The U.S. Department of Labor has unveiled a sweeping proposed rule that could significantly expand the range of investment options available in 401(k) retirement plans, marking a potential tipping point for alternative assets — including crypto — within tax-advantaged retirement accounts.
Released Monday by the department’s Employee Benefits Security Administration, the proposal aims to reduce regulatory uncertainty and litigation risk for administrators considering alternative investments.
The move follows an executive order by Donald Trump directing agencies to “democratize access” to non-traditional assets in pension portfolios.
At its core, the rule reinforces that fiduciary liability under the Employee Retirement Income Security Act is based on process rather than results.
Plan managers will retain broad discretion to include a wide range of investment opportunities – provided they follow a prudent, well-documented evaluation process that assesses factors such as fees, liquidity, valuation and performance benchmarks.
Labor Secretary Lori Chavez-DeRemer said the proposal is designed to align pension investments with modern financial markets. “This greater diversity will drive innovation and result in a big win for American workers, retirees and their families,” she said.
Bitcoin gets exposure
The guidance could open the door to increased exposure to digital assets like Bitcoin within 401(k) plans — a development long sought by segments of the crypto industry. While plan sponsors have technically always been allowed to consider such assets, regulatory ambiguity and advance guidance had a chilling effect.
In 2022, the Biden administration issued a compliance release warning fiduciaries against offering cryptocurrency in pension plans, citing volatility and investor protection concerns.
That position is now being reversed, with Deputy Labor Minister Keith Sonderling emphasizing neutrality. “The days of the department picking winners and losers are over,” he said.
The proposal does not explicitly support crypto or any specific asset class. Instead, it establishes “safe harbor” frameworks designed to protect fiduciaries who conduct thorough due diligence when adding alternative investments to plan menus.
This process-based approach can make it easier for asset managers to introduce diversified funds that include exposure to private equity, real estate or digital assets or Bitcoin.
Assets like Bitcoin can improve long-term returns and provide a hedge against inflation, especially for younger savers with longer time horizons.
The U.S. Securities and Exchange Commission and the U.S. Treasury Department both collaborated on the rulemaking, signaling a broader interagency effort to modernize pension investments.