Kiplinger's May 2026 Tax Letter: The 401(k) Is Getting Access to Alternative Assets for the First Time

An ongoing policy shift is expanding what workplace retirement accounts can hold. Executive Order 14330 in August 2025 directed regulators to remove barriers that kept alternative investments out of 401(k) plan lineups. The Department of Labor rescinded earlier guidance that warned fiduciaries against private equity in defined contribution plans. A proposed safe harbor rule issued March 30, 2026 would guide fiduciaries selecting alternative assets, with comments due June 1, 2026 and a final rule possible by year-end. The change is expected to be implemented more likely in 2027. The shift targets regulatory and litigation concerns and valuation challenges that previously limited alternatives, while ERISA still requires fiduciaries to act prudently.

"Executive Order 14330, “Democratizing Access to Alternative Assets for 401(k) Investors,” signed in August 2025, directed the Department of Labor and the SEC to clear regulatory and litigation barriers that had kept alternatives from appearing in plan lineups. Five days later, the DOL rescinded earlier guidance warning fiduciaries against investing in private equity in defined contribution plans."

"On March 30, 2026, the DOL issued a proposed safe harbor rule for fiduciaries selecting alternatives. The comment period closes June 1, 2026, with a final rule possible by year-end and implementation more likely in 2027. The legal backdrop matters: ERISA requires fiduciaries to act prudently rather than banning specific asset classes."

"Agency guidance, litigation fear, and the difficulty of valuing illiquid holdings are what kept them out, and those are the pieces the DOL can address without Congress. For the typical saver, this shift opens the door to four major asset classes that were previously locked away."

"Private equity buys into companies off the public ticker, while private credit acts as the lender to those same firms. Real estate funds manage everything from commercial towers to apartment portfolios, and infrastructure funds scoop up “backbone” assets like data centers, energy pipelines, and toll roads."

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