In their constant pursuit of additional committed capital, fund managers have long waited with bated breath for full-throated authorization from the U.S. Department of Labor (DOL) to permit PE, hedge fund and other alternative assets to be included in 401(k)s and other plans under the Employee Retirement Income Security Act of 1974 (ERISA). The private funds industry has only received lukewarm assurances, however, that the practice is neither illegal nor necessarily favored. Changes in that and other ERISA-related issues were addressed in a program hosted by Strafford CLE Webinars that featured Ian L. Levin, partner at Schulte Roth; and Jennifer A. Neilsson, partner at King & Spalding. This first article in a two-part series details the narrow path for plan fiduciaries to include PE and hedge funds in 401(k)s, along with guidance for conducting an ERISA review of private fund documents. The second article
will describe the DOL’s evolving approach since 1979 to the inclusion of environmental, social and governance factors in plan investments and new changes introduced in a 2021 proposal. For coverage of previous Strafford programs, see our two-part series on corporate sponsorship of investment funds: “Overview, Key Terms and Unique Governance Issues
” (Jun. 22, 2021); and “Manager- and GP-Level Governance; Credit and Infrastructure Fund Issues
” (Jun. 29, 2021).