Trump Executive Order Expands 401(k) Investments to Crypto, Real Estate, Private Equity

President Donald J. Trump signed an Executive Order on August 7, 2025, that will allow 401(k) retirement accounts to include investments in alternative assets such as cryptocurrency, private equity, and real estate [1]. This marks the first time that everyday American workers may gain access to investment opportunities previously limited to institutional investors and wealthy individuals. The policy is part of Trump’s broader economic strategy to promote U.S. leadership in cryptocurrency innovation and expand market access to wealth-generating tools.

The shift is intended to address what the Trump administration calls an "opportunity gap," referring to the disparity between the investment tools available to everyday savers and those used by wealthier investors. The order aims to diversify retirement portfolios and provide participants with the potential for higher long-term returns. Approximately $8.7 trillion is currently held in 401(k) accounts, with around 70 million Americans participating in these plans [1]. This move could significantly impact the financial landscape of retirement savings by expanding the range of investment options within these accounts.

Under the new directive, the Department of Labor is tasked with revising its rules regarding how fiduciaries handle alternative investments under the Employee Retirement Income Security Act (ERISA). The agency must collaborate with the Securities and Exchange Commission (SEC), the Treasury, and other federal bodies to align regulations with the executive order [1]. The SEC will also be responsible for updating its regulations to permit 401(k) participants to select funds with alternative assets, breaking down historical barriers that have limited such investments to a select few.

Cryptocurrency has drawn the most attention among the newly permissible assets. Digital assets like Bitcoin and Ethereum offer potential high returns and diversification benefits, as they operate on blockchain technology and trade 24/7. However, they also present risks due to their volatility and the ongoing uncertainties in the regulatory environment [1]. To include cryptocurrencies in 401(k) plans, administrators may need to partner with regulated custodians or create indexed funds or managed portfolios that incorporate these assets. These strategies must ensure strong investor protections.

Advocates of the policy argue that offering alternative investments to a broader audience could lead to better long-term outcomes for retirement savers. They point to the documented success of private equity and real estate investments in large institutional portfolios and suggest that diversification can reduce overall risk [1]. Supporters also highlight the potential for greater financial equality, as these investment opportunities have historically been inaccessible to the average worker.

Conversely, critics warn of the risks associated with alternative assets. Private equity can involve high fees, long lock-up periods, and unclear valuations, while cryptocurrencies introduce additional concerns related to volatility and cybersecurity. Consumer advocates caution that many individuals may lack the expertise to manage these investments effectively, potentially leading to overexposure to risk [1]. There are also fiduciary responsibilities for plan administrators to ensure that any new offerings align with the best interests of participants and comply with regulatory standards.

Moving forward, the implementation of this policy will depend on the regulatory agencies tasked with developing the necessary guidelines. The Department of Labor will provide updated guidance on fiduciary duties related to alternative assets, while the SEC and Treasury will draft rules to allow these assets to serve as qualified default investment options. The speed of these changes is uncertain, and some technology-focused 401(k) platforms may act quickly to introduce alternative assets, while traditional sponsors may adopt a more cautious approach [1].

Overall, the Executive Order represents a potentially transformative shift in U.S. retirement policy. It opens nearly $9 trillion in 401(k) assets to a range of alternative investments, offering both growth potential and new risks. The success of the policy will depend on how regulators craft clear rules, how plan administrators incorporate these new options, and how effectively retirement savers understand and manage the assets they choose to invest in.

Source: [1] Signed! Trump Order Opens 401(k)s To Crypto, Real Estate, And More (https://www.forbes.com/sites/digital-assets/2025/08/07/signed-trump-order-opens-401ks-to-crypto-real-estate-and-more/)