INSIGHT

Trump’s 401(k) executive order opens new doors: What employers need to know about alternative assets 

August 11, 2025

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President Trump signed an executive order on Aug. 7 directing federal agencies to allow 401(k) investors access to alternative assets including private equity, real estate, and digital assets. This sweeping change could reshape how millions of Americans invest for retirement, but it also raises important questions about fiduciary responsibility, risk management, and implementation. 

If you’re an employer sponsoring a 401(k) plan or an employee thinking about your retirement strategy, this shift requires careful consideration. Let’s break down what this order means, what opportunities it creates, and what challenges you should prepare for. 

Understanding the scope of change 

The executive order directs the U.S. Secretary of Labor to review fiduciary guidance on private market investments in 401(k) and other defined contribution plans that are governed by the Employee Retirement Income Security Act of 1974, or ERISA. This isn’t just about adding a few new investment options. It’s about fundamentally expanding access to asset classes that have historically been reserved for wealthy investors and institutions. 

The numbers tell an important story. According to the Investment Company Institute, defined contribution assets stood at $12.2 trillion on March 31, with $8.7 trillion in 401(k)s. Even small allocation percentages to alternative assets could drive significant capital flows into these markets. 

What assets are now potentially available 

The order specifically mentions three categories of alternative investments: 

• Private equity and private credit: Investments in companies not publicly traded on stock exchanges 
• Real estate: Direct real estate investments and real estate investment trusts (REITs) 
• Digital assets: Cryptocurrencies like Bitcoin and Ethereum, likely through exchange-traded funds (ETFs) 

The implementation timeline and process 

Don’t expect immediate changes to your 401(k) menu. Federal agencies would need to rewrite rules and regulations to allow the expanded choices, and that would take months or more to complete. The Department of Labor has 180 days to reevaluate existing guidance and potentially propose new regulations. 

Even after regulatory changes are finalized, plan sponsors will need to: 

• Update their investment policy statements 
• Conduct due diligence on new investment options 
• Work with recordkeepers to integrate new assets into plan platforms 
• Develop participant education and communication strategies 

Key considerations for plan sponsors 

As a plan fiduciary, you have a responsibility to act in the best interests of your participants. The inclusion of alternative assets raises several important considerations: 

Fiduciary responsibility remains paramount 

The executive order doesn’t eliminate your fiduciary duties—it potentially expands the universe of acceptable investments. You’ll still need to conduct thorough due diligence, monitor performance, and evaluate fees. 

Fee transparency becomes more complex 

Alternative assets typically carry higher fees than traditional mutual funds. Private equity funds invest in non-publicly traded businesses and often charge both management fees and performance fees. You’ll need to carefully evaluate whether these costs are reasonable relative to expected benefits. 

Liquidity considerations 

Unlike traditional stocks and bonds, many alternative assets have limited liquidity. Private equity investments, for example, may have multi-year lock-up periods. This could create challenges for participants who need access to their funds. 

Potential benefits and opportunities 

Despite the challenges, alternative assets can offer meaningful benefits when properly implemented: 

Diversification beyond traditional assets 

Alternative assets, such as private equity, real estate, and digital assets, offer competitive returns and diversification benefits. This diversification could help reduce overall portfolio risk and potentially improve long-term returns. 

Access to institutional-quality investments 

Investment in private equity funds is typically reserved for accredited investors—generally those with annual incomes above $200,000 or a net worth north of $1 million. The order could democratize access to investments previously available only to wealthy individuals. 

Potential for enhanced returns 

Some alternative assets have historically outperformed traditional asset classes over long time horizons, though past performance doesn’t predict future results. 

What this means for employees 

If you’re saving for retirement through a 401(k), this change could eventually provide new investment options. However, consider these factors: 

• Education will be critical: Alternative assets are more complex than traditional investments. You’ll need to understand their risk profiles, fee structures, and liquidity constraints before making investment decisions. 
• Default allocations matter most: Distribution will run through defaults, where most dollars live. Target date funds dominate participant flows and house the qualified default for many plans. How plan sponsors incorporate alternative assets into default investment options will likely have more impact than standalone options. 
• Long-term perspective required: Many alternative assets are designed for long-term holding periods. They may not be appropriate if you’re close to retirement or expect to need funds in the near term. 

Preparing for implementation 

Whether you’re a plan sponsor or participant, preparation is key: 

For plan sponsors 

• Review your current investment policy statement and fiduciary processes 

• Begin conversations with your recordkeeper about platform capabilities 

• Consider engaging investment consultants with alternative asset experience 

• Start planning participant education initiatives 

For employees 

• Continue focusing on fundamental retirement planning principles 

• Increase your financial literacy around alternative investments 

• Don’t make dramatic changes to your current investment strategy based on speculation 

• Consult with financial advisors if you’re considering significant allocation changes 

Related regulatory developments: The debanking executive order 

On the same day Trump signed the 401(k) alternative assets order, he also signed a separate executive order addressing “debanking”—when financial institutions restrict services to customers based on their political or religious beliefs. This order directs federal banking regulators to remove “reputation risk” language from their guidance to lending institutions, which some businesses argue led mainstream lenders to deny them services. 

For retirement plan sponsors, this development could have implications for your relationships with financial service providers. The order requires regulators to review whether banks have had policies that led to politically motivated account closures and instructs them to take remedial actions when appropriate. 

What this means for your retirement plan operations 

While the debanking order primarily affects banking relationships, it could indirectly impact retirement plan administration in several ways: 

• Expanded service provider options: Alternative asset managers and cryptocurrency firms that previously faced banking restrictions may now have broader access to traditional financial services 

• Enhanced due diligence requirements: You may need to evaluate how potential service providers’ banking relationships could affect their ability to serve your plan 

• Regulatory coordination: The Treasury Department must develop a strategy to combat debanking activities, which could influence how retirement plan assets are held and managed 

Industry momentum already building 

Even before this executive order, major financial firms were positioning themselves for expanded alternative asset access in retirement plans. BlackRock announced in June that it’s launching a 401(k) target-date fund in the first half of 2026 that will include a 5% to 20% allocation to private investments. Similarly, Empower, the country’s second-largest retirement plan provider, said it’s working with asset managers like Apollo to start allowing private assets in some accounts later this year. 

This existing momentum suggests that implementation of the executive order’s directives may happen more quickly than typical regulatory changes. Plan sponsors who want to evaluate alternative asset options should begin their preparation now, rather than waiting for final regulations to be published. 

The road ahead 

This executive order represents a significant shift in retirement plan investment policy, but implementation will take time. The actual impact will depend on how federal agencies craft new regulations, how plan sponsors respond, and how participants engage with new options. 

While alternative assets could provide valuable diversification and return opportunities, they also introduce new complexities and risks. Success will require careful planning, thorough education, and ongoing monitoring. 

The key is to approach these changes thoughtfully, with a focus on long-term retirement security rather than short-term market trends. Whether you’re managing a plan or saving for your own retirement, the fundamentals of prudent investing remain the same: diversify appropriately, manage costs, and maintain a long-term perspective. 

Ready to navigate these changes to your retirement plan? Our experienced team can help you evaluate the implications of expanding alternative asset access, update your fiduciary processes, and develop comprehensive participant education strategies. Contact BPM today to discuss how these regulatory changes might affect your organization and your retirement planning approach.