interest of plan participants and beneficiaries and with the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use. This core fiduciary duty, as outlined in the Employee Retirement Income Security Act (ERISA), remains paramount.
The Department’s decision to withdraw the 2021 supplemental statement is based on a thorough review and feedback from various stakeholders, including plan sponsors, investment professionals, and participant advocates. This review indicated that the original statement, while well-intentioned, may have contributed to a perception that alternative assets were inherently more risky or less appropriate for defined contribution plans than other asset classes.
The rescission clarifies that ERISA’s fiduciary obligations apply to all investment options, regardless of their asset class. Fiduciaries are still expected to conduct rigorous due diligence, carefully assess the risks and potential returns of any investment, and ensure that the chosen investments are suitable for the retirement savings of their participants. This includes understanding the liquidity, valuation, and any associated fees of alternative investments.
This move by the Department of Labor aims to empower plan fiduciaries with greater flexibility to consider a diverse array of investment strategies that may align with the long-term objectives of their participants. It is understood that a well-diversified portfolio, potentially including alternative assets where appropriate and prudently managed, can be a valuable component of a comprehensive retirement savings strategy.
The Department encourages plan fiduciaries to continue to prioritize transparency, participant education, and prudent investment selection. They remain committed to fostering a robust retirement savings system that provides individuals with the opportunity to build financial security for their future. Further guidance and resources on fiduciary responsibilities and investment selection may be made available as appropriate.
US Department of Labor rescinds 2021 supplemental statement on alternative assets in 401(k) plans
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