Advisory Note on Department of Labor’s 401(k) Alternative Investment Proposal

The Department of Labor (DOL) has recently proposed a new rule regarding investment options available in 401(k) plans. Through executive order, President Trump has directed the DOL to draft rules that would allow alternative investments such as private credit and cryptocurrency within these plans.

To support that effort, the DOL has outlined six factors that plan fiduciaries must follow to fulfill investment due diligence responsibilities: (1) performance, (2) fees, (3) liquidity, (4) valuation, (5) benchmarking, and (6) the complexity of the designated investment alternatives.

The proposed rule, titled “Fiduciary Duties in Selecting Designated Investment Alternatives,” has been published in the Federal Register, with a 60-day comment period running through June 1, 2026. We will continue to monitor updates as the DOL provides additional guidance following that period.

Considerations Around Alternative Investments

Generally speaking, alternative investments may not be the right fit within a 401(k) plan, particularly those referenced in the executive order, which include private credit and cryptocurrencies.

These asset classes introduce higher levels of risk and complexity, and without a clear understanding of those risks, 401(k) investors should exercise caution.

We continue to believe highly diversified, marketable solutions within TRB investment lineups remain appropriate for most plan objectives.

The DOL’s Six- Factor Framework

The proposed six factors are a useful framework for fiduciaries to evaluate investment options, and TRB Trust & Wealth Management has historically approached due diligence in a similar form:

• Performance: evaluating whether projected performance, given the economic environment, is appropriate to reach plan goals
• Fees: reviewing and comparing fees to determine if they are reasonable relative to the strategy and market conditions
• Liquidity: ensuring each strategy provides an appropriate level of liquidity based on approach and plan needs
• Valuation: confirming that asset pricing is adequate and available given the approach and plan needs
• Benchmarking: comparing performance to relevant benchmarks to assess whether strategies are meeting expectations
• Complexity: determining whether the level of complexity is appropriate for the strategy and the plan

Ongoing Fiduciary Responsibility

While the primary objective of the proposed rules may be to facilitate broader access to alternative investments, the introduction of these factors does not change the core responsibility of plan fiduciaries.

Our approach remains consistent. Each investment strategy is evaluated based on its role within the plan, its structure, and its ability to support long-term outcomes for participants.

We continue to believe that marketable, diversified solutions may provide more consistent outcomes in achieving plan goals compared to more illiquid or complex alternatives.