401(k) plans may soon include crypto and private equity

A Labor Department proposal could let 401(k) plans invest in crypto, private equity, and other alternatives, raising debate over risks and benefits for retirement savers.

A new proposal from the Department of Labor, prompted by a directive from President Donald Trump, seeks to allow 401(k) retirement plans to include alternative assets such as cryptocurrencies, private equity, private credit, and real estate. The draft rule would give fiduciaries a legal safe harbor if they follow specific due-diligence steps, including thorough evaluation of performance, fees, liquidity, valuation, benchmarks, and complexity. Supporters believe this could offer higher returns and greater diversification, while critics warn of increased risks, higher fees, and reduced liquidity compared to traditional investments. The proposal is open for public comment for 60 days. If finalized, it would mark a significant shift in retirement investing, potentially expanding access to investment options previously limited to wealthy or institutional investors. Legal experts note that widespread adoption could take years, and debate continues over the impact on ordinary savers.