Newsweek reported on President Donald Trump's administration finalizing a plan to allow 401(k) retirement savings plans to invest in private assets such as private equity, venture capital, real estate, hedge funds, gold, and cryptocurrency.
The changes would occur through an executive order, involving guidance from the Department of Labor and the SEC, representing a major shift in retirement plan investment options.
The proposal is controversial, with advocates emphasizing potential for higher returns and diversification, while critics warn of increased risk, illiquidity, and higher fees.
Details of the executive order are not yet finalized and no official decision has been announced by the White House.
Action Items
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Proposed Changes to 401(k) Investment Options
President Trump’s administration is preparing an executive order to permit 401(k) retirement accounts to invest in private assets, including asset classes not publicly traded (e.g., private equity, venture capital, real estate, hedge funds).
The Department of Labor and Securities and Exchange Commission would be instructed to guide employers on implementation.
The proposal could potentially also include allowing 401(k)s to invest in gold and cryptocurrency.
Industry and Public Reactions
Proponents (including asset managers and the private equity industry) argue that expanding investment options could boost retirement returns and align employee opportunities with those available to wealthier investors.
Critics warn that private asset investments tend to have higher fees, greater complexity, limited liquidity, and in some cases do not outperform the stock market.
Survey data from Empower finds substantial interest among retirement plan participants, with 74% supporting access to private investments and 72% favoring broader diversification.
Regulatory and Fiduciary Considerations
Past guidance (2020) from the Trump administration indicated that 401(k)s could invest in private assets without violating federal regulations or fiduciary duties, but highlighted risks such as complexity, higher fees, and illiquidity.
The White House emphasized that no decision is final until confirmed by the President.
Key Public Statements
Bryan Corbett (Managed Funds Association) supports the move as broadening diversification and wealth-building options for Americans.
Edmund F. Murphy III (Empower) notes keen interest in private investing but cautions it is not appropriate for all investors.
Decisions
No official decision announced — While guidance and an executive order are reportedly in development, the White House stated no change is official unless announced by President Trump.
Open Questions / Follow-Ups
Details and timing of the executive order are pending finalization and review.
It remains unclear how or when the Department of Labor and SEC will implement guidance for employers.
The full range of allowed alternative assets (including gold and cryptocurrency) has not been officially confirmed.