On August 7, 2025, President Trump signed an executive order aimed at democratizing access to alternative assets in 401(k) plans. This landmark directive has the potential to reshape retirement investing by allowing private equity (PE) to be included in defined contribution plan lineups. For private equity funds and their portfolio companies, this opens new avenues for capital formation, employee benefits innovation and strategic differentiation.
Historically, private equity has been largely excluded from 401(k) plans due to concerns over liquidity, valuation, fees and fiduciary risk. The Department of Labor’s 2021 Supplemental Statement discouraged plan sponsors from including PE in defined contribution plans. However, the 2025 executive order marks a significant policy shift, directing regulatory agencies to reconsider prior guidance and explore mechanisms to safely integrate alternative assets into retirement portfolios.
Under the executive order, the Department of Labor (DOL) must reexamine and potentially rescind prior restrictive guidance and clarify fiduciary duties under ERISA, including potential safe harbor provisions. The SEC has already removed the 15% cap on private investments in registered closed-end funds and is reviewing investor qualification rules. Regulatory agencies are instructed to align frameworks and facilitate broader access to private equity in retirement plans.
Restrictions on investments within 401(k) plans are likely a key contributor as to why returns within 401(k) plans lag the market. Alternative assets can help close the gap, providing downside protection relative to traditional asset classes, and return streams more than their public market counterparts.
Private equity funds can now explore new distribution channels through retirement plans. This includes launching collective investment trusts (CITs), target date funds and managed accounts that incorporate PE exposure. Fund managers have the opportunity to design products tailored for long-term retirement investing, potentially unlocking a vast pool of capital from defined contribution plans.
Portfolio companies of PE funds can leverage this regulatory shift to offer differentiated retirement plans. By including alternative assets, they can attract and retain talent, align employee benefits with ownership structures, and enhance their value proposition. This also positions them as forward-thinking employers in competitive labor markets.
Fiduciaries must continue to act prudently and in participants’ best interests. Plan sponsors should consider risk mitigation strategies such as using managed accounts, CITs and robust documentation. Understanding ERISA compliance and monitoring investment performance will be critical to successful implementation.
Advisors play a crucial role in helping PE funds and portfolio companies explore this evolving landscape. This includes conducting diligence on fund structures, designing compliant retirement plans, benchmarking investment options and educating fiduciaries. WTW has advocated for broader adoption of private market assets in defined contribution plans for many years and is uniquely positioned to support these efforts given our expertise in employee benefits for PE-owned companies.
This executive order represents a promising opportunity for private equity and retirement plan innovation. By proactively engaging with advisors and preparing for regulatory changes, PE funds and their portfolio companies can unlock new strategic advantages. Now is the time to explore how alternative assets can enhance retirement outcomes and drive long-term value.
If you have any questions and would like to learn more, please contact a trusted WTW colleagues or contact us.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
