DOL Approves Private Equity in TDFs


The Department of Labor has given the green light to private equity investments in professionally handled funds within 401(k)s. In a detailed Information Letter, the head of Division of Fiduciary Interpretations at the Employee Benefit Security Administration’s Office of Regulations and Interpretations confirms private equity investments as a piece of a professionally operated multi-asset class vehicle structure as a target risk, target date or balanced fund can be given as an investment choice for plan participants in distinct contribution plans under ERISA law.

The letter clarifies that a plan fiduciary would not “violate the fiduciary’s duties under section 403 and 404 of ERISA solely because the fiduciary offers a professionally managed asset allocation fund with a private equity component as a designated investment alternative for an ERISA covered individual account plan as described in this letter.”

Though the DOL signs off on the utilization of private equity investments in professionally managed investment funds, it does not permit make these investments ready for direct investment on a standalone basis. Click here to read the letter in full.

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