Trump Executive Order Expands 401(k) Access to Private Equity, Crypto

President Trump has issued an executive order directing federal agencies to reevaluate regulations to allow 401(k) plans and other defined contribution plans to include alternative investments such as private equity, real estate, and digital assets like bitcoin. This move aims to expand investment options beyond traditional stocks and bonds, potentially enhancing diversification and retirement outcomes for the 90 million Americans holding 401(k) accounts. However, experts warn that these high-risk, low-liquidity assets may pose significant challenges for typical plan participants, who often lack the sophistication and understanding required for managing such investments responsibly. Fiduciary duties under ERISA remain stringent, requiring plan sponsors to act prudently and monitor investments closely to avoid litigation risk. The executive order sets a regulatory review process in motion, involving the Department of Labor, Treasury, and SEC, but actual changes will depend on forthcoming regulatory revisions and could take months to implement. While the order signals a policy shift favoring broader asset class inclusion, concerns persist about whether this expansion truly serves the best interests of most retirement savers or primarily benefits asset managers seeking new capital.