City’s Retirement Plan Committee to Review Federal Push to Expand Alternative Investments

The City of Pasadena’s Deferred Compensation Trust Administration Committee is scheduled to review a quarterly fiduciary newsletter on Aug. 4 that outlines a federal push to open workplace retirement plans to alternative investments, along with other recent regulatory developments, according to the agenda packet for the meeting.

The 457(b) Plan Fiduciary Advisor Newsletter, prepared by the Fiduciary Consulting Group for the second quarter, is an information item that would not require the committee to take action. But it previews policy shifts that could eventually reshape the investment menu and the rules governing the plan, which serves as a primary retirement savings vehicle for Pasadena city employees.

The newsletter highlights a proposed U.S. Department of Labor rule, “Fiduciary Duties in Selecting Designated Investment Alternatives,” released March 19. According to the newsletter, the rule responds to an executive order issued by President Trump on Aug. 7, 2025, titled “Democratizing Access to Alternative Assets for 401(k) Investors,” which directs the Department of Labor, the Securities and Exchange Commission and other federal agencies to revise guidance and reduce legal barriers that have kept defined-contribution plans, most notably 401(k)s, from offering alternative investment options.

A separate executive order would promote access to individual retirement accounts, the newsletter says. It notes that cost and quality criteria in the order could narrow which accounts qualify for a planned marketplace and may spur development of new, low-cost, index-based products. The newsletter points out that the federal Saver’s Match is set to take effect Jan. 1, 2027, leaving custodians and recordkeepers a limited window to build the systems needed to deliver the matching contributions.

The update also flags the launch of a state-level clearinghouse for uncashed retirement plan checks. The States’ Unclaimed Retirement Clearing House, created by the National Association of Unclaimed Property Administrators, a division of the National Association of State Treasurers, offers an online portal through which plan sponsors and recordkeepers can voluntarily report missing retirement funds.

Finally, the newsletter summarizes Internal Revenue Service guidance, Notice 2026-33, clarifying disclosure requirements for qualified long-term care distributions from defined-contribution plans under Section 334 of the SECURE 2.0 Act. Under that provision, participants may take annual distributions equal to the lesser of their premium cost, 10 percent of their vested benefit or $2,600 for 2026, without triggering the 10 percent penalty for early distributions, though the distributions remain subject to income tax.

The newsletter is one of several items on the committee’s Aug. 4 agenda, which also includes the plan’s quarterly performance report.

The Deferred Compensation Trust Administration Committee is scheduled to meet at noon on Tuesday, Aug. 4, in Pasadena. For more information call (626) 744-7311 or visit https://www.cityofpasadena.net/commissions/agendas/.