A Labor Department rule aimed at easing the inclusion of alternative assets like private equity and crypto into 401(k) plans faces skepticism from employers. While proponents, including firms like Blackstone and KKR, argue diversification benefits workers, the proposed safe harbor may not fully shield sponsors from lawsuits if these riskier investments falter.

Industry giants have long pushed for access to the $12 trillion defined-contribution market, citing the existing inclusion of alternatives in pension plans. The new framework requires plan sponsors to evaluate products on six criteria—performance, fees, and complexity among them—to satisfy fiduciary duty. However, legal experts suggest plaintiffs can still challenge the process's reasonableness.

Investor advocates worry that individual savers, lacking sophistication, will be steered toward high-cost, underperforming products, especially since assets like private credit are currently showing stress. Furthermore, the Supreme Court’s decision eliminating the Chevron doctrine makes it easier for judges to dismiss the Labor Department’s guidance as merely one opinion on prudence.

This regulatory move arrives as several beneficiaries feel market pressure; Blue Owl’s stock has dropped over two-thirds from its peak amid redemption requests. Employers must now conduct substantially more due diligence on these opaque offerings, as mere compliance with the new evaluation factors offers no absolute immunity.