Trump's executive order may reshape 401(k) investments

Trump's Executive Order Could Transform 401(k) Investments

Upcoming initiatives from employers might involve investing in alternative assets, including private equity, cryptocurrencies, and real estate, though establishing this could take several months or more.

NEW YORK — Millions of Americans investing for their retirement through 401(k) accounts could soon have the chance to allocate funds into higher-risk options like private equity and cryptocurrencies. This comes following an executive order by President Donald Trump, signed on Thursday, which might finally open these substantial funds to financial entities that have long sought access to this massive pool valued in trillions.

Currently, there is no immediate shift in how individuals allocate part of their work earnings. Changes require federal agencies to revise existing rules and regulations to facilitate these new investment options. This process would take several months or even longer to be fully implemented. However, once achieved, employers could present a wider selection of mutual funds and investments to employees, as stated by the White House. New plans could include alternative assets such as private equity, cryptocurrencies, and real estate.

The order from the Republican president instructs the Labor Department and other relevant agencies to redefine what constitutes a qualified asset under the retirement rules of 401(k) plans.

Americans’ retirement plans are regulated by the Employee Retirement Income Security Act of 1974, more commonly referred to as ERISA. By law, employers must provide retirement options that serve the best interests of their employees, rather than catering to Wall Street. Most American retirement plans consist primarily of stock and bond investments, with lesser contributions in cash and heavily traded commodities like gold.

Trump’s decision benefits both the $5 trillion strong private equity industry, which has long aspired to compete for a place in retirement plans, and the cryptocurrency sector, whose leaders were strong advocates of Trump’s 2024 campaign in their pursuit of greater mainstream recognition among Americans.

The price of bitcoin was up 2% on Thursday to $116,542 and has nearly doubled since Trump was elected.

Under Democratic President Joe Biden, federal regulators were to treat cryptocurrency investments with “extreme care” because of the extreme volatility of crypto. It is not uncommon for bitcoin, ethereum and other big cryptocurrencies to move up or down 10% in a single day, whereas a 2% or 3% single-day move in the stock market would be considered historic.

For cryptocurrency companies, which donated millions to Trump’s campaign as well as his inauguration, one goal was to get their industry qualified under ERISA. Coinbase, one of the largest crypto companies in the United States, was also a major donor toward Trump’s military parade in Washington this summer. Under Trump, the Securities and Exchange Commission dropped its lawsuit against Coinbase, where the Biden administration said crypto should be treated as a security.

Crypto is particularly popular among young Americans. While volatile, bitcoin has generally moved upward since it was created by an anonymous programmer nearly 20 years ago.

“It was inevitable that bitcoin would make its way into American 401(k)’s,” said Cory Klippsten, the CEO of Swan Bitcoin. “As fiduciaries realize bitcoin’s risk-adjusted upside over the long term, we’ll see growing allocations, especially from younger, tech-savvy workers who want hard money, not melting ice cubes.”

Private equity firms rely heavily on high-net-worth individuals and state and private pension plans, which have extremely long investment timelines. But having access to Americans’ retirement assets would open up a deep pool of cash.

Blackstone CEO Steve Schwarzman has told investors going back to at least 2017 that it was a “dream” of his and the industry to be able to draw upon these retirement assets. Previous administrations, Republican and Democrat, have agreed that private equity investments, which can be riskier, more expensive and less liquid than traditional stock and bond market mutual funds, should not be included in 401(k) plans.

The average historic annual return on private equity assets going back to 1990 is roughly 13%, net of fees, according to Cambridge Associates. The S&P 500 index has had an approximate annual return, including dividends, of roughly 10.6% in the same period of time. However, private equity assets tend to be locked up for years, because the companies underlying the assets have to be sold on the private market, making them highly illiquid compared to stocks, which can be sold in a day.

“We look forward to working with the Trump Administration on a thoughtful framework that expands access to alternatives for retirement savers, offering Americans more diversification and investment options with appropriate investor guardrails,” said Bryan Corbett, the president and CEO of the Managed Funds Association, which is the trade group for the private equity industry.

Even after the regulations are written, it will take time for major retirement plan companies, such as Fidelity, Vanguard, T. Rowe Price, and others, to develop appropriate funds for employers to use. Employers are unlikely to revise their retirement plan options quickly, so it may take several years before crypto and private equity investments become mainstream in an individual’s retirement plan.

“While Vanguard has not committed to launching a product for defined contribution plans, Vanguard is dedicated to educating retirement investors to ensure a clear understanding of the opportunities and risks of investing in private assets,” the company said in a statement.

Copyright 2025 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.     

You May Also Like

NBC reporter Eliana Moreno's brother calls out scammers trying to profit off her helicopter crash death

Eliana Moreno’s Brother Warns of Scammers Exploiting NBC Reporter’s Helicopter Crash Death

The brother of NBC reporter Eliana Moreno, grieving her death, has condemned…
Inside the Secret Service's LA28 recruitment effort

Secret Service Steps Up LA28 Recruitment for Olympic Security

The U.S. Secret Service is ramping up recruitment as it prepares for…
St. Johns County community honors Tristyn Bailey and Kyle Lambert at remembrance football game

St. Johns Remembrance Football Game Honors Bailey, Lambert

A special football game brought fans together to remember Tristyn Bailey and…
Patrick Clancy makes heartbreaking revelation about his dead children in first interview since mistrial

Patrick Clancy Shares Heartbreaking Details About His Children’s Deaths in First Interview Since Mistrial

Patrick Clancy says he continues to speak with his three deceased children…
Steel Across America ends its cross-country 9/11 memorial at NY Giants game

Steel Across America Concludes Cross-Country 9/11 Memorial at New York Giants Game

The Tunnel to Towers Steel Across America tour ended its journey of…
WATCH: Handcuffed inmate breaks free, punches deputy in wild courthouse escape attempt

Handcuffed Inmate Escapes Restraints and Assaults Deputy During Courthouse Escape Attempt

A newly sentenced Ohio man allegedly slipped free of his handcuffs, struck…
A Few Stray 'Terminators' Are Worth Blocking Leftists From an AI Information Monopoly

Why a Few Stray ‘Terminators’ May Be Worth Stopping a Leftist AI Information Monopoly

As a bit of fun, I recently asked Google Gemini to create…
Pope Leo XIV receives 'symbolic’ sphere in charity's push for AI to 'protect human dignity'

Pope Leo XIV Backs Call for AI That Protects Human Dignity

A charity has given Pope Leo XIV an unusual work of art…
Hero NYC cop praised as 'strong mom' for saving son from clutches of crazed kidnapper while pregnant

Pregnant NYPD Officer Praised for Rescuing Her Son From Alleged Kidnapper

A Brooklyn father has praised his pregnant wife as a hero after…
Maryland family speaks out after ‘4-foot-long’ rabid beaver attacks 13-year-old boy

Maryland Family Speaks Out After Rabid Beaver Attacks 13-Year-Old Boy

The family of a 13-year-old Maryland boy has described the terrifying moment…
Federal Reserve raises interest rates for the first time since 2023

Fed Raises Interest Rates for First Time Since 2023: Impact

The Federal Reserve raised interest rates Wednesday for the first time since…
Texas man who killed 3 in 2005 burglary executed after warden asks him for last words

Texas Executes Man Convicted of Killing Three in 2005 Burglary

A Texas death row inmate was offered a final chance to speak…