Labor Department Proposes Safe Harbor to Add Crypto and Private Markets to 401(k) Menus

Overview

• The Labor Department issued a proposed rule that would let employers list cryptocurrency, private equity, private credit and other alternative assets alongside mutual funds in 401(k) plans.
• The draft creates a process-based safe harbor that tells plan fiduciaries to review performance, fees, liquidity, valuation, benchmarking and product complexity before adding an option.
• The White House describes the move as expanding worker choice, and a group of Republican lawmakers voiced support for broader access to these funds.
• Critics warn that these assets can be volatile, illiquid and fee-heavy, with lockups and withdrawal limits that can make savings hard to tap and can erode long-term balances.
• Recent stress in private credit vehicles, including capped redemptions at Blue Owl funds, highlights liquidity and valuation risks that could deter employers and still leave them open to lawsuits even with a safe harbor.