MFA Issues 401(k) Principles in Response to Trump’s Executive Order on Alternatives
Managed Funds Association (MFA) has released a set of five guiding principles for 401(k) plans in response to President Donald Trump’s recent executive order aimed at expanding access to alternative assets in defined contribution retirement plans. The framework is designed to broaden investment choices for retirement savers, provide clarity to plan sponsors, and improve long-term outcomes for participants.
“Retirement savers are best served by having access to a broad range of investment options that meet their long-term horizons,” said Bryan Corbett, MFA president and CEO. “These principles offer a roadmap to help policymakers empower fiduciaries and reduce legal uncertainty to improve retirement security for America’s workers.”
The MFA highlighted that alternative strategies can play a constructive role when incorporated into diversified options such as target-date funds, particularly for participants with longer investment horizons. The group stressed that regulatory guidance should be strategy-neutral and process-based, allowing fiduciaries to select the most suitable investment mix without undue restrictions.
On the question of fees, the principles caution against making cost the sole determining factor in investment decisions. Instead, fees should reflect the complexity of the strategy, the services provided, and the demographics of the plan’s participants. The MFA reminded policymakers that ERISA does not require plans to always select the lowest-cost option.
The document also addresses the growing wave of litigation against plan sponsors, warning that “overzealous” lawsuits have discouraged innovation and pushed sponsors toward commoditized products, often at the expense of long-term returns. The MFA urged policymakers to pursue reforms that reduce litigation risks and restore fiduciaries’ flexibility to exercise sound judgment in offering investment options.
