Trump to sign executive order opening 401(k)s to private equity and other alternative assets.  

According to the latest reports, President Trump will sign an executive order on Thursday local time to allow alternative assets such as private equity, real estate, and cryptocurrencies to be included in 401(k) retirement savings plans, opening the door to approximately $12.5 trillion in retirement account funds for these industries.  

Insiders familiar with the matter revealed that the executive order will direct the Labor Department to reassess the guidance on alternative asset investments in retirement plans under the *Employee Retirement Income Security Act of 1974 (ERISA)*. The Labor Department will also be responsible for clarifying the government’s stance on fiduciary duty when providing asset allocation funds that include alternative investments.  

The order will further instruct Labor Secretary Lori Chavez-DeRemer to collaborate with federal regulators such as the Treasury Department and the Securities and Exchange Commission (SEC) to determine whether related rules need to be revised. The SEC will be required to facilitate alternative asset investments in participant-directed retirement plans.  

This move is expected to be the Trump administration’s largest effort to introduce private assets into fixed-contribution accounts and a key part of its push to promote the development of the cryptocurrency industry.  

A New Opportunity for Asset Management?  

The White House has been weighing this directive for months, aiming to address long-standing legal concerns that have prevented alternative assets from entering most employees’ fixed-contribution plans. Retirement portfolios have been concentrated in stocks and bonds partly because corporate plan administrators have been reluctant to venture into illiquid and complex products.  

This initiative echoes measures from Trump’s first term, when the Labor Department issued guidance stating that retirement plan administrators would not violate their fiduciary duties by including private equity in investment portfolios. This guidance was later withdrawn during the Biden administration.  

Both alternative asset and traditional asset management firms are eager to share in the fixed-contribution market, seeing it as the next growth frontier. Institutional investors such as U.S. pension funds and endowments have reached internal limits on private equity allocations amid a general slowdown in deal activity and insufficient client allocations.  

Opening 401(k) plans to private market products would provide savers with more investment options, which supporters argue could lead to greater potential returns. However, it also comes with higher risks and fees, potentially exposing retirement plan administrators to litigation risks.  

Aligning with Cryptocurrency Policy Advancements  

This initiative aligns with Trump’s efforts to promote the cryptocurrency industry. Last month, Trump hosted "Crypto Week" at the White House and signed the first federal stablecoin regulatory law. He also appointed David Sacks, a venture capitalist at Craft Ventures LLC, as the first White House czar for artificial intelligence and cryptocurrency.  

In March, Trump met with industry leaders at the White House and signed an executive order requiring the establishment of a strategic Bitcoin reserve and other digital asset reserves. According to the Bloomberg Billionaires Index, multiple cryptocurrency projects launched by Trump and his family have added at least $620 million to their net worth in recent months.  

Asset managers have argued to policymakers that savers’ portfolios fail to reflect changes in the financial industry as public markets shrink. The number of publicly listed companies in the U.S. has declined significantly since peaking in the 1990s, while private equity assets more than doubled over the decade ending in 2023.