The Labor Department has filed a proposed rule at the Office of Management and Budget, Fiduciary Duties in Selecting Designated Investment Alternatives, that could pave the way for promoting alternative investments in 401(k) plans.
The rule proposal filed at OMB on Tuesday is in response to President Donald Trump's executive order Democratizing Access to Alternative Assets for 401(k) Investors, a Labor Department spokesperson confirmed.
The exact contents of the proposal will be unclear until the office's review is complete.
"We should know at some point in the next 45 to 75 days, when it is released — although if given high priority by the OMB, it could be sooner," said Fred Reish, of counsel with the Ferenczy Benefits Law Center.
The filing "is expected to propose the circumstances under which a plan fiduciary of a defined contribution plan can offer private investments, private equity, private credit and some other types of alternative investments in 401(k) plans," Lisa Gomez, former head of Labor's Employee Benefits Security Administration, told ThinkAdvisor Thursday in an email.
Another Trump order awaiting a DOL response involves the role of environmental, social and governance factors in defined contribution plan investments.
That rule, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, is slated for release in May, according to Labor's regulatory flexibility agenda.
Labor's plan "should not include anything ESG related but it will be interesting to see whether there's anything in this proposal that impacts ESG directly or indirectly," Gomez said.
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