Key insights
- The DOL's proposed rule easing private equity inclusion in 401(k)s raises concerns about fiduciary duty and potential underperformance. The "safe harbor" provision shields plan managers, making it difficult for employees to sue over poor returns or high fees. Increased allocation to illiquid private equity within target-date funds could negatively impact long-term retirement savings, especially for those with a "set and forget" approach.
I haven't seen anyone talking about this here yet, but the Department of Labor has a proposed rule out right now (Docket EBSA-2026-0166-0001) that basically gives 401k plan managers a legal "safe harbor" shield if they choose to dump private equity or private credit into target date funds and default plan lineupsFiduciary Duties In Selecting Designated Investment Alternatives - Regulations.gov.
The way it’s written, if an employer ticks off a basic procedural checklist when choosing these alternative funds, they get a "presumption of prudence."Legal Alert: Department of Labor Advances Proposed Rule Expanding 401(k) Access to Private Capital - Shulman RogersThat means when the underlying assets inevitably underperform or the multi-layered fee drag eats up your returns, it is going to be almost impossible for everyday employees to sue them for a breach of fiduciary dutyDOL 401(k) Fiduciary Rule Enables Accounting Fraud | The CommonSense 401k Project.
This is a massive conflict with the whole Boglehead philosophy. We are talking about replacing low-cost, liquid, daily-valued index funds with completely opaque, illiquid assets that have predatory fee structures DOL 401(k) Fiduciary Rule Enables Accounting Fraud | The CommonSense 401k Project. The real danger is they want to bake this directly into Target Date FundsDOL 401(k) Fiduciary Rule Enables Accounting Fraud | The CommonSense 401k Project. Anyone who just "sets and forgets" their retirement account is going to get auto-allocated into a private equity sleeve without even realizing it, just so Wall Street firms can find a new batch of retail bag holders to dump their illiquid assets onWith the private equity 401k EO have an impact on us? : r/Bogleheads - Reddit.
The public comment window shuts in just a few days on June 1st. If you want to submit a formal comment to the DOL telling them that high fees and opaque active management do not belong in retail retirement accounts, you can submit your data directly on the Federal Register site: