DOL Releases ‘Safe Harbor’ Regulation for Alts in DC Plans

The Department of Labor on Monday issued a proposed rule clarifying how alternative investments may be used in defined contribution retirement plans, marking a significant step in the agency’s evolving approach to private markets in 401(k)s and other DC plans.

The rule permits plan fiduciaries to include investments such as private equity and private credit within diversified, professionally managed options like target-date funds, while reaffirming that longstanding fiduciary duties under federal law continue to apply.

The proposed rule includes a regulatory safe harbor “to curb litigation risk” for fiduciaries who seek to include alternative investments into investment funds, according to the DOL. Comments on the proposal can be submitted to the DOL within 60 days of its publication in the Federal Register.

The guidance stops short of encouraging widespread adoption of alternative assets, instead emphasizing caution, documentation and risk management.

The rule arrives after a push from alternative asset managers hungry for access to the $12 trillion defined contribution market and as plan sponsors continue to weigh the potential benefits of broader diversification against concerns about liquidity, fees and litigation risk. The rule also comes as private credit funds have been reeling from an uptick in redemption requests as retail investors continue to look to pull their money out.

Alternative investments have long been accessible in DC plans, but adoption remains low often due to litigation concerns, which the proposed rule seeks to change. According to data from sister publication PLANSPONSOR’s 2026 Plan Benchmarking report, only 2.9% of plan sponsor respondents provided any investment options that include alternatives.

Under the DOL rule, fiduciaries must evaluate whether alternative investments are appropriate for their plan based on factors including liquidity constraints, valuation practices, cost structures and the role those investments play within a broader portfolio. The rule also underscores that such assets are generally intended to be used as components of multi-asset strategies, rather than as stand-alone options available for direct participant selection.

The guidance reiterates that fiduciaries are responsible for ensuring that any investment included in a plan lineup is prudent and in the best interest of participants, regardless of asset class. It also highlights the importance of clear communication with participants about how these investments function and the risk they may carry.

The proposed rule builds on earlier guidance issued in 2020 and 2021, which first acknowledged a potential role for private equity in DC plans but also raised concerns about complexity and oversight. The new regulation consolidates those positions into a single framework intended to guide plan sponsors as interest in private markets continues to grow.

While the rule provides additional clarity, it leaves key decisions in the hands of plan fiduciaries, who must determine whether and how to incorporate alternative investments within the constraints of their plans’ structure and participant needs.