US President Donald Trump is expected to sign an executive order on Thursday aimed at expanding the scope of investments allowed in 401(k) retirement accounts, a White House official confirmed. The order would pave the way for the inclusion of private equity, real estate, cryptocurrencies, and other alternative assets options traditionally off-limits in such plans.
“The order directs the Securities and Exchange Commission to facilitate access to alternative assets for participant-directed defined-contribution retirement savings plans by revising applicable regulations and guidance,” the official said. It also instructs the labour secretary to consult with Treasury, the SEC, and other federal regulators to explore aligned policy changes. Trump is scheduled to sign the order at 12:00 PM ET, according to the official White House agenda.
How will it change the saving scenario for retirement savers?
The executive order could unlock a new funding channel for alternative asset managers, granting them access to the $8.7 trillion held in 401(k) plans as of Q1 2025, according to the Investment Company Institute. While pension funds and university endowments have long allocated to private market assets, 401(k) plans have been more restricted due to concerns over high fees, illiquidity, and limited transparency.
Alternative investments typically come with lower disclosure requirements and longer lockup periods and can be more difficult to convert to cash quickly compared to publicly traded stocks and bonds. While these assets promise potentially higher returns, critics warn they also introduce greater risk into retirement portfolios.
Private investments in 401(k)s gain ground since 2020
Private market exposure in 401(k)s was first considered permissible in 2020, when the Department of Labour under Trump’s first administration issued guidance supporting their inclusion under certain conditions, a stance later upheld by the Biden administration. Since then, several asset managers and plan sponsors have developed products targeting this space. In June, BlackRock announced it would launch a 401(k) target-date fund in 2026 that includes a 5% to 20% allocation to private investments.
What are 401(k) plans?
A 401(k) is a retirement savings plan offered by employers, allowing employees to contribute a portion of their pre-tax income. Employers often match a part of these contributions. The funds grow tax-deferred, meaning taxes are only paid upon withdrawal during retirement.