August 19, 2025
By James Van Bramer
The Department of Labor has a tall task and a short budget.
Less than two weeks ago, President Donald Trump signed an executive order encouraging more access to private investments for participants in 401(k) plans. Last week, the Department of Labor rescinded a 2021 information letter that questioned if private investments belong in retirement plans.
The DOL is still managing deadlines for regulatory guidance required by the SECURE 2.0 Act of 2022 and is operating with fewer resources, but its swift decision to rescind the 2021 information letter suggests that fulfilling its obligations under the executive order remain a top priority.
According to Michael Pedroni, the founder and CEO of Highland Global Advisors, which advises financial services companies on regulatory and market strategy, the executive order elevated providing regulatory guidance on alternative investments in 401(k) plans to the top of the DOL’s agenda.
For now, in the absence of clear regulatory guidance, most plan sponsors have avoided offering participants access to alternative assets, citing litigation risks. Only 3.9% of plans included alternative investments such as private equity in 2024—up from 2.2% the year before—according to the 2025 PLANSPONSOR DC Plan Benchmarking Report. As the industry awaits direction, some argue that plan sponsors will remain hesitant unless the DOL establishes a safe harbor.
Benefits of a Safe Harbor
“The key thing that plan sponsors are looking for is protection for litigation related to the fiduciary obligations,” Pedroni says. “The DOL is certainly working on a safe harbor. I am sure that the staff within the DOL are thinking about how to balance that safe harbor against maintaining the strength of the fiduciary obligation.”
A regulatory safe harbor is a legal provision that would offer plan sponsors protection from litigation under specific conditions. For example, the DOL has an annuity safe harbor that details the fiduciary responsibilities plan sponsors have when selecting an annuity provider. Following the guidelines, in theory, protects a fiduciary from litigation.
A safe harbor could be especially impactful in the case of broadening access to private market investments in 401(k) plans because of the numerous risks for which plan sponsors need to account…