What Donald Trump’s Executive Order Allowing Alternative Investments in 401(k)s Means for Investors

On August 7, 2025, President Donald Trump signed an Executive Order that could reshape the way Americans save for retirement. This order directs federal regulators to expand access to alternative investments—including real estate, private equity, infrastructure, commodities, and digital assets—within 401(k) and other defined contribution retirement plans.[1]

The Department of Labor has until early 2026 to evaluate and address the proposed regulatory updates. Thereafter, financial providers would need to update disclosed risk disclosures, investment offerings and determine the logistics associated with providing alternative investments to plan participants. These changes could take a very long time before implementation is practical.

The move promises broader diversification opportunities for retirement savers but also raises questions about fees, liquidity, asset quality and investor education. In this article, we unpack what the order means, explore how real estate fits into the picture, and clarify whether it might include single-family homes—and if so, how related expenses like property taxes and insurance would be paid.

Understanding the Executive Order

The Executive Order instructs the Department of Labor (DOL) and the Securities and Exchange Commission (SEC) to:

• Review and amend regulations that limit alternative investments in 401(k)s
• Provide legal clarity to plan sponsors who want to add these options
• Promote investor education around alternative assets[2].

The White House described the initiative as an effort to “democratize access to investment opportunities traditionally reserved for institutional investors,” enabling ordinary Americans to diversify their portfolios beyond traditional stocks and bonds.¹

What Counts as an Alternative Investment?

Under the order, alternative investments include:

Private equity and private credit

Investments in companies and loans outside public markets. Private equity involves an investment firm buying a company, improving its operations and then selling it for a profit.

Real estate

Both direct ownership and indirect vehicles like Real Estate Investment Trusts (REITs)

Infrastructure projects

Investment in bridges, airports, energy facilities, etc.

Commodities

Precious metals, oil and agricultural products. This could include the 401k plan holding physical commodities directly, or more likely the physical assets would be held in trust and investors could buy an ETF. Currently, most commodity ETFs use commodity futures contracts to gain exposure to the commodity. This is especially true for commodities that are difficult to store such as oil, natural gas and agricultural products. How implementation of the executive order would be facilitated in respect to these commodities is uncertain.

ETFs that invest in gold, silver, platinum, and palladium are often physically backed already. These funds purchase and store the physical bullion in secure vaults, and investors essentially own a share of that stockpile. This structure allows them to more closely track the spot price of the metal.

Digital assets

Cryptocurrency funds and blockchain-related investments (through regulated channels).

Lifetime income products

Annuities and structured income vehicles.

This list reflects a broader global trend toward including non-traditional assets in retirement planning as a hedge against market volatility and inflation[3].

Why This Matters for Retirement Savers

Potential Benefits

1. Diversification – Alternative assets historically show lower correlation with traditional equity and bond markets, potentially reducing overall portfolio volatility[4].
2. Inflation Hedging – Assets like real estate and commodities often hold or increase value when inflation rises.
3. Access to Higher-Return Strategies – Private equity and certain real estate funds have historically delivered higher returns than public market averages—though with higher risk.

Potential Risks

1. Liquidity Constraints – Many alternative assets are illiquid, meaning you can’t sell quickly without potentially taking a loss. Many private equity and private credit arrangements have long capital lock-up periods.
2. Valuation Challenges – Without a daily market price, determining an asset’s worth can be complex.
3. Higher Fees – Private funds and alternative vehicles often carry management and performance fees that exceed those of traditional funds.
4. Complexity for Investors – Understanding the risk/reward profile of alternatives requires education and due diligence.

Real Estate in a 401(k): How It Works

The Executive Order explicitly lists real estate as an eligible category.¹ In practice, this will likely mean exposure through:

• REITs – Pooled vehicles investing in portfolios of commercial or residential properties
• Private real estate funds – Professionally managed, often focusing on specialized sectors like multifamily housing or logistics centers
• Real estate ETFs or mutual funds – Publicly traded, offering liquidity with real estate exposure

While the language includes “direct ownership,” regulatory and operational constraints make direct acquisition of properties—especially single-family homes—highly unlikely in mainstream 401(k) plans.

Can You Buy a Single-Family Home in Your 401(k)?

Technically possible, practically improbable. Here’s why:

• ERISA Plan Constraints – Most 401(k)s are employer-sponsored, with strict fiduciary oversight. Directly owning and managing a property would require the plan administrator to handle ongoing maintenance, compliance, and valuation—an administrative burden few are willing to take on[5].
• Liquidity Requirements – 401(k) assets must remain relatively accessible for distributions. A single property ties up significant capital in an illiquid asset.
• Valuation Issues – Accurately pricing a unique property for quarterly reporting is complex and costly.

Instead, plan participants are more likely to gain exposure to residential real estate through pooled funds—where their capital is part of a diversified portfolio managed by professionals.

