Opening 401(k)s to Private Equity, Crypto Tests New Safe Harbors

Richard Shea’s commentary was included in a Bloomberg Law article about a rule proposal from the Department of Labor that outlines a legal safe harbor for fiduciaries to offer more alternative investment assets in 401(k)s. The proposed rule would provide legal cover for fiduciaries who thoroughly consider six factors before adding private equity, cryptocurrency, and other non-traditional assets to plan menus.

Richard said the inclusion of six non-exhaustive factors could create more openings for plaintiffs to bring lawsuits if they feel a fiduciary didn’t satisfy every requirement.

“On the one hand, it’s very helpful to have a list of factors both to the courts, and the fiduciaries, and the plan sponsors to address these issues,” Richard believed. “But there’s a question, does this give plaintiffs more bullets to shoot at the fiduciaries?”