Trump Admins' 401(k) Private Equity Experiment Picks Up Speed, But Retirement Advisors Worried About The Risk

Retirement savers are getting a new window into private markets, but a fresh debate has begun brewing over whether the asset class belongs in everyday 401(k)s.

What Happened: BlackRock, in late June, said it plans to launch target-date funds that include private equity and private credit as soon as 2026, with allocations that scale from roughly 5% to 20% depending on investor age, a shift it says can improve outcomes in professionally managed portfolios. Empower, one of the largest 401(k) providers, announced in May that it will offer access to private investments in some workplace plans this year.

According to a July report, the Trump administration is expected to sign an executive order soon directing federal agencies to guide employers on adding private assets and possibly crypto to 401(k) menus, a move private-fund managers have long sought.

Wealthy investors and endowments favor private equity for its potential to diversify portfolios and outperform public markets over long periods. Between 2000 and 2020, private equity delivered average annual returns of about 10.5%, topping major stock indexes over that span, according to Investopedia. BlackRock argues that carefully designed private-market exposure could modestly boost target-date performance.

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Why It Matters: But financial planners warn that what works for institutions can be too risky for 401(k) savers. Private funds are illiquid, charge higher fees and disclose less than public companies, making valuations and risks harder to assess.

“These are private companies, and with that comes less transparency,” said retirement planning adviser Robert Brokamp in a statement shared with USA Today, adding that target-date wrappers may not erase the underlying complexities. “Private equity is riskier than public equity… more speculative in nature,” Investopedia’s Caleb Silver said, cautioning that everyday savers should keep any private exposure small.

Sen. Elizabeth Warren (D-Mass.) in mid-July challenged Empower’s decision to offer private equity as an investment option in workplace retirement plans. Empower CEO Ed Murphy defended the move, likening it to the introduction of 401(k) plans decades ago and emphasizing the importance of making private markets more accessible.

Photo Courtesy: ZozerEblola on Shutterstock.com

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