WASHINGTON (dpa-AFX) - President Donald Trump has signed an Executive Order to allow 401(k) investors to access alternative assets for better returns and diversification.
The Order directs the Secretary of Labor to reexamine the Department of Labor's guidance on a fiduciary's duties regarding alternative asset investments in ERISA-governed 401(k) and other defined-contribution plans.
The Order instructs the Secretary of Labor to clarify the Department of Labor's position on alternative assets and the appropriate fiduciary process associated with offering asset allocation funds containing investments in alternative assets.
The Order directs the Secretary to consult with the Secretary of the Treasury, the Securities and Exchange Commission, and other federal regulators to determine whether parallel regulatory changes should be made at those agencies to give effect to the purpose of the Order.
The Order also directs the Securities and Exchange Commission to facilitate access to alternative assets for participant-directed defined-contribution retirement savings plans by revising applicable regulations and guidance.
More than 90 million Americans participate in employer-sponsored defined-contribution plans, and most of those are currently restricted from investing in alternative assets, unlike wealthy investors and retirement plans for government workers.
Alternative assets, such as private equity, real estate, and digital assets, offer competitive returns and diversification benefits.
Regulatory overreach and litigation risks have limited ERISA-governed plan fiduciaries from including alternative assets in their investment portfolios, hindering workers' retirement growth, according to the White House.
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