Your 401(k) Could Be Changing—Here’s What Trump’s Order Means
Would you ever imagine holding cryptocurrency, private equity, or real estate inside your 401(k)? For decades, those kinds of investments were off-limits to the average retirement saver. But now, that possibility may be closer than you think.
In August 2025, former President Donald Trump signed an executive order aimed at reshaping retirement investment options for millions of Americans. While this doesn’t mean instant change, it sets the stage for a potentially significant transformation in how employer-sponsored retirement plans operate.
This article breaks down what happened, what it could mean for you, and how to approach these potential changes with a clear, informed strategy.
What Happened?
On August 7th, 2025, former President Trump issued an executive order directing two major federal agencies—the Department of Labor and the Treasury—to review existing rules governing 401(k) plans and explore ways to expand the investment menu.
The White House framed the move as part of a broader push to “democratize” access to investment opportunities and enhance retirement security for the roughly 90 million Americans currently participating in defined-contribution plans like 401(k)s. According to the administration’s fact sheet, the goals are to expand choice, improve diversification, and reduce legal and regulatory barriers that may be discouraging plan sponsors from offering new asset classes.
The focus? Making it easier for plan sponsors to offer what’s known as alternative investments.
Alternative investments cover a broad range of asset classes that fall outside traditional stocks, bonds, and mutual funds. The executive order specifically pointed to:
Private equity – Investments in privately held companies, from early-stage startups to well-established firms that aren’t listed on public exchanges.
Real estate – Potentially beyond the standard public REITs (Real Estate Investment Trusts), offering exposure to institutional-grade or privately managed property portfolios.
Cryptocurrency – Access to digital assets such as Bitcoin or Ethereum, potentially through ETFs or other approved investment vehicles.
Historically, these types of investments have been the domain of pension funds, endowments, hedge funds, and high-net-worth individuals. The average worker with a 401(k) has never had straightforward access to them.
While the order does not mandate immediate changes, it signals a clear policy direction: to explore how these asset classes could be responsibly incorporated into qualified retirement plans while still protecting participants from undue risk.
What This Could Mean for Your 401(k)
At present, most 401(k) plans are intentionally simple. They typically offer:
Mutual funds and index funds tracking the stock or bond markets
Target-date funds that automatically adjust over time
Bond funds or stable value funds for conservative savers
These options are designed to be easy to understand, cost-effective, and broadly diversified—making them accessible for workers at all levels of investment knowledge.
If regulators follow through on the executive order, this investment menu could expand considerably. In the future, your 401(k) could potentially offer:
Private equity funds – Targeting companies not traded on public markets, often with long investment horizons and a focus on growth.
Real estate partnerships or funds – Going beyond publicly traded REITs to include private real estate projects, which may generate income and provide inflation protection.
Crypto-linked investments – Such as ETFs or structured products designed to give retirement savers exposure to digital assets without directly holding cryptocurrency themselves.
The appeal for investors is clear: these asset classes may behave differently from traditional stocks and bonds, offering new opportunities for diversification and potentially higher returns over the long run.
Why This Matters
The interest in alternative investments isn’t new. For decades, institutional investors have used them to enhance returns, reduce volatility, and gain exposure to growth opportunities outside the public markets. The idea behind this executive order is to “level the playing field” by giving everyday savers access to some of those same tools.
Here are a few reasons why this could be a game-changer for retirement planning:
Higher return potential – In certain environments, private equity and other alternatives have outperformed traditional asset classes, especially over long holding periods.
Reduced correlation with public markets – When stocks drop, some alternative assets may hold steady or even rise, helping to smooth out portfolio performance.
Access to new growth sectors – Real estate developments, emerging private companies, and digital assets can offer opportunities not available in the S&P 500.
For those with longer time horizons and a higher tolerance for risk, incorporating a small allocation of alternatives could provide a valuable edge in building wealth.
Important Risks to Understand
While the potential rewards are attractive, these investments are not without their challenges—and in some cases, their dangers. Before deciding if alternative assets belong in your retirement plan, it’s important to understand the downsides:
Illiquidity – Many alternatives, like private equity and certain real estate funds, can lock up your money for years. If you need access to that cash, you may not be able to sell quickly—or at all—without taking a loss.
