The Trump administration is preparing to sign off on a major shift in retirement policy. A new executive order is being finalized that would open the door for 401(k) plans to invest directly in private equity. The directive instructs the Labor Department and the SEC to issue guidance allowing employers and plan administrators to include private-market assets in retirement portfolios. This move targets the $12.5 trillion held in defined-contribution plans and gives private equity firms access to a pool of capital they’ve been chasing for years2.
The timing is not random. Private equity firms are under pressure. Auditors are asking questions. Valuation marks are stretched. Liquidity is tight. Firms like Apollo, Blackstone and KKR are looking for new financing channels that don’t rely on institutional redemptions or public markets. Retail retirement accounts offer a steady inflow. If this order goes through, PE firms get access to long-duration capital with minimal redemption risk. That’s the play.
Empower Retirement already launched target-date funds with private market exposure. Apollo and State Street are involved. The structure uses collective investment trusts to bypass liquidity constraints and minimums. But the risks are real. Private equity funds carry high fees, opaque valuations and limited transparency. Most 401(k) participants have no experience with these assets. Fiduciary liability is about to spike.
The last time the Labor Department touched this issue was in 2020. Trump’s DOL issued guidance allowing private equity in managed portfolios. Biden’s DOL rolled it back in 2021. Now Trump is reversing that reversal. The order is expected to drop within days. No final date yet. But the industry is already positioning. Empower has 19 million participants. That’s scale. That’s flow. That’s exit liquidity.
Senator Elizabeth Warren is already pushing back. She sent a letter to Empower demanding answers on risk exposure. Her office cited bankruptcy data showing that 7 of the 10 largest corporate failures in Q1 2025 were tied to private equity ownership. The warning is clear. If this goes wrong, retirees eat the losses.
The SEC is expected to issue parallel guidance. Chair Paul Atkins has signaled support. The White House says the goal is diversification and wealth-building. Critics say it’s a bailout for overleveraged funds. Either way, the floodgates are opening. And once the money moves, it won’t come back out easily.
Sources:
https://theinterviewtimes.com/trump-order-to-open-401k-plans/
