Streamlining Investment Opportunities in Unconventional Assets for 401(k) Participants
In an effort to modernize retirement plan investment options and democratize access to alternative assets, President Donald J. Trump issued an Executive Order on August 7, 2025. The policy aims to expand access to alternative investments such as cryptocurrency, private equity, private credit, real estate, and more in retirement accounts governed by ERISA, including 401(k) and other defined contribution plans.
The policy reflects a significant shift towards making alternative asset investments more accessible to the general public. By doing so, it aims to improve diversification and growth opportunities for over 90 million American DC plan participants.
Under the Executive Order, the Department of Labor (DOL) has been instructed to clarify its position on a fiduciary’s responsibilities regarding alternative asset investments within 180 days. The DOL will also propose rules, regulations, or guidance to help fiduciaries prudently balance higher costs against the potential for greater long-term returns and diversification. Additionally, the DOL will coordinate with other agencies and facilitate regulatory changes to reduce barriers that have hindered participant-directed investments in alternatives.
Fiduciaries of 401(k) and other defined-contribution retirement plans must carefully vet and consider all aspects of private offerings, including investment managers' capabilities, experiences, and effectiveness managing alternative asset investments. The DOL will further clarify, within 180 days, 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 under ERISA.
The SEC will also consider ways to facilitate access to investments in alternative assets by participants in participant-directed defined-contribution retirement savings plans, which may include revisions to existing SEC regulations and guidance relating to accredited investor and qualified purchaser status.
The President's Administration aims to relieve the regulatory burdens and litigation risk that impede American workers' retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement. The costs for publication of this order will be borne by the Department of Labor.
It is important to note that this order does not create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States. However, it does mark a significant step towards making alternative asset investments more accessible to the general public and improving retirement outcomes for millions of Americans.
References: [1] White House. (2025, August 7). Executive Order on Encouraging Investment in Alternative Assets for 401(k) and Other Defined-Contribution Retirement Plans. Retrieved from https://www.whitehouse.gov/executive-actions/executive-order-encouraging-investment-alternative-assets-401k-other-defined-contribution-retirement-plans/ [2] Department of Labor. (2025, August 7). Fact Sheet: Executive Order on Encouraging Investment in Alternative Assets for 401(k) and Other Defined-Contribution Retirement Plans. Retrieved from https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/fact-sheets/fact-sheet-executive-order-encouraging-investment-alternative-assets-401k-other-defined-contribution-retirement-plans [3] Securities and Exchange Commission. (2025, August 7). Statement of the Chair on Executive Order on Encouraging Investment in Alternative Assets for 401(k) and Other Defined-Contribution Retirement Plans. Retrieved from https://www.sec.gov/news/statement/statement-chair-executive-order-encouraging-investment-alternative-assets-401k-other-defined-contribution-retirement-plans [4] Department of Labor. (2021, December 21). Supplemental Private Equity Statement regarding a fiduciary's duties under ERISA in connection with making available to participants an asset allocation fund that includes investments in alternative assets. Retrieved from https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/faqs/faqs-private-equity-supplemental-statement [5] Securities and Exchange Commission. (2025, August 7). Request for Comment: Proposed Rulemaking on Investment Company Act of 1940; Exemptions from the Prohibition Against Acquiring Investment Company Shares by an Investment Company, Investment Company Act Release No. 34-92337. Retrieved from https://www.sec.gov/rules/proposed/2025/ic-34-92337.pdf
- The Executive Order aims to encourage the inclusion of alternative assets like private equity, private credit, real estate, and cryptocurrency in retirement plans, making it possible for investors to gain exposure to these sectors through their 401(k) plans, thereby expanding investment opportunities and potentially increasing returns.
- To further facilitate investing in alternative assets, the Securities and Exchange Commission (SEC) may consider revising regulations related to accredited investor and qualified purchaser status, ultimately paving the way for individuals to invest in these assets using technology-driven platforms, thus engaging the power of finance and technology to transform the retirement landscape.
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