401(k) Executive Order: What New Investment Options Could Mean for You

A potentially significant change is coming to retirement plans. On August 7, President Trump signed Executive Order 14330, “Democratizing Access to Alternative Assets for 401(k) Investors,” which paves the way for alternative investments (such as private investments and cryptocurrencies) in 401(k) and 403(b) plans.

It will take some time before these investments are available to retirement plan investors because regulators still need to develop a framework and rules for how private markets and cryptocurrencies can be accessed. Here’s what we know right now and what you should keep in mind ahead of new rules.

What Are Alternative Investments?

Right now, the investments available to retirement plans like 401(k)s and 403(b)s are traded in public stock and bond markets, which require companies and governments to disclose financial information, giving investors transparency that can help them evaluate the quality of their investments.

Private investments are investments in companies or assets that aren’t traded on public stock markets. They don’t have to provide the same level of financial detail as public companies, and they’re harder to access. Examples include private equity funds (shares in private companies), private credit funds (loans to private companies), venture capital funds (investments in early-stage companies), and private real estate. Because of limited access and complex review processes, these investments are usually reserved for large institutions and endowments.

Cryptocurrency is a form of digital money that isn’t backed by a government or company. It’s traded on public exchanges, and every transaction is recorded on a blockchain—a shared online ledger. Unlike traditional investments, cryptocurrencies don’t have financial fundamentals like earnings or assets to reference. Their value depends entirely on collective belief in each unit.

Each alternative investment has its own advantages and disadvantages. Let’s focus on private investments and cryptocurrency, since these are the most immediately viable investments for retirement plans.

Private Investments

Advantages:

• Potential for higher returns
• Diversification beyond stocks and bonds
• Access to unique opportunities

Disadvantages:

• Low liquidity (money tied up for years)
• Limited transparency
• High fees
• Complex structures

Cryptocurrency

Advantages:

• Potential asymmetric return profile (a small allocation could have an outsized impact)
• Low correlation with traditional investments
• Highly liquid alternative asset

Disadvantages:

• Extreme volatility
• No underlying fundamentals
• Regulatory uncertainty

What Does This Mean for You?

Private investments and cryptocurrencies could offer new ways to diversify and potentially increase returns, but they also come with higher risk and uncertainty. As regulators finalize the rules and these options evolve, we will keep you informed and provide clear, unbiased guidance.

Regardless of how investment opportunities change, our priority is helping you make confident decisions for your future. If you have questions or want to explore strategies that fit your goals, our Retirement Specialists are ready to help. Contact us at 888-322-7586 or contact401k@frs.net.