Trump Administration Opens Door for Private Equity and Cryptocurrency in 401(k) Plans
By Kayla Steinberg and Emily Lorsch | August 10, 2025
In a significant shift for American retirement savings, President Donald Trump has signed an executive order aimed at expanding investment options within 401(k) plans to include private equity, cryptocurrency, real estate, and other alternative assets. This move seeks to offer retirement savers access to a broader array of investments beyond the traditional mutual funds and exchange-traded funds (ETFs).
What Does the Executive Order Entail?
The new directive instructs the U.S. Department of Labor (DOL) to revisit and clarify its guidelines on what types of investments are permissible in retirement plans, such as 401(k)s, with a focus on private market assets, real estate interests, and digital assets like cryptocurrencies. Alongside this, the Securities and Exchange Commission (SEC) is tasked with exploring ways to facilitate access to these alternative investments within retirement accounts, with a timeline of 180 days to provide updated guidance.
Potential Benefits for Retirement Savers
Advocates highlight that this policy could democratize access to investment opportunities historically reserved for institutional and high-net-worth investors. Robert Brokamp, a financial planning expert with The Motley Fool, notes the potential for everyday Americans to invest in a "broader menu of companies" by gaining entry into private markets.
Kenneth E. Bentsen Jr., president and CEO of the Securities Industry and Financial Markets Association (SIFMA), emphasized the growth of private markets due to more companies staying private and praised the expansion as beneficial to retirement savers. He said, “Policy changes to expand access to private markets investments — appropriately tailored under ERISA and SEC rules — could serve to improve diversification, democratize access, and offer more investment choices.”
Risks and Concerns
Despite the excitement around expanded investment options, significant caution is being advised by financial experts regarding the risks involved.
Firstly, private equity and similar assets often lack the transparency and liquidity that define traditional 401(k) investments. Brokamp explains that such assets can be difficult to sell quickly, especially during market downturns when many investors seek to liquidate simultaneously.
Moreover, fees associated with private market funds are typically much higher. While traditional target-date mutual funds may charge around 0.3% in management fees, private funds might command 1% to 2% in fees plus as much as 20% in performance-based fees. Interval funds can reach annual fees of 2% to 3%. These higher costs can erode retirement gains if not carefully managed.
There are also concerns about the technology-driven risks linked to cryptocurrency investments. Benjamin Schiffrin, director of securities policy at Better Markets, highlighted the unclear protections for investors in crypto within retirement accounts, warning of the unique risks this category entails.
Employer Hesitation and Fiduciary Responsibility
Since employers ultimately decide whether to include these alternative assets in their 401(k) offerings, many may be reluctant due to potential legal liabilities tied to investment losses. However, updated government guidelines could encourage employers to participate.
Financial planners express concerns that less-informed investors may be lured by the promise of higher returns without fully understanding the risks, which could jeopardize their retirement savings. Anh Tran, managing partner at SageMint Wealth, warns that “without proper guardrails, such as limiting exposure to 5% to 10% of the portfolio, these investors could be exposed to unnecessary risk, misaligned expectations and potentially irreversible losses.”
Similarly, Knut Rostad, co-founder of the Institute for the Fiduciary Standard, anticipates potential widespread harm should private assets become commonplace in 401(k) plans, forecasting “a massive train wreck where many people are seriously hurt.”
What’s Next?
Though private equity and crypto exposure within 401(k)s is permitted under current rules, they are rarely offered. With some financial institutions like BlackRock planning offerings, and the Trump administration’s executive order spurring regulatory review, the landscape could change in the coming months.
Until new rules and product options emerge, experts stress the importance of education, transparency, and appropriate investment limits to protect retirement savers, especially younger individuals and those without access to professional financial advice.
“It’s critical that transparency, education and limits are in place to prevent widespread harm,” says Tran. “Otherwise, we could be setting the stage for not only financial loss, but broader economic and social consequences.”
As Americans await further guidance from regulators and developments from employers and financial firms, retirement savers should remain cautious and well-informed about the risks and rewards of alternative investments in their 401(k) portfolios.
For more information on retirement investing and updates on regulatory changes, visit our Personal Finance section.