President Trump Signs Executive Order to Expand 401(k) Investment Options to Private Equity and Cryptocurrencies
On August 7, 2025, President Donald J. Trump signed an executive order aimed at democratizing access to alternative asset classes—such as private equity, real estate, and digital assets like cryptocurrencies—for participants in 401(k) and other defined-contribution retirement plans. This move could significantly reshape the investment landscape of America’s retirement savings, which traditionally have been limited to stocks, bonds, and mutual funds.
Expanding Investment Choices for Retirement Accounts
The executive order directs the U.S. Department of Labor to reexamine its guidance on fiduciary duties related to alternative asset investments under the Employee Retirement Income Security Act (ERISA). It also tasks the Secretary of Labor with clarifying regulations around the inclusion of these asset classes in retirement plans, and calls on collaboration with the Treasury Department, Securities and Exchange Commission (SEC), and other federal agencies to ensure regulatory alignment.
Specifically, the order instructs the SEC to revise its regulations and guidance, facilitating increased access for participant-directed defined-contribution plans to invest in alternative assets, which have traditionally been limited to wealthier individuals and public pension plans.
The Promise and Risks of Alternative Investments
Alternative investments like private equity and cryptocurrencies have shown strong long-term returns and offer diversification benefits that could protect retirement portfolios from traditional market volatility. Simon Tang, head of U.S. private markets specialist Accelex, noted that these asset classes have “matured into a strong-performing asset class delivering excellent long-term returns,” suggesting this development is positive news for American investors.
However, experts also caution that these investments carry higher risk profiles and costs. Private equity investments can involve complex operations such as travel, legal negotiations, and management expenses that result in higher fees for investors. Additionally, cryptocurrencies are known for their volatility and regulatory uncertainties. Furthermore, the lack of daily transparency typical of alternative investments may concern some investors and fiduciaries.
Employers and plan fiduciaries will need to carefully vet these investment options and balance their potential for outsized gains against their risks and costs to protect workers’ retirement assets. Higher management fees and legal complexities inherent in private equity and crypto investments could erode returns if unmanaged effectively.
Potential Impact on the Retirement Savings Industry
The inclusion of private equity and cryptocurrencies in 401(k) plans could be a game changer for the roughly $5 trillion private equity industry, potentially opening a vast new pool of investor capital. For savers, it means that the traditionally conservative menus of retirement plan investment options may evolve to include higher-risk but potentially higher-reward vehicles, thus catering to a broader array of investor preferences and risk tolerances.
Nevertheless, how quickly employers will adopt these new investment options remains uncertain, as fiduciaries will be cautious to ensure compliance with their duty to invest prudently while also managing liabilities associated with offering higher-risk choices.
Regulatory and Industry Responses
The executive order is seen as a reversal of more cautious regulatory stances that have previously limited such investment options because of concerns about lawsuits challenging fiduciaries’ decisions and fears of exposing worker savings to undue risk. While President Trump describes the changes as enabling retirement security through diversified investments, regulatory agencies will now need to draft clear rules and guidelines to govern these alternative investments responsibly.
In summary, the executive order signed by President Trump in August 2025 opens the door for 401(k) participants to potentially invest in private equity and cryptocurrencies, providing opportunities for stronger returns and portfolio diversification but accompanied by higher risks and costs. Workers, employers, and regulators alike will need to navigate this new terrain carefully.
Sources:
- White House Fact Sheet on Democratizing Access to Alternative Assets (August 7, 2025)
- CBS News coverage on 401(k) investment changes under President Trump (August 12, 2025)
- Official Executive Order text from the White House (August 7, 2025)
- YouTube briefing on 401(k) changes from private equity to digital assets (August 12, 2025)