Trump Signing EO Today Enabling Private 401(k) Investments
In a long-anticipated move, President Donald Trump this afternoon was expected to sign an Executive Order laying out ways for alternative assets like private equity, real estate investments and cryptocurrencies to be included in 401(k) and other workplace defined contribution plans.
“Fiduciary advisors/consultants and plan sponsors are in the best position to determine what’s in a specific plan’s best interests.”
Broadridge’s John Faustino
The executive order will direct the Department of Labor and the Securities and Exchange Commission to review and provide fiduciary guidance to employers on including private market investments in workplace DC plans governed by ERISA.
“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,” a White House official told Reuters on condition of anonymity.
The order directs Labor Secretary Lorie Chavez-DeRemer to consult with her counterparts at the Treasury Department, the SEC and other federal “regulators to determine whether parallel regulatory changes should be made at those agencies,” the official said.
“Encouraging the Department of Labor to review their guidance on alternatives is positive from my perspective,” John Faustino, Head of Data & Analytics Product, Strategy, and Fiduciary Solutions at Broadridge told 401(k) Specialist today. “Fiduciary advisors/consultants and plan sponsors are in the best position to determine what’s in a specific plan’s best interests.”
Faustino added it’s important to note that not all alternatives are the same. “Encouraging ‘consideration’ is not the same as providing a blanket approval for a given asset class, vehicle type, or investment,” he said. “Fiduciaries need to consider the specific needs of participants and beneficiaries relative to the specific characteristics of each investment considered for inclusion in the plan.”
President Trump was scheduled to sign today’s Executive Orders at noon EDT, according to a White House public schedule, but as of 1 p.m. Thursday the White House had not yet issued a release on the signing.
EDITOR’S NOTE: This article has been updated (see below) to include information from a White House Fact Sheet following President Trump’s signing of the Executive Order. 401(k) Specialist will also have additional coverage this afternoon of DOL and industry reaction.
The controversial move is seen by some as a direct response to the private equity industry’s aggressive lobbying efforts to access the vast pool of 401(k) capital held by American retirement savers, which the Investment Company Institute pegs at about $8.7 trillion as of the end of Q1 2025.
ICI released a statement this morning applauding Trump’s Executive Order: “ICI supports giving Americans the opportunity to access private markets through fund vehicles in their retirement plan accounts just as millions of Americans already benefit from private market investments through institutional pension funds. Retirement savers are the ultimate long-term investors and would benefit from the diversification offered by the inclusion of private assets. We look forward to working with the White House, Congress, the SEC, and the Department of Labor as they work to expand access to everyday investors.”
Already, several major asset managers have taken steps to incorporate private equity investments within DC plans. In May, Empower, the country’s second-largest retirement plan recordkeeper, said it’s joining asset managers such as Apollo to start allowing private assets in some accounts later this year. In June, BlackRock, the world’s largest asset manager, said it’s launching a 401(k) target date fund in the first half of 2026 that will include a 5% to 20% allocation to private investments.
Private market exposure in 401(k) plans began being considered permissible in 2020, when the DOL under the first Trump administration issued an information letter saying it could be appropriate for DC plans under certain conditions. The guidance was later affirmed by the DOL during President Joe Biden’s term.
Proceeding with caution
Many are acknowledging the potential of alternative investments while urging caution in adoption. Among them is “Queen of Alternatives” Shana Sissel, Founder & CEO of Banríon Capital.
“Alts can be for everyone, but not every type of alt is right for every investor. More complex and illiquid investments, such as private funds, require extensive education,” Sissel said. “401(k) participants span a wide range of financial literacy, and granting broad access to complex strategies without adequate understanding could backfire.”
She stressed that diversification matters, but sequencing is key. A variety of alternative options can strengthen retirement portfolios, but added that it makes sense to start with more established vehicles before moving to private markets and crypto.
“ETFs, for example, are a more transparent and liquid option—and should be prioritized in retirement plans long before private funds,” Sissel said.
“401(k) investment selection and management is governed by fiduciary rules, which require an employer—and any advisor they may be working with—to review the investments to ensure they have fair fees and performance in line with general market returns. It will be extremely challenging for private securities to meet those standards, and employers should be very cautious to rush to adopt them as new investment options for their employees,” said Edward Gottfried, VP of Product at Betterment at Work.
