President Trump Signs Executive Order Allowing Private Equity and Crypto in 401(k) Plans
On August 7, 2025, President Donald J. Trump signed a landmark executive order aimed at expanding the investment options available in 401(k) and other employer-sponsored defined-contribution retirement plans. This directive paves the way for private equity, cryptocurrency, real estate, and other alternative investments to be incorporated into Americans’ retirement portfolios, a significant shift aimed at democratizing access to these asset classes traditionally limited to wealthy investors and public pension plans.
Expanding Investment Choices in Retirement Plans
The executive order, titled “Democratizing Access to Alternative Investments for America’s Workers,” directs federal regulators to revise current rules and guidance to facilitate the inclusion of alternative investments in Employee Retirement Income Security Act (ERISA) governed plans. These assets—including private equity, private credit, digital assets like cryptocurrency, and real estate—are recognized for their potential to provide competitive returns and diversification benefits, which may enhance the overall performance of retirement savings.
Specifically, the order instructs the Department of Labor (DOL) to clarify a fiduciary’s responsibilities when offering funds containing alternative assets and to consider new rules or safe harbors within 180 days. The Securities and Exchange Commission (SEC) is also tasked with revising regulations to accommodate these investments in participant-directed accounts, promoting increased access for millions of 401(k) participants.
Potential Benefits and Considerations for Investors
Advocates of the policy highlight that alternative investments have become a strong-performing asset class delivering long-term growth. Simon Tang, head of U.S. operations at private markets specialist Accelex, emphasized that this move is “good news for Americans,” as it enables broader participation in assets historically reserved for institutional and wealthy investors.
Alternative investments can provide protection against stock market volatility and the potential for outsized returns. However, these come with notable caveats. Experts warn that such investments typically carry higher risk profiles and less day-to-day transparency. Additionally, fees for private equity and cryptocurrency investments are considerably higher due to the complexities involved in managing these assets, which can impact net returns.
Pitchbook, a financial data provider, explained that costs are higher because acquisitions and operations of private companies require travel, legal negotiations, and other efforts absent in public stock trading, often passed on to investors through fund fees.
Challenges for Plan Sponsors and Regulators
The inclusion of illiquid assets like private equity in plans that traditionally require daily liquidity presents operational challenges. Plan sponsors and recordkeepers will need to carefully evaluate how to manage these holdings administratively while fulfilling fiduciary duties to protect participants’ retirement savings.
Furthermore, it remains to be seen how many employers will embrace these options given the increased risks and regulatory scrutiny. Fiduciaries must diligently vet investment managers and ensure prudent investment decisions, balancing opportunities for enhanced returns against risks that could impact participants’ long-term financial security.
Context and Future Outlook
This executive order is regarded by many in the financial industry as a significant modernization of retirement plan offerings, potentially transforming the $5 trillion private equity industry by providing it access to America’s vast retirement savings sector. It responds to calls for more diversified retirement portfolios that could weather market swings more effectively.
However, the changes are not self-executing and depend on coordinated regulatory adjustments, including forthcoming guidance from the DOL and SEC. The outcome will determine how quickly and broadly these alternative assets become integrated into retirement savings plans.
Notably, this policy promises to reshape the retirement investing landscape by enabling millions of Americans to potentially benefit from alternative assets, signaling a new era of retirement investment choices but also underscoring the critical need for informed, prudent plan management.
About the Executive Order
Issued on August 7, 2025, the executive order aims to reduce barriers imposed by previous regulations and lawsuits that have limited the inclusion of alternative investments in 401(k) plans. By promoting regulatory clarity and encouraging fiduciaries to consider these assets, the administration emphasizes retirement security through diversification and strong financial outcomes.