Quick overview

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President Trump is set to issue an executive order that will allow alternative assets, such as cryptocurrencies, real estate, and private equity, to be included in 401(k) retirement savings plans.

 

This change will provide these sectors with access to approximately $12.5 trillion in retirement account funds. Sources familiar with the matter indicate that the executive order will instruct the Labor Department to review the guidance under the *Employee Retirement Income Security Act of 1974 (ERISA)* related to alternative asset investments in retirement plans.

Additionally, the order will clarify the government’s position on fiduciary duties when offering asset allocation options that include alternative investments.

It will also direct Labor Secretary Lori Chavez-DeRemer to work with federal regulators, including the Securities and Exchange Commission (SEC) and the Treasury Department, to assess whether relevant regulations need updating. The SEC will play a role in facilitating investments in alternative assets within participant-directed retirement plans.

This initiative is expected to be the Trump administration’s most significant effort to incorporate private assets into fixed-contribution accounts and a key part of its broader goal to promote the growth of the cryptocurrency sector.

The White House has been examining this directive in response to ongoing legal issues that have restricted the inclusion of alternative assets in most employees’ fixed-contribution plans.

Corporate plan administrators have been reluctant to engage with complex and illiquid products, leading to a significant concentration of retirement portfolios in stocks and bonds.

. The guidance from the Labor Department suggests that retirement plan administrators would not be violating fiduciary duties by adding private equity to investment portfolios. This guidance is reminiscent of policies from Trump’s first term, which were withdrawn during the Biden administration.