Property Taxes and Insurance in a 401(k)-Held Real Estate Investment

If your 401(k) invests in real estate through a pooled vehicle:

• Property taxes are paid by the fund manager from the fund’s operating budget.
• Insurance premiums are likewise managed at the fund level.
• You don’t get a property tax bill—costs are embedded in the fund’s expense ratio or net asset value.

If, in rare cases, a plan offered direct property ownership, the plan would still have to pay taxes and insurance from plan assets—not from your personal checking account—to maintain tax-qualified status.

How the Rule Could Change Retirement Planning

More Institutional-Style Portfolios for Retail Investors

Historically, pension funds and endowments allocate 20–40% of their portfolios to alternatives. This order opens the door for retail investors to adopt similar strategies—though without the same in-house research teams.⁴

Need for Stronger Investor Education

The White House and DOL stress that expanded access must come with improved investor guidance. That includes understanding:

• How to assess alternative investments
• The role they play in a diversified portfolio
• The risks and illiquidity involved

Fiduciary Duty and Employer Caution

Even with regulatory green lights, many employers may move slowly. Fiduciaries are still responsible for ensuring investment options are in participants’ best interests, balancing innovation with caution.

Expert Perspectives

• Supporters argue that Americans should have the same diversification tools as large institutions, especially given longer lifespans and the potential for inflation to erode returns from traditional assets.³
• Critics warn that without proper oversight; ordinary savers could be exposed to opaque investments with high fees and limited exit opportunities[6]

Key Takeaways for Investors

1. Expect Gradual Rollout – Changes will require rulemaking and guidance from the DOL and SEC before appearing in your plan’s lineup.
2. Understand Before You Invest – Alternatives can enhance diversification but carry unique risks.
3. Ask About Structure – For real estate, clarify whether you’re investing via REITs, private funds, or other vehicles.
4. Watch Costs – Higher fees can erode net returns over time.
5. Stay Diversified – Even with new options, balance remains key to retirement success.

Conclusion

Donald Trump’s Executive Order on alternative investments in 401(k)s marks a significant policy shift. It opens the door for retirement savers to access asset classes that were once out of reach, potentially enhancing diversification and inflation protection, but not without risk.

For real estate enthusiasts, the order means greater exposure is possible—but not through buying and managing your own single-family rental inside your retirement plan. Instead, investors will likely gain access through professionally managed real estate funds that handle taxes, insurance, and administration on their behalf.

The opportunity is real, but so are the risks. As always, the best strategy is to stay informed, evaluate your options carefully, and ensure your portfolio aligns with your long-term goals.

Hemispheres Investment Management (HIM)

HIM is a wealth manager with a global investment management focus (domestic and international investments in the same portfolio). Our team of seasoned professionals each has over 35 years of experience in research, strategy development, and management of investment portfolios, including deep proficiency in U.S., international, and emerging markets. Hemispheres can assist you in diversifying your portfolio globally. Global Equities is Hemispheres’ flagship investment product.

Please contact Hemispheres Investment Management for a free consultation. We provide guidance to assist you in optimizing your investment strategies and helping you achieve your investment goals. Book a meeting.

[1] White House. “Fact Sheet: President Donald J. Trump Democratizes Access to Alternative Assets for 401(k) Investors.” White House.” August 7, 2025. https://www.whitehouse.gov/fact-sheets/2025/08/fact-sheet-president-donald-j-trump-democratizes-access-to-alternative-assets-for-401k-investors/

[2] Groom Law Group. Executive Order Directs Regulators to Expand Access to Alternative Assets in 401(k) Plans.” August 2025  https://www.groom.com/resources/executive-order-directs-regulators-to-expand-access-to-alternative-assets-in-401k-plans/

[3] JDSupra. “Planning to Take Advantage of Executive Order Expanding Alternative Investments in Retirement Plans.” August 2025. https://www.jdsupra.com/legalnews/planning-to-take-advantage-of-executive-7955964/

[4] Published by the CFA Institute 2024 “The Role of Alternative Investments in Diversified Portfolios.” https://www.researchgate.net/publication/383462552_The_Role_of_Alternative_Investments_in_Diversified_Portfolios_A_Study_of_Returns_Risk_and_Correlation_Taking_Examples_Under_Indian_Context

[5] U.S. Department of Labor. “Understanding Your Fiduciary Responsibilities Under a Group Retirement Plan.” Updated 2025. https://www.findlaw.com/legal/practice/human-resources/meeting-your-plan-fiduciary-responsibilities.html

[6] Economic Times: “Is your money safe? Trump’s 401(k) executive order could put your retirement savings on the line – check how”. Updated August 8, 2025 https://m.economictimes.com/news/international/us/is-your-money-safe-trumps-401k-executive-order-could-put-your-retirement-savings-on-the-line-check-how/articleshow/123195482.cms