A White House executive order aims to “democratize” retirement investing by opening the door for 401(k) and 403(b) menus to include so-called alternative assets like private equity and cryptocurrencies. The policy could be consequential not only for workers, but also for a private-equity industry that’s roughly $5 trillion and eager to tap the trillions in defined-contribution plans. Yet timelines remain uncertain, and practical hurdles abound. So what changes, and what questions should plan sponsors and participants be asking as this unfolds?
Consider the contrasts that make this moment feel pivotal. Alternative assets are pitched as diversifiers that have sometimes outpaced traditional markets; at the same time, they can carry higher fees, limited transparency, and pronounced volatility. Bitcoin, for instance, surged 135% last year after falling 65% in 2022, while the S&P 500 rose 24% last year and declined 19% the year prior. In private markets, a recent analysis cited by CBS shows 10-year returns that beat stocks and bonds, alongside warnings about cost and complexity. Are we witnessing a smarter retirement architecture, or a shift that simply makes risk look different?
What the order does (and doesn’t)
- Directs regulators to redefine “qualified assets.” The order tells the Department of Labor (and other agencies) to revisit what counts as permissible under 401(k) rules, which operate within the Employee Retirement Income Security (ERISA)’s “best interest” framework. It doesn’t flip a switch; it starts a process.
- Leaves core choice intact. Workers could still stick to stocks, bonds, and cash; opting into any new alternatives would be voluntary.
- Sets a long runway. Expect months for guidance and potentially years before mainstream adoption, as recordkeepers and asset managers design products and employers update plans. Analysts also anticipate slow uptake given costs, transparency issues, and operational complexity.
Why this matters for plan design and oversight
- Fiduciary standards remain the anchor. ERISA obligations don’t loosen just because the menu expands. If alternatives appear, sponsors would still need to document processes around selection, monitoring, valuation, liquidity, and participant communication, especially where day-to-day pricing is opaque, as in private markets. How do you explain “no real-time ticker” to participants used to instant quotes?
- Cost structure becomes a first-order variable. Private strategies typically entail higher fees—reflecting sourcing, diligence, and legal work—that can erode net returns, even when gross performance looks compelling. The economics may be particularly sensitive in target-date or multi-asset funds where fees cascade. At what fee level does a diversification benefit stop being a benefit?
- Volatility and behavior intersect. Crypto’s price transparency can be a double-edged sword: prices are visible, but swings can be dramatic. Private equity’s mark-to-model cadence, by contrast, can mute apparent volatility while shifting the conversation to valuation methodology, reporting lags, and liquidity gates. Which version of risk—visible swings or slower-moving uncertainty—will participants tolerate?
Practical checkpoints as menus evolve
- Menu architecture: If alternatives appear, will they live inside professionally managed multi-asset funds (e.g., target-date series) or as standalone “do-it-yourself” options? Each path implies different oversight, education needs, and trading mechanics.
- Liquidity terms: Private strategies often have lockups or limited redemption windows; participants accustomed to daily liquidity may encounter new constraints.
- Disclosure and education: Clear, plain-English explanations of strategies, fees, valuation practices, and risks will shape participant outcomes more than any headline return figure.
The bottom line
The order signals a potential expansion of 401(k) investment choice, not an instant transformation. Implementation will hinge on forthcoming DOL guidance, product engineering by fund firms, and employer adoption decisions under ERISA. Meanwhile, the core tensions—performance vs. fees, diversification vs. transparency, access vs. complexity—remain unresolved. Will broader menus truly improve retirement resilience, or will they simply repackage risk in ways that are harder to see?
If you’d like to talk through how these policy shifts could intersect with the design of your workplace plan or the disclosures you’re seeing, you’re welcome to schedule a complimentary conversation. No pitches—just a clear discussion of the landscape as it stands today.
Source:
Picchi, Aimee. “Trump Wants Your 401(k) to Access Crypto and Private Equity. Here’s What to Know.” CBS News, 8 Aug. 2025, https://www.cbsnews.com/news/trump-401k-changes-executive-order-risk-what-to-know/
For more complete information about your 401(k) investment options, call your company’s plan administrator or your financial professional for a prospectus. The prospectuses contain details on investment objectives, risks, fees, and expenses, as well as other information about your plan’s investment options, which you should carefully consider. Please read the prospectuses thoroughly before sending money. Diversification does not guarantee profit, nor is it guaranteed to protect assets. Investing involves risk, including possible loss of principal. No investment strategy can ensure financial success or protect against losses. This information is being provided only as a general source of information and is not intended to be the primary basis for investment decisions. It should not be construed as advice designed to meet the particular needs of an individual situation. Please seek the guidance of a financial professional regarding your particular financial concerns. Consult with your tax advisor or attorney regarding specific tax issues. We are not affiliated with or endorsed by any government agency, and do not provide tax or legal advice or services.
