The comment period for the Department of Labor’s proposed new rule governing the use of alternative assets in 401(k) accounts drew over 37,000 comments before closing at midnight on Monday, according to the posting on Regulations.gov.
Commentators included alternative asset management associations, financial services firms, politicians and private citizens. The letters weighed in on an effort driven by the Trump administration to ease the inclusion of private equity, private credit, real estate and cryptocurrency in employees’ retirement accounts. Those investments are governed by the Employee Retirement Income Security Act, which tends to be more stringent than retail investment regulation, in addition to being a consistent target of class action lawsuits.
Numerous proponents argue in the most recent comments that allowing alternatives in 401(k)s is essential for individuals to gain access to investments that institutional investors (including pension plans), qualified purchasers and accredited investors have long used. Some opponents claim the effort is a money grab by alternative investment providers and the ecosystem around them, which doesn’t really benefit, or even puts at risk, the retirement savings of millions of Americans.
The DOL’s rule stemmed from an executive order issued by President Donald Trump in August 2025 calling on the department to reevaluate guidance on alts in 401(k) plans under ERISA. The Trump administration, along with other advocates, has argued that an active plaintiff’s bar in the 401(k) arena has been dictating policy rather than regulators.
The new rule relies on a six-factor safe harbor when electing such investments, including performance, fees, liquidity, valuation, benchmarking and complexity.
Now that the comments are in, the DOL will have time to evaluate them to either incorporate them into a final rule, consider a new direction or withdraw the rule if it encounters practical flaws. If a final rule is published, it is expected to face legal challenges.
Asset Managers Back the Move
The American Securities Association, a Washington, D.C.-based trade association representing wealth and asset management services, weighed in with support for the rule’s protection of plan fiduciaries from lawsuits.
“The final rule should make clear that a fiduciary who prudently selects a plain vanilla index fund is entitled to the same presumption of prudence as a fiduciary who prudently selects a more complex alternative investment,” President and CEO Chris Iacovella wrote. “The standard is process and participant benefit—not the outcome.”
The ASA head also argued that litigation has been the “real gatekeeper” in keeping alternatives out of retirement savings. The organization recommended changes to the rule clarifying how litigation would be handled in coordination with the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
“This proposal can change that, but only if the final rule makes clear the presumption of prudence kicks in before a case ever gets to trial,” Iacovella wrote.
Another group in the pro column included a coalition made up of organizations such as the Americans for Tax Reform (led by conservative activist Grover Norquist), the American Association of Senior Citizens and the Small Business & Entrepreneurship Council, among others. In a letter filed on May 16, the coalition argued that the rule would shift investment decision-making to investors rather than regulators.
“The regulatory posture towards alternative assets under the Biden administration was remarkably exclusionary, creating a wedge in investment access between defined-benefit and defined-contribution plans,” the coalition wrote. “This reform will help level the playing field between 401(k) investors and defined-benefit plans that have long benefited from alternative asset allocations.”
The Investment Company Institute, which lobbies on behalf of the regulated funds sector, said its research indicates that “modest private market allocations can enhance diversification and improve expected risk-adjusted returns.”
“[O]ur simulation results suggest better estimated outcomes for retirement savers when modest private market allocations are included in target date funds,” the association wrote. “These analyses highlight the material importance of the proposal for 401(k) participants.”
The Managed Funds Association, a Washington, D.C.-based association representing the alternative asset management industry, also supported the rule while calling for “strengthening” some of the language and examples, such as the DOL’s benchmarking use cases.
Watchdog Groups Raise Red Flags
The Trump administration and industry advocates have faced opposition to alternatives in 401(k) plans from the Democratic side of the political aisle since last year, including an October letter from U.S. Sens. Elizabeth Warren (D.-Mass.) and Bernie Sanders (I-Vt.). That letter was cited by some commentators, along with its arguments that private funds can carry the risk of overbilling clients or preferential treatment for some investors.
The Private Equity Stakeholder Project, a nonprofit financial watchdog, argued that limiting the ability for retirement savers to sue the plan sponsors and fiduciaries that make their investment choices would “weaken fiduciary protections” for those savers.
PESP also argued that some private investment vehicles, such as evergreen funds, “underperform while also charging higher fees.” In addition, it raised a common concern for all investors, let alone retirement plan participants: the ability to divest.
“While retirement savings are meant for the long term, they are built around daily liquidity,” PESP Policy Director Chris Noble wrote. “Stocks and index funds can be bought or sold any business day. If someone changes jobs, needs to rebalance or faces an emergency, their savings aren’t locked away or impossible to access.”
Comments also included a letter signed by 24 state attorneys general opposing the new rule. The coalition argued in its comments that the proposed rule would move the financial risk of retirement plan investing from paid fiduciaries to the workers investing in them—and potentially the state support systems for those workers.
“The proposal, if finalized, would harm workers and retirees because it aims to increase their exposure to risky, volatile, and poorly understood ‘alternative assets’ like cryptocurrency and private credit, which could result in catastrophic financial losses,” the attorneys general argued. “Those losses, in turn, would prejudice the states by increasing demand on our public assistance programs while simultaneously decreasing tax revenues. If finalized, the proposed rule would also require state outreach and education to protect residents from these new threats to their retirement security.”
Other opponents requested that the comment period be extended beyond June 1 for a case to be made against the rule. Those included a coalition including organizations such as the AFL-CIO, the Consumer Federation of America and Ali Khawar, the former Acting Assistant Secretary of Labor for the Employee Benefits Security Administration during the Biden Administration.
There were also many general commentators concerning the rule in the con column.
One of them, Chris Atkins, filed a comment calling the rule “2008 all over again,” referring to the financial crisis stemming from subprime loans and their widespread repackaging into various investment instruments.
“Instead of the housing market, they’re coming for our retirement accounts,” Atkins wrote. “When will our government put Main Street over Wall Street?! This is who you work for, the people, not the corporations or the banks. DONT (sic) DO THIS!”
