On August 7, 2025, the White House issued an executive order telling the Department of Labor (DOL), the Department of the Treasury, and the Securities and Exchange Commission to remove regulatory and litigation friction that had kept participant-directed 401(k) plans from offering professionally managed exposure to private markets.¹ Five days later, on August 12, 2025, DOL withdrew its December 21, 2021 supplemental statement on the 2020 private-equity letter and said explicitly that it was returning to a neutral, principles-based approach.² Read together, those actions reopen the path DOL first described in 2020: ERISA does not categorically bar a 401(k) from using a target-date fund, balanced fund, or bank collective investment trust that holds a limited sleeve of private credit or private real estate, so long as the fiduciary can show prudence, manage liquidity, value the assets on the plan’s schedule, and document that fees are reasonable for the service provided.³

The market read that signal clearly. In mid-October 2025, Blackstone announced a unit dedicated to channeling retirement savings into private investments, which is the clearest possible proof that large managers now see a real defined-contribution distribution channel for private credit—not just a white paper.⁴ Vehicles of that kind will want senior or unitranche, floating-rate, clearly documented loans that can be valued quarterly and explained to plan participants. That is precisely the kind of paper banks, commercial real estate lenders, and sponsor-backed private-credit funds are already originating. Once retirement plans are allowed to sit at that table, lenders either have to sell to them or compete with them.

What Actually Shifted

The June 3, 2020 DOL information letter already said, in plain language, that a plan fiduciary “would not, in the view of the Department,” violate ERISA simply because it offered a professionally managed asset-allocation fund with a private-markets component, provided that the exposure was indirect, was part of a diversified strategy, and was supported by a prudent selection and monitoring process.⁵ The 2021 supplemental statement did not change that legal conclusion, but its tone—warning that many 401(k)-type plans might not be equipped to evaluate private-market investments as designated alternatives—was enough to make many sponsors, recordkeepers, and platform providers pause.⁶ The August 12, 2025 rescission removes that chill and tells fiduciaries to go back to the 2020 framework.⁷ The August 7, 2025 executive order supplies the policy wind behind that framework.⁸

Why Lenders Should Care

Banks and nonbanks are heading into late 2025 with tighter capital and concentration rules as the Basel “endgame” proposals and parallel prudential guidance filter through. In that environment, selling down pieces of commercial real estate, construction, and sponsor-backed corporate loans is often the only way to keep the client. A defined-contribution private-credit vehicle—especially one embedded in a target-date sleeve or a bank collective—can now be that take-out buyer, but only if the loan looks like something a plan fiduciary can defend: standard LSTA/LMA-style documentation, a clear collateral and appraisal package where the loan is real-estate-backed, scheduled financial and covenant reporting to support quarterly valuation, commercially reasonable fees, and servicing through an institution the plan already trusts. If retirement dollars can fund that loan without bank-capital costs, they can sometimes take it at a spread a lender would not prefer to hold.

How to Stay in the Flow

The practical move for lenders is to originate “DC-ready.” That means building and maintaining a data room with the credit memo, appraisals, covenant-compliance histories, KYC, and fee disclosures; drafting reporting provisions that let a fund’s valuation committee strike periodic NAVs; and being willing to co-lend so the DC vehicle takes the plain senior piece while the bank or private lender keeps the bespoke, relationship-driven piece. Lenders that do that will treat retirement money as a new, sticky distribution channel. Lenders that do not will watch defined-contribution products buy around them.

The Remaining Ceiling

Nothing in August 2025 relaxed ERISA’s prudence or loyalty rules; DOL said so in the rescission.⁹ State regulators have also signaled that they will watch closely for high-fee, illiquid products being pushed into small plans in response to the federal policy shift, which means plan fiduciaries will demand bank-quality loans, not bespoke, thinly documented credits.¹⁰ That scrutiny is exactly why lenders who want their paper bought by 401(k) vehicles will need to make it look and report like institutional credit.