What Investors Need to Know

At Larson Financial, we make it our mission to stay ahead of the changes that could impact your financial future. On August 7, 2025, President Donald Trump signed an executive order that could significantly change how Americans save for retirement.[i] The order directs regulators to expand options in 401(k) plans. This potentially opens the door to private equity, real estate, infrastructure, digital assets, and other alternative investments.

For the 90 million Americans who currently participate in employer-sponsored 401(k) plans, this could represent the biggest shift in retirement investing in decades. While details are still unfolding, this move could eventually give retirement savers access to alternative investments such as private equity, real estate, infrastructure, and even certain digital assets. We are watching these developments closely so we can guide you through what they might mean for your retirement strategy.

What Changed?

Traditionally, 401(k)s have been limited to a familiar menu of stocks, bonds, and mutual funds. This new executive order, however, directs the Department of Labor (DOL), the Securities and Exchange Commission (SEC), and the Treasury Department to reexamine existing rules and guidance to allow for broader diversification.[ii]

Specifically, the order highlights:

• Private Market Investments: Including private equity, private credit, and venture capital.
• Real Estate and Infrastructure: Both direct and indirect opportunities.
• Commodities and Inflation Hedges: Such as energy, agriculture, and metals.
• Digital Assets: Cryptocurrencies, but only through actively managed funds.
• Lifetime Income Strategies: Products designed to help retirees manage longevity risk.

It’s important to note that this executive order does not change the law outright. Instead, it signals to regulators and plan sponsors that the administration wants to see these investment options made more broadly available.

Why it Matters

Supporters of the move argue that greater access to alternative assets could benefit everyday savers in several ways:

• Diversification: Alternative investments often behave differently than stocks and bonds, which could help reduce portfolio volatility.[iii]
• Potential for Higher Returns: Private markets and real estate, for example, have historically delivered strong long-term performance, however, they are accompanied by higher risk.
• Inflation Protection: Tangible assets such as real estate and commodities may serve as hedges against inflation.[iv]
• Access to Exclusive Opportunities: Until now, many alternatives have been reserved for institutional or ultra-wealthy investors.

For workers seeking to build a more resilient retirement plan, this expansion could be a game-changer.

The Risks and Unknowns

At the same time, alternative investments come with challenges that can’t be overlooked:

• Illiquidity: Unlike mutual funds or ETFs, many alternatives cannot be bought or sold quickly.[v]
• Higher Fees: Private equity funds and similar vehicles typically charge much higher costs than traditional funds.
• Complexity and Transparency: Valuations are less straightforward, and performance reporting can be less clear.
• Fiduciary Concerns: Employers and plan sponsors will face heightened responsibility for vetting these investments. Poor performance or miscommunication could increase litigation risks.

This means that while the opportunity is intriguing, implementation must be handled with extreme care.

What’s Next?

Although the executive order is effective immediately, the actual rollout depends on regulatory rulemaking. The DOL and SEC are expected to provide new guidelines and safe harbors over the next year, with the first alternative investment options likely appearing in 401(k) plans sometime in 2026.

Employers and plan sponsors will need to evaluate whether and how to incorporate these investments, while financial advisors and recordkeepers will need to ensure participants understand both the risks and potential rewards. For investors, patience and caution are essential.

What You Should Do Now

For now, retirement savers do not need to take immediate action. The investment menus offered by most 401(k) plans remain unchanged, and it will take time for any new options to become available.

However, this is a development worth following closely. Expanding options in 401(k) plans by providing access to alternatives could reshape how Americans invest for retirement, but it will not be a one-size-fits-all solution. Alternative assets may be suitable for some investors, but risky for others.

Our team at Larson is monitoring this story carefully. As more details emerge from regulators and plan sponsors, we will be here to help you evaluate how these changes may impact your retirement portfolio.

Key Takeaways

The Trump administration’s executive order marks a significant shift in retirement policy, aiming to democratize access to investment opportunities once reserved for the wealthy. While the potential benefits are real, so are the risks. With many unknowns still ahead, the best course of action is to stay informed, remain cautious, and lean on professional advice to guide decisions.

Retirement planning is about more than chasing returns: it’s about building long-term security. As the regulatory landscape evolves, we are committed to helping you navigate these new possibilities with confidence and clarity.

[i] https://www.whitehouse.gov/fact-sheets/2025/08/fact-sheet-president-donald-j-trump-democratizes-access-to-alternative-assets-for-401k-investors/

[ii] https://www.foxbusiness.com/economy/trumps-401k-expansion-order-what-new-investment-options-available

[iii] https://bipartisanpolicy.org/explainer/alternative-assets-in-401ks-explained/

[iv] https://www.groom.com/resources/executive-order-directs-regulators-to-expand-access-to-alternative-assets-in-401k-plans/

[v] https://www.dechert.com/knowledge/onpoint/2025/8/new-order–targets–401-k–plan–alternatives—president-takes-.html