Capital Raising Considerations for Alternative Investment Managers Following the Department of Labor's (DOL’s) Proposed Safe Harbor for Alternative Investments in 401(k) Plans

Alternative investment managers are expected to have increased opportunities for capital raising if the US Department of Labor’s (DOL’s) proposed safe harbor “Fiduciary Duties in Selecting Designated Investment Alternatives Rule” becomes final, likely next year.

On March 30, 2026, the DOL proposed this landmark regulation that could fundamentally reshape the investment landscape for 401(k) plans in the US. The proposed rule would create a process-based safe harbor under the Employee Retirement Income Security Act of 1974 (ERISA) for plan fiduciaries selecting investments—including alternative investments such as private equity, real estate, venture capital, infrastructure, digital assets, and commodities—for participant-directed defined contribution retirement plans.

There are several considerations that alternative investment managers need to take into account to secure capital under the proposed rule, around liquidity, valuation, fees, complexity, benchmarks, and performance.

Key takeaways:

• Alternative investment managers are expected to see increased opportunities for capital raising targeting 401(k) plans if the proposed safe harbor “Fiduciary Duties in Selecting Designated Investment Alternatives Rule” becomes final next year.
• There are a handful of fund strategies and structures that are best suited for allocations from 401(k) plans, including private credit, interval funds, and tender offer funds, due to their regulatory, structural, and fiduciary parameters.
• There are a number of considerations funds need to take into account to best position themselves for 401(k) plans around liquidity, valuation, fees, complexity, benchmarks, and performance.

What Fund Structures & Strategies Are Best Suited for Allocations from 401(k) Plans? 

Private credit funds with quarterly liquidity, interval funds, and tender offer funds will likely be the first to receive allocations from 401(k) plans for a number of regulatory, structural, and fiduciary reasons.

• Private credit funds solve the liquidity mismatch. Even though private credit funds can be a hurdle for 401(k) participants who prefer daily liquidity, private loans can't be sold on demand. However, their quarterly redemption windows create a built-in buffer, and the fund manager knows approximately when liquidity events will occur and can plan around them, holding enough liquid assets or credit lines to meet redemptions and avoid a fire sale of underlying loans.
• Interval funds and tender offer funds align with existing regulatory frameworks. Interval and tender offer funds are registered under the Investment Company Act of 1940 and already have the disclosure, custody, and governance requirements the DOL expects from investments in 401(k) plans. ERISA fiduciaries are far more comfortable with these SEC-registered wrappers than with traditional LP structures because they already meet those abovementioned requirements.
• Interval and tender offer funds have daily NAV. Most 401(k) recordkeepers require daily NAV, which interval and tender offer structures can accommodate, unlike traditional closed-end private credit funds, making them operationally compatible in a fiduciary plan’s existing infrastructure.
• ERISA fiduciary liability favors familiar structures. Under ERISA, plan sponsors are personally liable for imprudent investment decisions. A registered, SEC-regulated fund with audited financials, standardized fee disclosures, and defined liquidity terms is a much easier investment to make than a side-pocket LP interest in a private credit vehicle. Additionally, the quarterly redemption window gives fiduciaries increased confidence in investing in registered alternatives since the manager(s) thought about the participant’s liquidity needs.

• The DOL’s evolving guidance supports registered alternatives. The DOL’s 2020 letter on private equity in DC plans stated that PE can be included if it is embedded within professionally managed asset allocation funds with built-in liquidity and valuation protections. Interval and tender offer funds meet those guidelines, unlike traditional PE or private credit.
• They can be offered as a sleeve inside a target-date fund or model portfolio. Rather than being a standalone election, these vehicles are most easily introduced as a component allocation (5%–15%) within a managed account, collective investment trust, or target-date fund. That structure prevents 401(k) participants from making concentrated, uninformed bets on illiquid assets.

What are Some Considerations for Alternative Investment Advisors When Targeting 401(k) Plans? 

There are a number of considerations that investment advisors to alternative investment funds need to take into account to best position themselves for allocations from 401(k) plans, around liquidity, valuation, fees, complexity, benchmarks, and performance.

• Liquidity management. Alternative investment funds will have to make sure their liquidity provisions accommodate 401(k) participants’ needs since 401(k) plans often require daily liquidity. Therefore, if they haven’t already done so, they will be required to structure vehicles with gated structures, redemption limits, or liquid sleeves. Participants who desire access to illiquid assets will have to access them as part of a target-date fund, which includes both liquid and illiquid assets, and only the liquid assets will offer daily liquidity, while the illiquid portion will sit underneath, largely untouched day-to-day.
• Valuation methodologies. Alternative investment funds need to have robust valuation policies since plan fiduciaries require credible, conflict-free, and transparent valuation processes. Managers who invest in less liquid assets must adopt robust, auditable fair-value frameworks that align with the plan’s reporting cycles.
• Fee transparency and value proposition. Alternative investment funds need to provide fee transparency. Although fees are not required to be the absolute lowest for 401(k) investors, they must be justified by risk-adjusted returns net of fees and any additional value provided, such as downside protection.
• Complexity and fiduciary education. Alternative investment managers will have to provide necessary education to plan fiduciaries so plan fiduciaries can fully understand all the intricacies around investing in these strategies and accurately explain their benefits and risks to participants in a way that is easy to understand.
• Meaningful benchmarking. Alternative investment managers will be required to provide meaningful benchmarks for performance measurement. Since alternative assets often lack direct traditional peers, managers will need to establish benchmarks with similar mandates, risk profiles, and strategies to satisfy the DOL’s safe harbor.

The Path Forward 

Although the rule is not expected to be final until next year, there are a number of things that alternative investment managers can do to demonstrate a presumption of prudence to be ready to receive allocations from 401(k) plans around liquidity, valuation, fees, complexity, benchmarks, and performance.

For further discussion on how EisnerAmper can help your fund be prepared to receive allocations from 401(k) plans, please use the form below to contact our team.