DOL Withdrawal of Current Guidance for Retirement Plan Investments: Private Equity, Cryptocurrency, and ESG Investing

Description

On May 28, 2025, the DOL announced its plans to rescind its 2022 ESG rule (and presumably the portion of that rule that addresses proxy voting activities on behalf of ERISA plans) and rescinded its 2022 guidance cautioning plan fiduciaries to exercise “extreme care” when permitting cryptocurrency and other digital asset investments in 401(k) retirement plans. We also expect an Executive Order encouraging investments in alternative assets classes, such as private equity. While the change in policies presents opportunities, related changes to benefit plans must be managed carefully in light of ERISA’s requirements and the possibility of related litigation.

In 2022, the DOL issued guidance regarding the inclusion of cryptocurrency investment options in 401(k) plans, with stark warnings regarding (1) the fiduciary duty of prudence and personal liability; (2) security risks; (3) recordkeeping and custody; (4) valuation challenges; and (5) liquidity and diversification concerns. However, in light of the recent withdrawal of such guidance, plan sponsors and fiduciaries must grapple with ERISA rules and monitor carefully retirement plan investments to minimize risks and potential claims. In addition, rules governing consideration of ESG factors in investment decisions are in flux, with the DOL stating that they will engage in new rule-making with no indication of the extent to which the forthcoming regulation will depart from prior guidance. The DOL previously issued guidance on 401(k) plans investing in alternative assets classes and we expect the current Administration to promote such investments.

Listen as our panel discusses the impact of the DOL’s withdrawal of the ESG rule and cryptocurrency guidance and what is expected with regard to investing in alternative assets classes.