U.S. Executive Order Spurs Review of Alternative Assets in Retirement Plans

In August 2025, an executive order directed U.S. regulators to facilitate the inclusion of alternative assets such as private equity, real estate, and digital assets into employer-sponsored retirement plans like 401(k)s. The goal is to enhance asset diversification and potentially improve returns for retirement savers. The Department of Labor was tasked with reviewing and clarifying fiduciary duties related to these alternative investments within a 180-day timeframe. The executive order follows the Department of Labor's rescission of prior guidance that urged extreme caution when incorporating cryptocurrencies into retirement plans. Despite this rollback, fiduciaries retain substantial responsibility to provide prudent advice and manage compliance risks associated with emerging investments in retirement portfolios. Alternative assets introduce considerations such as increased illiquidity, with private equity requiring long lock-up periods of five to ten years, potentially limiting appeal for older employees nearing retirement. Cryptocurrencies bring heightened volatility and regulatory uncertainty, which fiduciaries must address when counseling younger investors who may have longer accumulation horizons. Employers and plan administrators face challenges in communicating the implications of these newer investment options, including changes to asset growth expectations and timelines, along with educating employees about risks like crypto theft and project failures. The potential introduction of "appropriately calibrated safe harbors" may aid fiduciaries but awaits regulatory clarification. Overall, while the executive order does not mandate new rules, it is likely to stimulate interest in alternative retirement strategies, particularly among younger workers. Employers and fiduciaries should proactively evaluate how such assets fit within their plans and ensure comprehensive employee education on the associated risks and benefits.