New DOL information letter sheds light on how US defined contribution retirement plans (such as 401(k) plans) may offer private equity investments in compliance with ERISA.

Key Points:

..Private fund sponsors and “fund of funds” can now potentially access large pools of defined contribution retirement plan capital that, as a practical matter, had been off limits.

..Financial institutions (and other investment managers) are likely to create investment vehicles designed to capture some of this market by creating appropriate multi-asset class vehicles that include private equity investments as a component.

..The DOL letter offers plan fiduciaries, including investment advisors and asset managers, helpful guidance on how to meet their ERISA obligations when designing, selecting, and offering participants an investment option that includes a private equity component.