US President Donald J. Trump has signed an executive order that gives participants in 401(k) retirement plans access to alternative assets, including private equity, real estate, and digital assets. The document instructs the US Department of Labor to review existing fiduciary duty rules and coordinate potential changes with other regulatory agencies.
What Changes for Retirement Investors
Under the order, the Department of Labor must review its fiduciary responsibility guidelines for managers of retirement plans covered by the Employee Retirement Income Security Act (ERISA). The agency must also clarify its position on including alternative assets in investment portfolios and develop a process for selecting such assets as part of capital allocation strategies.
The department is directed to consult with the Department of the Treasury, the Securities and Exchange Commission (SEC), and other relevant regulators. The goal is to determine whether similar amendments to their regulations are needed to ensure the order’s implementation.
SEC to Facilitate Access to Alternative Assets
The order instructs the Securities and Exchange. Commission to simplify conditions for plan participants with self-directed accounts to access such investments. The SEC must amend its current regulations and guidance to support the reform.
How the Order Fits into Trump’s Economic Policy
According to the White House, over 90 million Americans participate in corporate defined contribution retirement plans. However, most of them have fewer investment options compared to wealthy investors or government employees. Trump believes these restrictions slow savings growth and hinder the ability to secure a sufficient retirement income.
Alternative assets, including cryptocurrencies, are viewed as a source of higher returns and a diversification tool. However, their adoption has previously been limited by regulatory risks and the potential for lawsuits against pension fund managers.
Focus on Digital Assets and Deregulation
According to the Trump administration, the Department of Labor has already repealed prior guidance issued under President Joe Biden that concerned digital assets. This means the new initiative aligns with the broader agenda of deregulation, tax incentives, and expanded investment access.
It is also emphasized that the order fulfills Trump’s promise to make the US the “crypto capital of the world” and stimulate the economy through the adoption of digital technologies.
This post is for informational purposes only and is not an ad or investment advice. Please do your own research making any decisions.