Trump Wants This Big Change to 401(k)s That Could Impact Your Retirement Savings

In August 2025, President Donald Trump issued an executive order asking regulators to consider adding alternative investments to 401(k) retirement plans. In this request, he highlighted that workers should be able to invest in private equity and cryptocurrency within their 401(k)s if they choose. Shortly after that, the Department of Labor rescinded a statement from a few years earlier that discouraged the use of private equity in 401(k) plans.

After the executive order, large private asset firms like Blackstone and Apollo Global Management began creating products specifically for 401(k) plans. However, many financial experts and government officials have concerns about offering alternative assets in 401(k) plans, namely that the investments can be risky and illiquid. Here’s everything you need to know about it.

Find Out: 14 benefits seniors are entitled to but often forget to claim

Private equity investments are usually reserved for accredited investors

Private equity essentially means private businesses. Large asset funds and hedge funds invest in companies that are not publicly traded. Private equity firms acquire companies, sell private businesses, and typically, these investment deals are not available to the general public.

Usually, only accredited investors and qualified clients can invest in these deals. However, allowing this type of investment within 401(k) plans will expand access to millions of investors. The main drawback, though, is that these funds are risky.

Who really has the cheapest auto insurance in your area? Check your zip code here.

How private equity differs from traditional 401(k) investments

Most 401(k) plans allow investors to purchase assets such as stocks, bonds, mutual funds, ETFs, and other traditional investments. While these investments carry inherent risk and the stock market fluctuates regularly, investors can choose assets based on their risk tolerance.

Alternative investments, such as cryptocurrency and private equity, have a history of greater volatility.

What proponents of alternative assets in 401(k)s say

The proponents of alternative investments disagree with the argument about volatility. One cryptocurrency CEO explained that stocks can be incredibly volatile as well, and those are allowed within 401(k) plans.

President Trump’s executive order specifically stated that the purpose of allowing alternative investments in 401(k) plans is to democratize access to them. The idea is that for decades, private equity has been reserved for a select few. Allowing these assets in 401(k)s gives American workers the opportunity to take part in these investments, too.

Retire like the rich: 14 ways you could build wealth in your 50s.

What the critics say about allowing alternative assets in 401(k) plans

Critics of allowing alternative assets in 401(k) plans are concerned that workers will purchase these assets without realizing the risk. In fact, Senator Elizabeth Warren drafted a letter to the SEC asking how it would protect American workers if these types of assets were allowed in 401(k) plans.

The concern is that workers will invest in cryptocurrency or private equity, thinking that they will earn guaranteed returns, when they might experience volatility and lose hard-earned retirement investment gains.

The importance of investment transparency and liquidity

Another concern that some financial experts highlight is that private equity is an illiquid form of investing. Many private equity deals take a long-term approach to getting returns. Additionally, private equity has high fees, which can dramatically cut into an individual’s retirement returns.

Courts are defining retirement plan protections in real time

While government officials are considering allowing alternative investments in 401(k) plans, there are active court cases discussing “loss causation,” that is, who is responsible for investment choices: the workers or the employers who manage retirement plans.

401(k) plans are supposed to have protections under a law called ERISA, the Employee Retirement Income Security Act. This law requires employers to be fiduciaries for employees. However, these recent court cases show it may be hard for workers to get legal protection when investments go wrong.

How workers can stay up to date on their 401(k) investment options

To stay up to date on these evolving 401(k) changes, employees should read emails from their employer or human resources department that outline any changes in asset availability. If employees are unsure whether these assets are right for them, it’s a good idea to check with a financial planner to ensure they have the proper asset allocation to help them reach their retirement goals.

Make Money: 8 things to do if you’re barely scraping by financially

Bottom line

Although 401(k)s may include alternative assets soon, most workers likely won’t choose these investments directly. Rather, these investments will likely be included as part of larger funds. Workers should be aware of fees, fund expenses, and overall risk when choosing any asset for a 401(k) plan. After all, the goal is to invest enough to have a stress-free retirement. Choosing highly volatile investments can put that at risk, so it’s important to carefully vet any asset in a 401(k), regardless of what it is.

More from FinanceBuzz: