The Department of Labor has received more than 47,000 public comments on its proposal to make it easier for 401(k) plans to offer private assets, and it has said it wants to publish a final rule before the end of the year. If it does, a market that retirement plans have mostly avoided for decades could open within months, with effects that reach well beyond the retirement industry. Here is where the proposal stands and what to watch before it becomes final.
Where the proposal stands
The proposal, released on March 30, 2026 under the title “Fiduciary Duties in Selecting Designated Investment Alternatives,” follows an executive order signed in August 2025 that directed the department to revisit its guidance on alternatives in retirement plans. The comment period closed in June, and as of mid October the rule is still a proposal.
It does not require any plan to add private assets. Retirement plans were never barred from offering them. Fiduciaries stayed away because the legal risk of getting it wrong, in a class action, outweighed the appeal of getting it right. The proposal addresses that risk with a process based safe harbor. A fiduciary that objectively and thoroughly weighs six factors, performance, fees, liquidity, valuation, benchmarks and complexity, and documents the conclusion on each, is presumed to have met ERISA’s prudence standard for that factor. Law firms reviewing the text stress that the safe harbor reduces litigation risk without eliminating it.What has moved since March
What has moved since March
The industry has not waited for the final text. Several large asset managers have said they expect to bring target date funds that include private assets to market, and alternatives are already available in some plans through collective investment trusts.
Opposition has not faded either. When the proposal was released, consumer advocates called it dangerous and argued it could steer workers’ savings into risky, opaque and high fee investments, while industry groups said it correctly emphasizes fiduciary process. With more than 47,000 comments on file, the final text may look different from the proposal.
Why liquidity and valuation are the real test
Two of the six factors carry most of the practical weight. Retirement plans typically value holdings daily, while many private assets are valued quarterly, an operational gap EisnerAmper calls a major challenge. And a traditional closed end private fund, with capital calls, complex tax reporting and a ten year lockup, does not fit inside a plan at all.
That is why attention has turned to evergreen funds. According to industry tracking data, investors subscribe monthly at net asset value, redemptions are requested quarterly and capped at 5 percent of fund assets, and managers typically hold a cash buffer of 10 to 20 percent to meet them. Trackers count 252 registered evergreen vehicles in the United States with 431 billion dollars in net assets. Most of that sits in private credit and real estate, where regular income helps fund redemptions, and the ten largest funds hold roughly half the total.
Valuation also draws a line in the proposal. In one law firm’s reading, a valuation process that the manager itself controls, such as a continuation fund where the manager sets the inputs, would not qualify for the safe harbor.
The size of the opening
Industry estimates put the 401(k) opportunity that asset managers want to tap at about 13.8 trillion dollars. One analysis offers a sense of scale with an illustration rather than a forecast: U.S. defined contribution plans held 12.2 trillion dollars at the end of 2024, and a 2 percent shift in target date fund allocations would send roughly 244 billion dollars toward evergreen vehicles, more than half of the current U.S. evergreen market.
Adoption is unlikely to be fast even after a final rule. Target date funds are expected to be the first route, large corporate plans are expected to move before small ones, and the same analysis expects fee related litigation to follow the first major adoption.
What it means for private investors and family offices
A family office’s own access to private markets does not change with this rule. The effects are indirect, and three are worth watching.
The first is structure. If retirement money flows into evergreen vehicles, the terms those funds set on liquidity, fees and reporting become the reference point for the whole category. Analysts note that plan share classes will need lower fees and no performance allocation, and that sets a visible benchmark.
The second is valuation. A safe harbor that puts weight on timely, unconflicted marks will push managers toward more transparent valuation practices, and private investors can reasonably ask for the same standard on their own commitments.
The third is competition for allocations, particularly in private credit and real estate where evergreen assets are concentrated. Whether this ends up pressing on pricing or terms for other investors depends on how quickly plans actually adopt, and nobody can answer that yet.
What to watch before year end
Three markers will tell us how much changes. The first is the final rule itself, including whether the six factors survive intact after more than 47,000 comments. The second is the first large plan to add a private allocation, which will show how fiduciaries handle the liquidity and valuation questions in practice. The third is how evergreen funds behave when redemption requests rise, because a structure that works in calm markets is judged by its worst quarter.
For investors who already hold private assets directly, the opening of the 401(k) is less a threat than a signal. The industry is being asked to prove that its liquidity, fees and valuations hold up in front of the most litigation sensitive buyers in the market. The standards that emerge from that test are likely to travel well beyond retirement plans.
