Attorneys representing plan participants say they will challenge new Department of Labor (DOL) rules that “facilitate” inclusion of private equity as investment options in 401(k) (and other) participant-directed retirement plans. They say that ERISA preempts agency guidance and the President’s executive order directing DOL to “facilitate” inclusion of “alternative investments” (including private equity) in employer-sponsored retirement plans.
The President’s August 7 EO also directs DOL to prioritize actions that would curb “frivolous” ERISA litigation. Generally, employers sponsoring retirement plans approve of the Administration’s effort to make it harder for plan participants to sue for violation of fiduciary standards. But any such efforts must comply with ERISA, some attorneys say, and so they plan to continue lawsuits—which have been spiking since 2020—focused on excessive fees as a violation of fiduciary duty.
Prospects: A DOL regulation implementing the President’s alternative investment EO creates a challenge for the agency. The expectation is that DOL will have to create a safe harbor that is broad enough to encompass the alternative investments (including lifetime income products, private equity, cryptocurrency and others), but still narrow enough to comply with ERISA and pass muster under an Administrative Procedure Act (APA) review. There is as yet no timeline for proposed regulations implementing the President’s EO on alternative investments in retirement plans.
NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.