DOL Reverses Biden-Era Guidance on Private Equity in 401(k) Plans
The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has formally rescinded a 2021 supplemental statement that discouraged plan fiduciaries from offering private equity as part of 401(k) plan investment options. The Biden-era guidance, issued under then-acting EBSA leadership, warned that most fiduciaries were “not likely suited to evaluate” the complexities of private equity within designated investment alternatives.
This stance rolled back a 2020 Trump administration letter that took a more permissive position, clarifying that fiduciaries could offer private equity exposure—typically through diversified, professionally managed vehicles—without violating their ERISA duties. The 2021 statement’s cautionary language was widely seen in the industry as a deterrent to innovation in defined contribution (DC) plans.
“This is just another example of how the Biden administration put their thumb on the scale to pick winners and losers,” said U.S. Secretary of Labor Lori Chavez-DeRemer. “Instead of allowing Washington bureaucrats to call the shots, we believe plan fiduciaries should decide which retirement investment options are best for hardworking Americans.”
The rescission follows an executive order from President Trump last week instructing the DOL to “clarify” its position on alternative investments, with a clear intent to restore the broader investment latitude granted in 2020. Industry observers anticipate that future guidance will closely resemble the original 2020 DOL letter, which confirmed that plan administrators would not breach ERISA fiduciary duties by offering private equity allocations.
The Investment Company Institute praised the rapid policy shift, saying it demonstrates the Department’s intent to give millions of American retirees broader access to private market opportunities through their professionally managed retirement plans.
