Retirement Retirement Planning

Critics Warn a Trump 401(k) Rule Could Quietly Shrink Your Nest Egg

American workers need to know about this proposed 401(k) change.

By Catherine Collins , Edited by Laura Hohenstein

Updated Nov. 2, 2026

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Last year, the Trump Administration proposed allowing alternative investments in 401(k) plans. The goal, according to the White House, would be to let all Americans access certain types of investments that have not previously been available to average investors.

Critics, however, say that investing in alternative assets, like private equity and cryptocurrency, in retirement plans could shrink Americans' nest eggs because of the high fees and volatility. Here's more information about the proposed 401(k) rule and where it currently stands.

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Trump's proposed 401(k) rule and what it entails

In August 2025, President Trump signed an executive order that asked federal agencies to start investigating ways to include alternative investments in 401(k) plans. In March 2026, the Department of Labor moved this executive order to the next step by proposing a rule that gives employers guidelines to evaluate these investments.

The Department of Labor also established a safe harbor rule that would reduce legal risks for fiduciaries. In September 2026, the SEC proposed its own changes specifically to the management fees involved in alternative investments. The proposal is not currently final or approved.

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What alternative assets include

Typical investment assets include things like stocks, bonds, mutual funds, index funds, and other investments that are typically available within 401(k) plans.

Alternative assets are investments that are non-traditional, such as private equity, private credit, real estate, gold, and cryptocurrency.

Why Trump wants to make alternative assets more available

The Trump Administration says that all Americans, not just wealthy investors, should be able to have access to investment opportunities like private equity. The White House also explained that alternative assets, like real estate and digital assets, could offer more diversification opportunities for investors as well as competitive returns.

The overall goal, according to the Trump administration, is to help Americans achieve a more comfortable retirement.

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The drawbacks to including alternative investments in 401(k) plans

There have been some outspoken critics of allowing alternative investments in 401(k) plans. For example, Senator Elizabeth Warren drafted a letter to the SEC sharing concerns about protecting consumers.

Other experts have explained that private equity funds usually charge higher fees and can be illiquid. Investors who are inexperienced may not be able to make informed choices about whether or not alternative investments should be a part of their retirement portfolio. Finally, volatile assets, like cryptocurrency, could put people's retirement accounts at risk.

What steps should investors take next with their 401(k)s

As of right now, workers do not need to make any changes to their 401(k) plans based on the current alternative asset proposals because they have not been fully approved yet.

Employees who want to purchase alternative investments as part of their retirement portfolio will not be able to do so until these proposals are out of the regulatory process, which could take several months.

Not all employers will include these options in the future

According to the Department of Labor, every retirement plan has a fiduciary. This is a person or group of people who are in charge of selecting investment options for a 401(k) plan.

Because every employer might have different fiduciaries in charge of their 401(k) plans, some employers may include alternative assets in their offerings while others may not. As an employee, you will only be able to choose from the investments that are actually available in your 401(k) plan.

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Where to get help with your retirement plan in the future

If you're not sure whether investing in alternative assets is right for you, you can schedule an appointment with a financial advisor. A financial advisor can look at your current retirement account and make suggestions for you based on your risk tolerance, age, retirement goals, and several other factors.

There's nothing wrong with asking questions about investments you don't understand. Also, if you're not sure how your 401(k) plan works or whether the assets you're currently invested in have high fees, contact your human resources department or your 401(k) plan administrator.

Bottom line

Trump's 401(k) changes that his administration proposed are controversial. On one hand, allowing alternative investments in 401(k)s would give many Americans access to investment opportunities that they wouldn't have otherwise. However, many critics say that investing 401(k) money into alternative investments could be a financial mistake because of the higher fees and uncertainty.

These rules are still not final, and alternative assets are currently not available in 401(k) plans. Because of that, investors who are interested in buying these types of assets should be on the lookout for announcements from their employer in case there are changes in the future.

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