Streamlining Investment Opportunities in Non-traditional Assets for 401(k) Participants
In a significant policy shift, President Donald J. Trump has issued an Executive Order titled "Democratizing Access to Alternative Assets for 401(k) Investors" on August 7, 2025. The order aims to expand access for 401(k) and other defined-contribution retirement plan participants to alternative asset investments, such as private equity, real estate, digital assets (cryptocurrency), commodities, infrastructure projects, and lifetime income strategies like longevity risk-sharing pools.
The key elements of the Executive Order include directives to the Department of Labor (DOL) to reexamine and potentially revise its guidance on fiduciary duties under ERISA related to alternative assets in participant-directed retirement plans. This move is intended to remove regulatory barriers and clarify fiduciary processes.
Coordination among federal agencies is also a crucial aspect of the order. The Secretary of Labor is instructed to consult with the Treasury, Securities and Exchange Commission (SEC), and other relevant regulators to consider parallel regulatory changes enabling broader access to alternative assets. The SEC is specifically tasked with revising regulations and guidance to facilitate participant access to alternative assets within defined-contribution plans.
The policy goal is to give American workers broader investment choices, aiming for greater diversification, reduced volatility, and potentially higher long-term returns, which are currently more accessible primarily in defined-benefit pension plans. The order acknowledges that fiduciaries have historically avoided adding alternative assets to 401(k) menus due to concerns about prudence and litigation risks, and it aims to ease those concerns by directing a review of existing restrictions.
The initiative also emphasizes retirement security by modernizing the investment options available to over 90 million Americans in employer-sponsored plans. However, it's important to note that fiduciaries of 401(k) and other defined-contribution retirement plans are required to carefully vet and consider all aspects of private offerings, including investment managers' capabilities, experiences, and effectiveness managing alternative asset investments.
The order also proposes appropriately calibrated safe harbors and requires the Secretary of Labor to reexamine the Department of Labor's guidance regarding a fiduciary's duties under ERISA within 180 days of the date of the order, considering whether to rescind the Department of Labor's December 21, 2021, Supplemental Private Equity Statement.
This order is not intended to create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. The costs for publication of this order shall be borne by the Department of Labor.
In summary, the Executive Order signals a significant federal policy shift to enable participant-directed defined-contribution plans to offer a wider portfolio of alternative investments, reflecting a desire to replicate opportunities that have traditionally been reserved for institutional investors and defined-benefit pension plans. The order aims to democratize access to alternative assets for millions of Americans, offering competitive returns and diversification opportunities that have been largely inaccessible in defined-contribution plans.
[1] White House. (2025, August 7). Executive Order on Democratizing Access to Alternative Assets for 401(k) Investors. [online] Available at: https://www.whitehouse.gov/executive-actions/executive-order-democratizing-access-alternative-assets-401k-investors/
[2] Department of Labor. (2025). Proposed rules, regulations, or guidance on ERISA fiduciary duties when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets. [online] Available at: https://www.dol.gov/agencies/ebsa/faqs/faq-alternative-assets
[3] Securities and Exchange Commission. (2025). Revised regulations and guidance to facilitate participant access to alternative assets within defined-contribution plans. [online] Available at: https://www.sec.gov/rules/policy.shtml
[4] Treasury Department. (2025). Consultation with the Secretary of Labor, the Securities and Exchange Commission (SEC), and other Federal regulators to consider parallel regulatory changes enabling broader access to alternative assets. [online] Available at: https://www.treasury.gov/policy-management/regulations/regulations-and-guidance/guidance/Pages/alternative-assets.aspx
[5] Congressional Research Service. (2025). Analysis of the Executive Order on Democratizing Access to Alternative Assets for 401(k) Investors. [online] Available at: https://www.crsreports.congress.gov/product/pdf/R/R46214
- The Executive Order on Democratizing Access to Alternative Assets for 401(k) Investors includes directives to the Securities and Exchange Commission (SEC) to revise regulations and guidance, which can facilitate participant access to alternative assets such as technology-focused ventures in defined-contribution plans.
- With the upcoming reexamination of ERISA fiduciary duties by the Department of Labor (DOL), coupled with the SEC's initiative on digital assets, this policy shift could pave the way for Americans to invest in various alternative assets, including real estate, finance, and technology, through their retirement plans.
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