What Trump’s Executive Order on 401(K)s Means for Workers Who Hope to Retire

A new Trump executive order has opened the door for 401(K) holders to invest in private equity, cryptocurrency, and other alternative assets. Why did Trump make this decision? Is this a beneficial “public policy” for common people preparing for retirement? Gerald Epstein, a leading expert on finance and financial crises, warns that Trump’s executive order on retirement accounts not only comes with high risks, but the so-called alternative assets deliver, at best, average returns. Epstein is professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts Amherst. His latest book is Busting the Bankers’ Club: Finance for the Rest of Us.

C. J. Polychroniou: On August 7, 2025, U.S. President Donald Trump signed an executive order titled “Democratizing Access to Alternative Assets for 401(K) Investors.” Trump’s executive order defines alternative assets in a very broad manner to include private equity and private credit, real estate, commodities, and cryptocurrencies. At any rate, with nearly $9 trillion being currently held in 401(K) plans, this executive order represents a historic shift that could potentially reshape how people save for retirement and have indeed major effects on the economy. Why would Trump open the door for 401(K) retirement plans to invest in private equity and crypto? It’s hard to imagine Trump being interested in expanding access to these assets because he cares about economic security and the future of the average U.S. worker.

Gerald Epstein: You are right: Trump signed an executive order on August 7, 2025, which, like so many of the Trumpian orders, has an Orwellian title: “Democratizing Access to Alternative Assets for 401(K) Investors.” It is Orwellian because, in effect, it will allow and indeed encourage more Americans, desperate to put away savings for their retirement, to open themselves up to exploitative and misleading investment advisors, brokers, and asset managers on the false promise that they will get higher returns from so-called “alternative” assets. It encourages the idea that, somehow, the common people are missing out on a great investment opportunity only open to the very rich. But in fact, this move is more like social dumping. The “smart money” — wealthy investors, pension funds, and university endowments — are starting to abandon some of these “alternative investments” such as private equity. Private equity firms, increasingly desperate for investors, and who for years have been eyeing the “little guys’” 401(K) plans, will now have a chance to make up lost ground by trying to attract middle-class and working-class retirement funds. So, far from democratizing access, Trump’s executive order will “democratize” exploitation.

And with respect to crypto — the new cool “alternative” asset — this move is a payback to all the crypto pushers who dumped millions of dollars into Republican and friendly Democratic coffers in the 2024 election. And more to the point, it is a pay-forward to Trump, his family, and his cronies, who are making a fortune from the crypto business. David D. Kirkpatrick at The New Yorker, using a very judicious approach, estimates that, so far, the Trump family has made a minimum of $3.4 billion from exploiting Trump’s role as president. Of that, 70 percent ($2.4 billion) has come from crypto-related ventures. And these estimates were published in August. Since then, the Trumps have sealed crypto deal after crypto deal.

So, like so much that passes these days for Trumpian “public policy,” the plan is to enrich friendly financiers and the Trumps themselves, at the expense of many people who were somehow convinced to vote for Donald Trump in the 2024 election.

Would it be accurate to say that Trump’s new 401(K) policy has the potential to offer bigger returns but also higher risks? As such, what could be the potential economic effects of this new policy, and could it actually undermine retirement security?

There are two main types of assets that come under the rubric of “alternative investment”: private equity and crypto assets. As Eileen Appelbaum and Rosemary Batt, among others, have detailed, private equity refers to financial firms that have become famous for taking over everything from Toys ‘R Us to Steward Health Care, running them into the ground by loading them up with debt, and generating billions for the private equity owners. According to Americans for Financial Reform, private equity firms have been called a “billionaire factory” for private equity managers, whose performance fees increased the number of multibillionaires in the U.S. sevenfold between 2006 and 2015. While the private equity partners make billions, some studies show the private equity investors make no more than average returns but pay much higher fees and expenses, according to analyst Ludovic Phalippou and others. As a result, as I said before, large investors, including some pension funds, are leaving private equity in droves.

The other “alternative investment” is crypto. As Tonantzin Carmona of the Brookings Institution and law professor Hilary Allen, among others, have shown, although there might be a few small investors who strike it rich, for most, crypto assets are highly risky with rates of return lower than those on other more regulated investments, such as index funds.

Let’s assume for a moment that the U.S. economy slips into a recession, where the odds of that happening are now 50-50. What could a recession mean for alternative assets in 401(K)s?

As I just indicated, these “alternative investments” are highly risky with, at most, average returns. This question asks whether they are good hedges against negative shocks to the economy, such as recessions, or inflation. With respect to crypto, the answer is clearly no, despite many advocates’ claim that it is. The problem with crypto is that it has no underlying real value, so it is highly speculative. Any significant shock is likely to spook investors, leading to a run on crypto-related assets, as we saw in 2023 with the runs on crypto-friendly banks — Silicon Valley, Signature Bank, and First Republic.

Private equity is more complicated but will also be at risk. So this means that small savers will lose.

Clearly, a new regulatory regime has been established in Washington since Trump’s reelection, which encourages all kinds of financial innovation. Are we witnessing a return to casino capitalism, or perhaps going even further beyond casino capitalism?

Well, ever since the Clinton/Greenspan gutting of the Glass-Steagall Act and other financial “reforms” (all of which are discussed in my book Busting the Bankers’ Club: Finance for the Rest of Us), we have returned to a “casino capitalism.” But now, under Trump 2.0, the crypto interests and big finance are taking us into territory not seen since the 1920s: crony capitalism on steroids.

And look what happened then!