Private Equity in Defined Contribution Plans – Executive Order Summary

James Iglewski, President of Courier Capital |

Trump’s executive order opens the door to private equity in 401(k) and 403(b) plans — what it does, why it matters, and the benefits and risks.

On August 7, 2025, President Donald J. Trump signed an executive order directing federal agencies to revise rulebooks so that defined-contribution retirement plans (like 401(k)s and 403(b)s) can more easily offer “alternative assets” — explicitly calling out private equity, real estate, cryptocurrencies and other private securities as potential plan options. The next day Financial Planning Magazine published an in-depth piece describing how the order could play out for advisers, plan sponsors and participants. The practical effects won’t be immediate — agencies such as the Department of Labor (DOL) and the SEC must rewrite regulations and issue guidance — but the order is a clear policy signal that could reshape plan menus over the coming months and years.

What the order actually does:

  • The executive order instructs regulators to remove or relax regulatory barriers that have long limited private (or “alternative”) assets in retail retirement accounts. Over 90 million Americans participate in defined‑contribution plans and are mostly excluded from these alternative-growth opportunities.
  • It asks agencies to consider changes to ERISA and related guidance so plan fiduciaries have clearer safe harbors and mechanics for offering private funds inside 401(k) lineups.
  • It doesn’t immediately put private equity into your account, but sets the process in motion that could make that possible.

How private equity could be offered inside Defined Contribution Plans:

  • Specialized share classes or pooled funds.
  • Target-date funds.
  • Optional side-funds or self-directed windows.

Benefits:

  1. Diversification and smoothing of long-term returns.
  2. Higher historical returns (for some strategies).
  3. Broader public access.

Risks:

  1. Illiquidity and plan design mismatch.
  2. High fees & fee opacity.
  3. Valuation uncertainty & limited transparency.
  4. Fiduciary and litigation exposure.
  5. Operational complexity for recordkeepers and sponsors.

Regulatory and Provider Outlook:

Expect detailed DOL guidance, model wrappers from asset managers, and pilot programs among large sponsors.

Practical Advice:

  • Participants: Read disclosures, understand fees and risks.
  • Plan sponsors & advisers: Focus on governance and documentation.

Bottom line:

The executive order could pave the way for private equity and other alternative assets in the 401(k) universe. The potential upside is diversification and possible higher returns, but risks include illiquidity, high fees, and fiduciary exposure. Most participants should watch developments closely before making allocation changes.

For plan sponsors, keeping informed of these changes and providing participants with high quality options will be important factors to consider going forward. Courier Capital stands ready to help sponsors and their participants make informed decisions.

Sources: 
White House Fact Sheet, Aug 7, 2025
Financial Planning Magazine, Aug 8, 2025
 


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