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President Donald Trump will sign an executive order on Thursday, 7th August to let private equity, real estate, cryptocurrency, and other nontraditional investments enter 401(k) accounts
The move comes as the White House looks to tap roughly $12.5 trillion held in these retirement plans. The order directs the Labour Department to revisit its guidance on alternative asset allocations under the Employee Retirement Income Security Act of 1974 and clarify fiduciary duties for plan sponsors.
It also instructs the Labour Secretary to coordinate with the Treasury Department, the SEC and other federal regulators to explore rule changes, Bloomberg reported.
Rethinking 401(k) Rules
For years, 401(k) portfolios have stuck largely to stocks and bonds. Plan administrators have shied away from illiquid or complex products out of fear that they might violate ERISA obligations.
By asking the Labour Department to update its guidance, the Trump administration aims to reduce those legal barriers. The goal is to give workers a chance at higher returns by widening their investment choices.
Working With Regulators
The executive order charges Labour Secretary Lori Chavez-DeRemer with teaming up with Treasury and the SEC. Together, they will study whether new regulations are needed to smooth the path for alternative assets.
The SEC specifically will be asked to ease rules that now limit access to private equity and real estate funds within participant-directed plans. If changes are approved, 401(k) participants could soon see new fund options on their retirement dashboards.
Industry Response
Alternative asset managers have been eager for this shift. Many large institutions, such as public pension funds and endowments, already invest heavily in private equity but face internal caps.
They now view defined-contribution plans as the next growth frontier. Industry groups say that adding private market products to 401(k)s could draw more capital into long-term deals and help close the gap left by a shrinking pool of publicly traded companies.
Potential Risks
Opening 401(k) accounts to nontraditional funds brings greater risk. Private equity and real estate often charge higher fees. Their illiquid nature means savers may not be able to sell quickly if markets turn.
Critics warn that plan sponsors could face lawsuits if these investments underperform. The new guidance must strike a balance between innovation and protection, ensuring that participants are fully informed of potential downsides.
Crypto Push Aligns With Broader Goals
The order dovetails with Trump’s broader effort to promote cryptocurrency. Last month, he hosted Crypto Week at the White House and signed the first federal law to regulate stablecoins.
He also appointed venture capitalist David Sacks as the first White House czar for artificial intelligence and crypto.
In March 2025, Trump signed an order to build a Strategic Bitcoin Reserve and stockpile other digital tokens. His administration has paused or dropped enforcement actions against major exchanges and platforms.
If implemented, the changes could mark the biggest expansion of 401(k) options in decades. Workers may gain new paths to invest in private markets alongside traditional funds.
Also Read: Ex-Trump Campaign Adviser David Bailey Launches $200M PAC For Bitcoin Interests