More than a year after President Donald Trump signed an executive order encouraging broader investment options in 401(k) plans, the Department of Labor has moved closer to putting that goal into action. In March 2026, it proposed a rule to make it easier for plans to offer these assets, and the public comment period closed in June.
The DOL’s 401(k) alternative-investment regulation still isn’t final. Although the department has submitted its final-rule version to the White House for review, the proposal has not yet taken effect. A final rule could be published following that review, although the timing remains uncertain.
If finalized, it could eventually give some workers access to alternative investments like private equity and cryptocurrency, but most retirement plans aren’t changing overnight.
In that executive order, he said workers should be able to invest in private equity and cryptocurrency in their 401(k)s if they choose. A few months earlier, in May 2025, the Department of Labor rescinded a Biden-era statement urging fiduciaries to use extreme care before adding cryptocurrency to 401(k) investment menus.
After the executive order, large private asset firms like Blackstone and Apollo Global Management began creating products specifically for 401(k) plans. However, many financial experts and government officials have concerns about offering alternative assets in 401(k) plans, namely that the investments can be risky and illiquid. Here’s everything you need to know.
Private equity investments are usually reserved for accredited
investors
Private equity essentially means private businesses. Large asset funds and hedge
funds invest in companies that are not publicly traded. Private equity firms
acquire companies, sell private businesses, and typically, these investment
deals are not available to the general public.
Usually, only accredited investors and qualified clients can invest in these
deals. However, allowing this type of investment within 401(k) plans will expand
access to millions of investors. The main drawback, though, is that these funds
are risky.
How private equity differs from traditional 401(k) investments
Most 401(k) plans allow investors to purchase assets such as stocks, bonds,
mutual funds, ETFs, and other traditional investments. While these investments
carry inherent risk and the stock market fluctuates regularly, investors can
choose assets based on their risk tolerance.
Alternative investments, such as cryptocurrency and private equity, have a
history of greater volatility.
What proponents of alternative assets in 401(k)s say
The proponents of alternative investments disagree with the argument about
volatility. One cryptocurrency CEO explained that stocks can be incredibly
volatile as well, and those are allowed within 401(k) plans.
President Trump’s executive order specifically stated that the purpose of
allowing alternative investments in 401(k) plans is to democratize access to
them. The idea is that for decades, private equity has been reserved for a
select few. Allowing these assets in 401(k)s gives American workers the
opportunity to take part in these investments, too.
What the critics say about allowing alternative assets in 401(k) plans
Critics of allowing alternative assets in 401(k) plans are concerned that
workers will purchase these assets without realizing the risk. In fact, Senator
Elizabeth Warren drafted a letter to the SEC asking how it would protect
American workers if these types of assets were allowed in 401(k) plans.
The concern is that workers will invest in cryptocurrency or private equity,
thinking that they will earn guaranteed returns, when they might experience
volatility and lose hard-earned retirement investment gains.
The importance of investment transparency and liquidity
Another concern that some financial experts highlight is that private equity is
an illiquid form of investing. Many private equity deals take a long-term
approach to getting returns. Additionally, private equity has high fees, which
can dramatically cut into an individual’s retirement returns.
Courts are defining retirement plan protections in real time
The debate over alternative investments in 401(k) plans isn’t happening in Washington alone. The courts are also weighing in on how retirement plan providers and fiduciaries should make investment decisions and protect participants.
One case to watch is Anderson v. Intel. The Supreme Court heard arguments on Oct. 6, 2026, but a decision is still pending. The case centers on what retirement plan participants must show to move forward with a lawsuit claiming plan fiduciaries made imprudent investment decisions.
While the lawsuit involves Intel’s use of hedge funds and private equity in retirement investments, the Court isn’t deciding whether employers should offer private equity in their 401(k) plans. Instead, it’s considering how much evidence participants need to provide when challenging those investment decisions.
The outcome could matter for workers who want to challenge how their retirement savings are invested. Depending on the Court’s decision, it could affect how easily participants can bring ERISA lawsuits alleging that plan fiduciaries failed to act in their best interests.
For now, the case remains unresolved, leaving employers, plan administrators, and retirement savers waiting for further guidance.
Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why
How workers can stay up to date on their 401(k) investment options
To stay up to date on these evolving 401(k) changes, employees should read
emails from their employer or human resources department that outline any
changes in asset availability.
If employees are unsure whether these assets are
right for them, it’s a good idea to check with a financial planner to ensure
they have the proper asset allocation to help them reach their retirement goals. Before making changes to your retirement strategy, be sure you’re not making common IRS-related 401(k) mistakes that could cost you money over time.
Bottom line
Although 401(k)s may include alternative assets soon, most workers likely won’t
choose these investments directly. Rather, these investments will likely be
included as part of larger funds. Workers should be aware of fees, fund
expenses, and overall risk when choosing any asset for a 401(k) plan.
After all,
the goal is to invest enough to have a stress-free retirement.
Choosing highly volatile investments could be a financial mistake that puts such a future at risk, so it’s important to
carefully vet any asset in a 401(k), regardless of what it is.