- The Trump administration is preparing an executive order to allow private equity in 401(k) plans, reversing Biden-era limits.
- Industry group DCALTA introduced new guidelines to help plan administrators treat private equity like traditional assets.
- Firms like BlackRock, Apollo, and KKR aim to reach individual savers as institutional demand for private equity slows.
A Potential Policy Shift
The Trump White House is preparing an executive order to let 401(k) plans invest in private equity, per Bloomberg. This would roll back Biden-era restrictions and revive earlier Trump-era guidance.
The Department of Labor first allowed private equity in managed 401(k) portfolios in 2020. That decision was later reversed under the Biden administration due to concerns over fees and transparency.
The upcoming executive order would mark Trump’s biggest move yet to expand retirement investment options.
Coordinated Industry Push
At the same time, the Defined Contribution Alternatives Association (DCALTA) released a framework to guide how plans assess private equity. DCALTA includes Apollo, KKR, and BlackRock among its members.
The group is also working on new legislation. It wants to protect plan sponsors who offer private assets in 401(k) plans from legal risks.
DCALTA President Jonathan Epstein said the guidelines help fiduciaries broaden investment options and improve retirement outcomes.
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The Rationale and Risks
Supporters say private equity could boost returns and add diversity to retirement portfolios. With fewer companies going public, private markets have become more important.
The number of publicly traded US firms has dropped since the 1990s. Meanwhile, private equity assets more than doubled in the last decade.
Critics argue that private investments are complex, costly, and harder to trade. These concerns have kept many 401(k) sponsors away from alternative assets.
DCALTA’s principles urge plan managers to consider a private asset’s role in the full portfolio, not just its cost or liquidity.
What’s Next
With pension funds nearing private equity limits, asset managers are targeting individual savers. The 401(k) market—worth over $12 trillion—offers a major growth opportunity.
If the executive order is signed, it could reshape how Americans save for retirement. Still, many sponsors may wait for clearer rules and broader adoption.
Why It Matters
Opening 401(k) plans to private equity could offer higher returns but also more risk. For asset managers, this shift could unlock trillions in new capital.
