What Fiduciaries Should Know About Trump’s Alternative Investments Executive Order

Between the two Trump Administrations and the Biden Administration, access to alternative investments in 401(k) and other defined contribution (DC) plans has swung like a pendulum.

By: Tony Roda, Williams & Jensen

On August 7, 2025, President Trump released an Executive Order (the “Order”), Democratizing Access to Alternative Assets for 401(k) Investors, which is designed to advance the stated policy that “every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity for plan participants and beneficiaries to enhance the net risk-adjusted returns on their retirement assets."1 That's a mouthful.

The Order was quickly followed by release of a 31-page policy rationale, entitled Retail Access to Alternative Investments Via Defined Contribution Plans.

Between the two Trump Administrations and the Biden Administration, access to alternative investments in 401(k) and other defined contribution (DC) plans has swung like a pendulum.

In promoting his stated goal of access to alternative investments, President Trump promised to “…relieve the regulatory burdens and litigation risk that impede American workers' retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement.” This would require plan fiduciaries to approve the addition of alternative assets to investment menus. Fiduciaries, naturally, want to avoid any unnecessary exposure to litigation, and will be watching with a keen eye toward this regulatory relief.

Specific to mitigating litigation risk, the Order requires the Department of Labor (DOL) to clarify its position on alternative assets and the appropriate fiduciary process for offering funds containing alternative assets under Employee Retirement Income Security Act (ERISA). It states further that,

Such clarification must aim to identify the criteria that fiduciaries should use to prudently balance potentially higher expenses against the objectives of seeking greater long-term net returns and broader diversification of investments. The Secretary shall also propose rules, regulations, or guidance, as the Secretary deems appropriate, that clarify the duties that a fiduciary owes to plan participants under ERISA when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets, which rules, regulations, and guidance may include appropriately calibrated safe harbors.  In carrying out the directives in this section to further the policy set forth in this Order, the Secretary shall prioritize actions that may curb ERISA litigation that constrains fiduciaries' ability to apply their best judgment in offering investment opportunities to relevant plan participants. (Emphasis added).

It's good news for plan fiduciaries if DOL clarifies how fiduciary duties relate to incorporating alternative assets in 401(k)s and other DC plans, including potential safe harbors, and takes action to curb ERISA litigation. Fiduciaries must nonetheless uphold their two fundamental duties—loyalty and prudence—breach of which plan participants may still enforce by suit.

Participants of self-directed, public plan equivalents to 401(k) plans may feel like they're missing out. Depending on plan design, such plans would include 401(a) deferred compensation plans, 457(b) governmental plans, and 403(b) annuity plans. Pressure may build to grant public participants similar opportunities, pushing plan sponsors and fiduciaries—but mainly fiduciaries—to decide if alternative assets investments are appropriate in their investment menus.

Bear in mind, plan fiduciaries are not prohibited today from offering alternative investments in their investment menus. However, over the years, regulatory pronouncements seesawing between promoting and discouraging such offerings created a net chilling effect on fiduciaries moving forward.

Plan fiduciaries also must navigate state and local laws, a task complicated by divergent state approaches. Let's take investments in cryptocurrency as an example. Recent financial disclosures show the Michigan Retirement System holds 300,000 shares of the ARK Bitcoin ETF, worth about $11.76 million, and 460,000 shares of the Grayscale Ethereum Trust, worth about $16.7 million. Michigan is not alone. The State of Wisconsin's Investment Board owns over 6 million shares of BlackRock's iShares Bitcoin Trust, valued at over $387 million.

Meanwhile, earlier this summer, the Connecticut General Assembly unanimously passed, and Governor Lamont signed, legislation banning state entities from investing in cryptocurrency or other digital assets. The law also prohibits the state and its political subdivisions from transacting in virtual currency.

Just days before Governor Lamont signed the Connecticut bill, Texas Governor Greg Abbott signed legislation authorizing the formation of the Texas Strategic Bitcoin Reserve. The bitcoin reserve is a special fund outside of the State Treasury and managed by the state comptroller with an initial investment of $10 million from the state.

President Trump's Order also directs the Securities and Exchanges Commission (SEC) to consider ways to facilitate access to investments in alternative assets by participants in participant-directed DC plans. Such facilitation may include, but not be limited to, revising existing SEC regulations and guidance on accredited investor and qualified purchaser status.

While the Order does not cover public pension plans, President Trump made great use of our plans in his rationale for the policy changes. In fact, he made three mentions of public plans in the Order:

• Many wealthy Americans, and Government workers who participate in public pension plans, can invest in, or are the beneficiaries of investment in, a number of alternative assets.

• A combination of regulatory overreach and encouragement of lawsuits filed by opportunistic trial lawyers has stifled investment innovation and largely relegated 401(k) and other defined-contribution retirement plan participants to asset classes whose returns lack the very same long-term net benefits allowed for and achieved by public pension plans and other institutional investors.

• Burdensome lawsuits that seek to challenge reasonable decisions by loyal, regulated fiduciaries, and stifling Department of Labor guidance issued since my first term, however, have denied millions of Americans opportunities to benefit from investment in alternative assets.  Such assets are an increasingly large portion of the portfolios of public pensions and defined-benefit retirement plans and offer competitive returns along with diversification opportunities.

I have every reason to believe that this regulatory guidance will be put into place by the Trump Administration. DOL, in consultation with the Secretary of the Treasury, the SEC, and other federal regulators, has 180 days from the date of the Order to reexamine existing policies and clarify its guidance according to the objectives in the Order.

Perhaps to demonstrate its commitment to the policy changes, just a few days after the Order's release, DOL rescinded a 2021 supplemental statement issued by the Biden Administration warning that plan fiduciaries were not likely suited to evaluate the use of alternative investments in designated alternatives in individual account plans. The Biden Administration's supplemental statement had reversed a prior letter issued in the first Trump Administration that encouraged the inclusion of alternative investments in defined contribution plans.

Please be assured that NCPERS will keep its members up to date on developments related to this important topic as the changes move through the regulatory process.

Tony Roda is a partner at the Washington, D.C. law and lobbying firm Williams & Jensen, where he specializes in legislative, regulatory, and fiduciary matters affecting state and local pension plans. He represents the National Conference on Public Employee Retirement Systems and state-wide, county, and municipal pension plans in California, Colorado, Georgia, Kentucky, Nebraska, Ohio, Tennessee, and Texas. Tony has an undergraduate degree in government and politics from the University of Maryland, J.D. from the Catholic University of America, and LL.M (tax law) from the Georgetown University Law Center.

_{1 For purposes of the Order, the term “alternative assets” means: (i) private market investments, including direct and indirect interests in equity, debt, or other financial instruments that are not traded on public exchanges, including those where the managers of such investments, if applicable, seek to take an active role in the management of such companies; (ii) direct and indirect interests in real estate, including debt instruments secured by direct or indirect interests in real estate; (iii) holdings in actively managed investment vehicles that are investing in digital assets; (iv) direct and indirect investments in commodities; (v) direct and indirect interests in projects financing infrastructure development; and (vi) lifetime income investment strategies including longevity risk-sharing pools.}