On August 7, 2025, President Trump signed an executive order titled “Democratizing Access to Alternative Assets for 401(k) Investors,” which instructs the Department of Labor (DOL) and the Securities and Exchange Commission (SEC) to take actions which may have the effect of increasing access to Alternative Assets1 for 401(k) plan participants (the “Order”). The full impact of this Order will not be seen until the agencies have completed their reviews and potentially issued further regulations or guidance.
In 2020, during the first Trump administration, the DOL provided guidance in an information letter regarding the inclusion of private equity investments as a component of a professionally managed asset allocation fund. The Order notes that, even after the guidance, most Americans still do not have the opportunity to have private asset exposure within their 401(k) plan, putting them at a disadvantage compared to other wealthy Americans, institutional investors and participants in public pension plans.
The Order notes that fiduciaries of 401(k) plans are obligated under ERISA to carefully vet and consider all aspects of private offerings, including investment managers’ capabilities, experiences, and effectiveness managing Alternative Asset investments, to protect plan participants. The Order now instructs the DOL to re-examine past and present guidance regarding a fiduciary’s duties in connection with making available to participants an asset allocation fund that includes Alternative Assets. In particular, the DOL is instructed to consider the adoption of safe harbor guidance for 401(k) plan fiduciaries when including such Alternative Asset choices in the plan’s portfolio of investments, and to prioritize actions that may curb ERISA litigation in respect of a fiduciary’s decision to include such assets in the plan’s investment portfolio.
The Order also instructs the SEC to consider ways to facilitate access to Alternative Assets within 401(k) plans. There are several SEC laws and regulations which currently complicate the inclusion of private assets in 401(k) plans. The Order states that facilitation may include considerations of revisions to existing regulations and guidance regarding accredited investor and qualified purchaser status.
The revision of such rules could ease the path for private asset exposure within 401(k) plan portfolios.
1 For purposes of the Order, “alternative assets” means “(i) private market investments, including direct and indirect interests in equity, debt, or other financial instruments that are not traded on public exchanges, including those where the managers of such investments, if applicable, seek to take an active role in the management of such companies; (ii) direct and indirect interests in real estate, including debt instruments secured by direct or indirect interests in real estate; (iii) holdings in actively managed investment vehicles that are investing in digital assets; (iv) direct and indirect investments in commodities; (v) direct and indirect interests in projects financing infrastructure development; and (vi) lifetime income investment strategies including longevity risk-sharing pools”.
