FACT FINDER: What the Trump executive order means for your retirement

TUCSON, Ariz. (13 News) – A new executive order from President Donald Trump would allow your 401k plan to include private equity, real estate, and cryptocurrencies.

We’re talking about more than $12 trillion in American workers’ savings.

In practice, not much has changed, including the law.

“What ultimately changed is that they rescinded a 2021 letter that kind of threw shade at the idea of including private equity investments in 401ks,” said Stephen Kates, a certified financial planner and Bankrate financial analyst.

Pulling that “shade” could give you more choices, more diversification, and potentially, more risk.

Traditionally, stocks and bonds make up your 401k portfolio.

“So in addition to a diversified stock, bond, international stock allocation – you might have a little bit of private equity – and in the far future – maybe you’ll have a little bit of private investments or cryptocurrency, but it’s going to take a very long time for any of that to develop,” Kates said.

So far, there have been no developments in any 401ks.

Next year, BlackRock plans to introduce a fund that includes private equity, six years after it was made legal to do so.

It takes so long because investments have to have a track record to prove they’re a good investment for you.

“Companies and custodians are extremely afraid of litigation. They are extremely conservative, and that’s not going to change,” said Kates. “There will never be a situation when you can put 100% of your 401k into Bitcoin or private equity or private investments – it will never happen.”

They have a fiduciary duty to offer quality investments at a low cost because they are choosing the options for you, and they must make it extremely clear what’s in a fund.

“You’ll be able to determine if any of your investments available in your 401k have exposure to that – if they do and you don’t want it, you don’t have to invest in it,” Kates said. “This is a lot of news and a lot of hype for something that probably isn’t going to be personally applicable to you for a decade.”

The Labor Department will have to create new guidance on these “alternative assets” and their accessibility to you. The department announced it is taking the first step toward a “more open environment” and expects more significant regulatory changes in the next six months.

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