August 8, 2025
On August 7, 2025, President Trump signed an Executive Order seeking to allow 401(k) retirement plans to invest in alternative assets such as private equity, real estate, and cryptocurrencies. The order opens the way for private equity and other fund managers to access the $12-trillion U.S. retirement market as a new funding source. The announcement also echoed the President’s promise to make the United States the “crypto capital of the world.”
To allow for alternative assets to be accessible by retirement plans, the order (1) directs the Secretary of Labor to re-examine guidance on fiduciary duties regarding alternate asset investments in 401(k) and other defined-contribution plans; (2) directs the Secretary of Labor to clarify the Department of Labor’s position on the fiduciary process for offering asset allocation funds containing alternative assets; (3) directs the Secretary of Labor to consult with the Secretary of the Treasury and the Securities and Exchange Commission (“SEC”) to determine if parallel regulatory changes should be made by those agencies and other federal regulators; and (4) directs the SEC to revise applicable regulations and guidance to facilitate access to alternative assets for participant-directed defined-contribution plans. How fast these changes can take place remains to be seen.
The inclusion of alternative assets in retirement plans is being celebrated by the industry despite concerns around legal risks for ERISA fiduciaries that must meet a duty of prudence and loyalty in selecting investments. Supporters of the order see benefits for retirement investors who could diversify their savings to include alternative investments and boost performance with potentially higher returns. Critics argue that alternatives tend to be less liquid, less transparent, and can have fewer investor protections while charging more expensive management fees.
