Key Takeaways
-
- The Trump administration has issued an Executive Order about facilitating 401(k) investments in “alternative assets,” which includes private funds.
- The Order directs the Secretary of Labor to examine current guidance and decide if it is appropriate for that purpose.
- The Order also directs the Secretary of Labor to issue guidance to clarify fiduciary responsibilities for 401(k) investing in alternative assets and to consider guidance for fiduciaries in selecting managers of asset allocation vehicles that include alternative assets. In addition, the DOL is directed to consider issuing a fiduciary “safe harbor” for investing in asset allocation funds that include allocations to alternative assets.
- This article discusses the guidance from the first Trump administration about the inclusion of private equity in asset allocation funds.
My last three articles, Things I Worry About (15), Things I Worry About (16) and Things I Worry About (17), reviewed the President’s August 7 Executive Order (EO) entitled Democratizing Access to Alternative Assets for 401(k) Investors (Democratizing Access to Alternative Assets for 401(K) Investors – The White House) and some of the misunderstandings about the EO.
This article focuses on the DOL’s guidance in a 2020 Information Letter issued by the first Trump administration on the inclusion of private equity in 401(k) plans. 06-03-2020.pdf The discussion in that Information Letter is relevant because it is foundational for any guidance that will be issued by the DOL in response to the EO.
