President Donald Trump signed an executive order that would allow workplace retirement plans to include riskier assets like crypto, private real estate, and private equity in the future. The Labor Department will determine what regulatory changes are needed to make these alternatives available.
Currently, there is no law or rule that prevents alternatives from being part of a plan. However, the Biden administration has warned about the risks of including crypto in retirement plans.
As part of the executive order, sponsors must consider the best interests of their participants and ensure investments align with them. In 2022, the Labor Department expressed concerns about investing in cryptocurrencies due to significant risks, including fraud, theft, and loss.
The new order may lead to less stringent language, providing sponsors with more protection if they decide to include these assets in their plans. The DOL had previously warned plan sponsors of the risks associated with direct investments in cryptocurrencies.
Private equity involves buying a stake in an unlisted company, often with the goal of selling it for a profit years later. Private real estate investments involve pooling money from investors to acquire and restructure companies.
Alternative investments come with higher risks and fees compared to traditional retirement plan funds. For example, private equity assets charge 2% management fee plus 20% of profits. Sponsors should consider these risks when making investment decisions.
Critics argue that this rule change primarily benefits the companies offering these assets, not participants. To invest in alternative assets in your 401(k), treat them like any other risky investment, limiting exposure to no more than 5-10% of your total account value.
Source: https://www.mercurynews.com/2025/08/18/jill-on-money-should-you-buy-risky-assets-in-your-401k