Trump's Blueprint for Expanding 401(k) Investment Options to Include Alternative Assets for U.S. Citizens

Trump's Blueprint for Expanding 401(k) Investment Options to Include Alternative Assets for U.S. Citizens

In 2025, President Donald J. Trump signed an Executive Order aimed at modernizing retirement plan offerings. Known as the "Democratizing Access for 401(k) Investors" order, this policy shift aims to broaden the scope of permissible investments in 401(k) plans, facilitating greater inclusion of alternative assets.

The order instructs federal regulators, including the Department of Labor (DOL), the Securities and Exchange Commission (SEC), and the Treasury Department, to expand investment options in 401(k) and other defined contribution plans. These options include private equity, real estate, infrastructure projects, commodities, digital assets like cryptocurrency, and longevity risk-sharing pools.

One of the key effects of this order is increased access to alternative asset classes that were historically limited in these plans due to regulatory concerns and fiduciary liability risks. To address these concerns, the DOL has been directed to reexamine and update its guidance under ERISA, potentially including safe harbor provisions for fiduciaries investing in alternatives. This move is intended to reduce the risk of litigation against plan sponsors for offering such investments.

The regulatory rulemaking process may take time, with new alternative investment options potentially available no earlier than 2026. However, this policy shift reflects a recognition that alternative investments may enhance portfolio diversification and long-term value for retirement savers. While they come with increased volatility and risk, careful consideration by plan fiduciaries and participants is warranted.

The Executive Order does not change the law, but it signals a significant change in federal policy. It aims to align 401(k) participants’ options with those historically available to defined benefit plans and wealthier investors. President Trump wants to give American workers more investment options to attain stronger and more financially secure retirement outcomes through diversified investments.

The SEC has been directed to facilitate access to alternative assets for participant-directed defined-contribution retirement savings plans by revising applicable regulations and guidance. The Secretary of Labor has also been directed to consult with the Secretary of the Treasury, the SEC, and other federal regulators to determine whether parallel regulatory changes should be made at those agencies to give effect to the purpose of the Order.

In summary, the order aims to broaden the scope of permissible investments in 401(k) plans by facilitating greater inclusion of alternative assets. This could diversify portfolios and potentially improve returns, while also addressing the regulatory and fiduciary challenges that have limited these options until now. The ultimate goal is to provide American workers with more investment choices, leading to stronger and more financially secure retirement outcomes.

1. As a result of the 2025 Executive Order, the Department of Labor, Securities and Exchange Commission, and the Treasury Department are instructed to expand investment options in 401(k) and other defined contribution plans, which now include personal-finance areas like real estate, infrastructure projects, commodities, digital assets like cryptocurrency, and longevity risk-sharing pools, thus offering a wider range of investment opportunities.
2. To improve retirement outcomes for American workers, President Trump's Executive Order is aimed at democratizing access to various investment options, such as real estate, private equity, and finance beyond traditional stocks and bonds, with a focus on personal-finance education and careful consideration by plan fiduciaries and participants.

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