Trump to Sign Executive Order Unlocking Alternative Assets for 401(k) Plans, Official Confirms
Washington, D.C. — August 8, 2025 — President Donald Trump is set to sign a groundbreaking executive order today that will pave the way for 401(k) retirement plans to include alternative assets such as private equity, real estate, and cryptocurrencies, according to a senior White House official. This move, aimed at diversifying investment options for millions of Americans, could reshape the $12.5 trillion retirement savings market, but it has sparked both enthusiasm and concern among industry experts and lawmakers.
The executive order directs the Securities and Exchange Commission (SEC) and the Department of Labor to revise regulations and guidance, enabling participant-directed defined-contribution plans, like 401(k)s, to offer alternative investments. “This is about giving Americans more choices to build wealth and secure their financial future,” the official said, speaking on condition of anonymity. The order also instructs Labor Secretary Lori Chavez-DeRemer to collaborate with the Treasury Department and other regulators to ensure cohesive policy changes.
A New Frontier for Retirement Savings
The inclusion of alternative assets in 401(k) plans marks a significant shift from traditional investments like stocks, bonds, and cash. Proponents argue that assets such as private equity and real estate could offer higher returns, particularly for younger investors with longer investment horizons. “Diversifying into private markets can provide a buffer against market volatility and inflation,” said Josh Cohen, managing director at PGIM DC Solutions. He noted that such investments could potentially add years of retirement income for savers.
Major asset managers like BlackRock, KKR, and Apollo Global Management stand to benefit significantly, gaining access to a vast new pool of capital. BlackRock, the world’s largest asset manager, is already preparing to launch a retirement fund incorporating private equity and private credit in 2026. The move aligns with Trump’s broader push to bolster the cryptocurrency industry, following his recent executive actions to regulate stablecoins and establish a Strategic Bitcoin Reserve.
Critics Warn of Risks and Complexity
However, the proposal has drawn sharp criticism from consumer advocates and lawmakers, who warn that alternative assets carry higher risks, fees, and less transparency compared to traditional investments. Democratic Senator Elizabeth Warren has been a vocal critic, questioning the safeguards for retirement savers. In a June letter to Empower Retirement, which manages $1.8 trillion in assets, Warren highlighted concerns about “weak investor protections, expensive management fees, and unsubstantiated claims of high returns” in private investments.
Plaintiffs’ lawyers are reportedly gearing up for potential lawsuits from investors unprepared for the complexity of these assets. BlackRock CEO Larry Fink acknowledged the challenges, stating, “There’s significant litigation risk in the defined contribution business. Robust analytics and data will be critical to navigating this shift.” Critics also point out that alternative assets often have lower liquidity, making it harder for investors to access funds quickly.
A Step Toward Financial Innovation or a Risky Gamble?
The executive order builds on guidance issued during Trump’s first term in 2020, which permitted limited private equity investments in 401(k) plans but saw low adoption due to litigation fears. The new directive aims to reduce regulatory barriers, encouraging broader participation. However, industry experts caution that implementation will take time, as plan sponsors and asset managers adjust to new fiduciary responsibilities and investor education needs.
“This could democratize access to high-growth investments traditionally reserved for the ultra-wealthy,” said Sarah Gaymon, a tax services director at Berkowitz Pollack Brant Advisors. “But it’s critical that plan sponsors prioritize fiduciary duty to protect savers from undue risk.”
Market reactions have been mixed, with Bitcoin and private equity stocks like Apollo Global Management seeing modest gains in early trading on August 7, reflecting optimism about the potential influx of retirement funds into these sectors. Yet, Morningstar analyst Jason Kephart warned, “The complexity and fees associated with alternative assets could outweigh the benefits for the average investor.”
Looking Ahead
As President Trump prepares to sign the order at 12:00 ET today, the financial industry braces for a transformative shift in retirement planning. While the move promises to unlock new opportunities for wealth creation, it also raises questions about balancing innovation with investor protection. The SEC and Department of Labor are expected to issue updated guidance in the coming months, setting the stage for a heated debate over the future of America’s retirement savings.
Reporting by Jeff Mason and Isla Binnie, with additional contributions from Rishabh Jaiswal and Doina Chiacu. Sources: Reuters, Bloomberg, CNBC.