(Bloomberg) — President Donald Trump will sign an executive order Thursday that aims to allow private equity, real estate, cryptocurrency and other alternative assets in 401(k)s, a major victory for industries looking to tap some of the roughly $12.5 trillion held in those retirement accounts.
The order will direct the Labor Department to reevaluate guidance around alternative asset investments in retirement plans subject to the Employee Retirement Income Security Act of 1974, according to a person familiar with the plans who requested anonymity before the order was formalized. The department will also be tasked with clarifying the government’s position on the fiduciary responsibilities associated with offering asset allocation funds that include alternative holdings.
Trump will also direct Labor Secretary Lori Chavez-DeRemer to work with counterparts at the Treasury Department, Securities and Exchange Commission, and other federal regulators to determine whether rule changes should be made to assist in the effort. The SEC will be asked to facilitate access to alternative assets for participant-directed retirement plans.
Top officials in Washington have been weighing a directive for months that would ease the legal concerns that have long kept alternative assets out of most worker defined-contribution plans. Retirement portfolios are mostly concentrated in stocks and bonds in part because corporate plan administrators are reluctant to venture into illiquid and complex products.
It’s set to be the biggest move yet by the Trump administration to bring private assets to defined-contribution accounts.
Elements of the effort mirror measures taken during Trump’s first term, when the Labor Department issued guidance that retirement plan administrators wouldn’t be violating their responsibilities if they included private equity in their portfolios. That was later rolled back under former President Joe Biden.
Alternative and traditional asset managers are eager to grab a slice of the defined-contribution market, which they see as the next frontier of growth. Many institutional investors like US pension funds and endowments have reached internal limits of what they can put into private equity amid a broader slowdown in dealmaking and a lack of distributions to clients.
Read More: Private Equity Covets New Golden Age in $12 Trillion of 401(k)s
Opening 401(k)s to private markets products would offer savers more investment options and, proponents argue, greater potential upside. But with that comes greater risk and higher fees that may leave retirement plan administrators vulnerable to lawsuits.
Money managers have pitched policymakers on the argument that savers’ portfolios don’t reflect changes in finance as public markets shrink. The number of publicly traded US firms has greatly declined since a peak in the 1990s, while private equity assets more than doubled in the decade ending in 2023.
The initiative dovetails with Trump’s effortstochampion the cryptocurrency industry. Last month, Trump hosted a “Crypto Week” at the White House and signed the first federal law to regulate stablecoins. Trump also tapped venture capitalist David Sacks of Craft Ventures LLC to be the first-ever White House artificial intelligence and crypto czar.
The president hosted industry leaders at the White House in March and signed an executive order calling for the creation of a Strategic Bitcoin Reserve and a separate stockpile of other digital assets. His administration has also vowed to elevate crypto-friendly regulators and dismissed or paused lawsuits and investigations whose targets included Coinbase, Robinhood, Uniswap Labs and OpenSea.
Trump and his family have launched multiple crypto ventures of their own, with the projects adding at least $620 million to his net worth in recent months, according to the Bloomberg Billionaires Index.
#Trump #Alternative #Assets #401ks #Executive #Order