"The proposed rule could steer some of the trillions of dollars held in stock and bond funds into more opaque and higher-risk holdings, like private credit, a market for lending by alternative asset managers that has recently shown signs of strain."
"Keith Sonderling, the deputy labor secretary, stated that the rule clearly spells out that managers must evaluate any and all potential product offerings by following a prudent process."
"Plan fiduciaries must adhere to a law known as ERISA, which requires them to act solely in the best interests of employees, including choosing prudent investment options."
The Trump administration proposed a rule allowing 401(k) retirement savings to be invested in riskier alternative assets like private equity, private credit, real estate, and cryptocurrency. This rule aims to reduce regulatory burdens for plan sponsors and facilitate the inclusion of these investments in retirement plans. While not explicitly prohibited before, such options were rarely available to employees. The rule emphasizes that plan fiduciaries must evaluate investments prudently, adhering to ERISA requirements, and allows for a process-based safe harbor for investment evaluation.
Read at www.nytimes.com
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