Trump's executive order: Making alternative assets more accessible to 401(k) investors

Source: The White House, compiled by: Golden Finance

By virtue of the authority vested in me as President by the Constitution and the laws of the United States, I hereby order:

Section 1: Purpose. Many affluent Americans and government workers participating in public pension plans have access to, or benefit from, a variety of alternative assets. However, while more than 90 million Americans participate in employer-sponsored defined contribution plans, the vast majority of these investors do not have the opportunity to participate in the potential growth and diversification opportunities offered by alternative asset investments, either directly or through their retirement plans. Fiduciaries of 401(k) plans and other defined contribution retirement plans must carefully review and consider all aspects of private offerings, including the ability, experience, and effectiveness of the investment manager in managing alternative asset investments. They do this to protect the retirement accounts of Americans under their care and to fulfill their fiduciary duty to invest prudently and safely. During my first term, my Administration issued a 2020 Information Letter recognizing that prudent federal action can encourage the promotion of investment strategies in which a portion of retirement plan participants' interests are allocated to alternative assets, as is the case with institutional investors. However, burdensome litigation seeking to challenge the sound decisions of loyal and regulated fiduciaries, as well as stifling Department of Labor guidance issued since my first term, have deprived millions of Americans of the opportunity to benefit from alternative asset investments. These assets comprise a growing portion of public pension and defined-benefit retirement plan portfolios, offering both competitive returns and diversification opportunities. Regulatory overreach, combined with the encouragement of litigation by opportunistic litigators, has stifled investment innovation, leaving participants in 401(k)s and other defined-contribution retirement plans largely locked into asset classes that offer returns far below the long-term net returns available to public pension funds and other institutional investors. My Administration will reduce the regulatory burdens and litigation risks that prevent American workers from achieving the competitive returns and asset diversification in their retirement accounts that are essential to ensuring a dignified and comfortable retirement. Section 2: Strategy. It is the policy of the United States that every American preparing for retirement should have access to funds that include investments in alternative assets, if the applicable plan fiduciaries determine that such access provides plan participants and beneficiaries with a reasonable opportunity to enhance the risk-adjusted net return on their retirement assets. Section 3: Democratizing Access to Alternative Assets. (a) For purposes of this order, the term “alternative assets” means: (i) private market investments, including direct and indirect interests in equity, debt, or other financial instruments that are not traded on a public exchange, including investments in which the managers of such investments, as applicable, seek to take an active role in the management of such companies; (ii) direct or indirect interests in real estate, including debt instruments that are secured by direct or indirect interests in real estate; (iii) actively managed investment vehicles that hold investments in digital assets; (iv) direct and indirect investments in commodities; (v) direct and indirect interests in infrastructure construction financing projects; and (vi) Lifetime income investment strategies, including longevity risk pools.

(b) Within 180 days of the date of this order, the Secretary of Labor (“Secretary”) shall review the Department of Labor’s past and current guidance regarding the obligations of fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA), as amended (29 U.S.C. 1104), with respect to offering asset allocation funds that include investments in alternative assets to participants. In conducting this review, the Secretary shall consider whether to revoke the Department of Labor’s Supplemental Private Equity Statement issued on December 21, 2021.

(c) Within 180 days of the date of this order, the Secretary shall, as the Secretary deems appropriate and consistent with applicable law, seek further clarification of the Department of Labor’s position on alternative assets and the appropriate fiduciary procedures with respect to asset allocation funds that offer investments in alternative assets under the Employee Retirement Income Security Act (ERISA). Such clarification must be intended to define the criteria that fiduciaries should use to prudently balance potentially higher expenses with the goals of seeking higher long-term net returns and broader investment diversification. The Secretary shall also propose rules, regulations, or guidance, as the Secretary deems appropriate, to clarify the obligations of fiduciaries to plan participants under the ERISA when deciding whether to offer them asset allocation funds that include investments in alternative assets. Such rules, regulations, and guidance may include appropriately calibrated safe harbor provisions. In implementing the directives in this section to further the policies set forth in this order, the Secretary shall prioritize actions to curb ERISA litigation that restricts the ability of fiduciaries to exercise their best judgment in offering investment opportunities to relevant plan participants. (d) In implementing the directives in this section, the Secretary shall consult with the Secretary of the Treasury, the Securities and Exchange Commission (SEC), and other Federal regulators, as necessary to achieve the policy objectives of this order, including any parallel regulatory changes that may be incorporated by other Federal regulators. (e) The SEC, in consultation with the Secretary, shall consider how to facilitate investment in alternative assets for participants in participant-directed defined contribution retirement savings plans (PDSs). Such accommodations may include, but are not limited to, considering revising the SEC’s existing regulations and guidance related to the eligibility of accredited securities investors (ADSs) and qualified purchasers (QPIs) to achieve the policy objectives of this order. SECTION IV: GENERAL PROVISIONS. (a) Nothing in this order shall be construed to impair or otherwise affect: (i) the powers conferred by law on executive departments or agencies or their heads; or (ii) the functions of the Director of the Office of Management and Budget with respect to budgetary, administrative, or legislative proposals. (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations. (c) This order is not intended to and does not create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, instrumentalities, or entities, its officers, employees, or agents, or any other person. (d) The expenses of issuing this order shall be borne by the Department of Labor. Donald J. Trump, The White House, August 7, 2025.