The US government is set to finalize an executive order allowing 401(k) retirement savings plans to invest in private equity, a move that could benefit the private equity industry and everyday savers.
President Donald Trump’s directive aims to ease legal concerns that have traditionally prevented alternative assets like private equity from being included in most defined-contribution plans. This comes after months of discussion by top officials in Washington about how to integrate private equity into retirement portfolios.
Allowing 401(k) plans to invest in private equity would provide savers with broader investment choices and potentially higher long-term returns. However, critics warn that the move could increase legal exposure for plan administrators if investments perform poorly or fees eat into retirement savings.
Advocates argue that this change is necessary due to the shrinking public markets and the growing presence of private equity assets. They claim that everyday savers should have access to investment opportunities traditionally reserved for institutional investors.
The Trump administration’s move would build on earlier measures from Trump’s first term, including Department of Labor guidance stating that retirement plan administrators would not be violating their fiduciary duties if they opted to include private equity in their portfolios.
Source: https://nypost.com/2025/07/16/business/trump-to-allow-401ks-to-invest-in-private-equity-report