Expansion of 401(k) plans under Trump's administration: Overview of potential investment options

President Donald Trump's recent Executive Order, signed on August 7, 2025, aims to broaden the investment options available in 401(k) and similar retirement plans. The order directs financial regulators to consider including alternative investments such as private equity, private credit, real estate, digital assets (including cryptocurrency), and more [1][2][3][4].

The move is intended to democratize access to these investment opportunities, which have historically been reserved for institutional investors. Leanna Haakons, a financial commentator and president of Black Hawk Financial, notes that this change could provide 401(k) participants with strategies and asset classes that were previously unavailable [1][4].

The Executive Order comes in response to the growing trend of public pension and defined-benefit plans investing in alternative assets for diversification and higher returns. However, most 401(k) participants have been left out due to regulatory constraints and litigation risks affecting fiduciaries [1][4].

The order instructs the Department of Labor (DOL), Securities and Exchange Commission (SEC), Treasury, and other agencies to review and potentially revise rules to enable the inclusion of alternatives in 401(k) offerings. This could help alleviate fears of fiduciary liability and litigation that have previously constrained such investments [1][2][4].

The expansion of investment options could bring several benefits. For instance, younger savers might enjoy improved long-term returns and diversification opportunities not typically available through stocks and bonds alone [3]. However, critics express concerns about higher fees, greater complexity, liquidity constraints, reduced transparency, and increased investment risk [3][5].

The industry is making significant progress in developing solutions to meet the needs of defined contribution plans. Large private equity firms and asset managers stand to gain access to an expansive $12 trillion retirement assets market, potentially reshaping the landscape for retirement investment options [3][4].

However, the actual availability of the new investment options in plans is unlikely to be widely available until next year due to regulatory processes and guidance that will have to be developed [5]. Investment firms will have to ensure their products are compliant before they can be rolled out to retirement plan sponsors.

Investors must contend with liquidity constraints, higher management fees, and the need for financial education and due diligence when participating in alternative investments. Digital assets like bitcoin can be included in actively managed investment vehicles under President Trump's order [1].

Peter von Lehe, head of investment solutions for Neuberger Berman, believes including private markets in professionally managed retirement products can potentially enhance returns and diversification. A 10% private equity allocation to a target date fund, as suggested by Neuberger Berman's research, could meaningfully improve the fund's risk-return profile, boosting retirement income [1].

However, private market investments are not suitable for every investor due to their illiquidity and complexity. A professionally managed allocation can help ensure suitability and support stronger long-term outcomes for plan participants [1].

The Executive Order includes private market investments, direct or indirect real estate interests, commodities, infrastructure projects, digital assets, longevity risk-sharing pools, and other alternative assets [1]. Broadening the types of assets that can be held in 401(k) and similar retirement plans offers new investment opportunities but may also come with more volatility.

Ari Jacobs, global head of investments at Aon, stated that private investments in 401(k) plans have the potential to improve participant outcomes by providing individuals access to a wider range of investments [1]. The Labor Department, Treasury Department, and Securities and Exchange Commission will work together to determine if regulatory changes are needed to carry out the purpose of the order [1].

In summary, the Executive Order seeks to make 401(k) plans more accommodating to alternative investments like crypto, private equity, and private markets, aiming to broaden growth opportunities for plan participants. However, it also raises significant debate over balancing the potential for enhanced returns with the inherent risks and costs of these less liquid and more complex asset classes [1][3][5].

References: [1] CNBC. (2025, August 8). Trump's executive order on retirement plans could unlock alternative investments for millions. Retrieved from https://www.cnbc.com/2025/08/08/trumps-executive-order-on-retirement-plans-could-unlock-alternative-investments-for-millions.html [2] The Wall Street Journal. (2025, August 7). Trump's order seeks to widen 401(k) investment options. Retrieved from https://www.wsj.com/articles/trumps-order-seeks-to-widen-401k-investment-options-11631582672 [3] Forbes. (2025, August 8). Trump's executive order on retirement plans: What it means for investors. Retrieved from https://www.forbes.com/sites/ashleaebeling/2025/08/08/trumps-executive-order-on-retirement-plans-what-it-means-for-investors/?sh=7610e3e42c7e [4] Bloomberg. (2025, August 7). Trump signs executive order to expand 401(k) investment options. Retrieved from https://www.bloomberg.com/news/articles/2025-08-07/trump-signs-executive-order-to-expand-401k-investment-options [5] Kiplinger. (2025, August 10). What Trump's executive order on retirement plans means for you. Retrieved from https://www.kiplinger.com/article/retirement/T072-C032-S014-what-trumps-executive-order-on-retirement-plans-means-for-you.html

The Executive Order aims to provide 401(k) participants with strategies and asset classes previously unavailable, including private equity, private credit, real estate, digital assets, and more.
The move could potentially democratize access to these investment opportunities, which have historically been reserved for institutional investors.
The expansion of investment options could bring benefits such as improved long-term returns and diversification opportunities not typically available through stocks and bonds alone.
Critics, however, express concerns about higher fees, greater complexity, liquidity constraints, reduced transparency, and increased investment risk.
Large private equity firms and asset managers stand to gain access to an expansive $12 trillion retirement assets market with this change.
investing in digital assets like bitcoin can be included in retirement plans under President Trump's order.
A professionally managed allocation can help ensure suitability and support stronger long-term outcomes for plan participants, but private market investments are not suitable for every investor due to their illiquidity and complexity.
The Executive Order includes various alternative assets, such as private market investments, direct or indirect real estate interests, commodities, infrastructure projects, and longevity risk-sharing pools, broadening the types of assets that can be held in 4001(k) and similar retirement plans, but also bringing more volatility.

Expansion of 401(k) plans under Trump's administration: Overview of potential investment options