1210-AC38 comment 3618 McGuire, Patricia 06012026
Patricia McGuireOpposeIndividual
Summary: The commenter opposes the proposed rule, arguing that it normalizes risky, illiquid "alternative" investments in 401(k) plans while creating safe harbors that shield investment managers from liability. They advocate for the withdrawal or substantial revision of the rule to better protect retirement savers from potential losses.
Department of Labor
Employee Benefits Security Administration
RE: Comment in Opposition to Fiduciary Duties In Selecting Designated Investment Alternatives - RIN 1210 AC38
Dear Assistant Secretary and Staff:
I submit these comments in opposition to the above-referenced proposed rule. This rule appears to pose significant risks to retirement savers by 1) normalizing the inclusion of private equity and other illiquid “alternative” investments in 401(k) plans, and 2) establishing processes that could essentially remove liability should a fund or investment manager’s decisions to make “alternative” investments result in negative impacts to investors to such a degree that the investors would then pursue legal action.
All 401(k) participants know that there is risk associated with retirement investments, and many have borne significant losses due to market downtowns over the years. We also know that this type of retirement plan was established to provide security after decades of work and there have been a number of changes over the years to make it work as best as possible.
It is reasonable for 401(k) participants to expect that changes to include more risky investment options in investment portfolios would begin with clear provisions to protect the retirement investor. But the proposed rule outlines the parameters and processes an investment manager is able to use to protect themselves from liability. At its most basic level, this rule provides no clear, straightforward, or understandable mechanism for assuring the safety and appropriateness of these additional “alternative” investments for the purpose of retirement investing; its focus on the processes for creating a safe harbor for fund managers is antithetical to the need for trust and accountability between fund managers and 401(k) investors.
Where is the safe harbor for the retirement investor? It is not included in this proposed rule. Withdraw or substantially revise it and please, do your best to protect 401(k) retirement plan participants.