In 2026, Supporters and Critics Expect Regulators to Rethink Alts 401(k) Access

Core Viewpoint - The recent executive orders and regulatory changes under the Trump administration are expected to facilitate the inclusion of private assets, including alternatives like private equity and cryptocurrency, in 401(k) retirement plans, which could significantly alter the retirement investment landscape [6][3]. Regulatory Changes - SEC Chair Paul Atkins emphasized the need for reasonable access to retail alternatives, while SEC Commissioner Mark Uyeda called for litigation reform to protect plan sponsors offering alternatives in 401(k) plans [1]. - The Labor Department rescinded a previous order that discouraged the use of cryptocurrency in 401(k)s, indicating a shift towards a more crypto-friendly regulatory environment [2]. Market Trends - Private asset allocations have been prominent in defined-benefit plans but face challenges in defined contribution plans due to ERISA protections and litigation risks [4]. - The private market asset management sector is experiencing a slowdown in institutional investors' appetite for alternatives, yet there is a strong push to access the approximately $13 trillion in 401(k) assets [4]. Industry Perspectives - Industry leaders, such as Cheryl Nash from InvestCloud, believe that private markets will increasingly become part of retirement plans, indicating a growing interest in alternatives among advisors and plan participants [5][11]. - Rick Pederson from Bow River Capital anticipates that private assets could become mainstream in 401(k) plans by 2027 or 2028, contingent on further legislative changes to mitigate litigation risks [7][8]. Product Development - Major asset management firms are actively developing products for 401(k) plans that include private market exposure, such as State Street Global Advisors' target-date funds and Goldman Sachs' Collective Trust – Private Credit Fund [9]. - Advisors are showing a preference for private equity as an alternative investment, with 43% indicating they are likely to recommend it, followed by private credit and private real estate [12]. Regulatory Concerns - There are concerns regarding the potential risks associated with expanding alternatives to retail investors, with critics arguing that it could expose ordinary savers to complex financial products [14][15]. - The SEC's approach to democratizing access to alternatives is expected to be gradual rather than a sweeping overhaul, with a focus on incremental changes [17][18].