Opponents warn of risks
While many argue that DC plan investors are missing out on better returns generated by private equity and cryptocurrency investments that have already been utilized by defined benefit pension plans and university endowments, others argue that the higher fees, lack of transparency and less-liquid nature of private equity makes it riskier and therefore inappropriate for many rank and file 401(k) investors who lack education about the asset class.
“President Trump’s Executive Order poses a significant risk to the financial security of millions of hardworking Americans. We’ve seen these firms send hospital systems, retailers, and other companies into bankruptcy while they profit and laugh all the way to the bank,” said Chris Noble, Policy Director at the Private Equity Stakeholder Project in a statement released today. “President Trump is inviting them to do the same with the retirement savings of millions of American workers. Introducing these investments into 401(k)s, which are meant to be a nest egg for retirement, is a reckless decision that could lead to unnecessary financial harm for unsuspecting savers.”
PESP is a nonprofit with a mission to bring transparency and accountability to the private equity industry. In its release today, it listed among its “key concerns” that private equity is a bad investment compared to stocks; private equity is struggling to raise funds, spurring its interest in the 401(k) market; a lack of transparency and regulation; exorbitant fees; illiquidity and complexity; and increased fiduciary risk that opens up plan fiduciaries to litigation.
UPDATE: Trump Signs Executive Order
The White House released a Fact Sheet this afternoon following President Trump’s signing of the Executive Order, “Expanding Investment Choices for 401(k) Plans.” From the Fact Sheet:
Today, President Donald J. Trump signed an Executive Order to allow 401(k) investors to access alternative assets for better returns and diversification.
- The Order directs the Secretary of Labor to reexamine the Department of Labor’s guidance on a fiduciary’s duties regarding alternative asset investments in ERISA-governed 401(k) and other defined-contribution plans.
- The Order instructs the Secretary of Labor to clarify the Department of Labor’s position on alternative assets and the appropriate fiduciary process associated with offering asset allocation funds containing investments in alternative assets.
- The Order directs the Secretary of Labor to consult with the Secretary of the Treasury, the Securities and Exchange Commission, and other federal regulators to determine whether parallel regulatory changes should be made at those agencies to give effect to the purpose of the Order.
- 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.
PROMOTING RETIREMENT SECURITY THROUGH DIVERSIFIED INVESTMENTS: President Trump wants to give American workers more investment options in order to attain stronger and more financially secure retirement outcomes.
- More than 90 million Americans participate in employer-sponsored defined-contribution plans, and most of those are currently restricted from investing in alternative assets, unlike wealthy investors and retirement plans for government workers.
- Alternative assets, such as private equity, real estate, and digital assets, offer competitive returns and diversification benefits.
- Regulatory overreach and litigation risks have limited ERISA-governed plan fiduciaries from including alternative assets in their investment portfolios, hindering workers’ retirement growth.
- President Trump is expanding access to these assets to ensure a dignified and comfortable retirement for all Americans.
BUILDING WEALTH AND SECURING RETIREMENT FOR ALL AMERICANS: President Trump is delivering on his promise to enhance financial opportunities and retirement security for all Americans, ensuring they can build wealth and thrive.
Through tax cuts and deregulation, President Trump is delivering on his promise to Make America Wealthy Again, empowering workers to save and invest more for their retirement.
President Trump’s Department of Labor has already rescinded guidance put place by the Biden Administration regarding digital assets.
President Trump’s One Big Beautiful Bill delivers on his promise to ensure retirees can keep more of their hard-earned benefits.
President Trump promised to make the United States the “crypto capital of the world,” emphasizing the need to embrace digital assets to drive economic growth and technological leadership.
SEE ALSO:
• DCALTA Issues Set of Principles to Guide DC Plan Stakeholders on Use of Private Market Investments
• Private Equity’s Fast Lane to 401(k)s: Cover Story
• Trump Mulls Executive Order to Allow Private Equity in 401(k)s
• Op-ed: Should 401(k) Plans Offer Annuities and Alternative Investments?
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
