Trump administration proposes expanding 401(k) access to alternative assets

The Department of Labor on Monday released a proposal that would remove certain regulatory barriers and permit 401(k) plans to offer investments in cryptocurrency, private equity and private credit. The proposal follows an executive order directing the agency and the Securities and Exchange Commission to review regulations and expand access to alternative assets in participant-directed retirement plans.

According to the administration, broader investment options could produce higher returns through diversification. The Department of Labor has stated that many institutional investors already use these assets and that the change would give retirement savers greater freedom to allocate across a wider range of investment categories.

The $14.2 trillion held in U.S. retirement accounts is currently subject to long-standing regulatory limits on holdings in alternative assets. The proposal would alter those limits, allowing plan fiduciaries to evaluate cryptocurrency, private equity and private credit under the same prudence standards that apply to other investments.

Sens. Elizabeth Warren and Bernie Sanders and Rep. Bobby Scott sent a letter to acting Labor Secretary Keith Sonderling urging the department to withdraw the proposal in full. ” They argued the change runs counter to existing statute and could expose retirement savings, particularly those of seniors, to assets they described as more opaque and volatile than traditional holdings.

The letter also referenced reports that the Trump family’s wealth has grown through cryptocurrency ventures launched during the administration, including activities involving Jared Kushner’s private equity firm.