Trump issues decree expanding investment options in 401(k) plans for alternative assets
In a move aimed at democratizing access to alternative investments for ordinary 401(k) investors, President Donald Trump signed an executive order on August 7, 2025. The order directs federal agencies to facilitate and expand access to alternative assets, such as private equity, real estate, cryptocurrency, and similar investments, in 401(k) and other defined-contribution retirement plans.
The order instructs the Department of Labor (DOL) to reexamine and clarify fiduciary duties under ERISA related to alternative asset investments. The DOL is encouraged to consider rules with fiduciary safe harbors to reduce litigation risk. Similarly, the Securities and Exchange Commission (SEC) and the Treasury are tasked with reviewing regulations and coordination to enable participant-directed access to these alternatives.
This regulatory push aims to allow plan fiduciaries to offer alternative investments, enhancing diversification and potentially improving retirement outcomes for American workers. Traditionally, such investments have been more accessible to wealthy individuals and public pension plans.
Industry experts anticipate that this order will accelerate the development and launch of new alternative investment products tailored for 401(k) investors. These could include collective investment trusts or interval funds that meet liquidity and valuation requirements.
However, investing in these new options tends to carry higher fees. Concerns have been raised about potential litigation risks, with plaintiffs' lawyers preparing for potential lawsuits from investors who may not fully understand the complexity of the new investment forms.
Asset managers have welcomed the news, with BlackRock's head of retirement, Jaime Magyera, stating it was a major step towards modernizing retirement savings. However, BlackRock CEO Larry Fink has acknowledged that the change poses challenges for asset managers.
The move could be a boon for big alternative asset managers such as Blackstone, KKR, and Apollo Global Management, opening the $12-trillion market for defined-contribution plans to their investments. BlackRock plans to launch its own retirement fund that includes private equity and private credit assets next year.
Democratic Senator Elizabeth Warren has expressed concerns about the safeguarding of retirement savings placed in private investments due to the sector's weak investor protections, lack of transparency, high management fees, and unsubstantiated claims of high returns.
The implementation of Trump's order is not expected to happen immediately, according to private equity executives. The new investment options carry lower disclosure requirements and are generally less easy to sell quickly for cash than the publicly traded stocks and bonds that most retirement funds rely on.
This executive order establishes a comprehensive regulatory push to allow and encourage fiduciaries to offer alternative asset options in 401(k) plans, potentially benefiting sectors such as crypto exchange-traded funds and increasing litigation risk. Gerry O'Shea, head of global market insights at Hashdex Asset Management, believes the order will help accelerate the trend of Bitcoin being included in long-term investment strategies.
- The executive order signed by President Donald Trump in August 2025 targets the finance sector, encouraging federal agencies to expand access to alternative assets like real estate and cryptocurrency in retirement plans like 401(k).
- Asset managers, such as BlackRock and Blackstone, are anticipated to significantly benefit from this regulatory push, with BlackRock planning to launch a retirement fund containing private equity and private credit assets.
- Demonstrating potential risks associated with these new investment options, Democratic Senator Elizabeth Warren has raised concerns about safeguarding retirement savings due to the sector's weak investor protections, lack of transparency, and high management fees.
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