Higher fees – Private equity and real estate funds often charge significantly more than index funds, including management fees and performance-based fees. Over time, these costs can erode returns.
Volatility – Cryptocurrency is especially known for its rapid price swings. This can be exhilarating when prices are rising—but painful when they’re not.
Limited transparency – Unlike public stocks and funds, many alternative investments don’t have the same level of required reporting, making it harder to evaluate performance and risk.
Complexity – These aren’t “set it and forget it” investments. Understanding how they work—and how they fit into your retirement plan—requires time, effort, and often professional advice.
These risks don’t mean you should avoid alternatives entirely, but they do mean you should proceed with caution.
Fiduciary Ethics: Balancing Opportunity and Protection
One of the most talked-about—and debated—elements of this executive order is how it changes the landscape of fiduciary responsibility. According to a Mayer Brown analysis, the order directs the Department of Labor to re-examine guidance on fiduciary duties under ERISA and to “curb ERISA litigation that constrains fiduciaries’ ability to apply their best judgment in offering investment opportunities.”
On the surface, this appears to relax the current legal pressures on plan sponsors and employers, making it easier for them to consider adding alternative assets to a 401(k) lineup.
While this shift may free fiduciaries from the fear of costly lawsuits that have historically discouraged them from exploring these options, easing legal pressure comes with responsibility. Fewer barriers for fiduciaries could also mean fewer checks against poor decision-making, opening the door for investments that are too complex, too costly, or too risky for the average participant.
As a CFP® professional, my fiduciary duty is clear: always act in the best interest of the client. That means evaluating any alternative investment by the same rigorous standards as traditional options—assessing costs, risks, liquidity, and suitability for the participant’s specific goals and time horizon.
This also means ensuring that if alternatives are added to a 401(k) menu, participants receive transparent information and education so they understand exactly what they’re investing in. A high-potential return means little if it comes with risks that could jeopardize a secure retirement.
Bottom line: Reducing fiduciary litigation risk may encourage innovation in retirement plan design, but participant protection must remain the top priority. Choice is valuable—only when it’s paired with clarity, prudence, and ethics.
What Happens Next
It’s important to remember that this is only the first step in a potentially lengthy process. Here’s what to expect:
Agency review – The Department of Labor and the Treasury will examine existing regulations and consider changes that would allow for alternative investments within 401(k) plans.
Public and industry feedback – As with most regulatory changes, there will likely be opportunities for stakeholders to weigh in.
Plan sponsor decisions – Even if the rules change, your employer and 401(k) provider will decide whether to actually offer these new options.
It’s entirely possible that some plans will adopt alternative investments quickly, while others may choose not to offer them at all.
What You Should Do Now
Even though no immediate action is required, there are steps you can take to prepare:
Stay informed – Follow updates from reputable sources so you’re ready when changes occur.
Know your risk tolerance – If market swings keep you awake at night, a highly volatile investment may not be right for you.
Avoid chasing trends – Just because a new investment is available doesn’t mean it belongs in your portfolio. Consider whether it aligns with your goals and time horizon.
As Cary Smith of Client First Capital said in his article, Diversifying Your Portfolio After Retirement, “diversify, but with intention. Every asset in your portfolio should serve a purpose.” If you do decide to explore alternatives in your 401(k), start small. Even a modest allocation can give you exposure without putting your entire retirement plan at risk.
The Bottom Line
This executive order is about expanding choice and opportunity for retirement savers. For some, it could mean access to strategies once reserved for Wall Street insiders. For others, it may introduce more complexity and risk than they’re comfortable with.
However, it’s also important to recognize that relaxing fiduciary oversight—even with the intention of encouraging innovation—can shift more responsibility for due diligence onto participants themselves. Without careful regulation and education, what’s framed as “more choice” could unintentionally increase exposure to costly, risky or unsuitable investments.
The key takeaway: with greater choice comes greater responsibility. The right mix of investments for your 401(k) should always be based on your personal goals, risk tolerance, and time horizon—not on headlines or hype.
