Assets in the plan jumped 49 percent to $153 million during its first full year of existence in 2013, and almost all of that came because of growth in the funds, rather than new contributions or rollovers. The fee-free version of Medallion returned about 47 percent that year, compared with about 25.5 percent for the fee-paying version.

While seeking the IRA exemption, Renaissance also set up a new 401(k). (Such plans permit greater annual contributions than IRAs.)

Seeking Permission

Renaissance then returned to the Labor Department to ask for permission for the new 401(k) to invest in Medallion, too. In November 2014, the Labor Department said yes.

“The issue is tax fairness,” said Bill Parish, an investment advisor in Portland, Oregon, who has written on his blog about Renaissance. “To the extent that they’re eliminating taxes by stuffing deals in their retirement accounts, the rest of us end up paying more.”

Other hedge funds have included their own funds in 401(k) lineups, but Renaissance’s combination of an IRA and 401(k), as well as its government exemptions, are unusual.

“We review each of these applications case by case,” said Michael Trupo, a Labor Department spokesman.

As of the end of 2013, the most recent period for which data is available, Renaissance’s retirement plans held $193 million -- a small fraction of the about $23 billion the firm has under management. That was before the Labor Department opened Medallion to employees’ 401(k) accounts.

Over time, a bigger proportion of Medallion may move into the retirement accounts as those grow without fees and annual taxes.

‘Fairly Complicated’

The Renaissance exemption was one of the first “fairly complicated” hedge fund cases, said Ivan Strasfeld, who ran the Labor Department’s exemptions office until early 2012 and was involved in early discussions about Renaissance’s request.

But he said he didn’t think the exemptions were a tough call for the department, which focuses on retirement security for employees rather than maximizing tax receipts.

“These investors were very familiar with their own hedge fund,” Strasfeld said. “It didn’t present a sophistication issue that was often present in other cases.”