On August 7, 2025, President Donald J. Trump issued a much-anticipated Executive Order Democratizing Access for 401(k) Investors (the “Executive Order”) emphasizing the President’s view that it is important that all Americans have access to alternative investments in order to best prepare for and maximize their retirement savings. The Executive Order directs the Department of Labor (the “Department”), the Securities and Exchange Commission (the “SEC”), and other federal agencies to reexamine existing regulatory guidance that have limited participant-directed defined contribution (“DC”) plan participants, including participants in 401(k) plans, from investing in alternative assets – including investments in private equity, real estate, and infrastructure – that have long been utilized by defined benefit (“DB”) plans.
While the Executive Order does not alter existing law, it signals a significant policy shift aimed at expanding investment choices for over 90 million Americans participating in employer-sponsored DC plans. The Executive Order reflects the sentiment that modernization of retirement plan investment lineups can enhance diversification, reduce volatility, and maximize long-term value for DC plan participants.
We note that, in recent months, Senator Warren sent two letters to a large recordkeeper, which signals that the goal of expanding access to alternative assets in DC plans may not be bipartisan.
Groom will be covering this Executive Order and its implications in a webinar on Tuesday, August 12, 2025 from 2:00 – 2:30 p.m. Request registration here.
I. Background: Alternative Investments in DC Plans
The retirement industry has shown growing interest in broadening DC plan investment lineups to include alternative asset classes as part of retirement planning strategies. While DB plans have long invested in private equity and other alternatives, DC plans have remained largely confined to public market investments, due in part to regulatory complexity and litigation concerns. Recently, SEC Chair Paul Atkins commented on the need to revisit private fund investor thresholds that inhibit broader access to private funds for retail investors. Further, recent product innovation by retirement community stakeholders have brought new vehicles designed to bring private market access to DC plans in response to interest from plan sponsors and fiduciaries – emphasizing the broad appetite in the market.
Despite these developments, some fiduciaries have remained cautious when considering adding alternative investment strategies to their DC plans. The factors driving caution have commonly ranged from concerns about regulatory uncertainty to the impact of potential litigation that has been threatened by plaintiffs’ firms.
For example, some fiduciaries point to the Department’s evolving position on alternative investments. On June 3, 2020 the Department issued an information letter (the “2020 Information Letter”) to our firm addressing the use of alternative investments that provided a framework for fiduciaries to prudently include private equity in asset allocation funds within DC plans. However, in a December 21, 2021 supplement (the “2021 Supplement”), the Department clarified that the 2020 Information Letter was not an endorsement of the use of private equity in DC plans but rather guidance focused on larger plan fiduciaries who have experience managing private equity in DB plans.
II. Overview of the Executive Order
The Executive Order states that the Trump Administration policy is that all Americans should have access to alternative investments in order to best prepare for and maximize their savings for retirement – so long as the fiduciaries managing their retirement assets determine that such investments are appropriate.
Prior to the issuance of the Executive Order, there was significant speculation as to whether it would be narrowly focused on one or two asset classes or would focus more broadly on “alternative assets.” The Executive Order answers this question by defining “alternative assets” broadly to include:
- Private market investments (e.g., private equity, debt (private credit), and other non-public instruments);
- Real estate (including debt secured by real estate interests);
- Digital assets (via actively managed vehicles);
- Commodities;
- Infrastructure financing projects; and
- Lifetime income strategies, including longevity risk-sharing pools (i.e., potentially tontines).
To implement this policy, the Executive Order directs:
- Examination of Prior ERISA Guidance: Within 180 days, the Department must reexamine existing Employee Retirement Income Security Act of 1974, as amended (“ERISA”) guidance on fiduciary duties related to alternative assets. Of note, the Department has already been moving to more of an “asset class neutral” position with its recent revocation of its prior guidance on cryptocurrency in DC plans.
- Clarification of Fiduciary Duties: The Department must identify criteria for fiduciaries to prudently balance higher expenses with long-term net returns and diversification goals. This may result in new rules and guidance being proposed. The Executive Order opens a number of potential paths that industry stakeholders are already discussing.
- Regulatory Agency Collaboration: The Department must also consult with the SEC, U.S. Department of Treasury, and other regulators to align on the regulatory changes. The SEC has also been specifically directed to consider revisions to accredited investor and qualified purchaser definitions to enable access for DC plan participants.
- Litigation Risk Mitigation: The Executive Order emphasizes curbing ERISA litigation that constrains the ability of fiduciaries to securely offer diversified investment options. Of note, the Department has already been heading down this road in its recent amicus brief addressing the wave of forfeiture lawsuits being brought against DC plans.
III. Implications for the Retirement Industry/Groom Insights
The Executive Order will act as a roadmap to kick off a regulatory process that will likely result in new rules and/or guidance to encourage fiduciaries to consider including alternative assets in DC plans.
Meanwhile, courts are continuing to shape the litigation landscape around the use of alternative investments. In Anderson v. Intel Corporation Investment Policy Committee, the Ninth Circuit affirmed the dismissal of claims challenging whether the inclusion of private equity in Intel Corporation’s DC plans was a breach of the fiduciary duties of prudence and loyalty under ERISA. [1] The court emphasized that a fiduciary’s duty of prudence is process-based and turns on whether plan fiduciaries follow appropriate processes to evaluate investments, rather than whether they got the decision “right.”
Taken together, the Executive Order, along with recent litigation developments, signal a shift in momentum for DC plan investments – placing a different balance on the tradeoffs between innovation and investor protection. Retirement stakeholders can expect that the Department will evaluate other prior guidance that arguably may have discouraged the use of private equity, digital assets, and other alternative assets from investment by DC plans, including the 2021 Supplement to the 2020 Information Letter. Also, the Department may consider additional advisory opinions or information letters or other guidance that could provide a new framework for investment fiduciary decisions.
Groom Law Group attorneys have been deeply involved in the regulatory, policy, and implementation considerations for alternative assets in DC plans and are available to share this extensive knowledge with our clients.
[1] Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4th 1015 (9th Cir. 2025).
