Key Takeaways
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- 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 of 401(k) plan fiduciaries when 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 continues the discussion about the guidance from the first Trump administration on the inclusion of private equity in asset allocation funds. In all likelihood, that will be the basis for any new guidance.
My last four articles, Things I Worry About (15), Things I Worry About (16), Things I Worry About (17) and Things I Worry About (18), 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 discussed DOL guidance from the first Trump administration about the selection of asset allocation investments with private fund allocations.
This article continues the discussion in my last article about the 2020 DOL Information Letter (06-03-2020.pdf) and its discussion about the inclusion of an allocation to private equity in an asset allocation fund, such as a collective investment trust (CIT). That guidance is important today, since it will almost certainly be the foundation of the new guidance that the Executive Order directs the DOL to issue.
