In a landmark move, President Donald Trump signed an executive order on August 8, 2025, allowing 401 retirement plans—worth approximately $9 trillion and held by 90 million Americans—to include alternative investments such as private equity, real estate, and cryptocurrencies.
This decision, long sought by private equity firms, removes regulatory ambiguity and is expected to channel significant retail investment into alternative assets. Advocates argue that it opens new opportunities for savers, while critics note the risks of illiquidity and high fees.
The move comes amid a broader trend of private equity firms seeking to expand their investor base. KKR, a leading U.S. private capital group, has renegotiated investment terms with its institutional backers to allow its new investment vehicles for wealthy individuals—a particularly its evergreen "K-Series" funds—a larger share in private equity deals. Historically, institutions like pension funds and endowments were the primary investors in KKR's closed-end funds, which had a fixed lifespan and first rights to the majority of equity in deals. However, KKR has recently been requesting increases in this cap—to around 20%—to accommodate the surge of capital flowing into its new K-Series funds, which offer flexible investment and withdrawal terms and do not expire.
The inclusion of alternative assets in 401 plans is expected to provide investors with greater diversification and potential for higher returns. However, experts caution that these asset classes are usually reserved for wealthier individuals due to their complexity and risk. Major retirement plan providers like Empower and Wellington are exploring ways to integrate private credit into their offerings. Notably, around 87% of U.S. companies with over $100 million in revenue were privately held in 2023, drawing strong interest from retail investors eager to access high-growth private businesses like OpenAI, which recently reached a $500 billion valuation.
Despite the potential benefits, financial advisors warn that the long-term, high-risk nature of private investments might not be suitable for retirement accounts intended for stable, long-term growth. Expert advice suggests caution, as 401s represent critical financial goals for many Americans.
As the financial landscape evolves, investors are encouraged to stay informed and consult with financial advisors to navigate the complexities of integrating alternative assets into their retirement portfolios.