DOL rule could open 401(k) plans to crypto, real estate and private markets

BlackRock Global Head of Retirement Solutions Nick Nefouse joins ‘Varney & Co.’ to discuss a proposed rule expanding 401(k)s to crypto and real estate.

A proposed Department of Labor rule could significantly expand what Americans are able to hold inside their retirement accounts, potentially opening the door to assets like cryptocurrency, real estate and private markets.

BlackRock Global Head of Retirement Solutions Nick Nefouse described the rule as “a huge step forward for the 401(k) market” while discussing what the change could mean for everyday investors during his appearance on “Varney & Co.” Tuesday.

Labor Secretary Lori Chavez-DeRemer joins ‘Mornings with Maria’ to discuss a sweeping proposal to expand 401(k) investment options, potentially opening the door to crypto and real estate for millions of Americans.

“The proposed regulation explains the steps that managers of 401(k) plans should take when considering alternative assets as a component in their investment lineups and establishes a set of process-based safe harbors for plan fiduciaries to use when selecting designated investment alternatives,” the Labor Department said in a press release on March 30.

Rather than endorsing specific investments, Nefouse suggested that the proposal is focused on creating a structured process for plan providers to follow when evaluating alternative assets.

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“What the rule is trying to do… is establish a process, not necessarily say which asset classes are good or bad,” Nefouse said.

United States Department of Labor headquarters in Washington, D.C. (Celal Gunes/Anadolu via Getty Images / Getty Images)

The shift could narrow a long-standing gap between retirement systems. While large institutional-style plans already have access to a wider range of investments, many workers in traditional 401(k) plans do not.

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“Think of regular people. About 25% of the population are in defined benefit plans. About 80% are in defined contribution plans,” Nefouse said. 

“What we’re trying to do is level the playing fields, and so many Americans are relying on 401(k) plans,” he added.

The change could broaden access to investment options that have traditionally been limited to institutional retirement plans.

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