President Trump’s executive order to encourage 401(k) investment in private equity has been met with surprising speed and enthusiasm from his administration, reversing a policy reversal by former President Joe Biden.
The Labor Department recently rescinded a statement cautioning retirement plan fiduciaries against including private equity in 401(k) plans. This move comes after the Council of Economic Advisors published a report highlighting significant benefits for retail investors, PE fund managers, and the broader economy.
According to the CEA report, loosening the cap on private equity investments could lead to an extra $35 billion in aggregate output, or around 0.12% of GDP. However, concerns remain about the accuracy of the data used in the report, which is based on PE funds with vintages running through 2014.
This push is a departure from Trump’s initial attempt to introduce private equity into retirement plans during his first term. The initiative was quickly overpowered by campaign politics and left unfinished before Biden took office.
Source: https://www.axios.com/2025/08/15/trump-private-equity-401k