Investing in Your 401(k) with Alternative Assets under Trump’s New Policy
On August 7, 2025, President Trump signed an executive order titled “Democratizing Access to Alternative Assets for 401(k) Investors.”
This signals a pivotal shift in retirement investing by potentially enabling 401(k) participants to allocate funds into private market products like private equity, real estate, digital assets, infrastructure projects, commodities, and lifetime-income strategies.
What the Order Does:
Mandates regulatory review: The Department of Labor (DOL) must reexamine and clarify its guidance under ERISA for fiduciaries considering alternative assets—including possibly rescinding previous restrictions like the DOL’s 2021 Supplemental Private Equity Statement.
Establishes fiduciary safe harbors: Intended to reduce litigation risk for plan sponsors, encouraging them to offer alternative options responsibly.
Calls for interagency collaboration: Encourages the SEC and Treasury to adjust rules—such as modifying "accredited investor" thresholds—to facilitate broader access.
Rescinds prior crypto caution: Earlier advisories urging extreme care with cryptocurrencies have been withdrawn, restoring a neutral stance for fiduciaries.
Why It Matters:
A move to open alternative investments to everyday retirement savers aligns 401(k)s with institutional portfolios and public pensions that have long benefited from such asset classes.
It represents an industry-wide shift, as major firms like BlackRock plan to launch diversified retirement products integrating private equity and private credit.
The order restores momentum to Trump’s broader crypto-friendly deregulatory agenda and tax policy initiatives.
Potential Benefits:
Broader diversification — Alternative assets often have low correlation with stocks and bonds, potentially improving risk-adjusted returns.
Access to institutional-grade strategies — Everyday investors could benefit from private equity, real estate, and private credit previously limited to high-net-worth individuals and institutions.
Long-term return potential — Private markets may offer superior returns over extended horizons.
Key Risks and Challenges:
Liquidity constraints — Alternative assets are often illiquid, with lock-up periods that may pose problems, especially near retirement.
Higher fees and costs — These vehicles tend to charge more in management fees, which can erode net returns.
Transparency and valuation concerns — Private assets are less transparent and harder to evaluate compared to publicly traded assets.
Volatility and complexity — Especially with crypto, which remains highly volatile and may not suit all retirement profiles.
Fiduciary and regulatory lag — Although regulatory changes are underway, full implementation and new retirement plan offerings will take time.
Summary Table
Opportunity/Policy Shift
Executive order enabling alternative asset access
Rescinding of restrictive guidance
Safe harbors and regulatory clarity
Expansion beyond accredited investors
Benefit
More choices and possible higher long-term returns
Greater flexibility for plan sponsors
Reduced litigation risk and more innovation
Broader democratization of retirement investing
Caution/Risk
Liquidity, fees, and valuation challenges
Fiduciaries must still follow ERISA prudence and documentation
Full implementation may take months or years
SEC thresholds and protections must be defined clearly
Final Thoughts
President Trump’s executive order marks a bold push to modernize 401(k) investing, adding previously out-of-reach alternatives to the retirement toolkit. While these changes have exciting potential for enhanced diversification and long-term returns, they come with important caveats around liquidity, cost, complexity, and regulatory evolution.
For savers:
You’re not required to shift from traditional funds—consider this a bigger selection menu, not a mandate.
If leaning in, do so gradually and thoughtfully, starting with a small allocation.
Work closely with a trusted advisor, especially if you're unfamiliar with private equity, crypto, or other alternatives.
