Roughly 90 million Americans with 401(k) plans have had access to the same basic menu: public stocks, bonds, and target-date funds. Alternative assets like private equity, private credit, real estate & digital assets including Bitcoin & other cryptocurrencies have stayed mostly out of reach, not because the law prohibited them, but because the litigation risk made most plan fiduciaries too nervous to go near them. The U.S. Department of Labor shared a proposed rule on March 31, 2026 that is designed to change that & the implications stretch beyond retirement savings.

• What the Rule Actually Does
• The Six-Factor Safe Harbor
• Where Crypto & Digital Assets Fit
• What This Does Not Do

What the Rule Actually Does

The proposed rule, published by the Employee Benefits Security Administration under ERISA section 404(a)(1)(B), creates a process-based safe harbour for plan fiduciaries selecting investment alternatives for participant-directed defined contribution plans. When a fiduciary follows the process outlined in the rule their decision is presumed prudent & entitled to significant deference in any subsequent litigation.

That last part is the point. The rule is not primarily about adding crypto to 401(k)s. It is about reducing the litigation risk that has made plan sponsors avoid anything outside the conventional menu in the first place. Over 500 excessive fee cases have been filed since 2016, with more than a billion dollars paid in settlements. Plans with perfectly reasonable investment processes have spent millions defending themselves before cases were ultimately dismissed. That environment has produced a predictable result: plan sponsors offer the safest-looking options, not necessarily the best ones for participants.

The rule traces directly to Executive Order 14330, signed by President Trump on August 7, 2025, which directed the Department to reexamine guidance on alternative assets in retirement plans & create appropriately calibrated safe harbours. It builds on the Department's May 2025 rescission of Biden-era guidance that had urged plan fiduciaries to exercise extreme care before adding any cryptocurrency to a 401(k) menu. The proposed rule restores what the Department calls its historically neutral position, no asset class is favoured or prohibited by ERISA, as long as it is not otherwise illegal.

The Six-Factor Safe Harbor

The safe harbour identifies six non-exhaustive factors that fiduciaries must consider when selecting any designated investment alternative. The factors apply equally to traditional & alternative assets, the rule is explicitly asset-neutral & does not favour one category over another.

Performance is the first factor. Fiduciaries must consider risk-adjusted expected returns net of fees over an appropriate time horizon, compared against a reasonable number of similar alternatives. The rule is clear that selecting the highest-returning option is not the standard, maximising risk-adjusted returns for a given level of risk is.

Fees are the second. The fiduciary must determine that fees are appropriate relative to the risk-adjusted returns & any other value the investment brings. Crucially, the rule states that fiduciaries are not required to select the cheapest option. A higher-fee investment can be prudent if the value proposition justifies it.

Liquidity is the third. Fiduciaries must confirm that the investment can meet the anticipated needs of the plan at both the plan & participant levels. The rule explicitly acknowledges that illiquid investments can be appropriate particularly for younger participants with long time horizons as long as the liquidity tradeoffs are understood & documented.

Valuation is the fourth. The investment must have adequate measures to ensure timely & accurate valuation. For publicly traded assets, exchange prices satisfy this. For private assets, the rule accepts independent quarterly valuation processes meeting established accounting standards.

Performance benchmarking is the fifth. Fiduciaries must identify a meaningful benchmark with similar mandates, strategies, & risk characteristics to the investment being considered. For alternative assets with mixed exposures, custom composite benchmarks are explicitly permitted.

Complexity is the sixth. Fiduciaries must confirm they have or have obtained through qualified advisers, the skills & knowledge to understand the investment sufficiently to discharge their obligations. This factor is particularly relevant for private equity, private credit, & digital asset funds with sophisticated fee structures.

When a fiduciary objectively considers & makes determinations on any of these factors following the described process, their judgment on that factor is presumed reasonable. The Department describes this as providing confidence to act without undue fear of litigation.