President Donald Trump has signed an executive order that paves the way for private equity, real estate, cryptocurrency, and other alternative assets to be included in US 401(k) retirement plans, a potential game-changer for the $12.5tn defined-contribution market.

The directive, which targets the $12.5tn defined-contribution market, marks one of the most significant attempts yet to integrate private markets into mainstream retirement portfolios. While welcomed by many investment managers seeking new capital sources, the policy also raises broader questions about retirement security, financial regulation and the role of alternative assets in long-term savings.

Under the order, the US Department of Labor must reassess within six months its guidance on alternative investments in retirement accounts governed by the Employee Retirement Income Security Act (ERISA). The review will focus on clarifying fiduciary responsibilities for plan administrators offering asset allocation funds that include private market exposure.

The directive also instructs Labour Secretary Lori Chavez-DeRemer to work with the Treasury Department, the Securities and Exchange Commission and other federal agencies to explore regulatory changes that could ease access to alternative assets within retirement plans. The SEC has been tasked with examining ways to facilitate the inclusion of such investments in participant-directed plans.

The move effectively revives and expands guidance first issued during Trump’s initial presidency, which allowed private equity investments within diversified retirement portfolios without breaching fiduciary duties. That guidance was later rolled back under President Biden amid concerns about complexity, fees and transparency.

For private equity firms, the development could unlock a vast new pool of capital at a time when traditional institutional investors have approached allocation limits and dealmaking has slowed. Yet the debate surrounding the policy extends well beyond the industry itself.

Supporters argue that expanding access to private markets could offer retirement savers greater diversification and potentially higher long-term returns. Critics, however, warn that private equity and other alternative assets are less liquid, harder to value and typically carry higher fees than public market investments — factors that could introduce additional risk into retirement portfolios.

The executive order also sits within the administration’s wider push to expand the role of alternative financial assets in the US economy. Trump has previously promoted digital assets through initiatives such as hosting “Crypto Week” at the White House, supporting the first federal stablecoin legislation and establishing a Strategic Bitcoin Reserve.

As regulators begin reassessing the framework governing retirement investments, the policy could ultimately reshape not only how private markets access capital, but also how American workers build their retirement savings.

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