Trump has signed off on a sweeping executive order to allow crypto, private equity, and real estate deals inside 401(k) retirement accounts. This clears the way for about $9 trillion in American retirement savings to be funneled into riskier, less liquid assets, and it’s already shaking up how retirement plans will be built from here on out.
The directive tells regulators in Washington to go back and adjust existing laws so that professional managers running 401(k) funds can start offering these options to around 90 million American workers.
These workers have historically been limited to basic stocks, bonds, and index funds like the S&P 500. But Trump’s new order changes that.
Crypto lobbying helped get Trump’s signature
This has been months in the making. Private capital firms and crypto executives have been circling D.C. for a while, pushing for access to the 401(k) market. But it was the crypto industry that helped seal the deal.
As it is known, Trump has gone out of his way to support crypto, closing investigations into firms, softening banking rules, and easing up on regulation for the industry.
Prices for tokens have skyrocketed under his watch. And his family now has major stakes in companies heavily invested in this sector.
Big names like Blackstone, Apollo, BlackRock, and KKR have already started signing deals with 401(k) plan administrators. They want in… and fast. They’ve spent years trying to convince the government that workers shouldn’t be forced to invest only in stocks and bonds.
Trump had tried something similar at the end of his first term, but 401(k) managers pushed back. They worried about getting sued by employees if those risky investments underperformed. Private equity comes with higher fees, leverage, and complex pricing.
Those concerns haven’t vanished, but Trump’s order gives lawmakers room to rewrite legal protections and make it safer for employers and fund managers to offer them.
Still, the rule doesn’t make these new options automatic. It just gives agencies and Congress a nudge. And even if the door is open, a lot of Americans still don’t know what they’re getting into.
Workers rely on simple target-date funds
Most workers don’t pick and choose individual assets in their 401(k). They’re placed into target-date funds by default; automated mixes of stocks and bonds that adjust as retirement nears. Vanguard data showed that in 2024, over 80% of users stayed in these funds, and two-thirds of new contributions went straight into them.
BlackRock CEO Larry Fink thinks that’s a problem. He wants to replace the standard 60/40 portfolio split with something new: 50% stocks, 30% bonds, and 20% private investments like real estate, credit, and infrastructure.
In a letter to his clients yesterday, Larry argued that pension funds have been using these assets for years and outperforming 401(k)s by about half a percent annually. That small edge, he says, grows big over time.
Technically, private investments are already legal inside retirement accounts. But the people who design 401(k) plans haven’t included them, because most don’t know how.
These aren’t easy assets to understand. Lisa Kirchenbauer, who runs Omega Wealth Management in Arlington, Virginia, warned investors to stay out unless they truly understand the risks.
“They all have different returns and risks, and you need to understand those differences,” she told Yahoo Finance. “If you don’t know and understand what you are investing in, stick with traditional investments.”
Lisa said private assets are also harder to sell. If someone’s going to need cash soon, maybe to meet Required Minimum Distributions (RMDs) or to roll over their account after switching jobs, crypto and private equity won’t work.
For someone planning to leave their funds in place for years, it could make more sense. But even then, she said, start small; no more than 5 to 10%.
People close to retirement often select a fund that lines up with their full Social Security age, usually 67. If you’re younger or more aggressive, you pick a later year. If you’re cautious, you go earlier.
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Source: https://www.cryptopolitan.com/trump-signs-order-opening-401ks-to-crypto/