The Department of Labor is allowing companies to include private equity funds in defined contribution plans like 401(k)s, according to news reports.

Companies will be able to do so as long as they first carefully assess fees and risks of the investments, the Wall Street Journal writes, citing guidance from the DOL.

The guidance “helps level the playing field for ordinary investors,” U.S. Secretary of Labor Eugene Scalia says in a statement, according to the newspaper.

The move is likely also welcomed by private-equity fund managers, which have been shut out of the $6.2 trillion 401(k) market, the Journal writes. The DOL issued the guidance at the request of Partners Group and Pantheon Ventures , which offer private-equity funds designed to be included in 401(k) plans, according to the newspaper.

The Committee on Investment of Employee Benefit Assets Inc. — which counts among its 100 investment officers those at Walmart, Exxon Mobil and General Electric — welcomed the DOL’s guidance, saying it would “diminish the perception” that investing in alternative assets would increase the risk of litigation, the Journal writes.

While federal laws don’t prohibit firms from including private equity funds in 401(k)s, few actually do so for fear of litigation, says Josh Lichtenstein, a partner at law firm Ropes & Gray, according to the newspaper. That’s in part due to a lawsuit brought by a former employee against Intel in 2015 accusing the firm of violating its fiduciary duty by including private equity and hedge funds in its company plan, Lichtenstein tells the Journal. The Supreme Court ruled in February that the suit can proceed, according to the newspaper.

Advocates of allowing retail investors access to alternative assets argue that such assets, despite charging higher fees, also offer the possibility of higher returns, the Journal writes. 

Regulators have been moving in that direction as well. In addition to the DOL’s recent move, the SEC voted in December to amend the definition of “accredited investor” to allow more investors access to private markets, as reported. 

SEC Chairman Jay Clayton, meanwhile, worked with the DOL on its guidance about permitting private equity funds in 401(k)s, according to the Journal. 

But the SEC’s move to expand the accredited investor definition met criticism from the attorneys general of 11 states, who said the move “ignores the serious risks that private placement offerings pose for individual investors.” 

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