Over the last few months, President Trump has made progress on a 401(k) policy that would allow alternative investments in 401(k) retirement plans. It began in August 2025, with an executive order asking regulators to investigate the possibility of including alternative investments, such as private equity and cryptocurrency, in 401(k) plans.
The Labor Department responded by outlining a plan that would open the door to allowing these types of investments in consumer 401(k) plans. Here is more information about this proposed policy change, why some are proponents of it, and why others are calling it a Wall Street “greed grab.”
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New 401(k) rules open the door for alternative investments in plans
The Trump administration has taken steps to allow alternative investments within 401(k) plans. That means employees across America may be able to purchase cryptocurrency or invest in private equity if their employer offers these assets in a 401(k) plan.
In response to President Trump’s executive order, the Department of Labor outlined a six-step plan that 401(k) plan managers must follow before recommending any of these products.
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What is the status of the 401(k) alternative investment proposal?
Now, the proposal is within a 60-day public comment period. That means that the public can come forward and offer their opinions on this policy change, recommend adjustments, and review the proposal’s key terms and promises.
One key component is that the Department of Labor will offer a safe harbor to plan fiduciaries who show that they have evaluated investments across six different factors. This safe harbor agreement is intended to provide legal protection to those who wish to offer these types of alternative investments to their employees.
Why some lawmakers and experts support alternative assets in 401(k)s
President Trump indicated in his original letter that the goal of allowing alternative investments in 401(k) plans is to democratize access to more Americans.
Currently, investments like private equity are often limited to a select group of accredited investors. With this option, everyday investors would have the opportunity to purchase the same investments that were not previously available to them.
Proponents of the new policy also point out that it would help investors further diversify their 401(k) plans.
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Why some lawmakers and experts are against alternative assets in 401(k)s
There are, however, many critics of this plan. One of the most notable is Senator Elizabeth Warren, who drafted a letter to the SEC asking how they would protect consumers’ retirement plans from alternative investments and volatility.
Additionally, a Washington Post personal finance columnist, Michelle Singletary, called this policy “a massive greed grab for Wall Street.” Essentially, if this policy is approved, large financial institutions that offer alternative investments will be able to extend their products to a much wider range of investors.
Other experts point out that private credit markets are currently under stress, and private equity funds often underperform the public stock index and charge higher fees. Many do not feel like these funds are prudent financial choices for investors, especially those who are inexperienced.
The next steps for alternative assets in 401(k) plans
As mentioned, this policy is currently within a 60-day comment period. It is not a finalized plan. Additionally, even if it is finalized, it doesn’t mean that all 401(k) plans will automatically include alternative assets.
Each employer and 401(k) plan provider selects the assets available to employees. So, whether or not employees can purchase alternative assets will vary depending on their employer’s approval. If you have questions about whether or not your employer will include alternative assets in your plan in the future, ask your Human Resources department.
What 401(k) plan holders need to know about alternative assets
Many financial experts expressed concerns that private equity is more illiquid than other investment options. So, employees who are uncertain whether or not this option is best for them should consult a financial planner who can assist them by assessing their risk tolerance, retirement goals, and more.
It’s also a good idea to consult an accountant, especially if you’re close to retirement and planning your withdrawal strategy.
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How employees can stay up to date on this 401(k) policy
To stay up to date with 401(k) policies, make sure to open any emails from your employer regarding retirement plans and changes.
If you have questions about available assets, your employer’s match, or any other 401(k) policy, ask your Human Resources department.
Bottom line
Government officials and financial experts disagree on whether or not adding alternative assets to retirement plans will be beneficial for consumers.
Proponents of the plan say it can help employees diversify their investments and gain access to assets that were previously available only to institutional or accredited investors. Those who oppose it say that the volatility of alternative investments may prevent employees from successfully having a stress-free retirement one day.
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