Retirement Retirement Planning

The Government Wants to Change What You Can Put in Your 401(k) - Here's What It Means for You

Trump's 401(k) proposal could add private assets and crypto.

By Josh Koebert , Edited by Laura Hohenstein

Updated May 21, 2026

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A major shift could be coming to workplace retirement plans, and it may change what your 401(k) looks like in the years ahead.

A new proposal from the U.S. Department of Labor, tied to an initiative from Donald Trump, could make it easier for employers to include alternative investments like private equity, real estate, and even cryptocurrency in 401(k) plans. That may sound appealing to workers planning for a stress-free retirement, but critics warn it could also introduce new risks for everyday investors.

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Expanding investment options

Traditional 401(k) plans have long focused on a familiar mix of publicly traded stocks, bonds, and target-date funds. The proposed rule would open the door to a much broader range of investments, often referred to as "alternative assets."

These can include private equity funds, hedge funds, infrastructure projects, commodities, and cryptocurrencies. Unlike traditional investments, many of these assets are not traded on public markets and can behave very differently during periods of market volatility.

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The idea is gaining traction

The push comes from a broader effort to give everyday investors access to strategies that wealthy individuals and institutional investors already use.

Backers argue that adding a small slice of alternative assets could improve long-term returns or help protect against inflation. In their view, limiting 401(k)s to traditional investments leaves workers at a disadvantage.

At the same time, many employers have avoided these assets altogether. Not because they're banned, but because the rules around them have been unclear.

Lower legal risk

One of the biggest barriers to alternative investments in 401(k) plans has been the risk faced by plan sponsors.

Employers and plan managers are required under federal law to act in the best interest of participants. Introducing complex or higher-risk investments has historically raised concerns about lawsuits if those investments underperform.

The new proposal attempts to address that issue by providing clearer guidelines and a "safe harbor" framework to protect fiduciaries. If fiduciaries follow a defined process when selecting investments, evaluating factors like risk, fees, and liquidity, they would receive greater legal protection. So essentially, this shift could make employers more comfortable offering a wider range of options.

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Potential upsides

Expanding access to alternative investments could change how retirement portfolios are built. Greater diversification is one of the main advantages. Adding assets that do not move in lockstep with the stock market can potentially reduce overall portfolio risk and improve long-term returns.

Some alternative investments have also delivered strong returns in certain market environments, particularly private equity. Giving everyday investors access to those opportunities could, in theory, enhance retirement outcomes over time.

There is also the possibility that these assets may perform better during inflationary periods, when traditional stock and bond portfolios can struggle.

Key risks of alternative investments

Alternative investments are typically more complex than standard 401(k) options. Many are less liquid, meaning you can't sell them quickly if you need access to your money.

Fees are another concern. These investments often come with higher costs, which can eat into returns over time, especially in long-term accounts like retirement plans.

There's also the issue of transparency. Unlike publicly traded funds that update prices constantly, some alternative assets are valued less frequently, making performance harder to track.

Real-world challenges

Even if the rule moves forward, adding these investments won't be simple. Most 401(k) plans are designed for daily pricing and easy access. Many alternative assets don't fit that structure, since they may only be valued quarterly or have restrictions on withdrawals.

There are also regulatory limits to consider. Some private investments are currently restricted to accredited investors, which could limit how widely they're offered.

On top of that, employers would need to either understand these investments themselves or rely heavily on outside experts, adding another layer of complexity.

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New investment options

If the proposal is finalized, workers could begin seeing new types of investment options in their retirement plans over time.

That does not mean every 401(k) will suddenly include crypto or private equity. Employers would still decide whether to offer these options, and many may take a cautious approach, especially in the early stages.

Potential adoption

The proposed regulations are currently open for public comment through June 2026, and the final version may change before being implemented.

Additional action from regulators, including the Securities and Exchange Commission, could also shape how widely these investments become available in retirement plans. Even if approved, adoption will likely happen gradually as employers assess the risks and benefits.

Bottom line

The new proposal tied to Donald Trump could expand what's possible inside a 401(k), giving workers access to investments that were once out of reach.

Workers wondering whether they can retire early may find the potential for higher returns appealing, but the added risk and complexity could make planning harder. The shift would offer more control, along with more responsibility to understand where their money is going.

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