The U.S. Department of Labor has submitted its final rule on fiduciary duties for selecting investment alternatives in 401(k) plans to the White House for review. The package, received by the Office of Information and Regulatory Affairs on November 5, addresses how plan managers evaluate options that may include private equity, real estate and digital assets.

The rule carries the title “Fiduciary Duties In Selecting Designated Investment Alternatives” and the identifier 1210-AC38. It is classified as economically significant, with no legal deadline listed for the review process. Once cleared, the Labor Department would publish the final text in the Federal Register and set an effective date.

Background of the Proposal

The measure stems from an August 7, 2025, executive order titled “Democratizing Access to Alternative Assets for 401(k) Investors.” That order directed the Labor secretary to reexamine Employee Retirement Income Security Act guidance and propose rules with calibrated safe harbors where appropriate. Alternative assets under the order include private-market equity and debt, real estate, holdings in actively managed vehicles that invest in digital assets, commodities, infrastructure and lifetime-income strategies.

The department released a proposed version of the rule on March 30, 2026. It was published in the Federal Register the following day, with a public comment period that closed on June 1. The proposal drew thousands of responses. An earlier version of the draft had cleared White House review in late March after submission in January.

In May 2025 the department rescinded prior guidance that had urged fiduciaries to exercise extreme care before adding cryptocurrency options to 401(k) menus. Officials stated that the “extreme care” language did not appear in ERISA and restored a process-based standard of prudence.

Six-Factor Safe Harbor Framework

The March proposal outlined a process that plan fiduciaries could follow when deciding whether an investment belongs on a menu. Following the specified steps would create a presumption that the fiduciary met the prudence requirement under ERISA for the factors considered. The framework is described as neutral toward different asset classes.

The six non-exhaustive factors identified are performance, fees, liquidity, valuation, performance benchmarks and complexity. For performance, fiduciaries would compare similar investments and assess expected returns after fees, taking risk and time horizon into account. Cost reviews would not require selection of the cheapest product in every case, but higher expenses would need support from expected returns or other benefits.

Liquidity assessments would examine whether an investment can meet anticipated needs at both plan and participant levels, including retirement withdrawals, job changes, hardship distributions, reallocations and loans. Valuation and benchmarking provisions address investments without readily available market prices. Complexity forms part of the overall review.

The safe harbor would apply to any designated investment alternative, not solely those containing alternative assets. It does not require any plan to offer cryptocurrency or other alternatives. Employers and plan committees retain discretion over their menus.

Scale of the 401(k) Market and Potential Implications

Americans held $10.8 trillion in 401(k) plans at the end of June 2026, according to Investment Company Institute data. Mutual funds accounted for $6.2 trillion of that total. More than 90 million participants are covered by defined-contribution plans.

One industry estimate suggested that a 2 percent allocation of the $10.8 trillion base into crypto could represent $216 billion in potential inflows. That figure assumes broad participation across the entire asset pool and does not reflect any announced commitments by employers or participants.

Actual availability of crypto exposure would depend on individual plan decisions after the rule takes effect. Experts noted that Bitcoin and Ether are more likely to appear first because of established markets and existing investment products. Smaller tokens could face greater hurdles related to track record, liquidity, reliable daily pricing and benchmarks. Exchange-traded funds or managed vehicles that hold digital assets are expected to precede direct holdings in many cases, given existing custody and recordkeeping systems.

Adoption timelines remain uncertain. White House review can take up to 90 days, followed by publication and a typical effective date period. Some market participants anticipate limited options appearing in 2027, with broader availability later. Target-date funds are viewed by some industry groups as a primary potential vehicle for gradual private-asset exposure.

Opposition and Remaining Uncertainties

Democratic lawmakers have urged the department to withdraw the proposal. Senators Bernie Sanders and Elizabeth Warren, along with others, have criticized the inclusion of private equity and crypto, citing higher fees and performance relative to traditional index funds. A National Institute on Retirement Security survey found that 77 percent of respondents viewed crypto in retirement plans as risky.

The final text is not yet public. It remains unknown whether the six-factor framework survived the comment period intact, how digital-asset vehicles are described, or what effective date will be set. Legal protection under the safe harbor would not eliminate the possibility of lawsuits, and future administrations could revise the rule.

Plan sponsors would still need to document their reviews carefully. Market participants continue to develop products that combine traditional assets with blockchain-based holdings, but regulatory clearance alone does not place any specific cryptocurrency on plan menus.

The Office of Information and Regulatory Affairs review marks the final interagency checkpoint before the Labor Department can publish the rule. Once that process concludes, employers will decide whether and how to incorporate alternative assets into the options available to their workers.