Private Equity Options for 401(k)s Bring Litigation Uncertainty

New guidance from the Trump administration has reassured those managing 401(k)s that private equity investments are acceptable options for plans, but attorneys warn it won’t shield against litigation by participants unhappy with their returns.

In a guidance letter Wednesday, the Department of Labor’s Employee Benefits Security Administration said a fiduciary of an individual account can offer an asset allocation fund with a private equity component so long as they evaluate the risks and benefits involved and follow their duties under the Employee Retirement Income Security Act to act prudently. But ERISA attorneys say the letter doesn’t bless particular formulations of ...